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the statute begins to run from the time that a right of action accrues, without regard to when the actual damage results, is well settled. 26 Cyc. 1065, 1069, 1116, and cases there cited: Wilcox v. Plummer, 4 Pet. 172, 7 L. Ed. 821.
If an act occur, whether it be a breach of contract or duty which one owes another or the happening of a wrong, whether willful or negligent, by which one sustains an injury, however slight, for which the law gives a remedy, that starts the statute. That nominal damages would be recoverable for the breach or for the wrong is enough. The fact that the actual or substantial damages were not discovered or did not occur until later is of no consequence. The act itself, which is the ground of action, cannot be legally separated from its consequences. Were this so, successive actions might be brought in many cases of contract and tort as the damages developed, although all the consequential injuries had one common root in the single original breach or wrong. This would in effect nullify the statute.
There is a class of actions for consequential damages which are distinguishable from the class to which we refer and from the one at bar. The breach of duty or other wrongful act may or may not be legally injurious to the plaintiff until he has suffered some consequence therefrom. Thus a railway may be operated without the exercise of statutory precautions intended to safeguard the public. But, until one has sustained some injury in consequence, he has no right of action. It is the duty of a municipality to maintain its streets so that they may be safely used by the public. But the mere fact that a street is in a dangerous condition will not give a right of action to every one who chooses to sue. It is only when some injury has occurred as a consequence that the statute begins to run against the injured person's right of action. One may maintain a dangerous wall along a public street, but no individual right of action against him will arise until some injury shall result. If one has the legal right to take the coal or other mineral below the surface of premises occupied by another, he owes that person the duty of doing it in such manner as will not disturb his enjoyment of the surface. But until the enjoyment of the surface premises is interfered with no right of action arises for the breach of this duty. This last illustration is from the case of Bonomi v. Backhouse, 9 H. L. Cases, 305, and the decision in that case went upon the ground that the cause of action did not arise until the enjoyment of the surface was affected by the falling in of the ground. The surface owner was not bound to bring his suit when the mischief was done which ultimately led to the injury of his rights, because no legal injury had occurred until there was some interference with the enjoyment of his surface estate. The case of Smith v. City of Seattle, 18 Wash. 484, 51 Pac. 1057, 63 Am. St. Rep. 910, is to the same effect. The case of State v. McClellan, 113 Tenn. 616, 625, 85 S. W. 267, has been relied upon by the plaintiff in error as an authority holding that it is the occurrence of actual damage which starts the statute. That was an action upon the official bond of a register of deeds, etc., for damages resulting from his failure to correctly register a deed placed in his hands for that purpose by the plaintiff. It was held that the statute of limitations did not begin to run until the plaintiff had sustained some injury in consequence. But this was placed upon the well-recognized distinction between the liability of a public official for a breach of official duty and the right of action which may arise between persons having only private relations with each other when there has been a breach of some contract or duty which one personally owes to the other. The Tennessee court, speaking by Judge Shields, said:
“Public officers are not liable for a breach of official duty to an individual unless he can show that in the public duty was involved a duty to himself as an individual, and that he has suffered a special and peculiar injury, not common to the general public. In other words, without special injury, the wrong is to the public only, and punishable by indictment or removal from office, or both. The plaintiff, in an action against a public officer for a breach of a duty primarily due to the public, must show both the breach of an official duty, in the correct discharge of which he was interested, and the special resultant injury to himself. All these elements must be present. This rule is necessary to prevent public officers from being annoyed and harassed by groundless actions and in the promotion of good public services. 23 A. & Eng. Ency. of Law, 379, 380; Mechem on Public Officers, $$ 670–674. Therefore a right of action against a public officer growing out of a breach of official duty involving individual rights is not complete and does not accrue until the happening of a consequential injury resulting proximately from the breach."
To the same effect is the case of Moore v. Tuvenal, 92 Pa. 490. People v. Cramer, 15 Colo. 159, 25 Pac. 302, Steel v. Bryant, 49 Iowa, 117, and Bank of Hartford v. Waterman, 26 Conn. 324, were similar to the Tennessee case, and stand upon the distinction already stated, being actions upon the official bonds of public officers for neglect of official duty resulting in loss to the plaintiffs. The later Iowa case of Russell v. Abstract Co., 78 Iowa, 216, 42 N. W. 654, 4 L. R. A. 536, illustrates the distinction. That was an action against a private abstract company. It was held that the statute began to run when an erroneous abstract was furnished, although the damage did not result until later. To the same effect as the case last cited are Kinnison v. Carpenter, 9 Bush (Ky.) 606, and Carpet Co. v. Dornan, 64 Mo. App. 25.
The ground of the present action is the wrongful assignment of the policy of insurance to Stone. That act was in breach of his express agreement to deliver same to the company “forthwith” when it should be found. That act was also in direct contravention of his implied obligation, in view of the averments of the declaration in respect of the actual intent of the parties as to the full cancellation of the policy and his "affirmation and representations” as to the full effectiveness of the “lost policy receipt” as a cancellation of every interest which he claimed. Everything which followed was the plain result or consequence of that act, whether we treat it as a mere breach of contract or a tortuous and wrongful act in view of his obligations and relations to the insurance company. A right of action then arose. That the damages immediately accruing may have been purely nominal does not alter the case. For the nominal damages the plaintiff might have maintained its suit. Actual damages accrued when suit was actually brought upon the policy for the company was then compelled to incur the expense of a defense, and, when judgment was finally rendered for the amount of the policy with interest and costs, the full extent of the injury done by the act of assignment was determined. The act of wrongfully assigning the policy is the cause of action, or the plaintiff has stated none, and the damages which resulted 'cannot be legally separated from the act which constituted the legal wrong which lies at the foundation of this suit.
The case of Wilcox v. Plummer, 4 Pet. 172, 181, 7 L. Ed. 821, is not only a leading case, but an authoritative one. That was an action in assumpsit to recover the amount of a loss sustained by the negligent and unskillful conduct of a litigation. A promissory note was placed in the attorney's hands for collection by suit against the maker and indorser. The maker alone was sued. Judgment had. He proved to be insolvent. Suit was then brought against the indorser. This action was nonsuited for a negligent misnomer of the plaintiff. By the termination of this action the statute had run in favor of the indorser. The question in the case was whether the statute of limitations commenced running when the error was committed in the commencement of the action against the indorser, or only when the actual damage was sustained by the loss of the debt through the bar of the statute in favor of the indorser. The court held that the statute began to run when the negligent act of the attorney was committed. Among other things, the court said:
"When the attorney was chargeable with negligence or unskillfulness, his contract was violated, and the action might have been sustained immediately. Perhaps, in that event, no more than nominal damages may be proved, and no more recovered; but, on the other hand, it is perfectly clear that the proof of actual damage may extend to facts that occur and grow out of the injury, even up to the day of the verdict. If so, it is clear the damage is not the cause of action. This is fully illustrated by the case from Salkeld and Modern, in which a plaintiff, having previously recovered for an assault, afterwards sought indemnity for a very serious effect of the assault, which could not have been anticipated, and of consequence could not have been compensated in making up the verdict.
“The cases are numerous and conclusive on this doctrine. As long ago as the 20th Eliz. (Cro. Eliz. 53), this was one of the points ruled in the Sheriffs of Norwich v. Bradshaw. And the case was a strong one; for it was altogether problematical whether the plaintiffs ever should sustain any damages from the injury. The principle has often been applied to the very plea here set up, and in some very modern cases. That of Battery v. Faulkner, 3 B. & Ald. 288, was exactly this case ; for there the damage depended upon the issue of another suit, and could not be assessed by a jury until the final result of that suit was definitely known. Yet it was held that the plaintiff should have instituted his action, and he was barred for not doing so. In the case of Short v. McCarthy, which was assumpsit against an attorney, for neglect of duty, the plea of the statute was sustained, though the proof established that it was unknown to the plaintiff until the time had run out. And the same point is ruled in Granger v. George, 5 B. & C. 149; in both cases the court intimating that, if suppressed by fraud, it ought to be replied to the plea, if the party could avail himself of it. In Howell v. Young, the same doctrine is affirmed, and the statute held to run from the time of the injury, that being the cause of action, and not from the time of damage or discovery of the injury.”
(Circuit Court of Appeals, Eighth Circuit. October 19, 1907.)
No. 2,479. 1. BANKRUPTCY-"CREDITORS'-SURETY OR INDORSER.
A surety or indorser for a bankrupt is a creditor within the meaning of Bankr. Act July 1, 1898, c. 541, 30 Stat. 544 [U. S. Comp. St. 1901, p.
3418). 2. SAME—VOIDABLE PREFERENCE-PAYMENT FOR BENEFIT OF SURETY.
Where the president of a corporation was an indorser on its notes given to a bank, and with knowledge of its insolvency and within four months prior to its bankruptcy caused it to pay the notes with intent to relieve himself from liability and to secure an advantage over other creditors, a preference was given which may be recovered from him by the trustee under Bankr. Act July 1, 1898, c. 541, § 60b, 30 Stat. 562 [U. S. Comp. St. 1901, p. 3445), as amended by Act Feb. 5, 1903, c. 487, § 13, 32 Stat. 799 [U. S. Comp. St. Supp. 1907, p. 1031].
In Error to the District Court of the United States for the Eastern District of Missouri.
B. Schnurmacher and William A. Kinnerk, for plaintiff in error.
HOOK, Circuit Judge. The trustee in bankruptcy sued Kobusch to recover the amount of a voidable preference claimed to have been received from the bankrupt, and obtained judgment which this writ of error is brought to review. The bankrupt was a manufacturing company, and Kobusch was its president. It had executed to a bank four notes aggregating $4,800 upon which Kobusch was an indorser for its accommodation. Within four months of the filing of the petition in bankruptcy, and whilst the company was insolvent, he, as president, caused it to pay the notes to the bank. The trial court found from the evidence that, when the notes were paid, he had reasonable cause to believe his company was insolvent, that the payment was made with intent on the part of the company to give a preference, and that he, Kobusch, intended to secure such preference. The question is whether Kobusch received such a preference as may be recovered from him under the preference clauses of Bankr. Act July 1, 1898, c. 511, 30 Stat. 544 [U. S. Comp. St. 1901, p. 3 118], as amended by Act Feb. 5, 1903, c. 487, § 13, 32 Stat. 799 [U. S. Comp. St. Supp. 1907, p. 1031).
There is no doubt that, as abstractly defined by section 60a, a preference was given by the bankrupt. Nor in view of the findings of the trial court, which are not disturbed by the contents of the bill of exceptions, is there doubt that Kobusch was benefited by being discharged from his obligation to the bank as surety or indorser upon the notes of the bankrupt. Section 60b provides:
"If a bankrupt shall have given a preference, and the person receiving it, or to be benefited thereby, or his agent acting therein, shall have had reasonable cause to believe that it was intended thereby to give a preference, it shall be voidable by the trustee, and he may recover the property or its value from such person.”
There is a significant resemblance between the language of this section and that of the corresponding sections of Act March 2, 1867, c. 176, 14 Stat. 517. Section 35 (page 534) of the act of 1867 provided that if any person insolvent or in contemplation of insolvency, within the period limited, with a view to giving a preference to any creditor or person having a claim against him, or who is under any liability for him, makes any payment, etc., the same shall be void and the assignee may recover the property or the value of it from the person so receiving it or so to be benefited. Section 39 (page 536) of the same act also provided for the recovery of preferences given to persons under liability for the bankrupt “as indorsers, bail, sureties or otherwise.” It is quite clear that in passing the existing act Congress intended to adopt the substance of the prior provisions upon this subject, and in doing so to employ terms more concise, but equally as comprehensive. The act of 1867 was construed in Bartholow v. Bean, 18 Wall. 635, 21 L. Ed. 866. In that case the bankrupts when insolvent paid their note, indorsed by one Wilcox, which they had discounted with their bankers. Shortly afterwards bankruptcy proceedings were instituted, and the assignee who was appointed sued the bankers, not Wilcox, the indorser, to recover the payment as a voidable preference. In treating of the relation to the case of the fact that the indorser was solvent and the right of the bankers to refuse payment from the bankrupts without danger of losing their claim upon the indorser, the court said:
“The statute in express terms forbids such preference, not only to an ordinary creditor of the bankrupt, but to any person who is under any liability for him; and it not only forbids payment, but it forbids any transfer or pledge of property as security to indemnify such persons. It is therefore very evident that the statute did not intend to place an indorser or other surety in any better position in this regard than the principal creditor, and that, if the payment in the case before us had been made to the indorser, it would have been recoverable by the assignee. If the indorser had paid the note, as he was legally bound to do, when it fell due, or at any time afterwards, and then received the amount of the bankrupt, it could certainly have been recovered of him. Or if the money had been paid to him directly, instead of the holder of the note, it could have been recovere or if the money or other property had been placed in his hand to meet the note or to secure him, instead of paying it to the bankers, he would have been liable.”
If Wilcox, like Kobusch in the case before us, had occupied a position of power and control over the affairs of the bankrupts with authority to direct their business acts, and by virtue thereof had caused the preferential payment to be made to the holders of the note with intent to relieve himself from liability, it is difficult to perceive how he could have escaped liability under the statute as so construed. Landry v. Andrews, 22 R. I. 597, 48 Atl. 1036, arose under the present act. Andrews had indorsed a note of the bankrupts given to a bank. Within four months of the commencement of the bankruptcy proceedings, and when insolvent, the bankrupts paid to the bank the amount of the note, thereby discharging it and relieving Andrews from liability. Andrews, with knowledge of the insolvency