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Opinion of the Court.

Even though there is no state statute applicable to similar equitable demands, when the jurisdiction of the federal court is concurrent with that at law, or the suit is brought in aid of a legal right, equity will withhold its remedy if the legal right is barred by the local statute of limitations. It thus stays its hand in aid of a legal right which, under the Rules of Decision Act, would be unenforcible in the federal courts of law as well as in the state courts. Wilson v. Koontz, 7 Cranch 202, 205-6; Michoud v. Girod, 4 How. 503, 561; Stearns v. Page, 7 How. 819; Clarke v. Boorman's Executors, supra, 505; Carrol v. Green, supra; Godfrey v. Terry, 97 U. S. 171, 176, 180; Baker v. Cummings, 169 U. S. 189; Metropolitan Bank v. St. Louis Dispatch Co., 149 U. S. 436; McDonald v. Thompson, supra; Hughes v. Reed, 46 F. 2d 435; cf. Wagner v. Baird, 7 How. 234; Godden v. Kimmell, supra; Wood v. Carpenter, supra.

But where the equity jurisdiction is exclusive and is not exercised in aid or support of a legal right, state statutes of limitations barring actions at law are inapplicable, and in the absence of any state statute barring the equitable remedy in like cases, the federal court is remitted to and applies the doctrine of laches as controlling. Wagner v. Baird, supra, 258; Badger v. Badger, 2 Wall. 87, 94–5; Kirby v. Lake Shore & Michigan Southern R. Co., 120 U. S. 130, 139; Metropolitan Bank v. St. Louis Dispatch Co., supra, 448; Speidel v. Henrici, 120 U. S. 377, 386, 387; see Southern Pacific Co. v. Bogert, 250 U. S. 483, where no statute of limitations was pleaded. 244 F. 61, 65.

rights because of the fraud or inequitable conduct of the defendant. Michoud v. Girod, supra, 561; Meader v. Norton, 11 Wall. 442; Bailey v. Glover, 21 Wall. 342, 348; Kirby v. Lake Shore & Michigan Southern R. Co., 120 U. S. 130; Rugan v. Sabin, 53 F. 415, 420; Stevens v. Grand Central Mining Co., 133 F. 28; Johnson v. White, 39 F. 2d 793.

215234-40-19

Opinion of the Court.

309 U.S.

The question remains whether the court below correctly held that the doctrine of laches and not the local three-year statute of limitations is controlling. The present suit being, as we have seen and as the court below held, exclusively of equitable cognizance, in that it is not predicated upon any legal cause of action, the statute is not one which a federal court of equity will adopt and apply as a substitute for or a supplement to its own doctrine of laches, unless it is applied to like causes of action in the state courts.

The present suit was brought in less than four years after the cause of action had accrued, and it is conceded that the cause of action is not barred unless by the threeyear statute. Section 49 of the Civil Practice Act provides that "the following actions must be commenced within three years after the cause of action has accrued: ... (4) An action against a director or stockholder of a moneyed corporation, or banking association . . . to enforce a liability created by the common law or by statute. The cause of action is not deemed to have accrued until the discovery by the plaintiff of the facts under which... the liability was created." This Court has recognized that this statute is a bar to actions at law and has so applied it in suits to recover assessments on shareholders of a bank. See Platt v. Wilmot, supra.

Respondents, admitting that the statute is a bar to suits at law, argue that it is inapplicable to suits in equity and that when the remedy at law is so inadequate that resort must be had to remedies which are traditionally equitable, the limitation is not that of the three-year but of the ten-year statute, which is made applicable to all actions. for which no limitation is otherwise specially prescribed. § 53, N. Y. Civil Practice Act.

At the outset we are confronted with those cases in which this Court in McDonald v. Thompson, supra, and

280

2

Opinion of the Court.

the state courts have recognized and applied the statutory bar to an action at law to equity suits brought in aid of the legal right to recover an assessment upon stockholders. But as we have seen, those cases are referable to the doctrine accepted and applied in the federal courts of equity that equity does not give relief predicated on a legal right which the statute has barred.

Here the jurisdiction being exclusively in equity to enforce rights cognizable only in equity, statutes barring legal causes of action, as we have seen, are not controlling and we turn to the argument of petitioners that the threeyear statute is a bar as well to such suits brought in the state courts, even though they are suits in which it is necessary to resort to remedies which are exclusively or traditionally equitable.

The precise question thus raised appears not to have been decided by the New York Court of Appeals. In Mencher v. Richards, 256 App. Div. 280; 9 N. Y. S. 2d 990, which was a stockholders' suit brought against directors of a moneyed corporation for an accounting for profits gained through their malfeasance in office, the Appellate Division of the Supreme Court held that the three-year statute did not apply. It pointed out that the statute relates only to causes of action for which a money judgment will suffice and not to suits which, al

2 Schram v. Cotton, 281 N. Y. 499; 24 N. E. 2d 305; Nettles v. Childs, 281 N. Y. 636; 22 N. E. 2d 477; 255 App. Div. 849; 7 N. Y. S. 2d 1021; Wright v. Russell, 245 App. Div. 708; 281 N. Y. S. 994; 155 Misc. 877; 280 N. Y. S. 614; leave to appeal denied, 269 N. Y. 683; Reisman v. Hall, 257 App. Div. 892; 12 N. Y. S. 2d 442, a fortiori suits at law in the federal courts to recover assessments upon stockholders of banks are barred by the three-year statute. Platt v. Wilmot, 193 U. S. 602; Hobbs v. National Bank of Commerce, 96 F. 396; Seattle National Bank v. Pratt, 103 F. 62; Platt v. Hungerford, 116 F. 771; Whitman v. Atkinson, 130 F. 759; Ramsden v. Gately, 142 F. 912.

Opinion of the Court.

309 U.S.

though specifically within the language of the statute, require resort to the equitable remedy for an accounting, and that as to them the ten-year statute applies. In so construing the statute, it followed the rulings of the Court of Appeals that under the New York statutory scheme of limitations, suits in equity brought against corporate directors for an accounting for want of an adequate legal remedy are governed by the ten-year statute of limitations and not statutes fixing a shorter period of limitations which would be applicable if the suit were at law. Hanover Fire Insurance Co. v. Morse Dry Dock & Repair Co., 270 N. Y. 86; 200 N. E. 589; Potter v. Walker, 276 N. Y. 15; 11 N. E. 2d 335. Cf. Gilmore v.

3

3

In Hanover Fire Insurance Co. v. Morse Dry Dock & Repair Co., 270 N. Y. 86; 200 N. E. 590, the Court of Appeals declared (pp. 89, 90):

"In an action in equity the ten-year limitation prescribed by section 53 of the Civil Practice Act is applicable unless, in a particular action, a party has a choice of two remedies, one at law, the other in equity, both complete and adequate, and he selects the action in equity. In that event the party whose cause of action would be barred under the six-year statute, if he should elect to proceed at law, may not enlarge this time by electing to proceed in equity. Such is the rule where the remedies are concurrent. (Rundle v. Allison, 34 N. Y. 180; Keys v. Leopold, 241 N. Y. 189; 149 N. E. 828; Clarke v. Boorman's Executors, 85 U. S. 493.)

"The exception is not applicable in cases of concurrent jurisdiction, however, if a party's remedy at law is inadequate and imperfect and he is required to go into equity to procure complete and adequate relief. (Rundle v. Allison, supra; Mann v. Fairchild, 14 Barb. 548.)

"If relief may be had at law in an action for damages and in equity for rescission of a contract on the ground of fraud with a reconveyance of land and an accounting for profits, the action in equity is subject to the ten-year limitation though the action for damages is barred under the six-year statute. (Schenck v. State Line Telephone Co., 238 N. Y. 308; 144 N. E. 592.)"

In Potter v. Walker, 276 N. Y. 15; 11 N. E. 2d 335, the court said (pp. 25, 26):

"In respect to those causes of action by which is sought to recover profits received by directors by reason of wrongful acts, an action

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Opinion of the Court.

Ham, 142 N. Y. 1; 36 N. E. 826; Treadwell v. Clark, 190 N. Y. 51; 82 N. E. 505.

In the absence of a definitive ruling by the highest court of the state, we accept the decision of the Appellate Division and the reasoning of the Court of Appeals upon which it rests as persuasive that the three-year statute does not apply to suits like the present where the remedy is exclusively equitable. See Wichita Royalty Co. v. City Bank, 306 U. S. 103, 107.

We take it that in the absence of a controlling act of Congress federal courts of equity, in enforcing rights arising under statutes of the United States, will without reference to the Rules of Decision Act adopt and apply local statutes of limitations which are applied to like causes of action by the state courts. Cf. Mason v. United States, 260 U. S. 545; Jackson County v. United States, 308 U. S. 343. In thus giving effect to state statutes of limitations as a substitute or supplement for the equitable doctrine of laches, it must appear with reasonable certainty that there is a state statute applicable to like causes of action. As that does not appear here with respect to the three-year statute, the court beat law would not afford adequate relief. To the extent that an accounting is necessary, the right and the remedy must necessarily be of an equitable nature. The Appellate Division is, therefore, clearly right in applying the ten-year Statute of Limitations as to such causes of action. (Civ. Prac. Act, § 53; Hanover Fire Ins. Co. v. Morse Dry Dock & Repair Co., 270 N. Y. 86.)"

Wright v. Russell, 269 N. Y. 683, 245 App. Div. 708; 281 N. Y. S. 994; 155 Misc. 877; 280 N. Y. S. 614, and Reisman v. Hall, 257 App. Div. 892; 12 N. Y. S. 2d 442, cited by petitioner, do not qualify this doctrine. There, although representative actions were brought, the Illinois constitution under which the liability arose had been interpreted as permitting actions at law, Golden v. Cervenka, 278 Ill. 409; 116 N. E. 273. Since the legal action would have been barred within three years, the court, as in McDonald v. Thompson, 184 U. S. 71, and consistently with Potter v. Walker, supra, applied the same period to the equitable action founded upon it.