In actions for relief, on the ground of fraud or mistake, and in actions for injuries to, or conversion of property, the cause of action shall not be deemed to have accrued until the fraud, mistake, injury or conversion complained of, shall have been discovered by the party aggrieved.

History: Laws 1880, ch. 5, § 6; C.L. 1884, § 1865; C.L. 1897, § 2918; Code 1915, § 3366; C.S. 1929, § 83-123; 1941 Comp., § 27-106; 1953 Comp., § 23-1-7.

Bracketed material. — The bracketed material was inserted by the compiler and is not part of the law.

Compiler's notes. — This section was amended by Laws 1893, ch. 47, § 1, by adding thereto the provisions contained in 37-1-26 NMSA 1978.

Discovery rule. — A cause of action arises not necessarily at the time of injury, but rather at the time a plaintiff knows or should have known of the claims. McNeill v. Burlington Resources Oil & Gas Co., 2007-NMCA-024, 144 N.M. 212, 153 P.3d 212, aff'd, 2008-NMCA-022, 143 N.M. 740, 182 P.3d 121.

Constructive fraud is breach of legal or equitable duty which the law declares fraudulent because of its tendency to deceive others; such fraud may be present on the part of the fraud feasor without any showing of dishonesty of purpose or intent to deceive. Gaston v. Hartzell, 1976-NMCA-041, 89 N.M. 217, 549 P.2d 632.

Accrual where no duty to disclose. — Purchasers' action, eight years after the real estate closing, against a title insurer for "negligence or oversight" in not informing them of a balloon payment on an assumed mortgage was barred by 37-1-4 NMSA 1978; this section does not extend the limitation period where the insurer had no duty to make such a disclosure and the purchasers failed to make a reasonable inquiry or to examine the original mortgage. Roscoe v. United States Life Title Ins. Co., 1987-NMSC-028, 105 N.M. 589, 734 P.2d 1272, overruled on other grounds by Ruiz v. Garcia, 1993-NMSC-009, 115 N.M. 269, 850 P.2d 972.

Running of statute of limitations in fraudulent concealment actions. — In an action for fraudulent concealment, the statute of limitations begins to run when plaintiff learns of facts that should arouse his suspicion about defendant's statements or nondisclosure. Ramsey v. Culpepper, 738 F.2d 1092 (10th Cir. 1984).

Particularity of plea. — Where receiver in an action against a director of a failed savings and loan failed to plead the circumstances giving rise to estoppel with sufficient particularity, but rather made bald allegations of concealment, the statute of limitations was not tolled under this section. FDIC v. Schuchmann, 224 F. Supp. 2d 1332 (D.N.M. 2002).

Normally some positive act of concealment must be shown such as a false representation in order to establish fraudulent concealment. Gaston v. Hartzell, 1976-NMCA-041, 89 N.M. 217, 549 P.2d 632.

Limitation period not tolled where party did not actively or passively conceal transactions. — Trial court properly granted summary judgment on the basis of limitations in regard to a claim regarding the purchase of disputed property, where there was nothing in the record to indicate that the moving party did anything, either actively or passively, to conceal his transactions from the opposing party, so as to justify the equitable tolling of the statute of limitations. Dow v. Chilili Coop. Ass'n, 1986-NMSC-084, 105 N.M. 52, 728 P.2d 462.

Limitation not tolled. — Although Section 37-1-7 NMSA 1978 is applicable to both actual fraud and constructive fraud and may be grounds for equitable estoppel for purpose of tolling the statute of limitations, plaintiff has not made a case of fraudulent concealment. FDIC v. Schuchmann, 319 F.3d 1247 (10th Cir. 2003).

Mistake of one party. — Oil company's claim that it overpaid oil and gas royalties to city for sixteen years was barred by the statute of limitations; the period of limitations was not tolled by the oil company's mistake because it could have been discovered any time during the sixteen-year period, had the oil company examined its accounting records. City of Carlsbad v. Grace, 1998-NMCA-144, 126 N.M. 95, 966 P.2d 1178.

Effect of fraudulent concealment. — Where a party against whom a cause of action accrues prevents the one entitled to bring the cause from obtaining knowledge thereof by fraudulent concealment, or where the cause is known to the injuring party, but is of such character as to conceal itself from the injured party, the statutory limitation on the time for bringing the action will not begin to run until the right of action is discovered, or, by the exercise of ordinary diligence, could have been discovered. Hardin v. Farris, 1974-NMCA-146, 87 N.M. 143, 530 P.2d 407.

Fraudulent concealment is not restricted to actions in which fraud is the gist of the action, and neither does it create a new or separate cause of action; it merely tolls the running of a statute of limitations. Gaston v. Hartzell, 1976-NMCA-041, 89 N.M. 217, 549 P.2d 632.

Concealment not shown. — Where municipality not merely failed to enforce collection of assessments but affirmatively accepted bonds higher in number than those held by plaintiff in satisfaction of the lien against the property of the persons surrendering the bonds and canceled the lien against the property, plaintiff was required to take notice of the records of municipality pertinent to the time and manner of payments, defaults, etc., and in the absence of evidence that cancellation of the liens was surrounded by secrecy, cause of action accrued at time this wrong occurred and a suit initiated more than four years thereafter was barred by limitations. Freeman v. Town of Gallup, 152 F.2d 273 (10th Cir. 1945).

Continuing wrong doctrine. — In an action for fraud, misrepresentation and unfair trade practices, the fact that the plaintiff knew of his injuries, which he attributed to the risk of loss inherent in every contract, did not prevent application of the continuing wrong doctrine since the defendant held the plaintiff to the agreement while at the same time taking measures to dissolve it. Tiberi v. CIGNA Corp., 89 F.3d 1423 (10th Cir. 1996).

Action for breach of fiduciary duty. — In lessor's action against realtor for breach of fiduciary duty in connection with negotiation of lease on lessor's behalf, trial court properly submitted issues of whether lessor relied on realtor acting in fiduciary capacity and when lessor discovered or should have suspected fraud or negligence of realtor. Ramsey v. Culpepper, 738 F.2d 1092 (10th Cir. 1984).

Discovery of false representation. — A false representation constitutes fraudulent concealment and constructive fraud, each of which tolls the statute of limitations; the date of discovery of the false representation is the time from which plaintiffs' cause of action accrues. Gaston v. Hartzell, 1976-NMCA-041, 89 N.M. 217, 549 P.2d 632.

Partnership. — Where two brothers operated a farm as partners, but property purchased in 1950 and 1957 was recorded in only one brother's name, the limitations period to reform the deeds did not begin to run until the brother in whose name the property was held repudiated the partnership agreement. Bassett v. Bassett, 1990-NMSC-070, 110 N.M. 559, 798 P.2d 160.

Discovery not shown. — Where articles of a corporation stated that 10% of subscriptions to its stock had been paid to its treasurer who made affidavit to that effect, the fact that he informed a creditor when an indebtedness was incurred that such subscriptions had not been paid did not constitute a discovery so as to make the statute of limitations begin to run. Albright v. Texas, S.F. & N.R.R., 1895-NMSC-018, 8 N.M. 110, 42 P. 73, rev'd, 1896-NMSC-010, 8 N.M. 422, 46 P. 448.

Scope of constructive notice. — The recording of an instrument is constructive notice to subsequent purchasers and encumbrancers only, and does not affect prior parties. Romero v. Sanchez, 1971-NMSC-129, 83 N.M. 358, 492 P.2d 140.

When grantor affected. — The recording of a deed must be accompanied by other circumstances sufficient to put a reasonable person upon inquiry in order for the recording to act as constructive notice to grantor of fraud. Romero v. Sanchez, 1971-NMSC-129, 83 N.M. 358, 492 P.2d 140.

Action against void private land grant corporation. — A void private land grant corporation has no right to the proceeds from a land sale and no authority to pay such proceeds to its "shareholders." Conversion is present where the "shareholders" claim and erroneously receive proceeds of the sale. The party aggrieved cannot be deemed to have discovered she has a cause of action for conversion until the date of the judicial opinion which declares the company in question to be a void corporation. Apodaca v. Unknown Heirs of Tome Land Grant, 1982-NMSC-100, 98 N.M. 620, 651 P.2d 1264.

Failure to obtain insurance. — Four-year statute of limitations began to run with discovery of fraud in 1961 and did not bar suit in 1963 for fraud from 1957 to 1961 against finance company for payments made by house trailer dealers to finance company for insurance which was not obtained. Sw. Inv. Co. v. Cactus Motor Co., 355 F.2d 674 (10th Cir. 1966).

Misrepresentation by real estate broker. — Plaintiffs, as a matter of law, had a right to rely on the misrepresentation of square footage made by the real estate agent through whom they purchased their residence; their cause of action for the false representation accrued not on the date of their purchase but on the date of discovery. Gaston v. Hartzell, 1976-NMCA-041, 89 N.M. 217, 549 P.2d 632.

In a suit against certain brokers, for intentionally and negligently misrepresenting the amount of square footage contained in certain apartments, given the purchasers' backgrounds involving real estate investments, the purchase of other apartment complexes, the fact that an enlarged version of the survey was made available to one of the purchasers before closing, the fact that one of the purchasers was a commissioned broker in the sale of the apartments, and that one of purchasers, according to testimony, was concerned at the time of sale with the number of square footage rentable area in the apartments, the court properly determined as a matter of law that the purchasers knew or should have known of the misrepresentation at the time of the sale. Ambassador E. Apts. v. Ambassador E. Invs., 1987-NMCA-135, 106 N.M. 534, 746 P.2d 163.

Complaint not barred. — Complaint filed in November, 1903, alleging that fraud was discovered "about the month of July, 1902," was not barred. Alexander v. Cleland, 1906-NMSC-027, 13 N.M. 524, 86 P. 425.

Specific allegations in pleading showing date of discovery govern a general statement in determining whether the statute of limitations has run. Mayer v. Lane, 1927-NMSC-078, 33 N.M. 18, 262 P. 178.

Determinations by trial court. — Where, in suit to cancel deed and settlement agreement entered into prior to divorce, for lack of consideration, the only possible defense is the statute of limitations, or laches, to establish which the burden rested upon the defendant husband, trial court should determine, first, whether husband at time of execution of the deed and the agreement held a fraudulent intent not to perform on his part, and, second, when the wife first discovered this fraud. Primus v. Clark, 1944-NMSC-030, 48 N.M. 240, 149 P.2d 535, subsequent appeal, 1957-NMSC-025, 62 N.M. 259, 308 P.2d 584.

Timely service of process. — Where complaint was filed before period of limitations had expired, though process was not actually served until slightly more than 60 days after expiration of four years from the accrual of the action, the action was timely brought and running of the statute was interrupted. Isaacks v. Jeffers, 144 F.2d 26 (10th Cir.), cert. denied, 323 U.S. 781, 65 S. Ct. 270, 89 L. Ed. 624 (1944).

Point not preserved for review. — Appellants may not urge in the supreme court that the statute of limitations could not run against them, to give right to adverse possession, because of ignorance of the mistake or fraud until suit was commenced, when such plea was not made in the court below. GOS Cattle Co. v. Bragaw's Heirs, 1933-NMSC-083, 38 N.M. 105, 28 P.2d 529.

What law governs. — The law of New Mexico governs as to the time within which an action must be commenced when brought in federal court of this state, but the manner in which actions are commenced, when actions are deemed to have begun, the manner and method of serving process, all relate to procedure and are governed by the law of the forum. Isaacks v. Jeffers, 144 F.2d 26 (10th Cir.), cert. denied, 323 U.S. 781, 65 S. Ct. 270, 89 L. Ed. 624 (1944).

Law reviews. — For article, "The Law of Medical Malpractice in New Mexico," see 3 N.M.L. Rev. 294 (1973).

For survey, "The Statute of Limitations in Medical Malpractice Actions," see 6 N.M.L. Rev. 271 (1976).

For annual survey of civil procedure in New Mexico, see 18 N.M.L. Rev. 287 (1988).

Am. Jur. 2d, A.L.R. and C.J.S. references. — 18 Am. Jur. 2d Conversion § 98; 51 Am. Jur. 2d Limitation of Actions § 146.

Action on implied contract arising out of fraud as within statute of limitations applicable to fraud, 3 A.L.R. 1603.

When action considered to be one on contract rather than one for fraud as regards statute of limitations, 114 A.L.R. 525.

Inclusion or exclusion of first and last day for purposes of statute of limitations, 20 A.L.R.2d 1249.

Estoppel to rely on statute of limitations, 24 A.L.R.2d 1413.

Running of statute of limitations against claim for contribution or indemnity based on tort, 57 A.L.R.3d 867.

When statute of limitations begins to run on negligent design claim against architect, 90 A.L.R.3d 496.

When does statute of limitations begin to run upon an action by subrogated insurer against third-party tort-feasor, 91 A.L.R.3d 844.

Statutes of limitation: actions by purchasers or contractees against vendors or contractors involving defects in houses or other buildings caused by soil instability, 12 A.L.R.4th 866.

When statute of limitations commences to run on action under state deceptive trade practice or consumer protection acts, 18 A.L.R.4th 1340.

When statute of limitations commences to run on right of partnership accounting, 44 A.L.R.4th 678.

Modern status of the application of "discovery rule" to postpone running of limitations against actions relating to breach of building and construction contracts, 33 A.L.R.5th 1.

When statute of limitations begins to run upon action against attorney for legal malpractice - deliberate wrongful acts or omissions, 67 A.L.R.5th 587.

Attorney malpractice - tolling or other exceptions to running of statute of limitations, 87 A.L.R.5th 473.

54 C.J.S. Limitations of Actions §§ 34, 87, 192, 197.