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Burns Philp Food v. Cavalea Cont'l Freight - 135 F.3d 526 (7th Cir. 1998)

Rule:

In Illinois, as in most states, the period for the statute of limitations begins not with the injury's actual discovery, but when the injury could have been discovered through the exercise of appropriate diligence.

Facts:

Cavalea Continental Freight bought several parcels of land from Nabisco while Burns Philp Food bought the remainder. In 1986, real estate records were changed to reflect these transactions, but something went awry. Tax officials treated Burns Philp as the owner of two parcels that Cavalea had purchased, and Burns Philp paid without inquiry or protest. In mid-1993 Burns Philp finally noticed that since 1987 it had paid almost $125,000 in taxes on Cavalea’s land, and it sought reimbursement. However, Cavalea refused to pay leading Burns Philp to sue. Cavalea filed a counterclaim accusing Burns Philp of building a fence that encroached onto its parcel. The district court concluded that Cavalea must make restitution of the amount by which it was unjustly enriched. Cavalea contended that the restitution should be limited to the taxes Burns Philp paid during the five years before it filed suit.

Issue:

Should the restitution to be made by Cavalea be limited to the taxes Burns Philp paid during the five years before it filed suit?

Answer:

Yes.

Conclusion:

The Court vacated the district court’s judgment that ordered Cavalea to pay Burns Philp back taxes that the latter paid on behalf of the former. According to the Court, the award violated the statute of limitations. The Court rejected Burns Philp’s argument that the period began to run when it discovered the error. The Court averred  that Burns Philp could have discovered the error by diligently checking invoices.

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