39 P. 49 | Cal. | 1895
This action was brought to obtain an accounting of the alleged trust estate and property of William C. Ralston, deceased, which is averred to have been conveyed by him in his lifetime to William Sharon, also now deceased, and by said Sharon to the defendants herein, and for a decree that there be paid to plaintiffs, out of said property, the sum of $200,000 and interest. The plaintiffs are the executrix and executor of William Burling, deceased, and the assignee in insolvency of James W. Burling, an insolvent; and the defendants are Frank G. Newlands and Frederick W. Sharon, to whom the said William Sharon during his lifetime conveyed all his property in trust. Defendants demurred to the complaint on general and on several special grounds. Their demurrer was sustained by the court
The amended complaint occupies four hundred and twenty-six pages of the printed transcript-; and we will not undertake to give here even a synopsis of such a lengthy document. We will state only such facts as will present a distinct view of the main epochs in the long historical narrative. William C. Ralston was cashier of the Bank of California from 1868 to 1873, and its president from 1873 to the time of his death, which occurred August 27, 1875. From 1869 to 1872 he employed William Burling, a stock broker, to negotiate loans; Burling giving his individual ñutes for the loans, and Ralston furnishing shares of the stock of the bank, and other collaterals, as securities for the money borrowed. In 1872, William Burling formed a partnership with James W. Burling under the firm name of Burling & Bro.; and thereafter, until Ralston’s death, loans were negotiated in like manner through the agency of said- firm. On August 26, 1875, the said bank failed; and on the next day Ralston died by drowning. At that time there were outstanding notes of said William Burling for loans negotiated as aforesaid in the amount of about $155,000; and there were notes of Burling & Bro. given for loans so negotiated in the amount of about $1,613,000. Before his death, and on the day of his death, Ralston executed a conveyance of all his property to said William Sharon, “in trust to collect and receive the rents, issues, incomes, and profits thereof, and every part thereof, and to sell and dispose of the same on such terms and prices as he deems best, and to apply the same and the proceeds thereof, and of all the property hereby conveyed, to such purposes and uses as the said William Sharon may, in his judgment, deem best for our joint and several interests.” On December 24, 1875, William Burling and Burling & Bro. made a contract with said William Sharon, under which they paid to Sharon $200,000, and assigned to him all claims against the estate of said Ralston upon said outstanding notes; and said Sharon, by said contract, undertook to assume all indebtedness upon said notes, and relieve said Burling and Burling & Bro. from all liability arising upon the same, which said undertaking by said Sharon he fully performed. The said Burlings and the said Sharon had been negotiating
Respondents present various reasons why the judgment of the court below should be sustained, and appellants attack it from various standpoints; but, under the views which we take of the case, it is not necessary to discuss all the propositions argued by the respective counsel. In our opinion, if, upon the facts alleged, the Burlings had any cause of action at all, their remedy was a personal action against William Sharon to recover damages for deceit in procuring their payment to him of the $200,000 in the manner as alleged, or upon an assumpsit to refund the money, implied from a rescission of the contract under which it was paid, for fraud by Sharon in obtaining it. But this is not such an action The nature of the action is stated in the first sentence of the brief of appellants, as follows: “This action is brought to obtain an accounting of the trust estate and property of the late William C. Ralston, which was conveyed to the late William Sharon in trust, and if, upon such accounting, it be ascertained that the estate of said Ralston was solvent, that there be repaid to the plaintiffs, the sum of two hundred thousand ($200,000) dollars and interest thereon, being moneys paid on account of liabilities incurred for said William C. Ralston.” No claim is made against the personal representatives of William Sharon, deceased, or against his estate.
The theory of the complaint is that the conveyance from Ralston to William Sharon was a deed of trust for the benefit of Ralston’s creditors; that the Burlings were beneficiaries under such deed of trust; and that, as such beneficiaries, they can charge the present respondents F. W. Sharon and New-lands for the repayment of said $200,000 and interest, to the extent of the value of any property which they may have
Moreover, we think that the action is barred by the statute of limitations, and is stale from laches. Of course, the statutory period has run two or three times unless the case is saved by the clause (subdivision 4) of section 338 of the Code of Civil Procedure, "which provides that in an action based upon alleged fraud the statute does not commence to run until the discovery of the facts constituting the fraud. This action is founded upon the contract between the Burlings and William Sharon, made on December 24, 1875, which was an executed contract; and the statute commenced to run on that day, except so far as its running was delayed by a want of knowledge of the fraud by which said contract is alleged to have been procured. But “the means of knowledge are the same thing, in effect, as knowledge itself” (Wood v. Carpenter, 101 U. S. 143, 25 L. Ed. 807); and one who makes a charge of fraud for the first time, many years after its alleged perpetration, must show that within a reasonable time he has used due diligence to discover it, has followed up circumstances which would have put a prudent man upon inquiry, and has not slept upon his rights until the lapse of time and the death of parties charged with the fraud have destroyed the means of a full, fair, and satisfactory investigation in a court of justice. Moreover, in such a case the complaint must state facts from which it will appear to the court that ordinary prudence could not have discovered the fraud within the statutory period. “The circumstances of the discovery must he fully stated and proved, and the delay which has occurred must be shown to be consistent with the requisite diligence”: Wood v. Carpenter, supra. Statutes of limi
Moreover, apart from the question of strict statutory limitation, the claim of appellants is too stale to be enforced in a court of equity. “No rule of law is better settled than that a court of equity will not aid a party whose application is destitute of conscience, good faith, and reasonable diligence, but will discourage stale demands, for the peace of society, by refusing to interfere when there has been gross laches in prosecuting rights, or where long acquiescence in the assertion of adverse rights has accrued. The rule is peculiarly applicable where the difficulty of doing entire justice arises through the death of the principal participants in the transactions complained of, or of the witness or witnesses, or by reason of the original transaction having become so obscured by time as to render the ascertainment of the exact facts impossible”: Hammond v. Hopkins, 143 U. S. 250, 36 L. Ed. 134, 12 Sup. Ct. Rep. 418. In speaking of this rule, this court, in Bell v. Hudson, 73 Cal. 288, 2 Am. St. Rep. 791, 14 Pac. 791, said: “It is a material circumstance that the claim was not made until after the death of those who could have explained the transaction.” In the ease at bar, William Burling and William Sharon, “the principal participants in the transactions complained of,” were both dead before the commencement of the action. It is quite apparent that no court could do “entire justice” in the premises without the testimony of William Sharon. Of course, if the suit had been commenced within a reasonable time, and William Sharon had died before his testimony could have been taken, the want of his testimony would simply have been one of those natural misfortunes which sometimes come to litigants. But William Sharon lived for ten years after the transaction complained of. William Burling died two years after the transaction, fully satisfied, as is averred, that it was a fair one. James W. Burling did business for several years afterward, and, until he became an insolvent, was also satisfied' with the fairness of the transaction. There was perfect acquiescence by all parties for ten years, and while Sharon lived. It was not until he died, and his testimony was forever beyond human reach, that the claim of appellants grew
Under the foregoing views, we need not discuss the many other points made by respondents in support of the judgment. Judgment affirmed.
We concur: Garoutte, J.; Van Fleet, J.
We concur in the judgment, upon the grounds last presented in the opinion of Mr. Justice McFarland.