59 Tex. 150 | Tex. | 1883
We are clearly of the opinion that the plaintiff’s cause of action, as shown under the pleading and evidence, was barred by the statute of limitations at the time he instituted his suit. More than two years had elapsed at that time since the date of the note given by the railway company to the defendant for the trust deposit made by White for the benefit of Shirley. The note was executed and delivered, according to the evidence, before its maturity. The note was dated March 20, 1877, payable at six mbnths, and it was by the defendant converted into bonds in-the transaction he had with the railway company in the month of July, 1877, when he acquired from the company certificates for the one hundred bonds of §1,000 each, and which, at a later date, the-company took up, and the contemplated bonds were delivered to-the defendants as provided for by the certificates. The cause of action accrued to Shirley as soon as the defendant Baker obtained possession or control of the money which belonged to Shirley. The-transaction between White and the railway company through the-defendant, at that time its vice-president, and the transaction subsequently between the defendant and the company, made at his request, through which he obtained the company’s promissory note for the principal and interest of Shirley’s money, constituted an effectual conversion of the deposit by the act of the defendant into-assets of Baker, which the railway company held in the capacity of debtor to Baker. This conversion constituted Baker, by operation of law, a trustee. The trust was not an express trust; the trust was not created by a contract whereby he assumed the position and relation of trustee, but the law imposed upon him the obligations-which had attached to the railway company as trustee of the fund., for the benefit of Shirley.
The statute of limitations commenced to run against Shirley as-soon as his right accrued to demand from Baker the money which
Against this view of the subject, the plaintiff interposes the objection that if the relation between Shirley and Baker was that of •cestui que trust and trustee, the latter could not invoke such a defense except by his having repudiated such trust relation, and having held the fund, adversely to Shirley, claiming the money absolutely as his own. This proposition has no proper application to this case; ■the nature of the trust with which Baker was affected in this transaction does not pertain to that kind of trust to which the above rule -of law relates. See Wingate v. Wingate, 11 Tex., 433; Tinnen v. Mebane, 10 Tex., 252.
“The doctrines of trusts are equally applicable to real and personal estate, and the same rules will govern trusts in both kinds of property.” Perry on Trusts, sec. 16.
This trust was a resulting trust; the transaction was such that the courts will presume that the defendant, under the facts of the case, intended'to hold the money of Shirley on the same terms as, the railway company engaged to do when it received it from. White. That company received the money on the conditions specified in the receipt of Baker, its vice-president, dated December, 1873, as follows:
“ Ofeioe op the Houston & Texas Central Bailway Company.
“ Henry K. White has deposited with the Houston & Texas Central Bailway Company $1,500 in gold, subject to the order of W. B. Wasson, or whom it may concern, being the amount of money deposited with him by Thomas M. Shirley to pay said Shirley’s draft in favor of W. B. Wasson, which Wasson has not called for.
(Signed) “ W. B. Baker,
“ Vice-President.”
The evidence shows that the money thus deposited was not for the benefit, use or control of White, but for the benefit of Shirley, ■and that the latter adopted and confirmed the action of White in the premises, and that the railway company accepted and recognized the transaction as being of that character.
It was a breach of the trust for the railway company to pay the.
Baker had full knowledge of all the facts when the railway company received the money, and thenceforth throughout; but that, fact is not, it seems, required to exist in order to affect his liability as a trustee. “ A mere volmiteer, or person who takes the property without paying a valuable consideration, will hold it charged with all the trusts to which it is subject, whether he have notice or not; for in such case no wrong or pecuniary loss can fall upon him in ■compelling him to execute the trust to which the property that ■came to him without consideration was subject.” 1 Perry on Trusts, sec. 217.
It is obvious that Baker is chargeable as a trustee, and that the trust is a constructive trust. The character of the trust is one, however, that is within the operation of the statute of limitations..
In Wingate v. Wingate, 11 Tex., 433, Justice Lipscomb said: But it does not follow that every kind of trust forms an exception to the operation of the statute of limitations; if so, half the business transactions of men would be removed from its influence. And the ■doctrine has been settled by a train of decisions, from the case of Lackey v. Lackey,- Prec. in Ch., 518, decided by Lord Macclesfield, down to the present time, that, to remove a trust from the operation ■of the statute, it must be such a trust, technically, as is created by the mutual confidence of the parties, such as equity alone can take •cognizance of and afford redress. If it is a trust that common law -courts' could give relief, the statute will run, although the party may have sought his relief in chancery. In such cases, the fact of the suit being brought in the court of chancery will not defeat- the -statute; it can be avoided only by a technical trust of which the
In Tinnen v. Mebane, 10 Tex., 252, it is laid down by Chief Justice Hemphill that “all trusts which are cognizable at law are not. withdrawn from the operation of the statute. Persons who receive-money to be paid to another, or who misapply money placed in their hands for a particular purpose; the reciprocal rights and, duties founded upon the various species of bailments, as between hirer and letter to hire, borrower and lender, depositary and persons, depositing, etc., are cases of express and direct trust, but, being cognizable at law, are within the reach of the statute. . . . All implied and constructive trusts, all which are cognizable at law, are-subject to the bar of limitation; and equity applies the same limitation to equitable demands that is applied in analogous cases at law.. It is only where the trust is the mere creature of equity — exclusively cognizable within that jurisdiction, and is a subsisting, continued and acknowledged trust, that the statute has no operation.”
The rules of law thus elaborately and clearly laid down by our supreme court in the two cases quoted from, place it beyond question that the statute of limitation commenced to run against Shirley, certainly, from the period at which Baker became chargeable as a trustee, by implication, of the fund. His wrongful and unauthorized acquisition of the money subjected him to an action at law for the money without the necessity of a previous demand for it by-Shirley. “Trover may be maintained against a purchaser in breach of the trust with full knowledge of the trust.” Kitchen v. Bradford, 13 Wall., 416. And without regard to the form of the action,,, or of distinctions as to equity or law jurisdiction of the court in. which the remedy might be pursued, it has been seen that trusts of this character do not belong to the kind of trusts against which the, statute does not under ordinary circumstances begin to run.
The doctrines on this subject as laid down by our own court are-maintained also in other states of the Union, and the application which is made of them seems to be consistently regardless of
“ It has been repeatedly held that a trust raised by implication of -law is within the operation of" the statute of limitations.” 7 Wait’s Actions & Def., p. 269, citing Manion v. Titsworth, 18 B. Mon. (Ky.), 582; Walker v. Walker, 16 Serg. & R., 379; Sheppards v. Turpin, 3 Gratt. (Va.), 373; Edwards v. University, 1 Dev. & Bat. (N. C.) Eq., 325; McClane v. Shepherd, 21 N. J. Eq., 76; McDowell v. Goldsmith, 6 Md., 319; Wilmerding v. Russ, 33 Conn., 67.
In cases of implied or constructive trust, where it is sought for the purpose of maintaining the remedy to force upon the defendant the character of trustee, such courts will apply the same limitation :as provided for actions at law. 7 Wait’s Actions & Def., p. 229, citing Beaubien v. Beaubien, 23 How. (U. S.) 190, 207; Eismendorf v. Taylor, 10 Wheat., 152-177; Sloan v. Graham, 85 Ill. See, also, Miller v. McIntyre, 6 Pet., 61; Nimmo v. Stewart, 21 Ala., 682.
This last proposition has a direct application to the merits of this •case upon the facts as developed by the evidence. And where a person claiming personal property or the profits of real estate is turned into a trustee by implication, or by operation of law, the right of action by the cestui que, trust will, as a general rule, be subject to the same limitation as a demand purely legal. See Hawley v. Camer, 1 Cow., 717; Martin v. Bank, 31 Ala., 115; Ashwist’s Appeal, 60 Pa. St., 290, which are cited by Wait in his Actions & Def., vol. 7, p. 270, to support the above proposition.
The doctrines of the law on this subject, as administered in courts •of equity as well as of law, are pointedly involved, and distinctly illustrated, in an opinion of much clearness by Judge Green in the ■case of Haynie v. Hall’s Executor, 5 Humph. (Tenn.), 290. The action was brought by bill in equity against the executor of the will of the plaintiffs’ father to recover certain moneys which they alleged came into the hands of the testator in his life-time, and which belonged to them under the will of their grandfather, who had died many years ago in Horth Carolina. The money was received by the testator in 1805; the bill was filed in 1812. The defendant
In Wilmerding v. Russ, 33 Conn., 80, the court said: “ A court of equity would undoubtedly declare the sale to be one which was invalid, as against the policy of the law and constructively fraudulent; but in cases of constructive fraud, the statute of limitation-applies. The decisions to this effect are conclusive.” Citing Bickford v. Wade, 19 Ves., 88; Murray v. Coster, 20 Johns., 576; Robinson v. Hook, 4 Mason, 151.
Although the plaintiff in his petition alleges an express trust to-exist and charges the defendant accordingly, yet the testimony of Shirley himself, who testified in behalf of the plaintiff, plainly contradicts that allegation and shows that the trust was a constructive trust, Ueither by allegation nor proof did the plaintiff show that Shirley was ignorant of the fact that the railway company held his funds in trust for him, but to the contrary alleges and proves his-knowledge and recognition of that fact; neither do the pleadings or proof maintain that there was actual fraud between the railway company and the defendant in the transfer of the money to Baker by the company, or that there was any secrecy or concealment practiced in effecting that transaction. The evidence shows that. Shirley knew that Wasson had from the first declined to receive the money from White, and that he had urged White to repay to him the money which he had confided to him to pay to Wasson, but which was thenceforth unavailing for that purpose because the-transaction with Wasson for which the money was required had been abandoned by Wasson. Shirley then claimed his money; he-could not get it; without his knowledge or consent it was next heard of by him in "a “ suspense” account kept by the Houston & Texas Central Railway Company, and he became reconciled to permit it to remain there for his benefit. Evidently it was known to all concerned that neither White nor Wasson claimed or desired to-have the money, and, manifestly, no other person than Shirléy claimed it, and with no less certainty was it known to all concerned that he alone was entitled to it as between each other; and they all mutually recognized the fund, or. were at least estopped by the facts from questioning that the same was a fund held in trust by said company
The statute was not, however, suspended in this case under the operation of the rules just stated, for the reasons that there was no issue presented under the pleadings setting up either fraud or concealment, and because it was not alleged nor shown by the evidence that Shirley or his assignee could not have ascertained, by the use of reasonable diligence, all such facts as were necessary to apprise them of the existence of their cause of action, if any, they or either of them had. The case and the opinion before cited and so liberally quoted from (Haynie v. Paul’s Ex’r, 5 Humph. (Tenn.), 293) may be aptly cited here on the point under consideration. The application made by the supreme court of Tennessee of the rule of law which should govern respecting the ignorance of a party concerning the existence of his right of action, which ignorance originated in the silence and failure by the party pleading the statute as a defense to notify the complainant concerning the facts constituting the supposed right of action, seems to be correct, and to have proper application to this case. It was held in that case that “ if a person make false representations to the parties interested, by which they were prevented from investigating the- matter and ascertaining their right of action, it would be a concealment of the ■ cause of action by fraud, and the statute of limitations would commence to run only from the time the cause of action was discovered; but the mere fact of the failure to disclose rights of record in another state would not constitute fraud; as ex. gr., where a father received
In this case the deposit was made by White with the company in 1873; the suit was brought about seven years afterwards. Shirley was informed by White as to his action in the matter, and having ratified White’s course, he was fully apprised concerning the liability of the company to account to him for the money. The evidence does not show, however, any action taken by Shirley to obtain his money, or to direct its use or management. No impediment is suggested through the pleading or the evidence to Shirley’s obtaining at any time previous to March 20, 1877, his money from the company, or at all events to learn during that period or subsequently as to what had been done with it. If under these circumstances, by reason of owant of due attention to his affairs, he failed to learn at an earlier day than he may have ascertained the facts entitling him to sue Baker, we are of opinion that the statute of limitations commenced to run against him the same as in any case of ordinary account or debt.
The facts upon which the opinion of the supreme court rested when this case was formerly here on appeal seem from the opinion which was delivered to have been in certain features different from those shown to us by this record. On the former appeal it was held upon the case before the court that the action of the company in placing the deposit to the credit of Baker, if unauthorized, did not make Baker the trustee of Shirley in respect to any investments which might be made by Baker with the money, so as to inure to the benefit of Shirley; that if it created any liability on the part of Baker to Shirley, it was, at most, a right of action for money had and received, or converted to his use and benefit.
The supposed want of privity of contract between Shirley and Baker seems to have influenced, if it did not wholly determine, the-conclusion announced in the opinion.
A careful reading of the statement Of the case made by the reporter, in connection with the opinion, inclines us to believes that the court misconstrued the record as showing that Shirley deposited the money with White as a banker and on general deposit, instead of depositing it as a trust to hold for the purpose of meeting Shirley’sdraft in favor of Wasson when the same should be presented, and to be returned to Shirley in case Wasson declined to receive it. The' opinion on that assumption held that there was no privity between-Shirley and Baker. The reporter’s statement of the case seems to
As an illustration by example given in Perry on Trusts (sec. 14), in respect to privity in estate between those who may be affected through a trust, he says: “ And so there must be privity between the persons to be bound by the trust; . . . and so if the trustee sell the estate to a purchaser with full notice of the trust or confidence, or if he transfer the estate to a volunteer without consideration, the estate and the persons to whom it comes in such manner will be bound by the trust, because there is both privity of estate and of persons. But if the trustee sells the estate to a third person for a valuable consideration, without notice of the trust, neither the estate nor the purchaser for value and without notice will be bound by the trust, for there is in such case no privity between the persons.” 1 Perry on Trusts, p. 12, § 14. See, also, id., sec. 223, where it is said that “ if in any way a person purchases with what the laAv construes to be full notice that another has a legal or equitable title to the property, or that he has been deprived of his interest by accident, mistake or fraud, he will be held as a trustee.”
Under the facts relied on by the plaintiff in the case as last tried, we think that Shirley showed a cause of action for the recovery of his interest in the bonds sued for originally or their value proportionate to the amount or number of bonds paid for by his money used in the purchase by the defendant; was entitled to recover his portion of the bonds if to be found,— by proceedings in partition if practicable,— or if the property is not subject to be recovered in kind, that he may recover the value of his said interest.
The plaintiff, if entitled to sue otherwise, may elect to proceed for the money, as he has done in this proceeding, under an amendment of his petition made probably in consequence of the reversal of the former judgment and the reasons given therefor by the supreme court’s opinion.
The funds of Shirley are traceable by the evidence into the bonds with unmistakable certainty. If the trustee invests the trust fund or its proceeds in other property, the cestui que trust may follow the fund into the new investment, so long as he can identify the purchase as made with the trust property or its proceeds, although the trustee may have taken the title in his own name, or in the name of any other person with notice of the facts. 2 Perry on Trusts, sec. 836 and sec. 835. See, also, 1 Perry on Trusts, 127, 128.
Story, in his treatise on Equity Jurisprudence, says: “ It has been truly said that the only thing inquired of in a court of equity is
“ The general proposition, which is maintained both at law and in equity upon this subject, is, that if any property, in its original state and form, is covered with a trust in favor of the principal, no change of that state and form can divest it of such trust, or give the agent or trustee converting it, or those who represent him in right (not being bona fide purchasers for a valuable consideration without notice), any more valid claim in respect to it than they respectively had before such change.” 2 Story’s Eq. Jur’., sec. 1258. An abuse of a trust can confer no rights on the party abusing it, or on those who claim in privity with him. Id. See, also, same authority, secs. 1261c and 1261d.
We conclude upon the whole case that because it appears from the evidence that the plaintiff’s action was barred by limitations, the judgment ought to be reversed; and in view of the fact that it is not entirely apparent to us that justice would be best promoted by the supreme court rendering the.judgment which ought to have been rendered below on the last trial, it is deemed more in consonance with the rights of the parties to remand the cause for further proceedings in order that both parties having before them the opinion of the supreme court upon the various questions which have been discussed, that they may prepare their pleadings and try the cause under views here presented not heretofore, perhaps, fully acted upon by the parties.
Therefore we report our conclusion to be that the judgment ought to be reversed and the cause remanded.
Reversed and remanded.
[Opinion approved March 20, 1883.]