140 A. 552 | Pa. | 1927
Lead Opinion
Argued December 5, 1927. McGrann, the plaintiff, became involved financially in 1912. His land was subject to a mortgage of $90,000 and judgments in excess of $50,000. Unsecured creditors for a large amount pressed for payment. For the purpose of saving as much as possible, he agreed to transfer his real estate, as well as such personal property as he possessed, to John Nauman, an attorney, also interested for the People's Trust Company, the holder of the record liens. The land to which he had title was conveyed to Nauman individually, who took possession of this, as well as of the personal property found thereon. In addition, McGrann confessed judgment to Nauman for $25,000, and it is claimed certain other funds were turned over to him by the debtor's wife. The real estate disposed of in 1912 did not net a sum sufficient by far to satisfy the liens, and the remainder of the property, subject to the judgments, with the exception of a tract which was deeded for the consideration of $1 in 1921, was sold at sheriff's sale in 1914, after which McGrann employed other counsel to represent him.
Proceeds of the sale of the personal property, as well as funds secured from loans for temporary use made by Nauman discounting individual obligations, were placed in a special deposit in the People's Trust Company, and upon it checks were drawn for necessary charges and expenses, and in payment of 50% of the claims of unsecured creditors. This account was balanced and closed in 1915. As far as appears no further claim has been made by any of those to whom debts were owing, and none is a party to the present proceeding. McGrann was a resident of Lancaster, where all the *577 parties lived and the transactions took place, and, except for some time spent by him in California, was located in that city during the years following. It is not averred that he made any complaint of the conduct of the trustee, or of his failure to properly expend the funds which came into his hands from 1912 until 1924, though there was ample opportunity to do so, if desired. In the last named year he requested two attorneys to interview Nauman in regard to his affairs, but neither of them asked for any accounting, nor made claim for any sum alleged to be due.
No proceedings were instituted by plaintiff to secure an accounting during the lifetime of Nauman, who died on July 14, 1924. Letters testamentary were granted upon his estate to the executors named, and to one of them McGrann thereafter made a request for the filing of a statement. On December 5, 1925, nearly seventeen months after Nauman's death, plaintiff filed a bill praying that an account be stated by the executors of his trust estate. No averment is made of fraud, nor does any unpaid creditor join in the proceeding. Nor is there any explanation given as to why the delay for 14 years in requesting a settlement occurred. A motion to dismiss the bill because of plaintiff's laches was refused. An answer was filed, setting up the defense of undue delay, and averring in effect that, by reason of the change of circumstances, caused by death, necessary testimony was no longer available, and the presentation of an accurate statement a practical impossibility. After hearing, the court directed an accounting, and defendants have appealed.
We are confronted with the single question as to whether plaintiff has by his conduct lost his right to equitable relief. In passing upon the effect of delay in the assertion of claims as here presented, the determination must rest on a consideration of the facts of the particular case: Selmer v. Smith,
Delay which injures no one will not furnish reason for refusing relief (Selmer v. Smith, supra; Bradly v. Jennings,
Equity will ordinarily lend its aid to the enforcement of an express trust, and an accounting is not barred by lapse of time. "But even in such cases a court of equity may refuse to enforce a trust on the ground of laches and its inability to do complete justice, where, with actual or constructive knowledge of a breach of trust or assertion of adverse rights, the cestui que trust has inexcusably and unreasonably delayed asserting his rights": 39 Cyc. 601. "The courts will ordinarily refuse to enforce a trust where under the circumstances the lapse of time is such as to give rise to a presumption of discharge or extinguishment of the trust, or to obscure the acts of the parties, or the nature and character of the trust, as where there have been deaths of witnesses, or loss of papers, or there are any matters in the nature of an estoppel, which make it clearly inequitable or unjust to enforce the trust": 39 Cyc. 602.
The equitable doctrine has been applied where an accounting was asked of one holding under an express trust (McKnight v. Taylor,
As was said in Kinter v. Commonwealth Trust Co., supra, laches does not depend on the statute of limitations, but whether due diligence has been shown; and nothing can call a court of equity into activity unless due diligence in prosecuting one's rights appears; and in Patton v. Commonwealth Trust Co., supra, the rule refusing equitable relief is particularly interesting in showing that delay has made difficult the doing of justice because of death, by reason of which the facts have become obscure. In the present case an accounting could have been demanded of Nauman for twelve years before his death. Other attorneys represented McGrann in 1914, after the sheriff's sale, and still others in 1924, who made no request for an accounting for any alleged balance due. It is immaterial that he asserted rights, if he took no legal steps to establish them: 10 R. C. L. 402; Mackall v. Casilear,
Further, the present bill is not filed against a living trustee, but the executors of his estate are made defendants. His mouth has been closed by death, and the situation as to available proof profoundly altered. Even when there is a right to demand an accounting from the estate of one deceased, reasonably diligent action must be taken. If we examine the Fiduciaries Act of 1917 (June 7th, P. L. 447), there is found an evident legislative purpose that estates shall be promptly closed, so that the rights of devisees and heirs may be determined. This is shown by the fact that the executor or administrator is required to advertise that all claims must be presented within six months, that an account shall be filed within that time, or may be compelled by the creditors, with the barring of any demand for a share in distribution if not presented at the audit which follows. *581
Likewise, we find that no debt whatsoever shall be enforced against real estate, unless the subject of suit within one year: Kirk v. Van Horn,
If there be an outstanding assertable right against the estate, it must be proceeded against with due diligence, and the legislature has indicated the period deemed reasonable. The application of the doctrine of laches does not depend on the statute of limitations, but the analogy to it in determining the time within which an act should be performed is considered: Edwards v. W. M. Ry. Co.,
In the present case, plaintiff made no demand for an accounting from Nauman for the twelve years before he died, nor did he proceed with any reasonable dispatch against the executors thereafter, but awaited sixteen months before filing his bill. No excuse has been offered for the failure to exercise due diligence, and the result has been to so alter the circumstances as to make difficult, if not impossible, the doing of exact justice. A court of equity will not lend its aid to one so in default to the prejudice of the estate of another against whom no allegation of wrongdoing is made. Under the circumstances of the case the harm, if there be any, must fall on the one whose delay makes impossible the award of an account without doing injustice to others.
The decree is reversed, and the bill dismissed, at the cost of appellees.
Dissenting Opinion
It is expressly admitted that decedent never denied the existence of the trust of which an accounting is *582 sought; that he never had accounted; that he never had refused to account; and that he never had been released from liability so to do. Under such circumstances, the majority opinion admits that the time which has elapsed since the trust began, is too short to defeat the right to an account, unless harm has resulted because of the delay. This harm is inferred to have arisen simply because of the death of the trustee and the lapse of sixteen months thereafter, before bill filed. Death alone would not be sufficient; the same harm which would arise therefrom, would have existed if decedent had died the day after he converted the assets committed to his care. His mouth would have been closed then exactly as it is closed now; and plaintiff's mouth would have been closed then as now. There is no averment that the difficulty in stating and proving the account is greater now than it was then. Delay of course raises presumptions; but they arise as against plaintiff, and will be applied if and when he objects to the credits on the account which the executors can prepare, or if he attempts to surcharge them. The fact that plaintiff may have lost the lien which the statutes gave him upon the estate which decedent left, is unimportant; accounting will not revive that lien, and those statutes provide no other penalty, for a failure to act promptly, than the loss of the lien. I would affirm the decree of the court below.
Mr. Justice WALLING concurred in this dissenting opinion.