85 F. 88 | U.S. Circuit Court for the District of Northern California | 1898
This is a bill in equity, as amended by leave of court, instituted by Susan McMonagle, sometimes known as Susan Monagle, against Mary McGlinn, sometimes known as Mary McGlynn. The suit is brought to recover the sum of $12,757.12, alleged to be trust funds, and that certain real estate owned by the defendant be charged with the trust. A demurrer to the original bill was sustained. The bill was then amended, with a view of explaining the long delay of complainant in bringing suit. The allegations of the bill show that the complainant, at all the times mentioned in the bill, was a resident of Providence, state of Rhode Island,
The determination of the question of the statute of limitations and of laches depends upon the view taken of the allegations of the bill. It is contended, by counsel for complainant, that the bill shows an express trust between the complainant and Patrick McGlinn, which continued between them at least until his death; while it is claimed, by counsel for defendant, that the allegations simply make out a case of implied or constructive trust. The bill does not show exactly when the alleged express trust commenced, but, if- it existed at all, it would seem, from the allegations of the bill, to have had its incipiency at some time after McGlinn, acting as attorney in fact for the complainant, under the power of attorney set out in the bill, had collected her distributive share of the estate, which would be some time in the latter part of 1882 or the first part of 1883. The first investment and use made of the trust moneys is alleged to have been on or about the 28th day of June, 1883. The bill alleges that the complainant did not become aware op discover the manner in which her trust funds had become invested until 1893. The original bill was’ filed October, 1895. A period of some 12 or 13 years had, therefore, elapsed when the bill was filed. If the bill charges an express
“The declaration of trust, whether written or oral, must be reasonably certain in its material terms; and this requisite of certainty includes the subject-matter or property embraced within the (rust, the beneficiaries or persons in whose behalf ir. is created, the nature and quantity of interests which they are to have, and the manner in which tlie trust is to be performed. If the language is so vague, general, or equivocal that any of these necessary elements of the trust is left in real uncertainty, then the trust must fail.”
Xo agreement is set out in the bill purporting to create an express trust of the money in question. We are at a, total loss to conceive wbat the terms of the trust were. We do not know how the money was to be invested; whether it was agreed that the deceased, Patrick McGlinn, should take the title to the real property in his own name; nor, in fact, any of the terms of the trust. To be sure, there is the general allegation that Patrick McGlinn held the money in trust for the complainant. But this is a mere conclusion of law, and is bad pleading. 18 Am. & Eng. Enc. Law, p. 502. Section 2221 of the Civil Code of California provides that:
“A voluntary trust is created, as to the trustor and beneficiary, by any words or acts of tlie trustor indicating, with reasonable certainty: (1) An intention on the part of the trustor to create a trust; and (2) the subject, purpose, and beneficiary of the trust.”
Section 2222 of the same Code provides that:
“A voluntary trust is created, as to the trustee, by any words or acts of his indicating, with reasonable certainty: (1) His acceptance of tlie trust, or Ms acknowledgment, made upon sufficient consideration, of its existence; and, (2) the subject, purpose, and beneficiary of the trust.”
See, also, 1 Perry, Trusts (3d Ed.) § 86; 2 Pom. Eq. Jur. §§ 1008, 1016.
It cannot be said that the averments of the bill indicate with reasonable certainty that it was the intention of the trustor (the complainant) on the one hand and of the trustee (Patrick McGlinn, deceased) on the other hand to create a trust, and the subject, purpose, and beneficiary of the trust. The hill is uncertain, indefinite, and ambiguous in these respects. Its allegations seem to be more consistent with what is termed a constructive trust; that is, one implied by operation of law. 2 Pom. Eq. Jur. § 1044 et seq.; Civ. Code, § 2224. Tlie averments of the bill cannot support both an express and a constructive trust. It must set out one or the other clearly and specifically. An express trust cannot exist where the trust is impressed by operation of law. It being determined that the trust set out in the bill is an implied or constructive, and not
But it is strenuously contended by counsel for the complainant that, if the bill, be considered as stating a case of constructive trust, it contains allegations which show that there was a fraudulent concealment of the cause of action until 1893, and within four years of the limitation provided by section 343, supra. It is claimed that these allegations show that the complainant did not know of the fraud of the. dceeased, Patrick McGlinn, and the violation of his trust, until after his death, in 1893; that any inquiry or discovery by her was prevented by the false representations made to her by the deceased during his lifetime; and that it was not until after his death that she discovered his fraudulent conduct, and then brought suit within the statutory limitation from the time of discovery. While statutes of limitation apply to constructive trusts, still the doctrine is well established that, where fraud or a violation of the trust is concealed, the statute will not apply, provided the injured party has not been guilty of laches in instituting inquiry, and has been reasonably diligent in discovering the fraud or breach of the trust. The concealment of the fraud is considered rather as an aggravation of the offense. Badger v. Badger, 2 Wall. 93; Michoud v. Girod, 4 How. 503. As stated by Mr. Justice Clifford, sitting as circuit justice, in James v. Atlantic Delaine Co., 3 Cliff. 614, Fed. Cas. No. 7,177:
“When the fraud charged and proved consists of misrepresentations and concealments, courts of equity are reluctant to apply the rule at all, unless it appears that the rights of innocent third parties will be injuriously affected if that defense is overruled.”
But a party, to bring himself within the qualification of the rule, must show clearly, by his bill, that he has been reasonably diligent in looking after his rights, and has not been guilty of laches. What the averments should be are thus stated by Mr. Justice Grier in Badger v. Badger, supra:
“The party who makes' such an appeal should set forth in his bill specifically what were the impediments to an earlier prosecution of his claim, how he came to be so long ignorant of his rights, and the means used by the respondent to fraudulently keep him in ignorance, and how and when he first came to a knowledge of the matters alleged in the bill; otherwise the chancellor may justly refuse to consider his ease, on his own showing, without inquiring whether there is a demurrer or formal plea of the statute of limitations contained in the answer.”
This rule of pleading has been repeatedly affirmed in other cases, and the complainant is held to stringent rules of pleading. Stearns v. Page, 7 How. 819, 829; Moore v. Greene, 19 How. 69, 72; Beaubien v. Beaubien, 23 How. 190; Badger v. Badger, supra; Wood v. Carpenter, 101 U. S. 141; Lansdale v. Smith, 106 U. S. 391, 1 Sup. Ct. 350; Speidel v. Henrici, 120 U. S. 377, 7 Sup. Ct. 610; Richards v. Mackall, 124 U. S. 183, 8 Sup. Ct. 437; Kilbourn v. Sunderland, 130 U. S. 505, 9 Sup. Ct. 594; Hammond v. Hopkins, 143 U. S. 224,
“It will be observed, also, that there is no averment that during the long -period over which the transactions referred to extended the plaintiff ever made or caused to be made the slightest inquiry in relation to either of them. The judgments confessed were of record, and he knew it. It could not have been difficult to ascertain, if the facts were so, that they were shams. The conveyances to Alvin and Keller were also on record in the proper offices. If they were in trust for the defendant, as alleged, proper diligence could not have failed to find a clew in every ease that would have led to evidence not to be resisted. With the strongest motives to action, the plaintiff was supine. If underlying frauds existed, as he alleges, he did nothing to unearth them. It was his duty to make the effort.”
After referring to and discussing a number of authorities, the learned justice coucludes as follows:
“A wide and careful survey of the authorities leads to those results: The fraud and deceit which enable the offender to do the wrong may precede its perpetration. The length of time is not material, provided there is the relation of design and its consummation. Concealment by mere silence is not enough. There must be some trick or contrivance intended to exclude suspicion and prevent inquiry. There must be reasonable diligence: and the means of knowledge are the same thing, in effect, as knowledge itself. Tlie circumstances of the discovery must be fully stated and proved, and the delay which has occurred must be shown to be consistent with the requisite diligence.”
It would serve no useful purpose to refer and discuss the many authorities cited by both sides on this question of fraudulent concealment oí the cause of action, and as to what constitutes diligence in bringing suit. I am of the opinion that the complainant, from the allegations of her bill as amended, failed to exercise that diligence with respect to the protection and enforcement of her rights which courts of equity invariably require of litigants seeking its aid. The allegations that she had great confidence in said Patrick Me
“In all cases wliere actual fraud is not made out, but the imputation rests upon conjecture, where the seal of death has closed the lips of those whose ¡character is involved, and lapse of time has impaired the recollection of transactions and obscured their details, the welfare of society demands the rigid enforcement of the rule of diligence. The hourglass must supply the ravage of the scythe, and those who have slept upon their rights must be remitted to the repose from which they should not have been aroused.”
I am of the opinion that the demurrer is well taken. The bill will be dismissed, and it is so ordered.