135 P. 255 | Idaho | 1913
This action was brought by the Olympia Mining & Milling Co., the cestui que trust or beneficiary, against the defendant as trustee, to enforce an alleged express trust in land. There was a demurrer to the complaint which was sustained by the court below and judgment of dismissal entered, from which judgment this appeal' was taken, the sole question being: Does the complaint state a cause of action and is the cause of action sought to be stated barred by the several statutes of limitations of this state?
This suit was originally commenced on May 29, 1905, by Clarence Cunningham’s causing a complaint to be filed in the lower court by the Olympia Mining Company, a Washington corporation, and the decisions rendered in that ease by this court on appeal were reported in 13 Ida. 514, 91 Pac. 92, and 15 Ida. 375, 97 Pac. 1031. On May 28, 1909, Clarence Cunningham caused another action to be commenced in the name of the Olympia Mining & Milling Co., Ltd., the same plaintiff as in this action, against the respondent Kerns, involving the same subject matter. The respondent appeared in that action by demurrer on substantially the same ground as stated in the demurrer in this action. On June 7, 1909, after the hearing, the demurrer was sustained by the trial court. Thereafter on June 27, 1909, the plaintiff, the appellant here,
In the complaint in this action, after alleging the corporate existence of the plaintiff and of' the Federal Mining & Smelting Co., one of the defendants, it is alleged that on May 28, 1901, the defendant entered into an agreement with Cunningham, in words and figures as follows:
“This Agreement, made and entered into on the 28th day of May, 1901, by and between Clarence Cunningham, party of the first part, and A. G. Kerns, party of the second part, all of the City of Wallace, County of Shoshone, State of Idaho,
“Whereas, the estate of Edwart T. Elom, deceased, is the owner of an undivided 5-8th of ‘Olympia,’ ‘Seattle,’ ‘Portland,’ ‘Olympia Fraction’ and ‘Alice’; and an undivided % of the ‘Darling,’ ‘Pacific,’ ‘Rose,’ ‘Lincoln,’ and ‘Diamond Fraction’ lode mining claims situated in Placer Center and Leland Mining Districts, in the County of Shoshone, State of Idaho, lying between the Mammoth and Sixteen to One mines, and south of the Custer mine; and the party of the second part is the owner of the other portions of the said mining claims except the Rose and Lincoln; and
“Whereas, the party of the second part as such owner has petitioned the probate court for an order for the sale of the interest of the estate of said deceased in said mining claims,*488 and said petition is to be heard on the 3rd day of June, 1901, and it is anticipated that an order for the sale of said property will be made; and
“Whereas, it is the desire of the parties hereto to purchase the interests of said estate in said properties if the same can be bought for a reasonable sum and upon reasonable terms; for the purpose of consolidating all of the interests therein and forming a mining corporation to prospect, develop and work said mining claims; and
“Whereas, the party of the first part is about to leave the State of Idaho, expecting to be absent for a period of two months, more or less, and the sale of said premises may occur during said period;
“It is therefore hereby mutually agreed that the party of the second part shall offer to purchase and purchase the interest of the estate of said decedent in said mining claims, if the same can be purchased for the appraised value of said premises, or any less sum; and that the party of the first part will assume and be responsible for the bid and purchase of the party of the second part, and furnish the necessary money to make such purchase at the time when called for by the party of the second part.
“And in consideration of the premises and the services to be so rendered by the party of the second part, it is further mutually agreed that said party of the second part shall be entitled to one-tenth of all of said mining claims, in which he at present has no ownership.
“And it is further mutually agreed that upon the formation of the corporation hereinbefore referred to, which corporation is to be formed as soon as practicable after making said purchase, the party of the second part shall have and be entitled to one-tenth of the stock of said corporation, which stock shall be fully paid up, and nonassessable until after all .of the other nine-tenths of the stock have paid ten cents per share to said corporation for the development of.said mining claims.
“And as a further consideration the party of the second part hereby agrees to do and perform on each of said mining*489 claims the assessment work required for the year 1901, free of expense to the party of the second part.
“And as a further stipulation the party of the second part agrees to convey to the party of the first part, or his assigns, all his rights, title and interest in said mining claims for the sum of five thousand dollars to be paid upon completion of the purchase of the interest of said estate in the premises or sooner.
“Witness our hands and seals this 28th day of May, 1901.
“CLARENCE CUNNINGHAM.
“A. G. KERNS.”
It is then alleged that in pursuance of said agreement, the defendant procured the necessary probate action in the said Elom estate and purchased the said interest of that estate on the 20th -of June, 1901, on a bid of $2,500, upon which he paid the sum of $500 in cash and executed his promissory note in the sum of $2,000 due in one year or as soon as said mining claims could be entered for patent, and executed a mortgage on said interest to secure said deferred payment; that said sale was duly confirmed by the probate court; that pursuant to said agreement said Cunningham entered into possession of said mining claims and procured a large number of persons to associate themselves together with him for the purpose of expending money in the development thereof and for organization and incorporation of a company for the purpose of acquiring the title thereto and working said claims; that representing himself and his associates, he expended approximately the sum of $26,000 in developing and working said mining claims, and paid to the defendant for his personal interest in said claims the sum of $4,100.00; that said Cunningham furnished the defendant the sum of $500 paid by the latter on the purchase price of said Elom’s interest ; that all of said money was furnished and paid to the defendant by said Cunningham and his associates, the predecessors in interest, organizers and stockholders of the plaintiff corporation, according to the terms of the agreement above set forth, and that the defendant had the title of said Elom estate and held it for the corporation provided to be formed under said
“DECLARATION OF TRUST.
“I, A. G. Kerns, of the the City of Wallace, County of Shoshone, State of Idaho, do hereby declare and acknowledge that I hold the legal title to the following interests in certain mining claims in trust for the use and benefit of a corporation to be hereafter formed and to be named the OLYMPIA MINING COMPANY, provided, Clarence Cunningham, of the City of Wallace, in the County of Shoshone, State of Idaho, or the said corporation, shall comply with the provisions of an agreement in writing dated the 28th day of May, 1901, between the said Clarence Cunningham and the said A. G. Kerns. ’ ’
That .thereafter the defendant in his own name, but in fact as trustee and agent for the corporation, provided to be formed by said agreement, and referred to in said declaration of trust, applied for and procured patents to said lode mining claims and the said Cunningham and his associates, organizers of the plaintiff corporation, furnished! and paid all of the expenses of procuring patents for said mining claims; that said Cunningham and his associates continued to expend money in the development of said mining claims up to about March 1, 1903; that on or about March 20, 1903, said Cunningham and his associates caused a corporation to be organized, under the laws of the state of Washington, named “Olympia Mining Company”; that the defendant consented to the organization of the Washington corporation, subscribing for a portion of the capital stock of the same and paid the sum of $50 upon such subscription, and thereafter
Plaintiff prays judgment that the court decree that the defendant is the trustee of the plaintiff; that the plaintiff is the owner in equity and entitled to a deed of said mining claims from the said Kerns, and for such other and further relief in the premises as to the court may seem just and equitable.
To this complaint the defendant interposed a demurrer upon the grounds that no cause of action was stated and that
To the complaint was attached the decision of this court on a former appeal in this case, which decision was rendered on December 13, 1906, but which was not published in the reports, as thereafter a rehearing was granted, and the decision on rehearing is found in 13 Ida., at p. 514, 91 Pac. 92, wherein it was held that under the contract between Cunningham and Kerns an Idaho corporation should have been formed and not a Washington corporation, and that the organization of the Washington corporation was not a compliance with said contract. The case was thereupon remanded to the trial court for further proceedings in harmony with the views expressed in that opinion. When the matter came on for hearing in the trial court, there was no substitution of an Idaho corporation to take the place of the Washington .corporation as plaintiff in said action, regardless of the decision of this court holding that said Washington corporation could not maintain this action. The trial court refused to admit any evidence to sustain said cause of action on behalf of the Washington corporation and entered a judgment of dismissal, whereupon an appeal was taken to this court and a decision was rendered on November 14, 1908 (see 15 Ida. 371, 97 Pac. 1031), in which it was again held that said Washington corporation could not maintain this action, and held that the trial court was justified in dismissing said action.
After the second appeal had been determined, Cunningham caused a corporation to be formed under the laws of the state of Idaho. Articles of incorporation were prepared and filed after Kerns had been given notice of the time and place of the organization and of the proposed articles. Thereafter the Idaho corporation, the plaintiff in this action, began suit in Shoshone county, Idaho, against Kerns, raising substantially the same issues as in the former ease. Kerns interposed a demurrer to the complaint, which by consent of plaintiff was sustained. An amended complaint was filed, to which a demurrer was interposed, whereupon plaintiff took a voluntary dismissal of the case. The order of dismissal was
Thereafter this suit was commenced in the district court of Shoshone county on the 28th of March, 1912, and the demurrer above mentioned to the complaint was sustained by the court on June 8, 1912, and judgment of dismissal entered. From that judgment this appeal was taken.
The order of the court sustaining said demurrer and entering judgment of dismissal is assigned as error. Counsel for appellant presents his assignments of error under three separate heads.
(1) The first contention of appellants is that where a corporation is to be brought into existence by some future act of the incorporators, the franchise remains in abeyance and attaches when such acts are done.
The original agreement between Kerns and Cunningham, above set forth, recites that said agreement is made for the purpose of consolidating all of the interests in said mining claims and forming a mining corporation to prospect, develop and work the same, and in the declaration of trust, above set forth, Kerns declares that he holds the legal title to certain mining claims for the use and benefit of a corporation to be thereafter formed and to be named the Olympia Mining Co.: “provided, Clarence Cunningham of the city of Wallace, in the county of Shoshone, state of Idaho, or the said eorpora
It appears from the record that said contract was executed on May 28, 1901, and the declaration of trust was signed on August 17, 1901. It is recited in said contract that said corporation was to be formed “as soon as practicable” after Kerns should make the purchase of the five-eighths interest owned by the Elom estate in certain of said mining claims, of which claims Kerns owned the remaining three-eighths interest. Kerns proceeded in accordance with said agreement to purchase the Elom estate interest, which he did on June 20, 1901, at a price of $2,500, paying $500 of such purchase price in cash and executing a promissory note for the balance of $2,000 due in one year, and a mortgage securing the payment of the same. The sale was duly confirmed by the probate court of Shoshone county. But Cunningham wholly failed to keep his part of said agreement by not furnishing the money with which to purchase the Elom estate interest, and by failing to organize the corporation provided for in said contract until April 5, 1909, — nearly eight years after Kerns had purchased said Elom estate interest. Under the terms of said contract, said corporation should have been organized within a reasonable time after Kerns had purchased the Elom estate interest, and eight years, or thereabouts, was not a “reasonable time,” under the facts of this case, in which to organize said corporation and to proceed and take over said mining claims.
The declaration of trust is based on the consideration that Cunningham, or the corporation to be organized, should comply with the provisions of the agreement of the 28th day of May, 1901, and Cunningham having failed to comply with said provisions, the declaration of trust cannot be enforced against Kerns for that reason. Under said contract and declaration of trust, if the plaintiff corporation had been organized within a reasonable time and Cunningham had complied with the provisions of said contract to be performed by him, then
We therefore hold that there is no merit in this contention, for the reason that the alleged trust depended upon conditions precedent which were never performed, and for the further reason that the plaintiff corporation was not organized within the time contemplated by said contract.
In this ease the fact must not be overlooked that Cunningham had agreed to form the corporation ‘ ‘ as soon as practicable” after making the purchase of the Elom estate interest in said mining claims by Kerns, for which purchase Cunningham was to “assume and be responsible for the bid and purchase of the party of the second part [Kerns], and furnish the necessary money to make such purchase at the time when called for by the party of the second part.” The plaintiff corporation endeavors by certain allegations to excuse itself for failure to pay the purchase money for said mining claims and for Cunningham’s failure to comply with his part of said contract. If, under the facts of this case, Cunningham and his associates could fail and neglect to pay the money required to be paid by them, and could delay the organization of the corporation contemplated by said contract for eight years after the corporation ought to have been organized, and thus prevent the tolling of the statute of limitations, where shall the line be drawn? Might not such, statute be avoided or prevented from running for fifty years, or even longer, in like manner ?
It is alleged that Kerns refused to join in the formation of such corporation; but his refusal would not excuse Cunningham and his associates from organizing a corporation within a reasonable time or “as soon as practicable” after the purchase of the Elom estate interest, which occurred on June 20, 1901. This is not a case where the interest in certain mining claims has been conveyed to Kerns as trustee, but is a case where Kerns agreed to do certain things, take over the title and hold it in trust for a corporation to be formed, provided Cunningham furnished the money with which to purchase said interest, which Cunningham failed to do. Had
Appellant attempts to justify the delay in the formation of the Idaho corporation by showing what was done in the organization of a Washington corporation, the organization of which was held not to be a compliance with said agreement of May 28, 1901. (See Olympia Min. Co. v. Kerns, 13 Ida. 514, 91 Pac. 92.) If Cunningham and his associates, against the protest and wishes of respondent, organized a Washington corporation, and thereafter lost some four or five years’ time in a vain endeavor to force the defendant to accept that corporation as a compliance with said contract, they certainly must be charged with the consequences of that delay, as this court held on June 18, 1907, that the organization of the Washington corporation was not a compliance with the terms of said contract, and Cunningham and his associates persistently refused, even after that decision, to organize an Idaho corporation in compliance with said contract, until April 5, 1909, nearly two years after said decision was rendered. After the organization of the plaintiff corporation, Cunningham delayed the commencement of this action until March 28, 1912. The entire record in this proceeding, since the said decision of this court, supra, shows a deliberate attempt to evade and nullify that decision.
Appellant’s whole argument and brief depends upon the assumption that the appellant corporation is a person, and the cause of action only arose when that person came into being by Cunningham and his associates organizing it. But the fact is, it was their duty, under the original contract, to have organized the plaintiff corporation at least as early as 1904.
It is stated in Morawetz on Private Corporations, sec. 227, that “A corporation is really an association of persons, and no judicial dictum or legislative action can alter that fact.”
In Cal. Consolidated etc. Min. Co. v. Manley, 10 Ida. 786, 81 Pac. 50, this court, speaking through Mr. Justice Ailshie, said:
“The plaintiff, the California Consolidated Mining Company, a corporation, is only another name for Keane, so far as this transaction was concerned. He was the promoter, principal incorporator, manager and resident director of the company, and notice to him was notice to his alter ego, the corporation. ’ ’
So in the case at bar: Cunningham and his associates were the promoters, principal managers, etc., of the said corporation. In other words, the Olympia Mining Co., the plaintiff, is merely descriptive in figurative language of Clarence Cunningham and his associates, the same parties who failed to make the payments required by the contract of May 28, 1901; the same parties who brought the suit in the name of the Washington corporation on May 29, 1905; the same parties who knew they attempted to secure title to the Elom estate interest in the Elom mining claims by purchase at the foreclosure sale by J. G. Cunningham, instead of advancing the money to pay for said mining claims as they had agreed to do; the same parties who are responsible for continuing this litigation so many years. All this delay was voluntary and, as we view it, inexcusable. It was in a matter peculiarly subject to the rule, well settled, that delay short of the period of the statute of limitations will defeat an action in equity by reason of the doctrine of laches.
While the Olympia Mining Co., Ltd., of Idaho, is named as the plaintiff in this action, it is clear from the record that
There is no merit in said second contention.
(3) The third contention is that in an action by the cestui que trust or beneficiary against the trustee to enforce an express continuing trust, the defense of the statute of limitations or laches is never available to the defendant.
We agree with counsel in that contention, but, as we view it, upon the facts in this case, there was not an express, continuing trust. Kerns did not become a trustee to hold the title to said mining claims, for the reason that Cunningham and his associates failed and neglected to comply with' the provisions of said original contract upon the performance of which Kerns had agreed to hold the title to said mining claims in trust. The allegations of the complaint show that the provisions of that contract were not complied with; hence there was no “continuing trust” created. The fatal weakness of this third position of appellant is that the trust was not absolute but upon a condition precedent, which condition had not been complied with. It was a contingent trust, depending for its operation upon a future event, that of full compliance with the original agreement. (39 Cye. 33.) Where the agreement contains a condition to be performed by the beneficiary, he may enforce the trust upon performing the condition, but only in that event. (39 Cyc. 65.)
This court has held in two cases that an express, as well as an implied, trust is repudiated by adverse possession, and the statute of limitations begins to run from the time the beneficiary has notice of such repudiation. (Nasholds v. McDonell, 6 Ida. 377, 55 Pac. 894; Coe v. Sloan, 16 Ida. 49, 100
In sec. 200, Wood on Limitations, after stating the general rule, the author says:
“But to this rule there is this qualification, and that is, that when the trustee openly disavows the trust, and clearly and unequivocally sets up a right and interest adverse to the cestui que trust, and which is made known to the latter, the statute begins to run in his'favor.”
The qualification there suggested by the author is supported by numerous authorities cited in the foot-note to that section. Under proper restrictions, equity as well as law favors the diligent. In 39' Cyc., p. 601, after stating the general rule to the effect that ordinarily no mere lapse of time will bar the cestui que trust of his rights in the subject of the trust, as against the trustee, the author states:
“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.”
Numerous eases are cited by the author sustaining that doctrine, from many different states, the supreme court of the United States and from England.
In 39 Cyc., p. 603, the author states: “The doctrine of laches applies to the enforcement of an express trust only where there has been an open breach or repudiation of the trust, or assertion of adverse title, by the trustee, which is so brought home to the actual or constructive knowledge of the cestui que trust as to require him to assert his rights
The first action to enforce this alleged trust was brought by the Washington corporation on May 29, 1905, on substantially the same grounds as the present suit. That suit was as solemn an acknowledgment of the repudiation of the alleged trust as could be made by Cunningham and his associates. It was alleged in that case that he refused to comply with said trust. Had a corporation been organized in compliance with said agreement and a suit brought in the name of such corporation, at that time, instead of bringing the action in the name of the Washington corporation, such action would not have been barred by the statute of limitations. But that was not done, and the present action was brought nearly seven years after said action had been brought by the Washington corporation, and nearly seven years after the repudiation of the alleged trust was judicially acknowledged by the appellant and its predecessors in interest by the bringing of said action by the Washington corporation. Under the admissions in the complaint, Cunningham and the corporation were in default in 1904, and the respondent Kerns was claiming a forfeiture at that time and was claiming to be the sole owner of said mining claims, and had made a conveyance of a one-fourth interest in the property to one W. J. Hall, and had entered into a written contract for the sale of the remaining three-fourths interest in the property. It is alleged in the complaint that Cunningham first became aware of this claim on the part of Kerns in the year 1904. To be sure, the Idaho corporation was not formed until 1909, when, under the express provisions of the contract, Cunningham and his associates should have organized the corporation “as soon as practicable” after Kerns had procured the interest of the Elom estate in and to said mining claims in 1901. The statute of limitations then commenced to run in 1904, when Cunningham first learned of the claim of respondent to hold title adversely to him. After Cunningham had been informed of that fact, he persistently refused to organize the Idaho cor
In the case of Speidel v. Henrici, 120 U. S. 377, 7 Sup. Ct. 610, 30 L. ed. 718, the court said: “.As-a general rule, doubtless, length of time is no bar to a trust clearly established, and express trusts are not within the statutes of limitations, because the possession of the trustee is presumed to be the posse°ssion of his cestui que trust.....
“But this rule is, in accordance with the reason on which it is founded, and, as has been clearly pointed out by Chancellor Kent and Mr. Justice Story, subject to this qualification: that time begins to run against a trust as soon as it is openly disavowed by the trustee, insisting upon an adverse right and interest which is clearly and unequivocally made known to the cestui que trust; as when, for instance, such transactions take place between the trustee and the cestui que trust as would in ease of tenants in common amount to an ouster of one of them by the other.”
This is an instructive case, and the court declares that where the bill or complaint shows on its face that the plaintiff by reason of the lapse of time and his own laches is not entitled to relief, the objection may be taken by demurrer. (See, also, Raymond v. Flavel, 27 Or. 219, 40 Pac. 158.)
Under the facts as alleged in the complaint, Cunningham and his associates could not stop the running or tolling of the statute by refusing to comply with said original agreement in the organization of the corporation, cestui que trust or beneficiary. From the declaration of trust, it clearly appears that one of the conditions precedent to the bringing into existence of such trust was the organization of a holding corporation within a reasonable time after Kerns had purchased the interest of the Elom estate in. said mining claims. The authorities both in England and America, where mines and mining property are the subject of contract, hold that time is generally of its essence, independent of any express stipulation in the instrument. (2 Lindley on Mines, 2d ed., see. 859; 2 Snyder on Mines, secs. 3676, 3677; 27 Cyc. 674.) And that is the rule in this state. As early as 1886, in the
The excuses offered and alleged in the complaint are not sufficient to justify Cunningham and his associates in not complying with said contract.
There is no merit in the third contention of appellant, for the reason that the complaint does not allege an express and continuing trust. That being true, the defense of the statute of limitations and laches is available to the defendant in this action.
We therefore conclude that the trial court did not err in sustaining said demurrer and entering judgment of dismissal. The judgment is affirmed and costs are awarded to the respondent.