Downer v. Squire

186 Mass. 189, 1904 Mass. LEXIS 928

Opinion

Hammond, J.

This is an action at law upon a bond given by John P. Squire, the defendants’ testator, who had been appointed trustee of a certain fund in which the plaintiffs, the obligees, were interested as beneficiaries. It was brought originally by John Herbert, who was appointed by the Probate Court as the successor of Squire as trustee, but the writ has been amended by substituting for Herbert the present plaintiffs.

The material condition of the bond is that “in the event of his ceasing-to hold said sum of forty thousand dollars as trustee, by reason of death or otherwise, said John P. Squire or his heirs, executors or administrators shall pay said sum, together with any and all income therefrom which may and shall then be due, to such person as may and shall be designated by said C. Helen Downer, Roswell C. Downer, Frank W. Downer and Samuel T. Downer, or their legal representatives ; or in case of no agreement between said persons, to the one who may and shall be designated by the Judge of the Probate Court in and for the County of Middlesex aforesaid; or to some person who may and shall be otherwise legally designated to receive said sum.”

The breach relied on is the refusal of the defendants to pay said- sum with interest to Herbert, Squire’s successor in the trust. The chief defence is the statute of limitations.

1. As to the special statute of limitations applicable to actions against executors. It is plain upon the facts reported that no trust fund, as such, came into the hands of the defendants, and the plaintiffs do not seek to follow a specific trust fund. As to these defendants, therefore, the bond is a merely personal obligation of their testator to be enforced like any other debt or obligation. Harlow v. Dehon, 111 Mass. 195. Since the plaintiffs stand upon the footing of general creditors, they are bound by the two years’ limitation unless something is shown to bring the case within some one of the exceptions to it.

John P. Squire the trustee died January 7, 1898. The defendants were appointed executors of his will February 7, 1893, on which day they filed their bond and gave due notice of their appointment. Herbert was appointed trustee to succeed Squire Januaiy 10, 1900. He made demand upon the defendants April 26, 1900, and on December 20, 1900, brought this action. The demand therefore was made and the action brought more than seven years after the appointment of the defendants as executors. It is contended by the plaintiffs that there was no default until the demand was'made. It is Tirged by the defendants that while in a technical sense that may be true, still, inasmuch as it was in the power of the plaintiffs by consent or by application to the judge of the Probate Court to cause to be appointed or designated at any time after the death of the defendants’ testator a person who could have made the demand upon the defendants within two years from their appointment, it was the duty of the plaintiffs to do so, and that having failed in that duty they cannot now say that their claim could not have been prosecuted within the two years. But we are not much impressed by this argument. It is plain that the breach did not occur until the demand and that the claim is therefore within the plain reading of the statute. The case of Hall v. Bumstead, 20 Pick. 2, upon which the defendants rely, was against the heirs of the deceased, and the language fixing the liability of heirs differs very much from that fixing the liability of executors; and we cannot read into this latter statute the words of the former upon which the decision in Hall v. Bumstead was made.

We are also of opinion that the petition to the Probate Court was presented before the estate was finally settled by the defendants. While Wyman, one of the executors and trustees, testified that in 1898 the personal assets of the estate were turned over from the- account of the defendants as executors to their account as trustees, and that their account as executors was closed on the books, still he further testified that what he meant by this was that “ the executorship was closed as far as the accumulation of any income was concerned, and that the administration of the estate as a trust estate began from and after said date.” The defendants were executors and trustees. They filed no account as executors until May 13, 1902, more than a year after this action was begun, and in this account charged themselves with a balance amounting to more than enough to meet this claim, and no account of the executors has been settled. Under these facts it must be held that the petition for the retention of assets was seasonably presented. Hall v. Cushing, 9 Pick. 395. Crocker v. Dillon, 133 Mass. 91, 98. It is urged by the defendants that the statute requires the application to be made by the party who can bring an action on the claim, and that the claim must be the same one upon which the action is afterwards brought.- There can be no doubt that the claim must be substantially the same. It is perfectly plain, however, from the petition and the full statement accompanying it, that the petitioner, who as the successor of Squire was legally entitled to the trust fund, was seeking to have reserved in the hands of the executors the amount due from Squire’s estate upon this bond as trustee. It is also plain that this action is brought on that bond for the purpose of recovering that sum; and that whatever the plaintiffs may recover is in liquidation of that debt and must go to the hands of Herbert, the petitioner, as trustee. We cannot agree with the contention of the defendants that the agreement made between the plaintiffs and Squire, under which he was authorized to lend the money to the firm of which he was a member, wholly annulled the trusteeship as between the parties. It is true that by the agreement between the eestuis que trust and Squire, as shown in the bond and contemporaneous paper, his liability as trustee was considerably different from what it would have been had no such agreement been made. In the absence of such an agreement he would have had no right to lend the money to the firm of which he was a member, he would have been accountable to C. Helen Downer, the life beneficiary, only for the net income, would have been entitled to a reasonable compensation, would not have been responsible for loss unless caused by his failure to perform his duty, and would have been answerable only for the fund remaining in his hands. Under the agreement the eestuis que trust were estopped to contend that the loan to the firm was a breach of the trust; the beneficiary for life was entitled to receive five per cent per annum as the income of the fund whether that per cent was earned or not; the trustee was entitled to no compensation; and, if there was any loss through fault on his part or from any other cause, he was to be responsible for it, and was absolutely bound to pay the sums named in the condition of the bond. In these and perhaps other respects the liability of Squire varied from that of an ordinary trustee. And yet the trust was not entirely annulled. The money was received by him as trustee duly appointed, and was to be paid by him upon “ his ceasing to hold said sum ... as trustee, by reason of death or otherwise ” to his successor in the trust. All this clearly appears from the bond and the contemporaneous paper. It was not the intention of the parties, nor was it the legal effect of the agreement, that Squire should cease to act as trustee. He was still a trustee and liable as such, except so far as the ordinary liability was changed by the agreement.

Although there is no specific trust fund with earmarks in the hands of the defendants, and therefore they cannot be held upon the ground that they are in possession of a particular trust fund in no way belonging to them as executors which they ought to pay over to their testator’s successor in the trust, but, as before stated, are answerable on this bond to the plaintiffs in the same way only as to any general creditor under a sealed instrument, yet nevertheless as between the parties to the bond the trusteeship lasted until the death of Squire, except as modified by the agreement, and the amount recovered in this suit will be held under the terms of the trust as' originally created. The sum due from the estate of the testator as trustee was the “ claim ” to satisfy which the defendants were ordered to retain in their hands sufficient funds, and the sum thus due is the sum to be recovered in this action. The petitioner as trustee is the person who was entitled to receive that sum in that capacity, and the person entitled to the proceeds of this suit. The merely technical rule that the action must be brought in the name of the plaintiffs cannot be regarded as fatal. In substance and effect, within the legal meaning of the statute, the party who made the application is the same who brings this suit, and the claim set forth in the petition, upon which is based the decree of the Probate Court, is that upon which the action is brought. See Hammond v. Granger, 128 Mass. 272. The special statute of limitations therefore is no bar to this action.

2. As to the general statute of limitations. No demand under the contract was made until more than seven years after it could have been made, and after the appointment of the defendants as executors. The defendants contend that this demand was not seasonably made; that it should have been made within a reasonable time, which, by analogy with the general statute of limitations, they say would not exceed six years; and that inasmuch as it was not made within that time there is no liability on the bond. Here, as elsewhere in the consideration of this case, it must be borne in mind that this is not an action seeking to recover the money received by the testator upon the ground-of an implied contract to repay it; and we are not considering whether such an action would be barred by the statute. This is an action upon a bond, and a cause of action arising under it is not barred until the expiration of twenty years at least from the time when in law it arose.

In some respects the decisions upon this branch of the law are conflicting, some courts holding that the statute does not begin to run until after a demand, no matter how long delayed, (Thorpe v. Coombe, 8 Dowl. & Ry. 347; Rhind v. Hyndman, 54 Md. 527,) some that it begins to run at once whether a demand be made or not, (Palmer v. Palmer, 36 Mich. 487; Ware v. Hewey, 57 Maine, 391,) and some holding that it does not begin to run until after a reasonable time for making the demand has expired. High v. County Commissioners, 92 Ind. 580. The subject has been discussed, many of the authorities being cited in support of each view, in Shaw v. Silloway, 145 Mass. 503, and Campbell v. Whoriskey, 170 Mass. 63. In the latter case the conclusion is reached that the true principle is that the demand should be made within a reasonable time, and that “ where there is nothing to indicate an expectation that a demand is to be made quickly, or that there is to be delay in making it, . . . the time limited for bringing such an action after the cause of action accrues should ordinarily be treated as the time within which a demand must be made.” If this language is to be literally taken, then, inasmuch as the cause of action on the bond would not be barred until the expiration of twenty years, the demand might be made at any time within twenty years, and the life of the bond might reach forty years. But this language was used in a case where the limitation of six years applied to the cause of action, and was not intended to be applicable to an action upon an instrument where the time within which an action may be brought is more than six years.

The rule that the demand should be made within a reasonable time is founded upon the pi’esumed intention of the parties that the liability, shall not be indefinitely extended, and is established simply for the purpose of carrying out that intent. It is not intended to affect the nature of the contract in any other way. No case has been shown us, nor do we know of any, in which it has been applied so as to shorten the time within which the action could have been brought if the demand had been made at once. The statute of limitations applicable to a cause of action under this bond, even if existing simultaneously with the execution of the bond, is twenty years; and the principle invoked by the defendants should not be applied to reduce the time to a shorter period. Even if the demand was not made within six years, it was made early enough for this action to be brought well within twenty years from the execution of the bond; and that is sufficient. The time for the continuation of the liability is not extended beyond the time contemplated by the parties, and a rule established solely to prevent an illimitable extension of time should not be applied to reduce the time to a shorter period than that originally contemplated by the parties. This case does not require us to go further. We make no intimation as to what the rule should be if an action be brought after the expiration of the twenty years from the execution of the bond upon a demand made more than six years after such execution. The present action being supported by a previous demand, and being brought within twenty years from the execution of the bond, is not barred by the general statute of limitations. See Keithler v. Foster, 22 Ohio St. 27.

It follows that the action is not barred by any special or general statute of limitations.

The defendants further contend that if their testator is to be regarded as trustee, and this bond as an obligation conditioned for the faithful performance of his trust, no action at law can be brought until the accounts of the trustee are fully settled. But it is to be noted that this is not a general bond given for the faithful discharge of his trust. It is rather a special bond given in consideration of the permission to do an act for which he otherwise would be held answerable as for a breach of trust. It is conditioned for the payment of a certain sum therein particularly specified. To such a bond the rule, for obvious reasons, is not applicable.

There must be judgment for the plaintiffs for the penal sum named in the bond, and execution is to issue for the sum which shall be found due by the court.

So ordered.