McCarthy v. McCarthy

74 Ala. 546

• Court: Supreme Court of Alabama
• Decided: December 15, 1883
• Status: Published

Opinion

SOMERVILLE, J.

— A.n express trust, as distinguished from one that is merely implied by law, is a trust created by the direct and positive act of a party, manifested by some instrument of writing, whether by deed, will, or otherwise. — 2 Story Eq. Jur. § 980. Every trust is clearly of this class, where the legal title of property is conveyed to a trustee, to be held by him for the benefit of another, no particular words or formality being required for its creation. — 1 Perry on Trusts, § 82; Law of Trusts (Tiff. & Bul.) 11; 2 Story’s Eq. Jur. § 980; Cresswell v. Jones, 68 Ala. 420.

There can be uo question of the fact, in our opinion, that the appellants’ intestate, James McCarthy, was the trustee of an express trust, under the plain construction of tbe-two deeds by which was conveyed to him the lot of land described in complainant’s bill. The deed from Richard Millrick, designed as a marriage-settlement for his intended wife, expressly declares, in the habendum clause, that he was to hold the lot “ upon trust cmd confidence,” and “for the sole use, profit and benefit of Mary Lahey,” the mother of the complainant, during her life; and words are used which unquestionably create a remainder in the complainant, she being the sole surviving heir of her mother'by the contemplated marriage. — May v. Ritchie, 65 Ala. 602. The nature of the trust is still further emphasized by the deed of Mary Millrick, by which she sold and conveyed her life-estate in the property to McCarthy, her trustee, with an express declaration that he was to surrender it to the complainant upon the grantor’s death. We find in the contents of these written instruments every element which goes to charac-* terize an express trust, under the definition which we have above stated. Upon their execution and delivery, the legal title of the entire property became vested in James McCarthy, for the benefit of himself during the life of Mary Millrick, with equitable remainder of the usufruct in favor of complainant, with the right of possession also in the trustee, and the incidental power to collect the rents and profits. Among the most common class of express trusts are those created by marriage-settlements, as also conveyances to trustees to receive the rents of the trust property, to be applied to the use of designated beneficiaries.

In this view of the case, it is immaterial whether the statute of limitations was properly pleaded or not, inasmuch, as this defense has no application to express trusts of this particular character. — -2 Brick. Dig. 217, § 10 ; 2 Perry on Trusts, § 863. The possession of the trustee is considered to be also the possession of the beneficiary, and, consequently, is not hostile or adverse within the meaning of the statute, until there is an open disavowal of the trust, which must be brought home to the knowledge of the beneficiary with unquestionable certainty. Until this is done, no length of time, less than twenty years, will operate as a bar; and this rule of twenty years is one of presumptive evidence, based on the doctrine of prescription, and not upon the statutes of limitation. — Garrett v. Garrett, 69 Ala. 429; 2 Perry on Trusts, § 863; Law of Trusts (Tiff. & Bul.), 716. It is. true that there are some cases, of mere money trusts, where the'remedy at law and that in equity are. concurrent, and the statute of limitations has been adjudged to apply alike in both forums. — Maury v. Mason, 8 Port. 222; Wood v. Wood, 3 Ala. 756. But it seems generally settled,-that the statute is no defense to such express or direct trusts as are peculiarly and exclusively the subjects of equity jurisdiction, and are subsisting, recognized and acknowledged, as between the trustee and cestui que trust. — Maury v. Mason, supra.

In Pinkston v. Brewster, 14 Ala. 315, we have a case essentially similar in principle to the one in hand. There, certain property had been conveyed to the defendants as trustees in a deed of trust. They sold the property under the power conferred in the deed, and misapplied the proceeds. Upon bill filed against them by the beneficiaries, it was held that the trust was a direct one, peculiarly and exclusively cognizable in a court of equity, and that the statute of limitations of six years was no bar to the suit.' The general rule, as stated by Mr.- Perry in his work on Trusts, seems to be, that “where the cestui que trust seeks an account of the rents and profits from an express trustee, there is no limitation of time, as the statute of' limitations does not apply.” If the claim to rents and profits rests upon the legal title, the remedy may be then at law, and the legal limitation be adjudged applicable. — 2 Perry on Trusts, § 871.

It is insisted, however, that the trust assumed by James McCarthy terminated in September, 1876, when he conveyed the corpus of the trust property to complainant, upon the occasion of her marriage, and that it does not, therefore, come within the above rule, as being yet subsisting and acknowledged. We understand the rule to be, that a trustee may, of course, be discharged from his fiduciary relation, either by the expiration, or by the full performance of the entire trust. This involves the duty of a settlement betweeñ him and the cestwi que trust, accompanied with a conveyance or transfer of the trust property according to the terms of the trust.- — 2 Perry on Trusts, §§ 921-922. It can not be justly contended, that there was any thing resembling a Settlement of the trust in this case. The evidence shows that the complainant was kept in ignorance of her ownership of the trust property, during the entire period of her minority. When the deed was delivered to her by McCarthy, it was under the ostentatious guise of a mere gift, or benefaction. Nothing was disclosed as to the trust nature of the property, and hence nothing was known as to the rents, which had for so many years been collected and appropriated by the simulated donor, during the period of time when the legal title to the trust property was in him. It would be in the very teeth of equity and good conscience to call this an accounting to the cestui que trust; and the trustee can not be discharged, until he has accounted in such a manner as the court shall consider that he ought to have done.— Wedderburn v. Wedderburn, 4 Myl. & Cr. 53; Beckford v. Wade, 17 Vesey, 100; Law of Trusts (Tiff. & Bul.), 715-716. All express trusts of this character must be regarded as continuing to subsist, until there is an open disavowal or repudiation of the trust, by clear and unequivocal words or conduct on the part of the trustee, and this is brought to the notice or knowledge of the cestui que trust. — 2 Perry on Trusts, § 864. Until there is a settlement of the trust, or an open and unmistakable repudiation of it, it .can not, in the absence of expiration, be regarded otherwise than as subsisting. It has been said, that it is the duty of the trustee, if he intends to claim the estate, to resign the trust, and deliver over the possession which he received as trustee. — 2 Perry on Trusts, § 863. As to the rents collected and misappropriated by McCarthy, we are of opinion that the trust, under the circumstances of this case, had not terminated, and that the statute of limitations of six years- was no bar to their recovery. To permit an express trustee .to escape liability by conveying to the cestui que trust the corpus of the trust property, and at the same time to secretly withhold the rents, would be to allow an unwarrantable fraud upon the jurisdiction of the Chancery Court.

We are, furthermore, of opinion that the averments of fraud are sufficiently sustained by the proof, to take the present case out of the operation of the statute of limitations, even if it be applicable upon general principles. The statute allows the aggrieved party twelve months within which to sue after the discovery of “ the facts constituting the fraud.” — Code, 1876, § 3242; Porter v. Smith, 65 Ala. 169. The evidence strongly supports' the averment of complainant’s entire ignorance of her rights until within a few months before the filing of the present bill. The trust in McCarthy was created before the birth of complainant, and he is shown to have purchased the life-estate in the trust property from Mrs. Millriek when the complainant was an infant of tender years, residing with him beneath his roof, as a member of his family, and under his care ,and maintenance. This property he claimed as his own, collecting and appropriating the rents as if he were the owner of them in fee-simple. Upon the marriage of the complainant, he made what purported to be a mere gift of the trust property to her, which, of itself, was a re-assertion of his private ownership, and a misrepresentation of the capacity in which he really held it, which was that of a trustee for the complainant. These facts, under all the circumstances, must be construed as a fraudulent concealment of the cause of action on the part of McCarthy. The evidence satisfies us that complainant was excusably ignorant of the existence of the trust until the trust deeds, which were found among the papers of the trustee after his death, were brought to light, and delivered to her as muniments of her title to the trust property. These deeds, it is true, were recorded, one of them as far back as the year 1852, and the other about three years later. We do not think, however, that the constructive notice of the nature of McCarthy’s possession, as imported by these deeds, should charge the complainant with a knowledge of her rights. The blind ignorance in which she seems to have been kept, by the fraudulent conduct of her trustee, was sufficient to drown all suspicion of unfairness, and stupify the activity of inquiry, particularly in view of the fact of her infancy, her position of dependence, and the relations of confidence existing between her and McCarthy, with its attendant influence exerted by these facts. — 2 Perry on Trusts, § 867; James v. James, 55 Ala. 525; Johnson v. Johnson, 5 Ala. 90; Morgan v. Morgan, 69 Ala. 80.

It is contended that the Chancery Court has no jurisdiction in this case, because the complainant did not first exhaust her remedies at law, by obtaining a judgment in a court of law, and pursuing to insolvency the personal representative of the deceased debtor and the sureties on her administration bond. This is undoubtedly the established rule, where the creditor of a decedent invokes the jurisdiction of a court of equity, in order to subject lands, descended or devised, to the payment of a debt of the deceased owner, and there is no other separate and distinct ground of eguity jurisdiction shown by the complainant’s bill. — Scott v. Ware, 64 Ala. 174, and cases cited. The court here, however, having taken jurisdiction of the case, upon the distinct ground of bringing a trustee to an account of his trust, will make its jurisdiction effectual for the purposes of complete relief, and will not drive the complainant to a court of law, that he may first establish his claim, by obtaining judgment with the return of nulla tona against the administratrix and her sureties. This could be required only on the false theory, that a court of equity will decline jurisdiction of trusts, unless there be an additional or superadaed ground of jurisdiction, at least in cases of the present character. — Johnson & Seats v. Smith's Adm'r, 70 Ala. 108; Shipman v. Furniss, 69 Ala. 555; Dargan v. Waring, 11 Ala. 988. The bill avers that the estate of the deceased trustee consisted entirely of real estate, and that he owned no personal property liable to the satisfaction of his debts, and owed no other debt than that due the complainant; and these facts are not denied in the answer.

There is no misjoinder of parties defendant to the bill. The purpose of the bill is to establish a trust claim against the decedent’s estate, so as to bind the realty of which he died seized. The heirs were interested in the taking of this account, as the real estate in their hands was an, auxiliary fund liable tobe ■charged with the debt in the absence of any personal property, which was a primary fund for this purpose. — Story’s Eq. Pl. (9th Ed.) §§ 172-173; Steele v. Steele's Adm'r, 64 Ala. 438. They were therefore proper, if not indispensable parties, and had a right to make any defense against the claim which would have been available to the personal representative. It is no objection that the judgment precludes them from such defenses upon an application by the administrator to the Probate Court to sell the lands of the decedent to pay the debt. This was the very purpose for which they were made parties, so as to prevent unnecessary litigation.

There is nothing in the suggestion as to the bill being multifarious. Where a bill is not rendered multifarious by an alternative statement of facts, it cannot be rendered so by an erroneous prayer, invoking some particular relief to which the complainant is shown not to be entitled. It is the distinct and unconnected nature of the several matters stated by way of fact in the bill, and not the redundancy of the prayer for relief, which renders it objectionable on the ground of multifariousness.

The decree of the chancellor is affirmed.