Opinion
02-03-1890
DYER v. WATERS et al.
H. A. Drake, for complainant. D. J. Pan coast, for defendant Waters.
(Syllabus by the Court.)
On bill, answers, and proofs.
H. A. Drake, for complainant. D. J. Pan coast, for defendant Waters.
PITNEY, V. C. The bill is filed by the administrator of a cestui que trust against her trustee, for an account of his trusteeship. The trust was created by the husband of complainant's intestate, who was the father of defendant, by his will, proven August 8, 1866. By it he directed his executors, the defendants, "to place at interest the sum of $8,500, and to collect the interest on the same half-yearly, and to pay the said interest half-yearly to his wife, Elizabeth Waters, during her life-time." The estate of the deceased was taken possession of by the defendant Ephraim Waters, and he has had actual charge and management of it, and is the sole answering defendant. The bill alleges that at the death of the tenant for life, the intestate herein, large arrears of interest were due her from the defendant Waters, and prays an account. The defendant Waters makes two defenses: First, he says he paid his mother the full amount of her annual interest during her life-time, and that he has paid out of his own estate, since her death, the expenses of her funeral, and so forth; second, he sets up the statute of limitations. I will consider these defenses in their order.
The defendant's allegation that he has from time to time paid his mother in full the interest provided for her by the will is supported only by his own oath. Except for the last three years of her life, he produces not a scrap of writing of any kind, nor any other evidence except his own oath, to support it. Among her effects was found a promissory note made by him in her favor, dated April 5, 1870, for $775. This note she seems to have preserved with great care in a pocket-book or purse which she kept constantly about her person. Its existence, viewed in the light of circumstances presently to be stated, indicates to my mind that at its date a sort of settlement took place between mother and son of their dealings, and this note was given as for a balance then found due. The son swears it was given for money borrowed from her at that time, and not for a balance then due for interest in arrears; but I think the circumstances do not support this statement. Defendant's statement of the manner in which the alleged payments of interest were made is extremely unsatisfactory; and it seems impossible to believe that a merchant and business man would pay even his own mother so much money, in so many different payments, running over such a period of time, without taking a single voucher, or making a single entry in his books, or being able to produce a single bank-check indicating such payment. Some time in 1868 or 1869 the deceased tenant for life went to live with her son-in-law and daughter, Mr. and Mrs. Dyer, in Camden, and made her home with them for about 10 years, and up to about April 1, 1878, when, Mrs. Dyer having become a confirmed invalid, and the decedent infirm and childish, from advancing years, provision was made by defendant for her to live with, and to be taken care of by, a Miss Abbott, in Woodstown, Salem county, where she lived until her decease, on the 28th of May, 1881. Defendant during all this time lived at Swedesborough, Gloucester county. The deceased was very plain and simple in her dress and habits, went out very little, and had very little occasion to spend money. At the same time, she was in a small way fond of it, and liked to have some in her purse, and to handle it; and during the last years of her life, when she had become a mere child, amused herself with some old coppers which she had in her purse, and with wads of paper which she supposed to be money. Mrs. Dyer is dead; but her daughter, Miss Anna L. Dyer, (now Mrs. Newkirk,) and her father, the complainant,—particularly Mrs. Newkirk,—had ampleopportunity to know what money she received and had and disbursed during the period of about 10 years which she spent at their house. Mrs. Newkirk swears that the defendant came to see his mother once or twice a year, and that she (Mrs. Newkirk) was always present at the interviews, and that he was in the habit of giving his mother a little money on these occasions, in sums varying from $10 to $50. She was familiar with her grandmother's habits and expenditures. Mrs. Dyer usually made them for her. She bought very little clothing, and expended very little in charity. Mrs. Newkirk and her father estimate her annual receipts and disbursements at not over $60, and it would seem quite impossible that they should have been greater without the knowledge of those persons. They are corroborated in their evidence by that of Miss Abbott, to whom Mrs. Waters made annual summer visits. It is true that she usually made one visit yearly to the defendant at Swedesborough, and these witnesses cannot speak as to what took place while she was there; but if payments or settlements were made on those occasions, and in defendant's own house, it is incredible that he should not have been able to produce some evidence of it, either by living witnesses who were present, or some vouchers, book entry, or check. Besides, if she ever received any such moneys from the defendant as he claims to have paid her, the question arises, what became of it? Surely, he would have been able to show some trace of it. I am constrained by the evidence to conclude that from April 5, 1870, to April 1, 1878, defendant did not pay his mother more than $50 a year. After April 1, 1878, when she went to live with Miss Abbott, the case assumes a different aspect. Here defendant became responsible for her care and board, and paid for the same to Miss Abbott, and produces her vouchers for it. He also gave Miss Abbott a few small sums of money to use in supplying his mother's wants, and furnished her dry goods from his store, for which he charges $37.25. These items, viz., the payments to Miss Abbott, and the goods delivered from his store, are not seriously disputed. Also, after her death he paid the doctor's bill, funeral expenses, and some other matters, to which the complainant does not object.
But he also charges $300 for cash paid her in 20 several payments, in sums varying from $10 to $25, between April 5, 1873, "and April 2, 1881. These payments are disputed by complainant. Defendant swears he made them all at Miss Abbott's house, and produces in support of his own testimony what he claims to be contemporaneous entries of these payments in his ledger, which he produced before the master. He was invited and requested to produce it for inspection by the court at the hearing in Camden, but failed, without any excuse whatever, so to do. The healing was postponed on one occasion by reason of the absence of this book. His counsel frankly admitted that he had notified him that the book must be produced, and that he had no excuse to offer for its non-production. I am therefore compelled to act upon such description of these entries as is afforded by the evidence, and by a photographic copy taken by complainant's counsel. The entries of these alleged payments are made by themselves, on a single page of the index of the ledger, and, judging by the photograph, they appear to have been made by the same pen and ink and hand, and with great uniformity; and hence, in the absence of the benefit of an inspection of the original, I am constrained to believe they were made at one time. This conclusion, of course, not only destroys their value, but throws suspicion on all the defendant's testimony. In this connection, the evidence of Miss Abbott and her niece, Mrs. Brown, is valuable. They had ample opportunity to observe and know what money was paid to Mrs. Waters, and what she had in her possession from time to time; and they both say that she had but very little money, and that the few dollars she did have were disbursed in her behalf by Miss Abbott, and that on a few occasions her son gave her a few dollars, or rather gave to Miss Abbott for her, and never more than $5 or $10 at a time. During the last year her stock was reduced to a few old-fashioned coppers and one-quarter of a dollar. During the greater part of the last three years of her life, she was a mere child, and quite unfit to have the possession of money. These witnesses, Miss Abbott and her niece, estimate the amount of money paid to or for her by her son during her stay with them at not over $20 in all; and T conclude that their estimate is reliable. Miss Abbott's bill for Mrs. Waters' board for the three years and two months is $1,203.13, and was paid by the defendant. He made other payments, for physicians' bills and funeral expenses, and the like, amounting to about $250. His bill for dry goods furnished is $37.25; making a total of about $1,500 for the three years. Now, supposing that six months' interest accrued due to Mrs. Waters on the 1st of April, 1878, when she first went to live with Miss Abbott, and should have been paid to her at that time, then after that, and up to the time of her death, there accrued further interest for three years and two months, which, added to the amount coming due on the 1st of April, 1878, would amount, upon the fund of $8,500, to more than $1,500, or to about $1,750. Hence the endeavor of the defendant to prove the further payment of $300 in cash during that period.
Upon the whole case, I conclude the defendant has failed to support his defense of payment in full; and I therefore come to the second defense, viz., the statute of limitations and lapse of time, or, in other words, stale claim.
The familiar rule applicable to cases of trust is that the statute of limitations does not apply to an express trust; and the trust in this case is an express one. The reasonof the rule is that in such cases the possession of the trustee is the possession of the cestui que trust, whether it be of lands, personal securities, or the income and earnings of either, and and that no action at law will lie by the latter against the former for any money payments due, and that the only relief is by bill in equity for an account. Partridge v. Wells, 30 N. J. Eq. 178, 179; Morse v. Oliver, 14 ST. J. Eq. 262, per Chancellor GREEN; Buckingham v. Ludlum, 87 N. J. Eq. 137, 144, 40 N. J. Eq. 422, 2 Atl. Rep. 265. And, with regard to the remedy in this court, it is worthy of remark that the cestui que trust cannot properly be said to have slept upon his rights until his trustee has assumed some position of antagonism or hostility to, or defiance of, his cestui que trust's rights, of which he has notice. A mere retention in his possession by the trustee of a portion of the income of the trust-fund, with the consent of the cestui que trust, and without any pretense that it is so retained upon a claim of right, would not produce such hostile attitude. The rule above stated included ordinary pecuniary legacies previous to the statute giving an action at law to recover them, after which the statute was held a bar in equity as well as at law; the rule being that, if there be concurrent remedies, and the demand is barred at law, it is also barred in equity. It was well settled in England, prior to the new statute of limitations of 3 & 4 Wm. IV., that equity would decree an account against the trustee for rents, annuities, and interest, without regard to the statute of limitations. Attorney General v. Brewers' Co., 1 Mer. 495; Chalmer v. Bradley, 1 Jac. & W. 51, 64; Ward v. Arch, 12 Sim. 472; Wedderburn v. Wedderburn, 2 Keen, 722, 4 Mylne & C. 41; Beaumont v. Boultbee, 5 Ves. 485; Mathew v. Brise, 14 Beav. 341; Man v. Ricketts, 13 Law J. Ch. 194. The peculiar provisions of the statute 3 & 4 Wm. IV. render the later English decisions not entirely applicable in this state, and it is therefore not worth while to cite them; but an examination of them will show that they support the rule above stated. And see the recent case of Lyell v. Kennedy, (in the house of lords,) L. R. 14 App. Cas. 437, 450. In the case in hand, if the defendant had literally and completely carried out the instructions of the will, by especially investing the sum named for the benefit of his mother, or by setting aside and ear-marking bonds and mortgages, or other competent securities for that purpose, from the testator's estate, and had collected the interest from time to time, and had dealt with it in such a manner as to render himself liable to an action at law at her suit for money had and received, then a serious question would arise, whether this court ought not to apply the statute notwithstanding the general rule above stated. But such is not the case. It appears that the defendant did not make any such especial investment, or set aside or earmark any particular securities, for the purpose in question, and that no action at law could have been maintained against him, either by his mother in her life-time, or her personal representatives since her death. He at all times acknowledged the trust, and it does not appear that his mother ever knew that he had not fully performed his duty, so far as the investments were concerned. He does not appear to have ever at any time, either before or after his mother's death, assumed towards her or her representative an attitude of hostility, inconsistent with the existence of the trust, and his duty to account for his dealings with it, and income from it. He never at any time set up a settlement or release, or its equivalent. The case then appears to be clearly within the rule laid down in the cases above cited; and the statute of limitations does not apply, either directly or by analogy. But it is said that the statute of limitations ought by analogy to be considered as running from the date of decedent's death, and it is urged that the lapse of time and delay to enforce complainant's rights are such as to make it inequitable for this court, at this day, to give relief; that it ought to be presumed from decedent's inaction that she gave her son the surplus income not actually used by her. I do not think that the inaction of the decedent, of itself, is sufficient to stay the hand of the court. Presumably, she had a settlement in April, 1870, and took her son's note for a balance, which is now clearly outlawed. Afterwards, he made small payments, from time to time, on account of what should have been due her, sufficient to satisfy her current wants; and she, at least as early as 1878, had reached such a state of senile imbecility or second childhood that it would be unsafe to base any presumption upon her inaction.
The lapse of time since her decease, and before the filing of the bill, is more Serious. She died May 28, 1881. Letters of administration were granted to complainant January 5, 1887, and the bill herein was filed October, 1887, six years and over five months from her death. The delay to take out letters and commence suit is in a great part accounted for by efforts on the part of the complainant to settle the affair between his wife and the defendant, who were the sole next of kin, amicably, and without suit. Complainant computed the amount due by defendant to his mother-in-law at considerably over $5,000, and proposed to fix it at that sum, and that out of it he should have $1,000, for taking care of the deceased for the 10 years she lived with him, and the balance of $4,000 should be equally divided between Mrs. Dyer and the defendant. The latter disputed the amount due the complainant for board, and also the amount due from him for arrears of interest; but I do not understand from the evidence that he contended that nothing was due. The only question was how much. He certainly did not then set up a release or its equivalent. On the contrary, he himself offered to settle on abasis of $4,000 due from him, which complainant declined. It is said that this offer should not be used against the defendant, because it was made by way of compromise. If it had been accompanied with a protest that nothing was due, or that he had a receipt or release from his mother which precluded an account, but was willing to pay so much for peace, the position would have been well taken; but the evidence does not show this state of facts, and it is hard to believe that a man who owed nothing would offer as much as $4,000 to avoid a lawsuit in which the total claim was only about $5,000. These negotiations for settlement extended over a considerable period of time, and are proper to be considered by this court in this connection; and, as before remarked, they were all based upon a continuing duty on the part of the defendant to account as trustee. I find no evidence that he ever insisted that he had paid his mother in full until the filing of his answer herein. At the last meeting between the parties with a view of settlement, the complainant stated his best terms to be to settle upon the basis of $5,000 due from the defendant; and the defendant asked for time to consider whether or not he should pay that amount. After waiting a considerable time without hearing from him, complainant commenced suit. Another circumstance is worthy of notice. Among the payments made by defendant after his mother's death is one to a church, for dues from his mother. For these dues, defendant was not personally responsible. The bill for them was made out to "the estate of Elizabeth Waters," and was paid by defendant in 1882,—less than six years before the filing of the bill. Complainant argues that such payment was an admission by defendant that so much money was due from him to his mother's estate at that time, and that it amounted to a payment on account, with all the consequences of such payment.
The principle upon which courts of equity refuse to enforce stale claims in cases where the statute of limitations does not apply, either directly or by analogy, is that, considering all the circumstances, it would be inequitable to do so, by reason of the danger of doing injustice to the defendant, because, for instance, the defendant, by reason of the delay, has changed his position irretrievably, or lost some advantage he was entitled to keep, or that evidence has been lost, or facts obscured, by the lapse of time. See Story, Eq. Jur. § 529. Upon a careful consideration of the case in hand, I find nothing to lead to the conclusion that there is any reason to fear that injustice will be done to defendant by calling on him to account in this case. It ought to be a simple and easy matter for him to prove what payments he has made to his mother, or on her account. He has had opportunity to state those payments under oath. He does not pretend that he set aside, or specially invested, the fund in question, and that, owing to inability to keep it constantly invested, he did not receive the full interest it was capable of earning, or that he lost a portion of it through unfortunate investments, and that it would be hard for him, at this date, to show the circumstances which would excuse the loss. Defendant sets up no loss. In point of fact, he has been guilty of a breach of trust, in not properly investing, and hence is liable for full interest. His only misfortune, according to his own statement, is that he paid his mother moneys without taking vouchers or making entries to perpetuate the proof of such payment. He does not set up either the loss of vouchers or the death of witnesses who could prove such payments, or any of them. In fact, his answer sets up no special facts or circumstances to show that it is inequitable now to call upon him to account. It rests simply upon a statement that the statute of limitations applies. And it is an important consideration, upon a view of the whole case, that defendant had it his power, at any and all times during these many years, to come by his own motion before the appropriate judicial tribunal, and procure a settlement of his accounts as trustee, and the protection of a judicial decree.
I find the case quite covered in all its aspects by two cases in our reports,—Cook v. Williams, 2 N. J. Eq. 209, and Williams v. McKay, 40 N. J. Eq. 197. In the earliest of these cases the trust was created in 1807. The trustee died in 1826, and the cestui que trust some time prior to April 27, 1830. On that day letters of administration upon the estate of the cestui que trust were granted to the complainant; and the bill was filed April 14, 1836, a few days short of six years after the granting of letters. How long before that date the cestui que trust died does not positively appear, but it must have been a considerable period; for the case shows that her friends made a pretended settlement of the account with the defendant before administration granted. So I think I am justified in inferring that the bill was filed more than six years after the death of the cestui que trust, and more than nine years after the death of the trustee. The bill was sustained, and the account ordered. In the later case, defendants were charged with a breach of trust as officers of a savings bank, and set up the statute of limitations, and lapse of time. The learned chief justice, speaking for the court of appeals, overruled this defense, and in language which I think includes and covers the present case. There should be the usual decree for an account.