Opinion
No. 33235.
September 26, 1938. Suggestion of Error Overruled November 7, 1938.
1. TRUSTS.
The delivery of notes to bank by bank president to be held in trust for president's daughter and her children, followed by a remittance of interest each year by the president as the interest was paid by the makers, constituted a completed "gift," notwithstanding that the bank was allegedly not authorized under its charter to act as a trustee, since president became trustee by assuming to act with acquiescence of the beneficiaries.
2. TRUSTS.
Equity will not permit a trust to fail for want of a trustee qualified to act.
3. TRUSTS.
The beneficiaries of a trust created by delivery of notes to bank to be held in trust for the beneficiaries were entitled to select or cause to be selected a trustee legally qualified to administer the trust, after lack of bank's capacity under its charter to act as such became apparent.
4. TRUSTS.
The donor may deliver possession of personal property to a trustee to hold as a gift for the donee, but if the donor expressly says, or does acts amounting to the same thing, he constitutes himself a trustee to hold the property for the donees.
5. TRUSTS.
Where deed of trust securing original notes and new notes when recast remained in the name of donor-trustee by whom the original notes had been given in trust to donor's daughter and her children, the lien thereof passed as an incident to the gift of the notes to the donees.
6. TRUSTS.
A donor-trustee who waived the priority of the lien of a deed of trust securing notes which donor held in trust for benefit of his daughter and her children, by assuming control of the notes and executing waivers, constituted himself a trustee de son tort of the security and became liable to the beneficiaries as owners of the equitable and beneficial interest of the lien, and became liable to account to them as trustee for the value of the notes after value thereof was destroyed by the donor's unauthorized act.
7. LIMITATION OF ACTIONS.
Where donor-trustee waived the priority of the lien of a deed of trust given in his favor and recorded in his name as security for notes which donor held in trust for the benefit of his daughter and her children, and value of the notes was destroyed by donor's unauthorized act, a suit against executor of the donor's estate, commenced within 10 years after donor had waived priority of the lien, was not barred by limitations, since donor's action created a trust in regard to the notes and their security not cognizable by the courts of common law, to the enforcement of which the 10-year statute of limitation was applicable (Code 1930, section 2316).
APPEAL from the chancery court of Leflore county; HON. R.E. JACKSON, Chancellor.
Ceylon B. Frazer, of Memphis, Tenn., and H. Talbot Odom, of Greenwood, for appellants.
Gifts inter vivos of unindorsed negotiable notes of a third person may be made by a simple delivery of the notes, the equitable interest therein vesting in the donee by the delivery and acceptance. However, in such case an actual delivery of the instrument in the lifetime of the donor is essential to perfect the gift, although delivery to a third person as trustee or agent of the donee is as effectual to make the gift valid as delivery to the donee personally.
Pace v. Pace, 107 Miss. 292, 65 So. 273; 28 C.J., page 659, sec. 61, page 642, sec. 34.
In the instant case there can be no question but that the trust is express and that the language creating the same is clear, unequivocal and irrevocable.
Delivery of the gift, regardless of the manner in which the same may be consummated is effected by the donor's surrender of all dominion over the gift.
It is recognized in the State of Mississippi that a gift may be consummated by actual, constructive or symbolical delivery of the property to the donee.
Harmon v. McFarlane, 99 So. 566; McLellan v. McCauley, 130 So. 145; Wheatley v. Abbott, 32 Miss. 343.
It is well settled that a donor may retain possession of the subject of the gift, and if he constitutes himself a trustee or holds for another as trustee to whom he is responsible, manual delivery of the gift being impossible, it is not essential to the consummation of the same. It is, of course, fundamental that the Wilson Banking Company, a corporation, could act only through its officers and agents.
Pohl v. Fulton, 119 P. 716, 1913B, Ann. Cas. 1014; Williamson v. Yager, 91 Ky. 282, 34 Am. St. Rep. 184.
In like manner as a donor may constitute himself a trustee and perfect a gift, likewise it necessarily follows that a donor with power to bind and hold for a corporation may bind the corporation.
Love v. Francis, 29 N.W. 843; Yokem v. Hicks, 93 Ill. App. 667; McMahon v. Lawler, 77 N.E. 489; In re Brady's Estate, 239 N.Y. Supp. 6, 173 N.E. 879; In re Valentine's Estate, 204 N.Y. Supp. 285; Tucker v. Tucker, 116 N.W. 119.
If it be sound law as expressed by the Circuit Court of Appeals, Third Circuit, in the case of Miller, Alien Property Custodian, et al. v. Herzfeld, 4 F.2d 355, that doubt as to whether a gift was perfected may be determined by subsequent declarations of the donor showing the nature of the transaction, there can be no question of the gift in this cause.
The complainants consistently and until the death of Mr. Wilson were paid the income from the notes involved herein.
The transfer of notes secured by mortgage carries pro tanto the underlying security.
41 C.J. 675, sec. 688; Henderson v. Herrod, 18 Miss. 631.
The trust was established. To create a trust or to appoint a trustee a written instrument is not necessary.
65 C.J. 573, 574, 576; Commissioner of Sinking Fund v. Walker, 7 Miss. 143.
The liability of G.A. Wilson to complainants was as trustee to cestui que trustent.
26 R.C.L. 1251, sec. 97; Cummings v. Oglesby, 50 Miss. 153; Jones v. McDougal, 32 Miss. 179; Buie v. Pollack, 55 Miss. 309; Calhoun v. Burnett, 40 Miss. 601; Smith v. Jeffreys, 16 So. 377.
What Mr. Wilson actually did was to dispose of the complainants' property, without their consent and to their prejudice, creating as between parties a status of trustee and cestuis que trustent on which the suit herein is based.
Cumings v. Oglesby, 50 Miss. 157; Patton v. Pinkston, 86 Miss. 651, 38 So. 500; Smith v. Jeffreys, 16 So. 377.
We readily concede that if the complainants' demand were based on a simple implied contract, section 2299 is applicable. However, such is not so, for as heretofore stated the purpose of this proceeding is to enforce liability against a trustee for moneys had and received. It is true that a trust arises from and is a contract, express or implied, but is a different type of contract, having applicable to it a different period of limitation than the simple contract contemplated in Section 2299. The case at bar is controlled by Section 2316 of the Code.
The executors also pleaded the six-year statute of limitations, being Section 2292 of the Code of 1930, but we respectfully submit that this statute does not apply.
Hook v. Bank of Leland, 134 Miss. 185, 98 So. 594; Sec. 3125, Code of 1906; Robinson v. Strauther, 106 Miss. 754, 64 So. 724; Patton v. Pinkston, 86 Miss. 651, 38 So. 500.
G.A. Wilson did assume the obligation of the bank to safely keep the notes and deliver them to the appellants on demand. Mr. Wilson was necessarily fully aware of appellants' ownership of the notes, the existence of the trust and the obligation he himself had imposed on the Wilson Banking Company.
Conner v. Hull, 36 Miss. 424; Restatement of the Law of Restitution, sec. 202; Jackson v. Jefferson, 171 Miss. 774, 158 So. 468; Bank v. McPherson, 102 Miss. 852, 59 So. 934; Wood v. Stafford, 50 Miss. 370; Coffin v. Bramlitt, 42 Miss. 194; Pennington v. Seal, 49 Miss. 518.
The ownership of the underlying security is incidental to the ownership by the appellants of the notes. It is well settled in this state and elsewhere that where part of a series of notes secured by mortgage or deed of trust are transferred, such transfer carries with it a proportionate part of the entire underlying security.
41 C.J., page 674, sec. 687, page 675, sec. 688; Henderson v. Herrod, 18 Miss. 631; McLeod v. First National Bank, 42 Miss. 99.
Appellants take the position that their cause of action accrued neither when Mr. Wilson subordinated the lien securing their notes to the liens of the Federal Land Bank and the Mississippi Joint Stock Land Bank nor at such time as he might have been called upon to deliver the notes to the appellants. The subordination agreements were duly recorded. It is in fact shown in the record that he was never called upon to deliver the notes to the appellants, but on the contrary, the same were delivered to the appellants after his death by his executors. It is submitted that appellants' cause of action accrued when the statute of limitations began to run against them.
Cooper v. Cooper, 61 Miss. 676.
It is submitted that under the laws of the State of Mississippi, the appellants' cause of action accrued when they acquired actual knowledge of the subordination of the security underlying their notes.
Cooper v. Cooper, 61 Miss. 676; Fleming v. Grafton, 54 Miss. 79; Peeples v. Boykin, 132 Miss. 359; 37 C.J. 943-945, sec. 310; 17 R.C.L. 861, sec. 219; Restatement of the Law of Restitution, pages 590-591, sec. 148; Buckner Stanton v. Calcote, 28 Miss. 432; Livermore v. Johnson, 27 Miss. 284; Wilson v. Ivy, 32 Miss. 233; Fertilizer Co. v. McMurphy, 114 Miss. 250; Cooper v. Cooper, 61 Miss. 676; Restatement of the Law of Trusts, sec. 198, subsection (e), and sec. 199; Calhoun v. Burnett, 40 Miss. 599.
Unquestionably Mr. Wilson by accepting the notes, with knowledge of their ownership and executing the subordination agreements, made of himself a constructive trustee.
26 R.C.L. 1251, Sec. 97; Calhoun v. Burnett, 40 Miss. 599; Livermore v. Johnson, 27 Miss. 284; Cooper v. Cooper, 61 Miss. 676; Murdock v. Hughes, 15 Miss. 219; Cummings v. Oglesby, 50 Miss. 153; Jones v. McDougal, 32 Miss. 179; Buie v. Pollock, 55 Miss. 309; Smith v. Jeffreys, 16 So. 377; Westbrook v. Munger, 61 Miss. 329; Hook v. Bank of Leland, 134 Miss. 185, 98 So. 594; Robinson v. Strauther, 106 Miss. 754, 64 So. 724; Patton v. Pinkston, 86 Miss. 651, 38 So. 500; Stanton v. Helm, 87 Miss. 287; Boswell v. Thigpen, 75 Miss. 308; Templeton v. Tompkins, 45 Miss. 424; Garner v. Townes, 134 Miss. 791.
Alfred Stoner and W.H. Montjoy, both of Greenwood, for appellees.
We contend that promissory notes sued on in the case at bar were never delivered to either the alleged trustee bank (Wilson Banking Company) or to complainants. We believe the proof establishes our contention beyond the shadow of a doubt.
The writing alone does not establish a completed gift.
The fact that Mr. Wilson, the original donor, in several letters written to complainants, appellants here, had evidenced an intention to give the notes sued on, is, of course, wholly insufficient to constitute a perfected gift. The cases abound with decisions, substantiating this statement. Mere intentions are worthless. Declarations unaccompanied by an actual delivery, are valueless. The reason for the rule is obvious and needs no enlargement here. A gift, being a contract without consideration, valuable in law, the same is, of course, unenforceable unless the subject matter of the gift is delivered.
The fact that the complainants received several interest payments on notes of the revamped series is, for reasons too numerous to mention, no evidence of a completed gift of the promissory notes.
Mr. George Wilson, son of the alleged donor, could commit no act to assist in perfecting the gift where the same was not heretofore perfected by his father, the alleged donor.
Liebe v. Battmann, 72 Am. St. Rep. 705.
The accountants, Taylor, Powell Wilson, were total strangers to the entire alleged gift, and they were powerless to commit any act, or make any statement that could change or alter the situation with reference to the completion of the gift. Regardless of what the said auditors did or said, the situation would not be disturbed, improved upon or detracted from in any shape, form or fashion.
Delivery is a parting with dominion and control, for the benefit of another. It includes a renunciation of the right of possession and the possession.
Conner v. Hull, 36 Miss. 424; Gidden v. Gidden, 176 Miss. 98, 167 So. 785; Meyer v. Meyer, 64 So. 420, 106 Miss. 638.
The promissory notes in the case at bar were subject to actual delivery, but instead the proof of complainants fails to show an actual delivery, and instead the proof shows that the alleged donor, Mr. G.A. Wilson, ever retained full control and dominion over the Parker notes. The locus poenitentiae existed. The notes in question were kept by Mr. Wilson in his own private lock box in the bank, and the opportunity to withdraw from the projected contract was omnipresent in Mr. Wilson in the absence of custody and control over the notes by the complainants or the trustee bank. There was no way for the complainants to compel a fulfillment of the projected contract by Mr. Wilson during his lifetime. There are numerous other cases equally as strong in favor of our contention among which are the following, to which we invite the attention of the court:
Young v. Power, 41 Miss. 197; Pace v. Pace, 107 Miss. 292, 65 So. 273; McClellan v. McCauley, 158 Miss. 456, 130 So. 145; Wheatley v. Abbott, 32 Miss. 343; Woods v. Sturges, 116 Miss. 412, 77 So. 186; McWillie v. Van Vacter, 35 Miss. 428.
The notes sued on are not the notes mentioned and referred to in the "trust receipt," but are notes of the "revamped" series, and entirely different.
The burden of the proof rested squarely with the complainants to establish every essential ingredient of the alleged gift, a burden which they have wholly failed to meet.
28 C.J., page 632, sec. 20, page 688, sec. 70, page 669, sec. 71; Hutcheson v. Bibb, 142 Ala. 586, 38 So. 754; Garner v. Bemis, 81 Fla. 60, 87 So. 426; Washington Loan Trust Co. v. Hutchinson, 144 So. 343.
The alleged trustee was incompetent and without qualifications to act in a trust capacity, and the "trust receipt" is of no validity. The record in this case shows conclusively that the alleged trustee, Wilson Banking Company, was without power under the law to act in a trust capacity.
Sec. 3837, Code of 1930; Commissioners of the Sinking Fund v. Walker, 6 How. 143, 38 Am. Dec. 433; 26 R.C.L. pages 1185, 1191, sec. 27.
There must be an acceptance by the trustee.
26 R.C.L. 191, sec. 28.
The "trust receipt" was executed by the alleged trustee (Wilson Banking Company) and not the alleged donor (G.A. Wilson).
Mr. Wilson did not constitute himself trustee.
Restatement of Law on Trusts, page 100, sec. 31; McHugh v. O'Conner, 9 So. 165.
The donor may constitute himself a trustee for the donee and in such case no further delivery is necessary. But the law will not imply such trusts; it must be expressed. In regard to personal property, the declaration of trust must be made either in writing or by parol. In either case the language used must be clear, unequivocal and irrevocable.
28 C.J., page 642, sec. 34.
On the question as to whether or not there was a perfected gift, we respectfully submit that the facts disclosed by the record in this case conclusively show that there was no delivery of the Parker notes to the alleged trustee bank. Mr. Wilson, as shown by the record, kept the notes in his own private lock box in the bank. No one else had access to this lock box. The notes were Mr. Wilson's own personal property, and he treated them as snch. The bank had no jurisdiction over the notes. Can it be successfully charged that the complainants could have obtained possession of the notes during the lifetime of Mr. Wilson without his full consent? We think it cannot. Therefore, Mr. Wilson having retained dominion and control over the notes, no gift was made and no trust was created. The very acts of Mr. Wilson in executing the waivers, which is the basis of appellants' complaint, is invincible proof that Mr. Wilson had the notes in his possession and in complete servitude to his commands.
Meyer, Weiss Co. v. Morgan, 51 Miss. 21; Code of 1930, sec. 1409; 1 R.C.L., pages 657, 671 and 680; Jackson v. Jackson, 28 Miss. 674; Woods v. Sturgis, 77 So. 186, L.R.A. 1918C 338.
We submit that the bill of complaint shows that the waivers were made by Mr. Wilson, respectively, on the 21st day of September, 1927, and on the 21st day of August, 1928. The suit having been filed on the 2nd day of February, 1936, insofar as the 1927 transaction was concerned, was not brought for about nine years, and insofar as the 1928 transaction was concerned, it was not brought for about eight years.
Fleming v. Grafton, 54 Miss. 79; Buntyn v. National Mut. Bldg. Loan Assn., 86 Miss. 454, 38 So. 345; Foote v. Farmer, 71 Miss. 148, 14 So. 445.
The three-year statute of limitations begins to run at the time that the wrong is done.
Federal Land Bank v. Collins, 156 Miss. 893, 127 So. 570; Johnson v. Crisler, 156 Miss. 266, 125 So. 724; D.S. Pate Lumber Co. v. Southern Ry. Co., 115 Miss. 402, 76 So. 481; Cook v. Rives, 13 S. M. 328.
A debt owing by an agent to his principal at the time of the death of the principal is barred by the three-year statute of limitations.
McDowell v. Minor, 174 Miss. 188, 160 So. 389.
Conceding, for the sake of the argument, that the money was not paid to the alleged trustee, the Wilson Banking Company, then the trustee, if the gift had been perfected, would have been bound to sue Mr. Wilson for the money. The beneficiary is barred when the trustee is barred.
Code of 1930, section 2297.
If a trust was created, then the Wilson Banking Company was the trustee and Mr. Wilson was a third party.
19 Am. Eng. Enc. of Law (2 Ed.), 186; Cruse v. Kidd, 2 A.L.R. 41 (Comment by Editorial Staff).
The rule that the statute of limitations does not bar a trust estate holds only as between cestui que trust and trustee on one side and strangers on the other, for that would be to make the statute of no force at all, because there is hardly any estate of consequence without such trust, and so the act would never take place; therefore, where a cestui que trust and his trustee are both out of possession for the time limited, the party in possession has a good bar against them both.
Lewellin v. Mackworth, 22 Eng. Repr. 488; Clayton v. Cagle, 97 N.C. 300, 2 Am. St. Rep. 293; Smilie v. Biffle, 2 Pa. St. 52, 44 Am. Dec. 156; Edwards v. Woodfolk, 17 B. Mon. 376; Molton v. Henderson, 62 Ala. 426; Merriam v. Hassam, 14 Allen (Mass.), 516, 92 Am. Dec. 795; Stoll v. Smith, 129 Md. 164, 98 A. 530; Herndon v. Pratt, 59 N.C. 327; Ewing v. Shannahan, 113 Mo. 188, 20 S.W. 1065; Patchett v. Pacific Coast R. Co., 100 Cal. 505, 35 P. 73; McLeran v. Benton, 73 Cal. 329, 2 Am. St. Rep. 814, 14 P. 879; Cushman v. Coleman, 92 Ga. 772, 19 S.E. 46; Wooldridge v. Planters' Bank, 1 Sneed (Tenn.) 297; Nelson v. Ratliff, 72 Miss. 656, 18 So. 487.
We submit that under no circumstances could it be said that Mr. Wilson was the trustee, and having failed to account as such, his defalcation would be covered by the ten-year statute of limitations. We submit that the only statute which would control if Mr. Wilson had gotten the money is the three-year statute, which covers implied contracts.
We submit that as between the trustee bank and the cestui que trust on the one side and Mr. G.A. Wilson, a third party, on the other side, the statute of limitations commenced to run at the time that the waivers were executed and certainly on and prior to the 21st day of August, 1928.
Section 2297, Code of 1930; Weir v. Monahan, 67 Miss. 434, 7 So. 291; Section 2316, Code of 1930.
We submit that assuming the gift to have been completed, and assuming that the money was retained by Mr. Wilson, then there existed on his part an implied promise to pay it over to the trustee bank. All implied contracts are subject to the bar of the three-year statute of limitations.
Buntyn v. National Mutual Bldg. Loan Assn., 86 Miss. 454, 38 So. 345; Foote v. Farmer, 71 Miss. 148, 14 So. 445; Federal Land Bank v. Collins, 156 Miss. 893, 127 So. 570; Johnson v. Crisler, 156 Miss. 266, 125 So. 724; D.S. Pate Lbr. Co. v. Southern Ry. Co., 115 Miss. 402, 76 So. 481; Cook v. Rives, 13 S. M. 328; Minor v. McDowell, 113 So. 576; Cooper v. Cooper, 61 Miss. 676; Hook v. Bank of Leland, 134 Miss. 185, 98 So. 594.
Counsel contend that the record of the waivers was not notice to the beneficiaries but in this we submit that they are in error.
Fleming v. Grafton, 54 Miss. 79; Peeples v. Boykin, 132 Miss. 359; Moore v. Foster Lbr. Co., 231 Fed. 1; Clark v. Van Loon, 108 Iowa 250, 75 Am. St. Rep. 219; Irwin v. Holbrook, 32 Wn. 349, 73 P. 360.
We submit that the three-year statute applied, and they are even barred by the six-year statute for the reason that the waivers were immediately recorded, they having proven no fraud, the burden being on them, and our court having held that close kinship does not count.
Minor v. McDowell, 113 So. 576.
There are two questions presented for decision on this appeal: First, whether certain promissory notes were delivered to the appellants by the alleged donor in such manner as to constitute a completed gift inter vivos; second, whether the alleged donor thereafter assumed custody and control of, dealt with, and destroyed the value of the notes and their attendant security in such a manner as to constitute himself a trustee thereof under circumstances such as to render the ten-year statute of limitation, relating to cases where there is the existence of a trust not cognizable by the courts of common law, applicable to the commencement of this suit, instead of either the three or six-year statutes of limitation.
The appellants, Mrs. Nellie Wilson Yandell and Mrs. Annie Yandell Potter, are the daughter and granddaughter, respectively, of Geo. A. Wilson, of Greenwood, Mississippi, who died in the month of November, 1930. Long prior to his death Mr. Wilson had accumulated considerable property, and was the majority stockholder and president of the Wilson Banking Company. On the 10th day of December, 1919, he delivered to the Wilson Banking Company of Greenwood, as trustee for the appellants, certain promissory notes signed by E.L. Parker and E.L. Parker, Jr., of the aggregate face value of $30,000, payable on January 1st, 1928, 1929 and 1930, respectively, to Geo. A. Wilson or bearer, bearing interest at the rate of 6% per annum, payable annually on the first day of each year, and secured by a first mortgage or deed of trust on a plantation consisting of approximately 1,250 acres of Delta farm land in Sunflower County, Mississippi, known as the White Deadening Plantation; and which mortgage or deed of trust was duly recorded in that county. These notes were delivered to, or deposited with, the Wilson Banking Company, in trust for the appellants, as constituting a gift to them from the said Geo. A. Wilson; and as evidence thereof the Wilson Banking Company executed the following receipt and agreement:
"This is to certify that G.A. Wilson, has deposited in this bank, the three notes given him on Aug. 26th, 1919, for twenty thousand dollars each, bearing six per cent interest from dates and payable annually on the first day of Jany, 1920, and on each successive Jany. 1st, until paid, and which said notes are due and payable at this bank, on Jany. 1st, 1928, 1929, and 1930, and are secured by a deed of trust on White Deadening Plantation, in Sunflower County, Mississippi, and are given by E.L. Parker and E.L. Parker, Jr., and are deposited with this bank in trust for Mrs. Nellie Wilson Cartmell and her children, and we agree to collect the interest and safely keep the said notes without costs. Wilson Banking Co., by G.A. Wilson, President."
On February 16, 1920, Mr. Wilson wrote to his daughter, Mrs. Yandell, among other things, the following: "Mr. E.L. Parker, the maker of the three notes I gave you and your children last fall, did not pay the interest on the notes, which was payable January 1st, 1920, until last week. . . . The next payment of interest will be for a whole year, and comes to $3,600.00. You and each of your children will be entitled to one-fourth each of the interest annually, which will be $900.00 each." And, for more than ten years thereafter and until his death during the latter part of the year 1930, Mr. Wilson continued to recognize the fact that he had given the notes to the appellants, and collected the interest thereon annually, deposited the same to his personal account at the bank, and remitted the same each year to the appellants in most instances by means of his personal checks therefor. As late as January 29, 1929, he deposited the interest for 1928 in the bank for the donees, and forwarded a deposit slip containing a pencil notation in his own handwriting, "For interest on your Parker notes to January 1, '29, G.A. Wilson." On January 2, 1930, he wrote to his granddaughter, Mrs. Annie Yandell Potter, among other things, that "the interest on each one's notes per annum is $900.00. You will therefore give Nellie half of the enclosed check on the Guaranty Trust Company of New York for $1,800.00, or rather, divide the money." Again, on April 10, 1930, he wrote to his granddaughter and referred to these notes as "the notes I gave you that are secured by a mortgage on a cotton plantation near here." It is undisputed that the letters all referred to the Parker notes in question.
It does not appear when Mr. Wilson re-acquired the possession and manual custody of the notes after he had delivered and deposited the same with the Wilson Banking Company to be held in trust for the appellants, but the proof shows that he did in fact thereafter assume control and custody thereof and handle the same exclusively, assuming to perform the obligations originally undertaken by the Wilson Banking Company, from and after the time that the gift of the notes was completed by their delivery to the bank. They were found in the private lock box of Mr. Wilson at the bank subsequent to his death and were delivered by the executors of his estate to the appellants. It is so well settled under the authorities that the delivery of the notes to the bank to be held in trust for the appellants, under the circumstances above stated, amounted to a completed gift that an extensive review of decisions is unnecessary.
It is urged, however, that the Wilson Banking Company was not authorized under its charter to act as trustee and was without authority under the law to do so. Be that as it may, equity will not permit a trust to fail for want of a trustee qualified to act. The beneficiaries of the trust were entitled to select, or cause to be selected, a trustee legally qualified to administer the trust, and the proof discloses that the donor assumed to act and constituted himself the trustee with the acquiescence of the beneficiaries of the trust, thereby creating the relationship of trustee and cestuis que trustent between himself and the owners of the equitable and beneficial interest in the notes.
It was said in Williamson v. Yager, 91 Ky. 282, 15 S.W. 660, 34 Am. St. Rep. 184 that [page 661]: "If one delivers possession of personal property to a trustee to hold as a gift for the donee, it is certainly a valid gift, and if he expressly says or does acts amounting to the same thing, he constitutes himself a trustee to hold the property for him. We perceive no reason why this should not be as valid and binding as a delivery of the property to a third person to be held in trust for the donee; the only difference being that in the first-named case the trust, by clear and explicit language, or acts amounting to the same thing, should be perfectly created, in order to prevent the confounding of the trust with an imperfect gift. Therefore, in seeking to enforce the trust, the donee must show that the donor has left nothing undone that is necessary to create it, and if it appears that the donor has yet to make a conveyance to the donee, the trust will not be enforced, because not perfectly created. . . . But if nothing is required of the court but to give effect to the trust as an executed trust, it will be carried into effect, although it was without consideration, and the possession of the property was not changed. This is upon the broad principle that in such matters a party may make himself trustee, as well as a third person." Discussing the right of the donor trustee, following the declaration of trust, to exercise dominion and control over the subject of the gift, the court in the case supra further said: "But, conceding that she, by such act, did undertake to recede from the gift, and assert her right to the notes, she could not do so after having declared a perfect trust in favor of the appellees. The title to the notes by that act passed to them, which the appellant could not thereafter recall without the appellees' consent, which they never gave."
The total amount represented by the notes referred to as having been given to his daughter and her children was $60,000, and the two shares of the appellants amounted to a total of $30,000, there being four donees of this gift.
The proof shows that the $30,000 worth of the notes are all part of a series of notes amounting originally to the principal sum of $220,000; and that the notes of the series outstanding and unpaid during the year 1922 were recast, as of March 15, 1922, by agreement of the said G.A. Wilson and the makers thereof, and $30,000 worth of the series as recast became due and payable January 1, 1933, 1934, 1935, and 1936, respectively, and were substituted for the notes mentioned in the receipt and agreement executed by the Wilson Banking Company on December 10, 1919, hereinbefore mentioned.
The mortgage or deed of trust securing the original notes and the new notes, when recast, remained of record in the name of Geo. A. Wilson, as beneficiary therein, although the lien thereof passed, under the law, as an incident to the gift of the notes to the appellants. Thereafter, on the 21st day of September, 1927, the said Geo. A. Wilson waived the priority of such lien on about one-half of the 1,250 acres of land in favor of a deed of trust executed by E.L. Parker and E.L. Parker, Jr., in favor of the Federal Land Bank of New Orleans, Louisiana, to secure a loan of $20,000; and on the 21st day of October, 1928, the priority of the said lien was waived by the said Geo. A. Wilson on the remainder of said land in favor of the lien of a deed of trust given by the said E.L. Parker and E.L. Parker, Jr., for the sum of $20,000 in favor of the Joint Stock Land Bank of Mississippi, such waivers being executed without the knowledge or consent of the appellants. The proceeds of these two $20,000 loans were applied on certain other notes belonging to the $130,000 series, some of which were then held by the Wilson Banking Company as collateral, and especially to the payment of those notes of said series which were given to the other two children of the appellant, Mrs. Nellie Wilson Yandell. The action of the donor, Geo. A. Wilson, in waiving the priority of the lien of the mortgage or deed of trust given in his favor on the 1,250 acres of land by the said E.L. Parker and E.L. Parker, Jr., insofar as such waiver affected and destroyed the value of those notes given to the appellants, is the subject matter of the complaint involved in this litigation, for the reason that the deeds of trust held by the two subsequent lienors were later foreclosed during the year 1931 for an amount not in excess of the indebtedness represented by the two said loans.
Assuming control of the notes and executing the waivers aforesaid, Mr. Wilson constituted himself a trustee de son tort of the security and became liable to the appellants, as owners of the equitable and beneficial interest in the lien, and became liable to account to them, as such trustee, for the value of the notes, which was shown by subsequent events to have been completely destroyed by his unauthorized act. There is no contention that the land was not worth the full amount of the notes of the series secured by the lien, which remained outstanding and unpaid at the time of the execution of such waivers, some of the notes of the series having been sold at an almost nominal discount for cash, and not long prior to the waiver of the lien securing same. Moreover, it is stated in the answer of the appellees that at the time of the execution of these waivers, Mr. Wilson, in good faith, believed that the property on which the lien existed was worth the full amount of both the two new loans of $20,000 each and all of the then unpaid purchase money notes on the land, and in which unpaid balance of the purchase money thereon the notes of the appellants were included; and although no proof was offered by the appellants as to what these notes were worth at the time of the execution of the waivers, they would be entitled to recover of their trustee the face value thereof with accrued interest due thereon, in the absence of any proof on behalf of the trustee that they were worth less than par value, it having been shown that their value was completely destroyed by the act of a trustee de son tort. The theory of the bill of complaint for relief in the alternative to the extent of only their proportionate share of the proceeds of the two $20,000 loans, on the idea that Mr. Wilson became a constructive trustee thereof, is not well founded, since it is not shown that he ever received any part of such proceeds.
The suit was filed on June 4, 1935, and within the time required by law for the commencement of a suit against the executors of the estate. Whether the cause of action arose at the time the waivers were executed or at the time the appellants were entitled to receive the notes unimpaired in value at the termination of the trusteeship, which was prior to the maturity of the notes, is immaterial, for the reason that there existed a "trust in regard to the notes and their attendant security not cognizable by the courts of common law," to the enforcement of which the ten-year statute of limitation, Section 2316 of the Code of 1930, applies. Restatement of the Law of Trusts, Section 198, Subsection (e); Calhoun v. Burnett, 40 Miss. 599; Cooper v. Cooper, 61 Miss. 676; Cummings v. Oglesby, 50 Miss. 153; Hook v. Bank of Leland et al., 134 Miss. 185, 98 So. 594. Notwithstanding that the ten-year statute of limitation was held applicable in the Hook's Case, supra, on other grounds, the courts also responded to the contention that the complainant had a remedy at law by saying that Mrs. Hook had only the beneficial or equitable interest in the bank stock involved, the same appearing on the books of the bank in the name of her guardian. Likewise, in the case at bar, the appellants held only the equitable and beneficial interest in the lien of the deed of trust which was waived and the value of which was thereby destroyed, since no formal assignment of such lien, or a proportionate interest therein, had been made to them, as such lien appeared of record in favor of the said Geo. A. Wilson.
From the foregoing views, it follows that the decree of the court below should be reversed and a decree rendered here against the executors of the estate for the face value of the notes in the sum of $30,000 and 6% accrued interest per annum since January 1, 1930.
Reversed and judgment here for the appellants.