Rollestone v. National Bank of Commerce

RAGLAND, J. This is an action in equity to enforce a trust in personal property and compel an accounting. The defendants are the executors of the will of John T. Milliken, deceased. The petition alleged that “in the early part of 1906, the said Milliken stated to plaintiff that he would set apart and carry as trustee for plaintiff, until such time as it could be resold, 10,000 shares of the said 600,000 shares of the stock so purchased at seventy-five cents per share as aforesaid, and would pay plaintiff the dividends and profits therefrom, plaintiff to repay the said Milliken *65 the purchase price of seventy-five cents per share out of the dividends or out of the proceeds of sale thereof.” It next set out in full two letters, hereinafter quoted at length, one of which was written by Milliken. This part of the petition, by intendment at least, amounted^to an averment that Milliken declared that he was carrying Rollestone for 10,000 shares of stock as he had agreed. It next alleged that Milliken received certain dividends on the 10,000 shares; that he sold the stock on or about March 1, 1915, at four dollars per share; that no part of the proceeds of the sale of the stock “so held by Milliken as trustee for plaintiff, and no part of the said dividends so received by said Milliken as trustee for plaintiff, as aforesaid, were paid over to him by said Milliken, or by the defendants, his executors,” but that said sums had been mingled by Milliken with his own property and assets and were then in the possession of his executors as part of the asset of his estate. The prayer was for the enforcement of the trust and for an accounting. , The answer was a general denial and pleas of the five-year Statute of Limitation, the ten-year statute, and laches. The evidence on the part of plaintiff tended to establish the following facts: On January 1st, 1906, the Golden Cycle Mining Company, a corporation, with a capital stock of one million five hundred thousand dollars divided into shares of the par value of one dollar each, was operating a gold mine at Cripple Creek, Colorado. John T. Milliken was its president, and owned 595,000 shares of its capital stock. Plaintiff, Rollestone, was treasurer, but did not own any of its stock. He was also cashier and vice-president of the bank of Victor at Victor, Colorado. Milliken was also president of the Milliken-Helm Commission Company of St. Louis. He was a man of great wealth, but was still pursuing with zest the fascinating game of piling up additional millions. Among other activities he *66 was extensively engaged in speculating in mines and in oil and mineral lands and leases. Colorado afforded in part the field of his operations, and here many of his most important transactions were effected through Rollestone or with his assistance. With respect to such matters their relations were intimate and confidential. In January, 1906, Milliken, with the assistance of Rollestone, purchased an additional six hundred thousand shares of the capital stock of the Golden Cycle Mining Company at the price of seventy-five cents per share. This purchase gave him control of the company, and eliminated a rival faction which had been trying to obtain the control. Shortly after the acquisition of the additional stock by Milliken he said to plaintiff in substance : “Rollestone, you have been better to me than a brother; I want to carry you for a block of this stock. Now you can have whatever amount you want at what I paid for it, seventy-five cents per share.” This statement was made in the Bank of Victor and in the presence of T. C. McDonald who was assistant cashier of the bank and also assistant to Rollestone as treasurer of the Golden Cycle Mining Company. In these capacities he was present at many of the conferences between Milliken and Rollestone. In reply to Milliken’s offer to carry a block of the stock for him Rollestone said he would accept 10,000 shares of it. , Soon after the conversation at the Bank of Victor just referred to, the following letters were exchanged between Milliken and Rollestone: “St. Louis, Mo., May 17, 1906. “A. A. Rollestone, Esq., Victor, Colo. “Dear Mr. Rollestone: “There is some Cycle stock on the market. My friend Carter here bought, 3,000 shares yesterday, and my bookkeeper, Miss Ellicott, bought 1,000 shares the day before, a'l at 77 cents. “I will go in with you on .ioint account and buy all that is offered at that price, because I am satisfied that the stock is worth par and that we will realize twice that much out of it when I get through with my present plans. “Yours very truly, Jjío. T. Millikkn.” *67 “June 13, 190b. “John T. Milliken, Esq., 322 Pine Street, St. Louis, Mo. “Dear Mr. Milliken: “I have been over to Routt County for the past ten days, and on my return, found your letter of the 6th, telling me to mail Mr. Logan a check for six months’ interest, which I have done today. My recollection is that the rate of interest is eight per cent. “I also received your recent letter, regarding the buying up of Golden Cycle stock which is now on the market, on joint account. As you are going to be in Colorado before long, I think it best to wait until you can come out, and we will map out a plan. I have been thinking about your offer to carry me for a b’ock of Golden Cycle Stock, and if, out of the last purchase, you will increase my holdings to thirty thousand shares, I should like it. However, if this is too much, kindly let me know, as I do not wish to press the limit in any way. “Thanking you for your kindness, I remain, “Yours very truly, A. A. Rollestone, Cashier.” “St. Louis, Mo., June 16, 1906. “A. A. Rollestone, Esq., Victor, Colorado. “My dear Mr. Rollestone: “Your letter of the 13th inst. at hand'-, contents fully noted. I expect to be out some time the latter part of this month. “I do not see my way clear now to let you have more Cycle stock than I agreed to carry you for, namely, 10,000 shares, but I will join you in joint account in .buying up the floating stock as stated in a previous letter; however, I do not think there is any hurry about doing so until we know what is at 12,000 feet. If we open’the ore there I am well satisfied that I can market the mine and mill on the New York market for at least five millions of dollars. You see what the U. S. R. & P. common and preferred stock is selling for, also their bonds are bringing $102.00. We will have a mill that will be $1.50 a ton better than any property they own, and the Cycle mine is another asset. “I believe that our property will be worth more than theirs, and I feel confident that I will ultimately be able to unload the whole outfit at the price above mentioned. “Yours very truly, Jno. T. Milliken.” Iii the summer or early fall of 1907, a little more than a year after the letters just quoted were written, Milliken was at Colorado Springs. In the course of a conversation which took place between him and McDonald at that time and place, with reference to some leases, Milliken said: “Mr. McDonald, I want you to make some money out of these leases, and I want you and Eollestone to make some money, especially Eollestone. I am carrying him now for ten thousand shares of capital stock at seventy-five cents that will make him a fortune.” *68 Milliken seems never to have disposed of any of the Golden Cycle Mining stock that he acquired from time to time until March 11, 1915, when he sold his entire holdings, amounting at that time to 1,431,623 shares, at $2.66 2/3 per share. He received dividends on the stock from 1910 to 1915 inclusive, ranging from three per cent to ninety-four per cent of the par value. From many letters written by Milliken to Rollestone from 1906 to 1911 it abundantly appears that the cordial relation between the two remained unbroken during that time and that Milliken was all the while availing- himself of Rollestone’s services in the capacity of confidential agent. During the summer of 1911, however, Milliken, who had also acquired control of the Bank of Victor, discharged Rollestone from the services of both, the bank and the mining company. What prompted Milliken to dismiss Rollestone from these positions is not disclosed by the record. The latter when let out was wholly without means. He first went to Denver where he remained a time; he next made a trip to Europe, and then to South Africa. Returning to this country after a year or so, he went to Oklahoma seeking to get into the oil business. He was residing there at the time he instituted this suit. On October 1, 1912, one E. J. Bougliton as attorney - for plaintiff wrote Milliken the following letter: “Cripple Creek, Colo., Oct. 1, 1912. “John T. Milliken, Esq., St. Louis, Mo. “Dear Sir: “Mr. A. A. Ro1 lesione represents to us the following statement of facts: , “Early in the year of 1906 he was treasurer of the Golden Cycle Mining Company, of which you were then, as now, the president. At that time you had a controversy with certain minority shareholders represented by Mr. Carlton and Mr. Campbell, whose stock you desired to purchase at 75 cents a share. For this purpose you asked Mr. Rollestone to procure you a loan from the Golden Cycle treasury of $283,000. Mr. Rollestone arranged the loan for you and with the money you purchased the minority stock at the price mentioned, depositing the stock certificates thus acquired as security for the loan. Later the loan and securities were transferred to a bank in St. Louis. In consideration of Mr. Rollestone’s services to you in this behalf you undertook to carry for Mr. Rollestone as many shares of the stock thus purchased as *69 Mr. Rollestone desired, at the purchase price of seventy-five cents per share. Mr. Rollestone indicated that he desired you to carry for him 10,000 shares of the stock, to which you agreed. On the 13th of June, 1906, Mr. Rollestone wrote to you requesting you to carry 25,000 shares for him instead of 10,000. You replied by letter over your signature, June 16, 1906, that you did not see your way clear to carry him for more than the 10,000 shares originally named by him and which you had agreed to carry him for. You added in this letter that you would, however, join him in buying up the floating stock, but that there was no hurry about that until you could find out what was at ten hundred feet. You went on to state that if ore was opened you thought you could market the mine and mill on the New York Market for ¡¡>5.000,000, concluding, ‘I feel confident that I will be able to unload the whole outfit at the price above mentioned.’ “Mr. Rollestone represents that since the date of the correspondence referred to the matter has rested. He now desires, however, to take up the 10,000 shares of stock, which you are holuing for him as trustee under your agreement, together with the accumulated dividends thereon, from which, of course, you may subtract the original purchase price of seventy-five cents per share. In other words, Mr. Rollestone has requested us to make demand of you that you turn over to him 10,000 shares of the stock of the Golden Cycle Mining Company as per your agreement, together with the accumulated dividends thereon since the date of agreement, less the sum of $7,500, representing the original purchase price of the stock. “Will you be kind enough to let us know as soon as possible what your intentions are with respect to a compliance with the request herein made, as in case of a refusal upon your part we are instructed to commence action immediately. “If your desire a consultation in the near future either with Mr. Rollestone or with ourselves about the matter referred to herein, we will be very glad to accommodate you in that respect by calling upon you either here, at Colorado Springs or Denver if you are going to be in any of those places in the near future. “Very sincerely yours, Edwakd J. Boughton.” Milliken ignored the letter, and no further demand was made npon him for the stock or an accounting. The matter thus rested until his death, which occurred February 4, 1919. The assets of his estate according to the inventory filed in the probate court amounted to $7,155,-319.25. No evidence was offered on the part of defendants. The court found the issues for'the plaintiff, and that upon an accounting there was due him the sum of $57,147.331/i¡. Judgment was .rendered accordingly and ordered certified to the probate court. Defendants bring the case here on appeal. *70 Completely Declared Trust. I. (1) The first question presented on the record is whether the declarations of Milliken constituted a completely declared, that is, executed, trust with respect to the 10,000 shares of the Golden Cycle Mining Company's stock. It is said that a trust is executed when the trustor has done everything which could have been done, the character of the property comprising the trust being considered, to transfer the property to the trustee in such mode as will be effectual to pass title. Where, however, he selects himself as trustee, a mere declaration to that effect and of the uses upon which as trustee he holds the property is all that is necessary to effect a completed trust. [In re Soulard's Estate, 141 Mo. 642.] Appellants insist that Milliken `s statements, if indicative of a trust at all, constitute nothing more than a mere promise to hold in trust in the future. His first statement, that he would carry Ro1leston~ for whatever amount of the stock the latter wanted, it must he conceded, was but an offer of future performance. His next statement with respect to the same subject-matter was contained in his letter of June 16, 1906, as follows: "I do not see my way clear to let you have any more capital stock than I agreed to carry you for, namely, 10,000 shares." This should be read in connection with Rollestone `s letter to which it was a reply, and in the light of the facts and circumstances which were evidently in the minds of both parties at the time. Mull-ken's offer in the first place was to carry Rollestone for whatever amount of the stock he wanted, and in response to that offer Rollestone had expressed a desire to be carried for 10,000 shares. When lie wrote Milliken on June 13, 1906, he referred to Milliken's original offer and requested that his holdings be increased to 30,000 shares. Now the evidence is explicit that he then had no holdings at all unless Milliken was holding the 10,000 shares for him. it is evident therefore that at least Rol- *71 lestone understood tliat Milliken was carrying him for 10,000 shares, and Milliken’s statement in response to Eollestone’s request for additional shares, while expressing in direct terms a refusal to grant the request, seems to imply that he was at that time carrying him for 10,000 shares as he had agreed to do. The third declaration by Milliken, the- one made to McDonald in 1307, was plain and unequivocal: “I am carrying him [Eollestone] now for ten thousand shares of capital stock at seventy-five cents that will make him a fortune.” Prom the three"" declarations it appears, therefore, that Milliken not only promised Eollestone that he ivould carry him for 10,000 shares of stock at seventy-five cents a share, but subsequently declared that he loas so .carrying him. Particu~ar Shares. (2) It is next contended that as the evideui.ce does not show that any particular portion of the stock was set apart for Rollestone and a certificate issued therefor, the alleged trust must fail for lack of a definitively ascertained subject. But it clearly appears from Milliken's statements that he was carrying IRollestone for 10,000 shares of the capital stock of the Golden Cycle Mining Company. Now Milliken at that time had more than a million shares standing in his name on the corporation's books, all of which were exactly alike in kind and value. There was no earmark by which any one of them could be distinguished from the others, so as to give it additional value or importance. They were like grain of a uniform quality, wherein one bushel is of the same kind and value as another. [Caswell v. Putnam, 120 N. Y. 153, 157.] The words "ten thousand shares of capital stock" embodied therefore an accurate description of definite property rights in the corporation. A certificate of the same number of shares would have evidenced nothing more. [Richardson v. Shaw, 209 U. S. 365.] Appellants contention under this head is disallowed. *72 Terms *71 (3) It is further claimed by appellants that Mil-liken’s statements were ineffectual to raise the trust al *72 leged because tbe terms thereof were not sufficiently declare¿h It is argued that Milliken’s statements amounted to nothing more than an executory agreement to sell Rollestone the stock on credit at seventy-five cents a share, or, possibly, to a promise to give him the dividends and profits, if any, that might be realized upon a re-sale. But his statement to McDonald in 1907, “I am now carrying him for ten thousand shares of capital stock at seventy-five cents,” when considered in connection with his previous declarations and in the light of all the attending facts an,d circumstances, and particularly with reference to the fact that up to that time no stock had ever been transferred to Rollestone in such a way as to invest him with the legal title, must, be regarded as equivalent to his saying, “Ten thousand of the six hundred thousand shares of stock that I bought at seventy-five cents a share I hold for Rollestone and I am extending him credit for the money that I advanced to pay for them.” In other words, it wás a declaration on the part of Milliken that ten thousand shares of the stock were Rollestone’s, subject to his own right to be reimbursed for what he had paid for them, either by Rollestone or out of the proceeds of the sale when the stock was sold. This was a sufficient declaration of a trust. “When a person sui juris orally or in . writing explicitly or impliedly declares that he holds personal property in prmsenti for another, such declaration constitutes him a trustee, in an express trust for such other, of the property, and in such case the beneficial interest in the property is considered as vested in the cestui que trust, and he is entitled to the aid of a court of chancery to enforce the trust.” [Tyler v. Tyler, 25 Ill. App. 333, 339; 1 Perry on Trusts (6 Ed;) sec. 86.] Milliken having constituted himself a trustee with respect to the stock, it was not necessary in order for his declaration to have raised an enforcible trust that he should have further declared the duties that devolved upon him as such trustee which were implied by *73 law. By these implied terms of the trust he was hound, when it was terminated by a sale of the stock, to account to Rollestone for the proceeds of the sale and for the dividends he had received, after deducting the purchase price. II. The proof that Milliken made in substance the oral statements heretofore set out, with reference to carrying Rollestone for 10,000 shares of the stock of the Golden Cycle Mining Company, rests solely in the testimony of the witness McDonald. Appellants strenuously urge that it lacks the cogent and convincing quality required in cases of this kind to establish a trust. In this connection they point out that McDonald was discharged as assistant cashier of the Bank of Victor by Milliken in 1911; that he voluntarily came from his home in Denver, Colorado, to- St. Louis, to testify for Rollestone in this case; and that after a lapse of nearly fifteen years he claimed to be able to recall the substance of statements made by Milliken with reference to a subject-matter in which he, the' witness, had no interest. They further suggest that the testimony itself, so far as it has any bearing on the existence of a trust, was as to mere loose declarations. For all of these reasons, they say that the proof is not sufficient to support an affirmative finding with respect to what they characterize as an unusual and extraordinary transaction. McDonald’s testimony, including that given upon a rigid cross-examination, embodies a straight-forward narration of the occurrences with respect to which he testified. It involves no contradiction and evinces no characteristic that tends to cast suspicion upon the integrity of the witness. Nor do we regard any of the facts or circumstances disclosed by the testimony as having impaired McDonald’s trustworthiness as a witness. The circumstances of his discharge as assistant cashier of the Bank of Victor were simply these: He notified Milliken in December that he would stay no longer than the first of the year and Milliken thereupon discharged *74 him. He testified that he was not in the least disgruntled by Milliken’s action because he was anxious to get away. If he had in fact ever entertained an ill-feeling for Milliken there was not the slightest indication of it while he was on the witness stand, in either his language or his bearing. That plaintiff was enabled to induce him to come to St. Louis and testify at the triál instead of giving’his deposition at Denver is, in our opinion, without significance. The statements to which McDonald testified cannot be characterized as “loose” or “casual.” Certainly those with respect to Milliken’s offer to carry Rollestone for whatever amount of stock he wanted at seventy-five cents a share and the latter’s acceptance of 10,000 shares would not fall within such category. The later statement, according to the testimony, was made while McDonald was negotiating with Milliken for leases for himself and Rollestone. While the subject of leases was under discussion, and in connection with the transaction then in hand, Milliken said: “McDonald, I want you to make some money out of these leases and I want you and Rollestone to make some money, especially Rollestone. I am carrying him now for 10,000 shares of capital stock at seventy-five cents that will make him a fortune.” McDonald not only knew of Milliken’s holdings in the Golden Cycle Mining Company and of the circumstances under which, he acquired 600,000 shares of its stock, but was himself a business man and entirely familiar with the implications of Milliken’s words that he was carrying Rollestone for 10,000 shares of the stock at seventy-five cents a share. There is no reasonable probability, therefore, that he misunderstood him, or has misquoted his language, if he is telling the truth. Nor is it remarkable that he is now able to recall the substance of the statement. He was intimately associated in a business way with both Milliken and Rollestone at the time it was made and for a number of years afterward; he knew that after the breach between the two, Rollestone de *75 manded the stock and Milliken failed to deliver it; and, as he says, “he wondered why.” The dividends and profits accruing from ten thousand of the shares of stock that Milliken purchased in 1906 and sold in 1915 exceeded $40,000. Viewed after the event, the assertion that he was during that period carrying Rollestone for that many shares at what it cost him would seem to betoken such generosity on Milliken’s part as to be unbelievable. But it must be borne in mind that at the time Milliken offered to carry Rollestone for a block of the stock and at the time he stated that he was carrying him for 10,000 shares at seventy-five cents a share the investment was a speculation pure and simple. There were no certain assurances that losses would not be garnered rather than profits. In addition to that fact the business relations of the two men were close; Mil-liken, as disclosed by his letters, in connection with his own speculations on the grain market, initiated, conducted and financed deals for Rollestone; he evidently regarded Rollestone, possibly because of his bank connection, as a valuable man for his purposes; and it is clearly inferable that instead of paying him for his services he secured them by- keeping before Rollestone an ever-present lure of large speculative profits about to be realized. In view of the particular services rendered by Rollestone in helping secure the 600,000 shares and in financing the deal, it would be a matter of no surprise that Milliken offered to let him share in a small way in the adventure. All the circumstances considered, we do not regard it as inherently improbable that Milliken, pursuant to an understanding with Rollestone, was “carrying” the latter for 10,000 shares of the stock, and that he so declared, as testified by McDonald. *76 Laches *75 III. (1) Appellants abandon here their pleaded defenses of the Statutes of Limitation. The only question that remains to be considered is that of laches. It is said that Milliken by ignoring Boughton’s letter of *76 October 1, 1912, repudiated the alleged trust; that there-after plaintiff stood by and silently acquiesced in Milliken’s drawing and appropriating the dividends and made no demand for an accounting, even when the stock was sold in 1915, but waited four years longer and until after Milliken’s lips were closed by death. It is insisted that there was no excuse for plaintiff’s failure to assert his alleged right during the lifetime of Milliken, and for that reason he should be precluded from doing so now. » We do not regard Milliken’s silence after the receipt of Boughton’s letter as a repudiation of the trust asserted therein; it cannot at least be considered such an unequivocal repudiation as to have required immediate action on the part of Rollestone unless he intended to abandon his claim. It was no doubt Milliken’s purpose, in any event, to retain control of the stock until such time as be could dispose of his entire holding, on the theory that a more advantageous sale could be effected in that way. Such plan was evidently within the contemplation of both parties when the 600,000 shares were acquired and 10,000' of them alloted to Rollestone by reading of Boughton’s letter, with its recitals of circumstances which are therein asserted to give rise to a trust, shows that its real purpose was to obtain from Milliken an express acknowledgment in some form of Rollestone’s ownership of the stock bather than to secure a delivery of it. It threatened suit only if Milliken denied the rights therein claimed on behalf of Rollestone, and this he did not do. Failing to get any further acknowledgment from Milliken, Rollestone quit the country to seek a livelihood elsewhere. He went to Europe and thence to South Africa; after remaining at the latter place a year or more he returned and enlisted in the activities of the oil fields of Oklahoma. ,It does not appear when he learned of the sale of the stock or of Milliken’s death. Laches in legal significance, is not mere delay, but delay that works to the disadvantage of another. It is *77 not like limitation a mere matter of time, but is principally a question of tbe inequity of permitting a claim to be enforced, this inequity being founded on some change in the conditions or relations of the property or the parties. [O’Day v. Realty Co., 191 S. W. 41.] No such inequity would be involved in granting the relief sought in this case. The only change that occurred that could be said to have any material bearing on the situation was the death of Milliken. But the claim now pressed against his estate is precisely the same as the one that was presented to him in his lifetime. Its bona fides cannot be questioned and the proof offered in its support is clear and convincing. In this contest Milliken’s death operates to put his estate at some disadvantage to be sure, but that is no reason for denying equitable relief against it when the right is clear. We concur in the conclusions reached by the chancellor who heard the cause nisi, as to both the law and the facts. The judgment is accordingly affirmed. All concur.