Fidelity Insurance, Trust & Safe Deposit Co. v. Nelson

The opinion of the. court was delivered by Fullerton, J. This is an action brought to recover upon a promissory note, and to foreclose a mortgage given to secure the same. The note and mortgage in suit were executed and delivered by the appellants to the Solicitor’s Loan & Trust Company, a corporation, which, in turn, for a valuable consideration, assigned the same to the respondent. The defenses set up are almost wholly technical. It is not disputed that a large sum (all that the respondent claims, in fact) is justly due and owing upon the note and mortgage, but it is claimed that the respondent did not sufficiently prove its legal capacity to maintain the action. While some thirty-one assignments of error have been made, they can all be grouped under a few general heads; and it is in this manner we shall proceed to consider them, without making reference to the specific assignments. < 1. The respondent was incorporated by a special act, and certain acts supplemental thereto, of the legislature of the state of Pennsylvania. It sought to prove its due incorporation by producing a copy of these acts, duly authenticated under the great seal of that state. It is contended that this was insufficient, because it was not [342] shown that the legislature of that state had constitutional power to pass a special act of incorporation. The argument is that, because our own constitution prohibits our legislature from creating corporations by special acts, we must presume, in the absence of a showing to the contrary, that the constitution of Pennsylvania is the same, and hence the act relied upon is unconstitutional. Gunderson v. Gunderson, 25 Wash. 459 (65 Pac. 791), is cited as maintaining this principle. We did say in that case that, in the absence of a showing to the contrary, we would presume that the laws of a sister state were the same as our owU, but that is not the present case. Here there is proof of a law of the sister state, and, if we were to indulge in presumptions at all, we would presume that it was passed with all due formalities, is within the constitutional powers of the legislative body which passed it, and is a valid and existing law, rather than presume that, because our constitution prohibits such law, the Pennsylvania constitution must likewise do so. By the constitution of the United States each state must give full faith and credit to the public acts, records, and judicial proceedings of every other state; and it would not be doing so to ignore a statute of a sister state, proven wdth the due formalities required by our own laws, merely because such an act could not be passed under our own constitution. 2. Among the powers conferred upon the respondent by the act incorporating it is the power to receive, hold, and manage trust estates. From the evidence it appears that one John Gibson died testate in Pennsylvania, leaving a large amount of property, which he devised to three trustees by name, “and their successors,” to manage and dispose of according to certain directions contained in his will. One of the trustees named refused to qualify as [343] such, and the trust was assumed by the remaining two. Of these, one never took any active part in the manage^ ment of the trust estate, and the burden thereof was actually carried by one. After several years the trustees qualifying petitioned the orphan’s court of Pennsylvania county to he relieved of their duties under the trust, reciting in their petition the foregoing facts, and the further facts that the trustee having the estate actively in charge was, owing to ill health, no longer able to perform the duties required of him in the management of the estate, and that the other did not desire'to take upon himself the active management. They prayed that they he discharged of the trust, and that the respondent he appointed in their place and stead. All parties in interest appeared in the orphan’s court and consented in writing that the petition he granted, whereupon the court ordered and decreed that the respondent “he appointed trustee under the trusts of said will, in the place and stead of the said” petitioners, and further ordered that the petitioners be discharged as such trustees on paying over, transferring, and assigning to the respondent all the property in their hands belonging to the estate. While it appears that the respondent accepted the trust, and entered upon hs active management as sole trustee, it does not appear that any subsequent order was entered discharging the old trustees, and from this it is argued that the respondent is not shown to he the sole trustee, and cannot maintain this action without joining its co-trustees. It is evident, however, that the respondent and the persons originally named as trustees did not become co-trustees under the order of the court. The respondent was appointed in the “place and stead” of the original trustees, not to act jointly with them; and, if [344] it is not the sole trustee, it is not a trustee at all. ISTor do we think the order can he construed not to he immediately operative. The phrase “discharged as trustees”, in the concluding part of the order, evidently means discharged from liability under the trust, rather than from the active performance of it. But more than this, it appears that the respondent entered upon the performance of the duties of the trust immediately after this appointment, and has continued in the performance of those duties, acting at all times as sole trustee, for more than twenty years, without question as to its right by any of the parties interested in the trust estate. This alone is sufficient evidence of right. Certainly no one interested in the trust estate could raise this question at this late day, and a stranger thereto ought not to be permitted to do so in order that he may defeat the collection of a just debt owing by him to the trust estate. 3. Another reason urged for reversal is that the respondent cannot maintain an action as trustee within this state. Strictly speaking, perhaps, a trustee deriving his powers from statute or judicial appointment cannot, as of right, maintain an action in courts outsidé of the jurisdiction of his appointment, and the tendency of the courts in earlier times was to refuse to entertain such actions. It may be true, also, that this privilege is even now generally denied to executors and administrators. But this court has, in common with many other courts, adopted a different rule with reference to certain classes of trustees, such as receivers, assignees, and like officers, and permit these to maintain actions when to do so does not interfere with the rights of local creditors pursuing their remedies in the local courts. Whitman v. Mast, 11 Wash. 318 (39 Pac. 649, 48 Am. St. Rep. 874) ; Happy [345] v. Prickett, 24 Wash. 290 (64 Pac. 528). See, also, for the general rule, Iowa & California Land Co. v. Hoag, 132 Cal. 627 (64 Pac. 1073), and cases there collected. The privilege is extended to these officers on the principle of comity and there would seem to he no just reason for making a distinction between them and a trustee having the powers possessed by the one before us. As no local creditor is affected, we think the right of action should not be refused. 4. Some question is made as to the validity of the assignment from the original mortgagee to the respondent, it appearing that the name of the respondent was not inserted in the blank form of assignment used until sometime after the transfer was actually made. As the note and mortgage were actually paid for and delivered, it would seem that in a court of equity a showing of a failure to make a formal indorsement of the papers ought not to be fatal to the right of the purchaser to recover thereon; but, be this as it may, it was shown by the uncqntradicted testimony, that the respondent’s name was afterwards inserted in the blanks with the express consent of the assignor. If title did not fully pass by the sale and delivery, it did do so by the latter transaction. The judgment is affirmed. Be avis, O. J., and Mount, Anders and Dunbar, JJ., concur.