McGaughey v. Brown

OPINION. Cockrill, C. J. 1. Trust: Purchase «of trust es-1t a te by trustee. We must regard the proof in this case as establishing the fact that James A. Brown acted as the agent of James A. McGaughey in purchasing the lands in controversy and conveying them to his wife, the mother of the principal appellants. Brown was only the instrument used to convey the title from McGaughey, as administrator, to McGaughey’s wife, the consideration being paid by McGaughey. As MeGaughey expected to derive a benefit fr.im the lands through the right of his wife, the purchase was a violation of his trust. The policy of the law is to demand so strict an adherence to duty that no temptation to weigh self-interest against integrity can be placed in the trustee’s way. The fact that he may seek to evade the law rather than openly violate it by causing another to appear as the purchaser, can avail him nothing. Freeman Void Jud. Sales, sec. 33, and cases cited in notes; Davoue v. Fanning, 2 John. Chy., 252. Where he has a duty to perform as vendor, and takes an interest by the purchase, the inquiry is not whether there was or was not fraud in fact; the law stamps the act as fraudulent per se, and the purchase will be set aside at,the instance of the cestui que trust. McNeil v. Gates, 4l Ark., 264; Mock v. Pleasants, 34 ib., 63. 2. Admin-ms tra tor's purchase -for wife. The purchase of the estate in this case was a voluntary settlement by the administrator upon his wife, and a court of equity would have declared her a trustee for the heirs and creditors of the estate, and avoided the sale at once if any party interested had disapproved of it. But the sale was not absolutely void and the parties in interest who were sui juris had their election on being put in possession of the facts to disaffirm or allow it to stand. Jones v. Graham, 36 Ark., 383; Ives v. Ashley, 97 Mass., 198. Nearly twelve years were allowed to elapse from the date of the sale to the institution of this suit. The appellants who were the defendants below, denied all charges of intentional fraud on the part of McGaughey, and claimed to have been in the notorious adverse possession of the land from the date of the deed to Mrs. McGaughey in 1868, to the institution of the suit in 1879. There was no contest about the fact of possession during this period. McGaughey aud wife lived upon the farm, made it their home and put valuable improvements on it, claiming it as the land of the wife. She died in 1873, and McGaughey with the appellants, her heirs, continued in the occupancy until his death, a short time after the bill was filed. The appellees alleged these facts substantially in their bills, but contended that the statute of limitations had no application to the facts of the case. It is argued in the outset that this is not a suit for the possession of lands, and therefore that neither the act prescribing a limit of five years for actions against purchasers at judicial sale nor the general seven years statute is applicable. There is no mistaking ihe object of the bill. It seeks to establish title to the lands in the appellees; and that being accomplished, to reap the advantages that follows ownership, i. e., possession. The prayer is that the sale by the administrator to James A. Brown, and the conveyance by Brown to the administrator’s wife “may,'by proper orders and decrees, be set aside and declared void; that a master be appointed to take an account of the rents and profits; that said conveyances be removed as a cloud upon the title of plaintiffs (appellees) to the lands aforesaid, and that they be put into the possession of the same.” 3. Chan-. eery jurisLegal1 with relief.tab,e It was competent for equity to grant the full measure of A A ** ° re^eI- It frowns upon a multiplicity of suits, and when the appellees had successfully invoked its aid to'invest them with the legal title, it would not then remit them to an action at law to recover possession; but having taken jurisdiction of the case for its own exclusive purposes, it would retain the cause to administer the legal after the equitable relief. 4.statute of Limitations in It is long established that “courts of equity in cases of , concurrent lunsdiction consider themselves bound by the statute of limitations which govern courts of law in like cases, and this rather in obedience to the statute than by analogy.” Farman v. Brooks, 9 Pick., 212. The evil resulting from delay in the enforcement of legal and equitable rights is the same, and the courts of equity take the same limitation for their guide that governs law courts in analogous cases. This is illustrated in this court by the application of the statute governing actions to recover real estate to a suit to foreclose a mortgage (Ringo v. Woodruff, 43 Ark., 469), as well as to remove a cloud from the title, as in Conway v. Kinsworthy, 21 Ark., 9. 5. Same: nusts.ainst It is argued further that Mrs. McGaughey and her heirs, aIter her death, held the land in trust for the heirs of Fountain Brown, and that the statute will not bar a trust. Express and positive trusts are certainly within the rule contended for. But this doctrine is subject to two qualifications, namely, that no circumstances exist to raise a presumption of the extinguishment of the trust, and that no open denial or repudiation of the trust is brought home to the knowledge of the parties in interest which requires them to act as upon an asserted adverse title. Angell on Lim., ; Wood on Lim., 212-13; Harriet v. Swan, 18 Ark., 495. 6. Sa“k: .As &gd.insti adminis The rule with the exceptions was clearly stated by Judge Fairchild in Brinkley v. Willis, 22 Ark., 6, and the benefit of the statute was denied an executor, ten years after his breach of duty, because the trust was still subsisting — the executor not having been discharged therefrom by the probate court. But this does not help the appellee’s case, for if we should regard James A. McGaughey as in possession of the estate in his own right, still the facts remain that he was regularly discharged from the trust by the probate court in 1870, and the lands were held adversely for more than seven years thereafter. The following language used in Clark v. Boorman’s executor, 18 Wallace, 493, is applicable to this case: “ It may be conceded that so long as a trustee continues to exercise his powers as trustee in regard to property, that he can be called to account in regard to that trust. * * * But when he has closed up his relation to the trust and no longer claims or exercises any authority under the trust, the principles which lie at the foundation of all statutes of limitations assert themselves in his favor, and time begins to cover his past transactions with the mantle of repose.” But trusts which arise from the operation of law, that is constructive trusts, are subject to the operation of the statute. The possession of Mrs. McGaughey and her heirs falls under this class, and it was incumbent upon the appellees to assert their rights within the period limited by the statute after knowing the facts in relation thereto. Achhurst’s Appeal, 60 Penn., 290, 316. 7. Same: b"sf?aíd.ed They seek to evade the force of the statute by contending that the appellants’ title originated in a fraud which no time will bar. To warrant this conclusion not only must the trust be established, but the fraud must have been successfully concealed from the knowledge of the beneficiaries. Wood on Lim., sec. 275, et seq.; James v. James, 41 Ark., 301; Geisreiter v. Sevier, 33 ib., 534; Meyer v. Ruetmans, 28 ib., 145. In Marsh v. Whitmore, 21 Wall., 178, the court quote approvingly this language from Badger v. Badger, 2 Wallace, 95: “The party who appeals to the chancellor in support of a claim, where there has been laches in prosecuting it or long acquiescence in the assertion of adverse rights, should set forth in his bill specifically what were the impediments to the earlier prosecution of his claim; how he came to be so long ignorant of his rights and the means used by the respondent to fraudulently keep him in ignorance, and how and when he first came to a knowledge of the matters alleged in his bill.” Neither in the original nor any of the several amended bills in this case is any reason given for not beginning this suit earlier; and no concealment of any fact by the administrator or any one acting with him, is charged. The fact that the administrator had caused the lands to be bought in for his wife was known to the heirs of Brown’s estate from the outset. James A. Brown, one of their number, who was the nominal purchaser at the sale, wrote to the absent members of the family advising them of the fact and explaining that it was believed to be the only way by which the younger children could be maintained and educated, McGaughey having agreed to do that. It remained a matter of family history with the Browns, and McGaughey talked about it with one or more creditors of the estate. The fraud charged upon McGaughey in preventing competition in bidding at the sale is not sustained by the proof, and as to his accounts as administrator, there was nothing at any time to prevent the fullest investigation into all the transactions now complained of. The claims allowed in his favor by the probate court for the support and maintenance of the minor heirs of his intestate, were not proper allowances against the estate. But no effort at concealment either from the court allowing the claims or the parties in interest was made. The accounts were itemized with the utmost particularity; they were regularly presented for allowance and appear to have been acted upon with due deliberation by the court, and remained on file subject to the inspection of all concerned. All that is now shown in reference to these transactions could as readily have been ascertained at any time since the sale. Some of the illegal claims, in favor of the administrator, were allowed after the sale, and could in no event affect it. They were put in evidence by the appellees, doubtless, to show a fraudulent disposition on the part of the administrator. This is true, also, of the Embree judgment. No effort was made to show that this was not a valid claim against the estate to the extent of some $3,900, the amount the administrator paid upon it. This being true, no one could be heard to complain of the administrator’s action in paying it off except creditors of the estate who had not received a pro rata upon their claims as great as was paid upon it. Ve do not wish to be understood as sanctioning the course of the administrator as to any of the acts complained of. But the statute prescribes a period of rest for such matters, and the parties in interest knowing, or in a position to know, all the facts,' have waited supinely until time has put a quietus upon the right to complain. Several of the heirs were minors when the sale was made, but more than three years had elapsed since the removal of the disability of the youngest,when the suit was brought and their rights are cut off. Chandler v. Neighbors, 44 Ark., 479. 8. same: W0*"M The statute of limitations protecting the purchaser at judicial sale makes no exception in favor of married women and the courts can make none. Pryor v. Ryburn, 16 Ark., 671; Gwynn v. McCauley, 32 ib., 97; Morgan v. Hamlet, 113 U. S., 449. This statute is a bar to Mrs. Price’s claim. 9. Same: admTnlstrator. Some of the creditors of the estate were brought into the litigation and sought to surcharge the administrator’s accounts upon the ground of fraud referred to. As the bill alleges the insolvency of the administrator’s estate and the worthlessness of his bond, we presume that their only serious design was to effect a re-sale of the lands for the balance due on their claims, and that the other matter was thrown in as inducement to that end. What has been said of the effect of adverse possession of the lands in reference to the rights of the Brown heirs, is true also of the creditors’ claim to the lands as assets to pay their debts. The statute was set in motion, however, against their right to have the accounts overhauled, from the time of their confirmation by the probate court, and it had run the full period before they sawfit to move. Hanf v. Whittington, 42 Ark., 491. Let the decree of the circuit court be reversed and set aside, and the case remanded with instructions to enter a decree for the appellants in accordance with this opinion ; to cause the receiver to pass his accounts, pay over the funds and be discharged, and for other proceedings that may be necessary in accordance with law and this opinion.