O'Toole v. Hurley

Grant, C. J. (after stating the facts). Counsel cite many authorities in support of the following propositions: 1. Equity applies the statute of limitations by analogy. 2. Where the jurisdiction is concurrent, the statute of limitations is a bar in equity as well as at law. 3. In cases of frauds in trusts, the statute does not apply. 4. It does not apply to continuing and subsisting trusts. These propositions are well established. Their application affords the only difficulty. An early and leading case is Kane v. Bloodgood, 7 Johns. Ch. 90 (11 Am. Dec. 417). Chancellor Kent,- in that case, in an able and exhaustive opinion, reviews the authorities. After reviewing them, and stating the well-established rule to be that the statute of limitations is a good plea in equity as well as at law, he says: “A pure plea of the statute is no bar where there are circumstances stated in the bill which take the case out of it, as an offer to account, an acknowledgment of the debt, a promise to pay, or to do what was right and just, or a promise to pay when assets came to hand, unless the plea be accompanied with an averment or answer destroying the force of these circumstances;” citing several authorities. He also says: “Lord Manners intimated in Barrington v. O’Brien, 1 Ball & B. 178, that to persuade a party not to prosecute, .by holding out promises until the debt is barred by the statute, was a fraud, and that a plea of the statute ought not to be sustained.” The authorities make a distinction between a trust constituted by the act of the parties and one founded on fraud or the like. In Baxter v. Moses, 77 Me. 481 (52 Am. [521] Rep. 783), the court quote with approval the proposition as stated in Wood on Limitations (section 215): “One who is not actually a trustee, but upon whom that character is forced by a court of equity only for the purpose of a remedy, may avail himself of the statute,” and add: “The doctrine could not be more satisfactorily stated.” In German American Seminary v. Kiefer, 43 Mich. 112, this court says, after stating the rule: “There is a well-understood exception, in the case of actual trusts, founded on and resting upon the mutual confidence of the parties.” Where a receipt was given for notes for collection, the proceeds to be applied on other notes given by the plaintiff, and to pay over or account to him for the balance, held, that “the receipt established the relation of principal and agent in respect to the collection and disbursement of the moneys, which could only be changed to the relation of debtor and creditor by a demand,” and that the statute did not apply. Kimball v. Kimball, 16 Mich. 211, 219. The relation between these parties was one of trust, and very similar to that of partners. The proper remedy is in equity, for an accounting. No obligation to pay existed until the Hurleys had settled the business of the concern, the Joy litigation was ended, and that debt paid. It was their duty to change the relation from trustee and cestui que trust to that of debtor and creditor, by rendering an account. They aver in their pleas and answers that they have rendered no account. Their duty to account is not denied. It would be' a harsh rule to apply in this case that complainant is barred by the statute or by laches, if it be true that he was lulled to sleep by the representations of the Hurleys. For years they received the entire proceeds of the business and of the sale of the vessel, and kept the books. It was their duty to account. Whether their excuses for rendering no account amounted to a fraud will depend upon the proofs. Whether complainant is guilty of laches in sleeping upon his rights without showing excuse, under the doctrine in Miles v. Vivian, 25 C. C. A. 212, 213, 79 [522] Fed. 853? and authorities there cited, will also depend upon the proofs. Upon this point, see Kobogum v. Jackson Iron Co., 76 Mich. 498; Compo v. Jackson Iron Co., 49 Mich. 39. As to the separate plea of the administratrix, it- is sufficient to say that the estate is not closed. A discovery and accounting are asked. The result may show that there is no money claim to be presented to the commissioners. All the books and accounts are in the hands of the defendants, and they have withheld all knowledge from complainant. Without a discovery and accounting, he could not make out a claim to present against the estate. In such case equity is the proper forum. Possibly complainant may be barred by laches, but that will depend upon the proofs-. We think the court was right in overruling the pleas. When the proofs are before the court, the rights of the parties can be determined according to the rules of law and equity. Decree affirmed, and case remanded for further proceedings. The other Justices concurred.