Nash v. Ingalls

SEVEKENS, Circuit Judge, having stated the case as above, delivered the opinion of the court. The gravamen of the amended bill consists of the charge that the defendant committed a breach of trust in neglecting to apply the proceeds of the sales of ear wheels and castings made to him, as receiver, by the plaintiff, in 187(5 and 1877, to the payment of the rent accruing on the leases mentioned in the preceding statement, and especially that he failed to pay from such proceeds the rent due to Butler on the lease of the latter to the railroad company, in consequence of which it is claimed the plaintiff lost the benefit of his own lease, and all tho improvements he put upon the premises on the faith thereof. In the circuit court the bill ivas dismissed upon the ground of laches on the part of the plaintiff in seeking a remedy for the wrong complained of. It is not sought by the plaintiff, in his bill, to recover special damages from the receiver for the consequences of the loss of the benefits of his lease or the loss of his improvements; but the object is to obtain an accounting by the receiver for the money remaining in his hands by reason of the alleged breach of trust, and a decree requiring him to pay it to the plaintiff. The failure of the receiver to apply the funds in his hands to the payment of the rent due on the Butler lease occurred as early as 1877, or early in the following year, for the proceedings taken hy the representatives of Butler on account of nonpayment of the rent were commenced on January 26, 1878; and it is as [648] Serted by the bill “that by reason of the said defendant’s failure, neglect, and omission to pay over the proceeds of said sales made to him in the said years of 1876 and 1877 to the holders of the leasehold obligations, in discharg'd of their debt, the said M. E. Ingalls was guilty of á breach of trust, and in equity became a trustee of the complainant for the amount of all moneys in his hands then belonging to the complainant.” In the nature of things, the complainant could not have been ignorant of the proceedings on the filing of the Butler petition; for they affected his own possession, and he was ousted by them. Indeed, the bill alleges nothing to show that he was not, at the time of its occurrence, aware that the breach he complains of was being committed. The law requires that, in order to relieve himself from the consequence of delay in seeking a remedy for a wrong, the party should have given reasonable attention to his own affairs, and he is •chargeable with knowledge of such facts as such reasonable attention would have afforded him. Foster v. Railroad Co., 146 U. S. 88, 13 Sup. Ct. 28, 36 L. Ed. 899. The statute of limitations in Ohio creates a bar to a suit for a cause of action like this after the lapse of 6 years. This suit was commenced June 12, 1896, — 18 years, at least, after the original cause of action accrued. But certain partial payments were made from time to time, the last of which was in the month of October, 1887, since which time there has been neither payment, nor written acknowledgment nor promise to pay, signed by the defendant, such as is required by the Ohio statute to keep the liability from being barred. In that state the distinction between legal and equitable forms of action is abolished, and the Matute of limitations applies as well to liabilities which were formerly enforced by suits in equity as to those which were the subjects of actions at law. But the plaintiff seeks to excuse himself from the operation of the statute as follows: He says that the trust set up by the bill was an express trust, and the suit was brought within the proper time after its repudiation. As an abstract proposition, the doctrine is correctly stated, where no other facts are stated which create a cause of action at an earlier date. But here a distinct violation of the trust is alleged to have occurred as early as the beginning of 1878, and this is the ground of the suit. The injury occurred at that time, and the cause of action immediately arose. The plaintiff had then the right to complain and seek redress. The object of the trust having been already defeated, it was open to him to sue for and recover the funds remaining in the hands of the trustee. If an accounting was necessary, that could have been demanded in his suit. His right to maintain such suit was no more perfect when he commenced the present suit than it had been for nearly 20 years before that time. Ho fact material to his right of action had occurred in the interval, and it would have been entirely competent for him to have maintained an action in the similitude of an action at law for money had and received at any time before it had become barred by the statute. There are several old cases in the early English chancery reports, in which it wgs declared in general terms that trusts were not within the statute. But later on the proper distinction was recognized and acted upon, ánd the distinction is this: That where the right was one purely of [649] equitable nature, and remediable only in tlie court of chancery, the statute does not apply; but, where the right is one upon which an action at law would lie, equity follows the law, and applies the statute to suits brought in that forum. In Kane v. Bloodgood, 7 Johns. Ch. 90, Chancellor Kent gave this subject prolonged consideration, and the authorities were fully examined. The deduction which he made from all of them was in accordance with the principles above stated. In Badger v. Badger, 2 Wall. 87, 94, 17 L. Ed. 836, Mr. Justice Grier, in delivering the opinion of the court, summarizes the doctrine thus: “Courts of equity, in cases of concurrent jurisdiction, consider themselves bound by the statutes of limitation which govern courts of law in like cases; and this father in obedience to the statutes than by analogy.” And see 2 Story, Eq. Jur. § 1520; Godden v. Kimmell, 99 U. S. 201, 25 L. Ed. 431; Wood v. Carpenter, 101 U. S. 135, 25 L. Ed. 807. Tiie reasons for the application of the statute to the contract of a receiver are the same as those which apply to the contract of any other party. In Seagram v. Tuck, 18 Ch. Div. 296,-a case much relied upon by counsel for appellant, — the suit was brought, not on a contract made by the receiver, but upon Ms liability to account to the court for a part of the assets which he had collected; and it was held that the cause of action did not arise until the passing of his final accounts, wherein he failed to charge himself with the item in question. It is settled that the defense afforded by the statute, as well as the defense arising from laches merely, may be taken by demurrer, where the facts stated in the bill show that the time within which suit should be brought has elapsed, and no circumstance is shown to indicate any valid excuse for not having brought it within that time. Hovenden v. Lord Annesley, 2 Schoales & L. 607; Badger v. Badger, 2 Wall. 87, 95, 17 L. Ed. 836; Lansdale v. Smith, 106 U. S. 391, 1 Sup. Ct. 350, 27 L. Ed. 219; Richards v. Mackall, 124 U. S. 183, 8 Sup. Ct. 437, 31 L. Ed. 396. The only reason assigned by the plaintiff for his delay is that the defendant, when called upon for a settlement, put him' off from time to time, “excusing himself by press of business from going into settlement, yet promising to do so, and to pay the remainder of said account which should be found due this complainant,” whereby the plaintiff was “delayed and deceived.” This was insufficient to affect the running of the statute. In Hume v. Beale's Ex'x, 17 Wall. 336, 21 L. Ed. 602, the plaintiff in that case, by way of excuse for delaying his suit, averred “that she called on Beale repeatedly to settle, and that he promised to do so, and that these promises induced her not to sue him.” But the supreme court held that this was too vague and general to avoid the bar of the statute of limitations. That was a much stronger case for relieving the plaintiff than the present; for the defendant was a lawyer, and the cestuis que trustent were women. But a short answer is that the statute which we are bound to apply' does not prolong the time for bringing suit on account of a mere verbal promise, however positive, and the plain implication from the language of the bill is that what passed was in conversation on a personal interview. The result is that the decree dismissing the bill was right, and it is accordingly affirmed.