Ashhurst's Appeal

• Decision Date: 23 February 1869
• Citation: 60 Pa. 290
• Parties: Ashhurst's Appeal — Estate of the Montour Iron Company.
• Court: Pennsylvania Supreme Court

60 Pa. 290

Ashhurst's Appeal — Estate of the Montour Iron Company.

Supreme Court of Pennsylvania.

January 15 and 16, 1869.

May 2, 1868.

February 23, 1869.

January 15th and 16th 1869.

Before THOMPSON, C. J., READ, AGNEW, SHARSWOOD and WILLIAMS, JJ.

Appeal from the decree of the Court at Nisi Prius: No. 38, to January Term 1865. In Equity.

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E. S. Miller and Meredith (with whom was W. F. Judson), for appellants.—A bill may be brought with two different aspects Bennett v. Vade, 2 Atk. 325; Lloyd v. Brewster, 4 Paige 537; Colton v. Ross, 2 Id. 396; Wilkins v. Wilkins, 1 Johns. Ch. R. 117; Rawlings v. Lambert, 1 Johns. & Hemming 458.

1. The paper of December 26th was not a purchase but a trust for creditors. If not that, 2, it was a fraud. As to 1st: Beans v. Bullitt, 7 P. F. Smith 221; Chaffees v. Risk, 12 Harris 432; Henderson's Appeal, 7 Casey 502. A trustee cannot manage for his own benefit: Ex parte Lacey, 6 Vesey 626; Aberdeen Railway v. Blaikie, 1 Macq. 461; Kimmell v. Geeting, 2 Grant 128; Hill v. Frazier, 10 Harris 320; Whichcote v. Lawrence, 3 Vesey 750; Michoud v. Girod, 4 Howard 555. The transfer of the lease was an assignment for the benefit of creditors: Lucas v. The Sunbury & Erie Railroad, 8 Casey 458. The debts provided for were those of the Montour Iron Company; the fact of others being joined with them as assignors will not prevent the instrument being an assignment for the benefit of creditors: McNutt v. Strayhorn, 3 Wright 269. In such assignments creditors are not purchasers: Knowles v. Lord, 4 Whart. 500; Foulke v. Harding, 1 Harris 245; Twelves v. Williams, 3 Whart. 485; McCrelish v. Churchman, 4 Rawle 36; Ludwig v. Highley, 5 Barr 132.

That the creditors were to release did not make them purchasers: Flanagin v. Wetherill, 5 Whart. 280. In Griffith v. Rogers, 2 Wright 382, the assignment was a mortgage, which is inconsistent with Driesbach v. Becker, 10 Casey 152. In cases of doubt the courts incline to construe an instrument an assignment, not a purchase: Seal v. Duffy, 4 Barr 278; Watson v. Bagaley, 2 Jones 165; McLellan's Appeal, 2 Casey 463. A trustee to obtain a good title to property at a sale which he could not control, must be under no duty to prevent the sale, and must not have encouraged it: Chorpenning's Appeal, 8 Casey 317; Meanor v. Hamilton, 3 Id. 140; Hamilton v. Wright, 9 Clark & Finn. 111; Cram v. Mitchell, 1 Sandf. Ch. 251; Tanner v. Elworthy, 4 Beav. 490; Ex parte James, 8 Vesey 346; Ex parte Bennett, 10 Id. 381. Cestui que trust may claim land purchased with trust-money: Pierce v. McKeehan, 3 W. & S. 280; Kauffman v. Crawford, 9 Id. 131; Hill on Trustees 522; Drysdale's Appeal, 2 Harris 537. With reference to the lapse of time, it is like a case at law of mutual accounts, where the last item is within six years: Hopkins v. Hopkins, 4 Strobh. 207; Vanhorn v. Scott, 4 Casey 316; McCoon v. Galbraith, 5 Id. 295. The time begins to run when the injury arises, although the cause existed long before: Gillon v. Boddington, 1 Car. & P. 541; Stout v. Kindt, 12 Harris 449; Lawe v. Harwood, Cro. Car. 140; Browne v. Gibbons, 1 Salk. 206; Gibbons on Limitations 67, 110; Whitehouse v. Fellowes, 9 C. B. 901; Bank of Hartford v. Waterman, 26 Conn. 324; Brinkerhoff v. Brown, 6 Johns. Ch 139. The length of time in equity to prevent a party from alleging a constructive trust, has not generally been held to be six years: Clegg v. Edmondson, 8 De Gex, McN. & G. 787; McDonald v. McDonald, 1 Bligh 335; Robinson v. Alexander, 8 Id. 374; Harcourt v. White, 28 Beav. 306.

Laches which would bar an individual standing by himself, will not bar a class: Whichcote v. Lawrence, 3 Vesey 750; Lister v. Lister, 6 Id. 632; Parkston v. Brewster, 14 Ala. 320; Co. of Undertakers v. Mackenzie, 8 Bro. P. C. 42-65.

R. C. Murtrie and G. W. Biddle (with whom was S. Dickson), for appellees.—A purchase by officers of a company is at most voidable: Canal Bridge v. Gordon, 1 Pick. 297; Angell & Ames on Corp. § 233 and cases cited. A trustee may purchase at his own sale for his cestui que trust: Ex parte Lacey, 6 Ves. 627; Ex parte Bennett, 10 Id. 385, 394, 400; Ex parte James, 8 Id. 348; Parkes v. White, 11 Id. 226; Campbell v. Walker, 5 Id. 681; Lister v. Lister, 6 Id. 632. After the relation has ceased a trustee may buy: Whichcote v. Lawrence, 3 Ves. 740; Fox v. Mackreth, 2 Brown's C. C. 400; Coles v. Trecothick, 9 Ves. 246; Beeson v. Beeson, 9 Barr 287; McGinn v. Schaeffer, 7 Watts 414; Clarke v. Law, 22 How. Pr. Rep. 426; Luff v. Lord, 10 Jur. N. S. 1248; Johnson v. Bennett, 39 Barb. 249; Olcott v. Railroad, 27 N. Y. (13 Smith) 567; Wentworth v. Lloyd, 32 Beav. 467; S. C. 10 H. of L. Cases 589; Railway Co. v. Magray, 25 Beav. 586; Dover v. Buck, 11 Jur. N. S. 580. There must be no laches on the party to set the sale aside: Story on Agency, § 210; 2 Story's Eq. § 1520; Smith v. Clay, note to Deloraine v. Browne, 3 Brown's Ch. Rep. 640; Wagner v. Baird, 7 How. 258; Read v. Read, 18 Beav. 398; Champion v. Rigley, 1 Russ. & Mylne; Ld. Selsey v. Rhoads, 1 Bligh N. S. 1; Gregory v. Gregory, Cooper's Cases 201; Bergen v. Bennett, Caines' Cas. 1; Campbell v. Walker, 5 Ves. 680; Chalmer v. Bradley, 1 J. & W. 59; Ex parte James, 8 Ves. 351; Webb v. Rorke, 2 Sch. & Lef. 672; Randall v. Errington, 10 Ves. 427; Parker v. White, 11 Id. 226; Roberts v. Tunstall, 4 Hare 257; Townshend v. Townshend, 1 B. C. C. 550, 554; Bonney v. Ridgway, 1 Cox 145; Andrew v. Wrigley, 4 B. C. C. 125; Collaw v. Hare, 2 R. & M. 675; Cholmondely v. Clinton (Sir T. Plumer, Eldon, C.), 2 J. & W. 190; 4 Bligh 4; Portlock v. Gardner, 1 Hare 594; Ex parte Hasell, 3 Y. & C. 622; Wedderburn v. Wedderburn, 4 M. & C. 13. Such trust can be enforced as to purchasers only against those acquiring the property with notice and without consideration: Sturges v. Morse, 3 De Gex & J. 1; Lewin on Trusts 560, 567; Beckford v. Wade, 17 Ves. 97; Hovenden v. Ld. Annesley, 2 Sch. & L. 633; Clegg v. Edmundson, 3 Jur. N. S. 299; Pennell v. Home, 3 Drew. 337; Pattison v. Hawksworth, 10 Beav. 375; Attorney-General v. Moor, 8 Id. 119. Presumptions are made by the court in absence of evidence to quiet possession: Eldridge v. Knott, Cowp. 215; Grenfell v. Girdlestone, 2 Y. & C. 682; Magdalen College v. Attorney-General, 3 Jur. N. S. 675; Jones v. Turberville, 2 Ves. Jr. 13. Acquiescence is presumed when one having a right sees another dealing in a way inconsistent with it and does not object: Duke of Leeds v. Amherst, 2 Phill. 123; Philippson v. Gatly, 7 Hare 523; Stafford v. Stafford, 1 De G. & J. 202; Jorden v. Money, 5 H. L. C. 185; Norway v. Rowe, 19 Ves. 158; Pendergast v. Turton, 1 Y. & C. 98; Ernest v. Vivian, 33 Law J. 513, 517.

As to the length of time. At most the trust is but by implication, and is barred at the end of five years: Act of April 22d 1856, § 6, Pamph. L. 532, Purd. 654, pl. 13. The distinction in equity as to the Statute of Limitations is, that possession for any length of time will not bar a trust created by act of the parties, but the statute as to a constructive trust will run from the time the circumstances making it are discovered: Hovenden v. Lord Annesley, supra; Clanricade v. Henning, 30 Beav. 195; Wentworth v. Lloyd, 32 Id. 466; Story Eq. Jur. § 1521 a.; Bruce v. Tilson, 25 N. Y. (11 Smith) 199; Whalley v. Whalley, 3 Bligh 1; Parham v. McCravy, 6 Rich. Eq. R. 140; Kane v. Bloodgood, 7 J. Ch. 90; Farnam v. Brooks, 9 Pick. 212; Pipher v. Lodge, 4 S. & R. 310; Green v. Johnson, 3 Gill & Johns. 389; Boone v. Chiles, 10 Pet. 223; Willison v. Watkins, 3 Id. 52; Hawley v. Cramer, 4 Cowen 712; Fleming v. Culbert, 10 Wright 498; Downey v. Garard, 12 Harris 52; Finney v. Cochran, 1 W. & S. 112; Webster v. Newbold, 5 Wright 482. But if the defendants were trustees of the real estate they could buy the personal estate: Prevost v. Gratz, 1 P. C. C. 373; Fisk v. Sarber, 6 W. & S. 18; Cadbury v. Duval, 10 Barr 272. Where the transaction is to effect a sale and value is paid by creditors, it will not be construed an assignment: Griffin v. Rogers, 2 Wright 382; York Co. Bank v. Carter, Id. 446; Fallon's Appeal, 6 Id. 235; Dubois's Appeal, 2 Id. 231. The bill makes a case of actual fraud, and relief cannot be obtained in any other aspect: Glasscott v. Lang, 2 Phill. 810; Price v. Berrington, 3 M. & Gor. 498; s. c., 7 Eng. L. & Eq. 254; Maguire v. O'Reilly, 3 J. & Lat. 224; Fenaby v. Hobson, 2 Phill. 255; Wilde v. Gibson, 1 H. L. C. 605: Luff v. Lord, 11 Jur. N. S. 51; Eyre v. Potter, 15 How. 42, 56; Fisher v. Boody, 1 Curtis 206. The directors could make an assignment for the company: Dana v. Bank of U. S., 5 W. & S. 223; Baird v. The Bank, 11 S. & R. 411; Gordon v. Preston, 1 Watts 385. The statute does not begin to run anew from investment of funds unlawfully appropriated: McCoon v. Galbraith, 5 Casey 295; Flemming v. Culbert, 10 Wright 498.

Judge STRONG delivered the following opinion at Nisi Prius, May 2d 1868: —

"The complainants are stockholders of the Montour Iron Company, a corporation formed in 1844, for the purpose of making and manufacturing iron. By the provisions of its charter, the capital stock of the company was divided into 18,000 shares, of which the complainants hold 3328. The bill alleges that the company has had no corporate meeting for several years; that there has been no pretence of an election for officers since the year 1860; that in all respects the stockholders have acted as if the franchises which the company held by its charter had been lost by non-user or abandonment, and that there are therefore no officers who can be called upon to assert the...