Currier v. Studley

• Decision Date: 08 April 1893
• Citation: 159 Mass. 17,33 N.E. 709
• Parties: CURRIER v. STUDLEY.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

159 Mass. 17

33 N.E. 709

CURRIER v. STUDLEY.

Supreme Judicial Court of Massachusetts, Suffolk.

April 8, 1893

Plaintiff and defendant associated themselves as partners in January, 1872, to buy and sell stocks and bonds. The seat was purchased with partnership funds in 1872, to facilitate the partnership business, but the membership was taken in defendant's name. The firm failed in April 1873, and defendant continued to be a member of the exchange until 1888, when he sold the seat for $14,000.

COUNSEL

Alfred Hemenway, for plaintiff.

Lewis S. Dabney and W.K. Richardson, for defendant.

OPINION

KNOWLTON J.

Although the seat in the stock exchange, at the time it was bought and for a long time after the dissolution of the partnership was not transferable, and could not be used or in any way made available except by the defendant's personal occupation of it, the plaintiff contends that it was property in which the firm had a beneficial interest that continued after the dissolution, and that when it was sold the proceeds were assets to be divided between the copartners. The defendant contends that it was a mere personal privilege, which could not be the subject of legal or equitable ownership in another, and that there was no resulting trust in favor of the firm. He also argues that, if there was a resulting trust, from the nature of the right and the use for which the seat was bought, the trust which would be implied would be an obligation to use it for the benefit of the firm during the life of the firm, and not an undertaking to continue to use it for the benefit of his copartner after the dissolution of the partnership. We do not deem it necessary to decide the questions arising in this part of the case, which are not free from difficulty, for we are of opinion that, if there was a trust enforceable in favor of the firm after its dissolution, this action is barred by the statute of limitations. The firm failed and ceased to do business in April, 1873. Although there was no formal settlement of the accounts between the partners, the report states that the determination of the matter in suit will settle the partnership affairs, and it fairly appears that for nearly 17 years from the close of the partnership business in April, 1873, until the last part of 1889, everything else relating to the partnership had been closed and treated as settled, and there had been no attempt by the plaintiff to have this seat disposed of or accounted for as a part of the firm's assets. It is well settled that suits between partners to obtain an account and settlement of the affairs of the partnership are subject to the statute of limitations. It is a general rule in such cases that, in the absence of an express contract in regard to the matter, or of conduct of the parties which works an extension of the time for bringing a suit, the statute begins to run at the date of the dissolution. This is established in England as well as in Massachusetts and in most of the other American states. Knox v. Gye, L.R. 5 H.L. 656; Noyes v. Crawley, 10 Ch.Div. 31, 39; Farnam v. Brooks, 9 Pick. 212, 242, 247; Johnson v. Ames, 11 Pick. 173, 182; Allen v. Woonsocket Co., 11 R.I. 288, 295; McKelvy's Appeal, 72 Pa.St. 409; Gray v. Kerr, 46 Ohio St. 652; ^[1] Richardson v. Gregory, 126 Ill. 166, 18 N.E. 777; King v. Wartelle, 14 La.Ann. 740. It is clear that if this had been a suit to obtain the proceeds of this seat through an account and a settlement of the partnership affairs it would have been barred at the expiration of 6 years from the termination of the partnership, or more than 11 years before this action was brought. If it had been a suit to establish against the defendant a resulting trust for the benefit of the plaintiff, it would equally have been barred. Where a trust results by implication of law from the payment of the consideration for property conveyed to another the statute begins to run in favor of the holder of the legal title against the equitable owner at the time of the conveyance, if there is no recognition of the rights of the cestui que trust, and, if his rights are recognized, then at the time when the holder of the title begins to hold adversely. Against an express trust the statute ordinarily does not run until there is an open disavowal of the trust, or some other breach of faith which may give rise to an action. There is a well-recognized distinction between express trusts and resulting or constructive trusts in this particular. Beckford v. Wade, 17 Ves. 87; Farnam v. Brooks, 9 Pick. 212; Harlow v. Dehon, 111 Mass. 195; Ripley v. Bates, 110 Mass. 161; Davis v. Coburn, 128 Mass. 377; Kane v. Bloodgood, 7 Johns.Ch. 90; Speidel v. Henrici, 120 U.S. 377, 386, 7 S.Ct. 610; Baxter v. Moses, 77 Me. 465, 481, 1 Atl.Rep. 350; McClane v. Shepherd, 21 N.J.Eq. 76; Prewett v. Buckingham, 28 Miss. 92, 99.

On a question arising under the statute of limitations the burden of proof is on the plaintiff. Pond v. Gibson, 5 Allen, 19. There is no evidence of any fact or circumstance in the case which tends affirmatively to show that an express trust was ever created, and there was no question for the jury on that part of the case. Even if there had been an express trust, the defendant's conduct after the termination of the partnership was equivalent to a repudiation of it which gave a cause of action. If the right acquired by the defendant was of such a kind that a trust in favor of the firm as owners would result by operation of law from the payment of the consideration for it by the copartners in equal shares, it might be argued with much force that there is no evidence of recognition by the defendant of the equitable title of the firm, inasmuch as the ownership and possession and use of the seat in the exchange, which, under the rules of the exchange then existing, could never be anything more than a privilege pertaining to the person of the member, merely enabled him better to do his duty in buying and selling stock as a member of the firm, and he only gave the firm the benefit of his personal privilege for the time being, just as in other ways he tried to promote the firm's interests. There was evidence that the use of this privilege while the partnership continued was worth much more to the firm than the sum paid for it. But if his use of his privilege be deemed evidence of a recognition of the trust in regard to the title while the copartnership lasted, there is no evidence that he dealt with it afterwards otherwise than as his private property. There was undisputed evidence that after the failure of the firm he paid to the firm creditors who were members of the stock exchange 25 per cent. more of their respective claims than other creditors received, and that this was done under a rule of the exchange, in order to retain his membership. He made this payment from his own pocket, the plaintiff not contributing nor being asked to contribute anything towards it. He also, from time to time, afterwards paid assessments and fines in conformity with the rules of the exchange, and for many years occupied his seat in the exchange for the transaction of his private business only, without recognizing any right of the firm or of the plaintiff. From the year 1873 to 1889 there was no communication between the parties in regard to it. Such a use of a privilege or of property to which he held the legal title must be deemed to have been under a claim of absolute right. The undisputed facts show a claim and a use adverse to the right now claimed by the plaintiff, and the jury would not have been warranted in finding that the defendant's possession and use were in recognition of an equitable right in the plaintiff. If there ever was a trust which could be enforced in equity, there can be no doubt that a cause of action for the enforcement of it arose after the termination of the partnership as soon as the defendant began to use the privilege solely on his own account. This right of action was barred at the expiration of six years. It is therefore clear that long before the sale of the seat by the defendant the plaintiff's right to have it accounted for in a suit to settle the partnership affairs, or to have a trust in it declared and enforced, had been barred by lapse of time.

The plaintiff contends that a right to maintain an action for money had and received grew up in the sale of the seat by the defendant. In most jurisdictions it is the rule that the statute of limitations affects only the remedy, and does not destroy the right. It is local in its application, and a debt barred by it is not extinguished, but may be a consideration for a new promise, or may be collected if jurisdiction is obtained in another state, where the statute is not in force. But, as is shown by Mr. Justice Story in Le Roy v Crowninshield, 2 Mason, 151, 168, the loss of the means of enforcing a right leaves of the right nothing of which the law can take hold against the will of the debtor, and, within the jurisdiction, differs little in practical effect from the destruction of the right. It is held everywhere that adverse possession of real estate for the period prescribed in the statute of limitations not only bars a suit to recover it, but gives a good title against the former owner; and there are decisions and dicta in many courts applying the same rule to adverse possession of personal property. Cockfield v. Hudson, 1 Brev. 311; Howell v. Hair, 15 Ala. 194; Jones v. Jones, 18 Ala. 248, 253; Clark v. Slaughter, 34 Miss. 65; Winburn v. Cochran, 9 Tex. 123; Vandever v. Vandever, 3 Metc. (Ky.) 137; Ewell v. Tidwell, 20 Ark. 136; Kirkman v. Philips' Heirs, 7 Heisk. 222; Preston v. Briggs, 16 Vt. 124, 130; Baker v. Chase, 55 N.H. 61, 63; Campbell v. Holt, 115 U.S. 620, 6 S.Ct. 209; ...