In re Estate of McCagg, 81-905.

• Decision Date: 12 August 1982
• Docket Number: No. 81-905.,81-905.
• Citation: 450 A.2d 414
• Parties: In re ESTATE OF Therese Davis McCAGG. William R. JOHNSTON, Registrar, National Museum of American Art, Smithsonian Institution, Appellant, v. INDUSTRIAL NATIONAL BANK, N. A., Administrator, c.t.a.d.b.n., Appellee.
• Court: D.C. Court of Appeals

450 A.2d 414

In re ESTATE OF Therese Davis McCAGG.

William R. JOHNSTON, Registrar, National Museum of American Art, Smithsonian Institution, Appellant, v. INDUSTRIAL NATIONAL BANK, N. A., Administrator, c.t.a.d.b.n., Appellee.

No. 81-905.

District of Columbia Court of Appeals.

Argued April 21, 1982.

Decided August 12, 1982.

Freddi Lipstein, Dept. of Justice, with whom J. Paul McGrath, Asst. Atty. Gen., Charles F. C. Ruff, U. S. Atty., at the time the briefs were filed, and William Kanter, Dept. of Justice, Washington, D. C., were on the briefs, for appellant.

Doris D. Blazek, Washington, D. C., for appellee.

Before NEWMAN, Chief Judge, and KELLY and FERREN, Associate Judges.

NEWMAN, Chief Judge:

This case involves a dispute over title to two paintings placed on indefinite loan to a museum by the owner, Therese Davis McCagg, in 1917. It is brought by her estate on behalf of the descendants of her residuary legatees, who acquired title to the paintings upon her death in 1932. The trial court held that the suit, filed less than two years after demand for return of the paintings was made and refused, thereby terminating the loan, was timely. We agree, and accordingly affirm the trial court's order directing the museum to return the paintings to the estate, for distribution to the owners.

I

In 1917, Therese Davis McCagg loaned two oil paintings, South American Landscape, by Frederic Church, and Mountain Scene, by Francois Diday, to the National Gallery of Art, now known as the National Museum of American Art, without charge, so that they could be enjoyed by the public. The loan agreement is evidenced only by correspondence between Mrs. McCagg and the Museum. It contains no limit on the duration of the loan, nor any indication that the loan would terminate upon Mrs. McCagg's death. Nor is there evidence of an oral agreement between the parties imposing any time limit.

Mrs. McCagg died in 1932. Her will made no specific bequest of the paintings, but contained a residuary clause giving all property not otherwise distributed to her four siblings, on whose descendants' behalf the present suit is brought. Since Mrs. McCagg's executor did not collect those assets, as he did the remainder of her estate, it is fair to infer that neither he nor the residuary legatees were aware of the existence of the paintings. The accounting of the estate was judicially approved in 1933.

The descendants of the legatees did not learn of the paintings until late 1979, when an art dealer who had inquired about the Church painting at the Museum brought it to their attention. On June 17, 1980, appellee Industrial National Bank petitioned to reopen the estate on the basis of newly discovered assets. The petition was granted and Letters of Administration were issued to appellee. On January 22, 1981, appellee, as administrator of the reopened estate, requested delivery of the paintings by telephone. The Museum refused. A formal written demand was presented to the Museum's registrar, appellant herein, on January 29, which was also refused. Less than two weeks later, on February 9, appellee sought an order to show cause why the paintings should not be delivered. The motion was granted, and a show cause hearing was held after the submission of thorough memoranda by the parties. Appellant defended on the ground that the demand for delivery of the paintings and the ensuing legal steps were untimely, and that title must therefore be deemed to have passed to the Museum. The trial court rejected this theory, and on May 28, 1981, issued an order directing appellant to deliver the paintings to the estate so that they could be distributed to their owners. The Museum now appeals that order.

II

The loan of the paintings, without any limit on the time for demanding their return, constituted a bailment for an indefinite term, which neither party disputes. The law regarding the accrual of a cause of action for the return of the bailed property is longstanding and clear. The bailee is under no duty to return the property to the owner until demand is made, and thus cannot be in breach of that duty before such demand. Accordingly, a cause of action for return of the property does not arise until demand has been made and refused, or the bailee takes some action inconsistent with the bailment. Irvine v. Gradoville, 95 U.S. App.D.C. 263, 221 F.2d 544 (1955); Schupp v. Taendler, 81 U.S.App.D.C. 59, 154 F.2d 849 (1946).

At no time before 1980 did Mrs. McCagg or the Museum terminate the bailment, or take any action inconsistent with it. At Mrs. McCagg's death, the paintings were estate assets. At that time title rightfully lay in her siblings, the residuary legatees, a fact which the Museum does not dispute. Demand for delivery was not made and refused until January 1981. A cause of action for the return of the paintings to the estate, and through it to the descendants of the legatees, arose at that time and not before. The motion seeking relinquishment of the paintings was filed less than three weeks after the first refusal to deliver them, well within the applicable three year statute of limitations. D.C.Code 1981, § 12-301(2).

The Museum, however, contends that Mrs. McCagg's successors in interest were required to demand return of the paintings, or otherwise affirmatively assert their continued ownership, at some time in the past, at the risk of forfeiture to the Museum. In other words, their right to demand delivery could only be exercised for a limited time, notwithstanding the lack of any temporal limit in the loan agreement. The Museum asserts that the demand should have been made by the closing of the estate in 1933, or at least within a "reasonable time" thereafter. Accordingly, the clock would begin to run on a cause of action to recover the paintings at that time. Given that starting point, the Museum concludes that, whatever time period is used,¹ time ran out well before the reopening of the estate in 1980. At that time, according to this theory, the paintings became the property of the Museum. While the theory places a burden on the bailor to take affirmative steps in order to retain that which is hers to begin with, the bailee had no comparable responsibility to take action in order to acquire title.

The Museum raises several interrelated legal and factual arguments in support of its theory. First, appellant argues that where no time for making demand is specified, a court must define a finite "reasonable time." See Wright v. Paine, 62 Ala. 340 (1878); Slack v. Bryan, 299 Ky. 873, 184 S.W.2d 873 (1945); Southward v. Foy, 65 Nev. 694, 201 P.2d 302 (1948); Campbell v. Whoriskey, 170 Mass. 63, 48 N.E. 1070 (1898); Temirecoeff v. American Express Co., 172 Wash. 409, 20 P.2d 23 (1933).² If one substitutes the word "may" for "must," the principle is sound. However, one must understand its proper function and limitations, which the Museum tends to ignore. The so-called reasonable time "rule" is, or should be, merely a particular application of familiar principles of implied contractual terms.³ The basic premise is simple: the lack of an explicit provision is not necessarily dispositive as to the parties' intent. A party may show that an implied term can be inferred from explicit provisions, or from the circumstances surrounding the formation of the agreement. See Remco Business Systems v. Hollowell, D.C.App., 430 A.2d 534 (1981); 1901 Wyoming Avenue Cooperative Association v. Lee, D.C.App., 345 A.2d 456, 461-62 (1975); Svestka v. Pell, D.C.App., 224 A.2d 478 (1966). See generally 3 A. CORBIN, CONTRACTS §§ 561-62 (1960). But while an implied finite time for demand is appropriate where intended by the parties, one is not to be automatically imposed notwithstanding the apparent lack of such intent. This principle is aptly noted in Nyhus v. Travel Management Corp., 151 U.S.App.D.C. 269, 466 F.2d 440 (1972), a case relied on by the Museum.

[T]he time for demand is ordinarily a reasonable time. That, however, is a matter of the parties' expectations, and a different result follows when an indefinite delay in making demand was within their contemplation. [Id. at 282, 466 F.2d at 453 (footnotes omitted).][⁴]

In sum, we decline to adopt a rule that a limited time for making demand must be imposed regardless of the parties' intent. To put the same conclusion in a somewhat different way, an unlimited period may be reasonable, depending on the circumstances.

With this understanding in mind, there is no basis for reversal. The trial court's refusal to impose a finite reasonable time rule was correct as a matter of law. Nor can we disturb the finding that the bailment was to continue for an indefinite term. On its face, the bailment agreement neither specifies a limited time for demand, nor otherwise suggests that any was contemplated. Appellant has not contended, much less proven, that the parties understood that the paintings would be forfeited unless Mrs. McCagg or her successors made demand within some limited, albeit unspecified, period. The nature of the loaned property indicates that a loan spanning several decades would not be unreasonable, since, with appropriate storage or display, oil paintings can last for centuries. These circumstances establishing the reasonableness of a very long term loan distinguish this case from those in which a finite reasonable time standard was applied. See Wright v. Paine, supra; Slack v. Bryan, supra; Southward v. Foy, supra; Campbell v. Whoriskey, supra; Temirecoeff v. American Express Co., supra. Thus, in light of the parties' explicit agreement and the surrounding circumstances, there was adequate support for the conclusion that there was no implicit limitation on the time for reclaiming the paintings. In other words, an indefinite delay was entirely reasonable under the circumstances.

Similarly, we find no support for the conclusion that the death of the bailor triggered a duty to demand delivery. Certainly no...