Kennedy v. Baker

• Decision Date: 20 March 1883
• Docket Number: Case No. 1235.
• Citation: 59 Tex. 150
• Parties: D. E. KENNEDY v. WM. R. BAKER.
• Court: Texas Supreme Court

59 Tex. 150

D. E. KENNEDY

v.WM. R. BAKER.

Case No. 1235.

Supreme Court of Texas.

Mar. 20, 1883.

APPEAL from Harris. Tried below before the Hon. James Masterson.

This cause was before the supreme court before on the appeal of the defendant W. R. Baker, when the judgment was reversed and the cause remanded. The case will be found reported in 53 Tex., 200, to which reference is made for a statement up to that time.

The suit was brought October 31, 1879; the record begins with the plaintiff's second amended petition, filed March 31, 1880, and it does not recite what were the contents of the plaintiff's original and first amended petitions.

The plaintiff alleged substantially the same leading facts as were stated in the original and first amended petitions; but the relief sought was variant from that asked on the previous trial.

The plaintiff prayed for judgment for $2,417.50, with interest from September 20, 1877, at the rate of seven per cent. per annum; and if not entitled to that relief, that he might have judgment for that amount for money, and for general relief, “and special relief and judgment for all moneys or property that this case may warrant.”

This amended petition in the record apparently varied from the plaintiff's original and second amended petition with reference to the changed character of the suit, so as to conform the allegations to such remedy for money instead of bonds, as the opinion of the supreme court indicated the plaintiff might be entitled to, if any. Among such changes in the plaintiff's averments, were that which alleges that the Houston & Texas Central Railway Company, “on the 20th day of March, 1877, for the purpose of relieving itself of all further responsibility on account of the trust fund and all liability as trustee for the owner thereof, induced William R. Baker to accept said trust fund for the benefit of the owner thereof, and then and there executed its promissory note in the name of Baker as payee, for the sum of $2,417.18, payable six months after its date (that being the amount of said fund with interest added to maturity of the note). That Baker accepted the trust fund, not intending at that time to appropriate the same to his own use, but in good faith, for the purpose of holding the same for the proper owner.” The petition alleged the exchange made of the note, together with defendant's personal assets, by the defendant with the railway company for one hundred bonds of $1,000 denomination each; which transaction was consummated before the maturity of the note. Also that Shirley ratified the conversion of his money into the bonds, and all the acts of the railway company and Baker in the premises, by claiming his trust fund in Baker's hands. Alleging that he demanded of the latter his interest in the bonds, or in lieu thereof, its value in money; that at the time of the demand, “Baker admitted that he held for the owner of the trust fund something over the sum of $2,700 in bonds, but claimed that he ought to be indemnified by Shirley against all loss that he might suffer from a judgment rendered in the district court of Harris county, in favor of W. T. Wasson, against him and Shirley jointly, and for that reason refused to deliver to Shirley either the amount of the trust fund in money or bonds.” It was further alleged that since the institution of this suit, the judgment above referred to had been reversed by the supreme court, and that Baker was thereby released from liability on the same; that Baker still refused to deliver to plaintiff (the assignee of Shirley) the trust property or trust fund, either in kind or in money.

Defendant filed an amended original answer, comprising a general demurrer, special exception, general denial, plea of the statute of limitations of two years, and a plea of offset.

Judgment was rendered for the plaintiff for $1,312.40.

Both plaintiff and defendant filed motions for a new trial, which were overruled; each gave notice of and perfected their appeals, and errors are assigned by each.

Baker relied only on the two following assignments of error:

1st. The court erred in not sustaining defendant's plea of limitation, and in rendering judgment for plaintiff, when the facts clearly show that if plaintiff ever had any cause of action against defendant it was barred by the statute of limitations of two years.

2d. The court erred in rendering judgment for the plaintiff, because the evidence shows conclusively that he had no cause of action against defendant.

The appellant Kennedy assigned the following grounds of error, viz.:

1st. The court erred in rendering judgment for plaintiff for only $1,312.40, when the whole evidence adduced upon the trial showed that plaintiff was entitled to the sum of $2,858.03.

2d. The court erred in valuing the note for $2,417.18 of the Houston & Texas Central Railway Company, delivered to the defendant in settlement of the trust fund sued for, at fifty per cent. discount, and in rendering judgment accordingly, there being no evidence of the insolvency of said company, or proof to show that the market value of said note was less than par; or that the bonds for which said note was exchanged by defendant were worth less than par when this suit was instituted, or on the 8th day of August, 1879, when the same was demanded.

3d. The court erred in refusing to give judgment for plaintiff for the face value of the note of said railway company, obtained by the defendant from said Central Railway Company in settlement of said trust fund sued for (or the face value of said bonds received by defendant for said note), with interest on same from the 20th day of September, 1877 (when said note matured), at the rate of seven per cent. per annum up to the date of judgment, herein rendered on the 28th day of April, 1880, to wit, $2,858.03, and eight per cent. per annum interest thereon from that date until paid.

4th. The court erred in overruling plaintiff's motion for a new trial.

E. P. Hill, for appellant, cited Tinnen v. Mebane, 10 Tex., 246;Wingate v. Wingate, 11 Tex., 430;Hunter v. Hubbard, 26 Tex., 547;Lumpkin v. Murrell, 46 Tex., 58, 59;Mitchell v. McLemore, 9 Tex., 151;Wood v. Carpenter, 11 Otto, 135.A. R. Masterson, also for appellant, cited Wethered v. Boon, 17 Tex., 146-7;Merriman v. Russell, 39 Tex., 285;Wheat v. Owens, 15 Tex., 242; Perry on Trusts, secs. 217, 241, 835; Story's Equity, sec. 533; Pars. on Con., vol. 1, p. 123; 4 Kent, p. 336; Stampers v. Johnson, 3 Tex., 3, 4;Carter v. Carter, 5 Tex., 99-101;Mead v. Randolph, 8 Tex., 196-7;Dunham v. Chatham, 21 Tex., 246-7;Leakey v. Gunter, 25 Tex., 403;Reeves v. Bass, 39 Tex., 632-3;Smith v. Sublett, 28 Tex., 169, 170; Story's Equity, sec. 533.

No briefs for appellee on file.

WALKER, P. J. COM. APP.

We are clearly of the opinion that the plaintiff's cause of action, as shown under the pleading and evidence, was barred by the statute of limitations at the time he instituted his suit. More than two years had elapsed at that time since the date of the note given by the railway company to the defendant for the trust deposit made by White for the benefit of Shirley. The note was executed and delivered, according to the evidence, before its maturity. The note was dated March 20, 1877, payable at six months, and it was by the defendant converted into bonds in the transaction he had with the railway company in the month of July, 1877, when he acquired from the company certificates for the one hundred bonds of $1,000 each, and which, at a later date, the company took up, and the contemplated bonds were delivered to the defendants as provided for by the certificates. The cause of action accrued to Shirley as soon as the defendant Baker obtained possession or control of the money which belonged to Shirley. The transaction between White and the railway company through the defendant, at that time its vice-president, and the transaction subsequently between the defendant and the company, made at his request, through which he obtained the company's promissory note for the principal and interest of Shirley's money, constituted an effectual conversion of the deposit by the act of the defendant into assets of Baker, which the railway company held in the capacity of debtor to Baker. This conversion constituted Baker, by operation of law, a trustee. The trust was not an express trust; the trust was not created by a contract whereby he assumed the position and relation of trustee, but the law imposed upon him the obligations which had attached to the railway company as trustee of the fund, for the benefit of Shirley.

The statute of limitations commenced to run against Shirley as soon as his right accrued to demand from Baker the money which he had received from the railway company. When Baker recognized the money as being within his possession and control (which he did do by taking the note of the company for the same, with interest), he became subject, eo instanti, to Shirley's right to demand and receive the same from him. Consequently the statute of limitations began then to run, and when suit was brought by Kennedy on the 31st day of October, 1879, the bar of two years had become complete.

Against this view of the subject, the plaintiff interposes the objection that if the relation between Shirley and Baker was that of cestui que trust and trustee, the latter could not invoke such a defense except by his having repudiated such trust relation, and having held the fund adversely to Shirley, claiming the money absolutely as his own. This proposition has no proper application to this case; the nature of the trust with which Baker was affected in this transaction does not pertain to that kind of trust to which the above rule of law relates. See Wingate v. Wingate, 11 Tex., 433;Tinnen v. Mebane, 10 Tex., 252.

“The doctrines of trusts are equally applicable to real and personal estate, and the same rules will govern trusts in both kinds of property.” Perry on Trusts, ...