Loring v. Mills

• Decision Date: 30 July 1878
• Citation: 125 Mass. 138
• Parties: Caleb W. Loring, trustee, v. Salisbury Mills
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

125 Mass. 138

Caleb W. Loring, trustee, v. Salisbury Mills

Supreme Court of Massachusetts

July 30, 1878

Argued November 9, 1875; April 3, 1877; April 4, 1877, June 26 1876; September 8, 1876 [Syllabus Material]

Suffolk. Tort for an illegal issuing of certificates of stock by the defendant corporation. Writ dated December 30, 1872. At the trial in this court, before Morton, J., without a jury, the following facts appeared:

On March 10, 1853, an indenture was executed by Elizabeth B Crowninshield of the first part, Francis B. Crowninshield, trustee, of the second part, and William Mountford of the third part, reciting that a marriage was intended shortly to be had and solemnized between the parties of the first and third parts, and by the terms of which Elizabeth B. conveyed to Francis certain personal property in trust, to pay the net income to her during coverture, taking her sole receipt therefor, "after such income accrues, and such income not at any time to be paid by way of anticipation," with provisions in case of the termination of the coverture. The indenture also contained the following clauses:

"And upon the further trust that the trustee under this instrument shall and may dispose of any part of the trust property, and the proceeds of such sale, and also any other proceeds of the trust property, invest and reinvest from time to time, and at all times, as he shall think discreet; and shall and may execute all deeds or other instruments convenient or proper to that end; and the purchaser or purchasers of said trust property shall not be bound in any manner to see to the application of the purchase money or consideration therefor. Provided, however, that said trustee shall first obtain the written approbation of said Elizabeth of such sales and investments, if she shall be at the time thereof within the United States of America."

"And in case the trustee herein named, or any trustee or trustees who may be appointed under this instrument, shall die, resign or become incapable to act, then and thereupon said trust property shall be conveyed to such other trustee or trustees as said Elizabeth may in writing appoint, to be held upon the trusts hereinbefore declared; or if said Elizabeth be not then alive, then such appointment to be made by the judge of probate, for the time being, for the county of Suffolk, and said trust property to be conveyed and held in conformity with such appointment and said trusts herein set forth."

On August 12, 1856, an indenture was executed between Francis B. Crowninshield and George H. Rogers, by which Crowninshield resigned his trust under the above named indenture, and conveyed the trust property in his hands to Rogers, with the knowledge and consent of Mrs. Mountford. Rogers died on May 21, 1870; and on August 6, 1870, the following indenture was executed by Mrs. Mountford, her husband, and Caleb W. Loring, the plaintiff in this action: "Whereas an indenture was made, bearing date the tenth day of March, A. D. one thousand eight hundred and fifty-three, between Elizabeth B. Crowninshield of the first part, Francis B. Crowninshield of the second part, and William Mountford of the third part, by which indenture certain property belonging to said Elizabeth, in a contemplation of a marriage with said William, was assigned and transferred to said Francis, in trust, as will more fully appear by said indenture, reference to which is hereby made as part of this instrument; and whereas said marriage was afterwards consummated between said William and Elizabeth, and said Francis resigned said trust, and George H. Rogers, of Gloucester, in the Commonwealth of Massachusetts, was appointed in his place; and whereas the said Rogers has since deceased, and the said Elizabeth, by virtue of the power to her given by said indenture, has appointed, and by these presents does now nominate and appoint, Caleb William Loring, of the town of Beverly, who is a citizen of said Commonwealth of Massachusetts, as trustee under said indenture, with all the powers and subject to all the provisions in said indenture contained. And the said Elizabeth does hereby authorize the said Caleb William Loring to receive said trust property from the executors of the will of the said George H. Rogers, or any representative of him or his estate, and does empower and authorize the said Loring to receive, take and obtain from any and all persons or corporations said trust property, and to commence and prosecute any and all actions that be necessary for obtaining possession of the same. And the said Loring on his part does hereby accept the appointment as trustee under the indenture aforesaid, and agrees to perform all the matters and duties to be done and performed by the trustee under said indenture as fully as if the same were herein specifically set forth. And it is mutually agreed between the respective parties hereto that the provisions and terms of said indenture are in full force and effect between them, the said Caleb William Loring being liable to the same extent and subject to the same obligations as are mentioned in the same."

The plaintiff also offered evidence tending to show that Rogers, while trustee, invested a portion of the trust fund held by him for Mrs. Mountford in shares in the defendant corporation, and took certificates, in some of which he was described as trustee for Mrs. Mountford, and in others as trustee simply; that the corporation had notice that he held all these shares in trust for Mrs. Mountford; that afterwards, and while trustee, he transferred these certificates to various persons, by transfers absolute in form, but in fact as collateral security for his own debts; that these certificates were surrendered to the defendant corporation and new certificates issued by it to such persons, in the years 1867 and 1869, and the early part of the year 1870.

On these facts, and others not material to be here particularly stated, the judge found for the defendant; and reported the case for the consideration of the full court. If the finding was justified, judgment was to be entered accordingly; otherwise, such order or judgment was to be entered as the court might deem proper.

Decree for the plaintiff.

E. D. Sohier & C. W. Loring, for the plaintiff.

C. B. Goodrich, for the defendant.

Gray, C. J. Lord, J., Ames, J., absent. Endicott, J., did not sit.

OPINION

Gray

This suit cannot be maintained by this plaintiff in its present form. Whether it is considered in the nature of an action of trover, or in the nature of an action on the case for negligence, it is for an injury to the trust property while the legal title thereof was in Rogers. Before the appointment of the plaintiff as trustee, that title had passed to bona fide purchasers, and the claim against the corporation for the damages thereby occasioned was but a chose in action, which could not be transferred by mere act of parties, without the assent of the defendant, so as to enable the assignee to sue at law in his own name for what was never an injury to him or to property in which he had any legal title.

In Salisbury Mills v. Townsend, 109 Mass. 115, the point decided was that the question whether the corporation was liable for this tort could not be determined upon a bill of interpleader filed by the corporation, but only in a suit brought by the party defrauded; the court had no occasion to consider in whose name or in what form such a suit should be brought, or the difficulty, under the peculiar circumstances of the case, of maintaining an action at law; and that no such point was in the mind of the court clearly appears from the fact that the late Chief Justice, while intimating, both in the rescript and in the opinion, that the remedy was by action at law for damages, spoke of such remedy, in the rescript, as belonging to the present plaintiff, and, in the opinion, as belonging to the cestui que trust.

In Ashton v. Atlantic Bank, 3 Allen 217, and in Murray v. Dehon, 102 Mass. 11, the suit was in equity, and the plaintiff had been appointed by the act of the law, and not by the act of the parties.

Judgment for the defendant.

At the term at which this judgment was entered, the plaintiff moved that it be set aside, and that he be allowed to amend by changing the action at law into a suit in equity under the provisions of the St. of 1865, c. 179, for the reasons that the action was begun under a misapprehension of counsel, induced by the rescript in the case of Salisbury Mills v. Townsend, and that, in consequence of the lapse of time, a new action might be barred by the statute of limitations.

This motion was argued by the same counsel before the full court in September 1876.

The plaintiff was evidently misled by the suggestion, in the rescript in Salisbury Mills v. Townsend, 109 Mass. 115, that his remedy was at law. By virtue of the terms of the original indenture, and of the power of appointment executed in accordance therewith, he has clearly become, in equity, the assignee of any rights of action for injuries to the trust property before his appointment. Justice therefore requires that he should have the opportunity of trying the question whether he can maintain his claim in equity against the defendant.

Amendment allowed.

The plaintiff thereupon filed, by way of amendment, a bill in equity, in which Mrs. Mountford was joined as a party plaintiff. Hearing, upon the pleadings and proofs, before Ames, J., who reported the case to the full court, for the entry of such decree as law and justice might require. The report, after stating the facts in regard to the marriage settlement; the death of Rogers, and the appointment of Loring, as above set forth, proceeded as follows:

On April 25, 1857, on the...