McGrann v. Allen
| Decision Date | 03 January 1928 |
| Docket Number | 248 |
| Citation | 291 Pa. 574,140 A. 552 |
| Parties | McGrann v. Allen et al., Appellants |
| Court | Pennsylvania Supreme Court |
Argued December 5, 1927
Appeal, No. 248, Jan. T., 1927, by defendants, from decree of C.P. Lancaster Co., Equity Docket No. 7, page 189, directing an accounting, in case of Richard P. McGrann v. Elizabeth Nauman Allen and the Lancaster Trust Co., executors of John A. Nauman, deceased. Reversed.
Bill for accounting. Before HASSLER, J.
The opinion of the Supreme Court states the facts.
Decree entered for accounting. Defendants appealed.
Error assigned, inter alia, was decree, quoting record.
The decree is reversed, and the bill dismissed, at the cost of appellees.
J. B Myers, of Zimmerman, Myers & Kready and Spencer G. Nauman for appellants. -- The laches of plaintiff bars his right to demand an account: Kinter v. Trust Co., 274 Pa. 436; Patton v. Trust Co., 276 Pa. 95; Hammond v. Hopkins, 143 U.S. 224; Hardt v. Heidweyer, 152 U.S. 547.
The existence of a fiduciary relationship does not excuse plaintiff from laches when death has intervened and the rights of third parties are affected: Hammond v. Hopkins, 143 U.S. 224; McKnight v. Taylor, 42 U.S. 161; Stevens v. R.R., 278 Pa. 284; Selmer v. Smith, 285 Pa. 67.
Chas. E. Workman, for appellee. -- The accounting was properly decreed: Gruber v. Hays, 280 Pa. 489; Davidson v. Davidson, 262 Pa. 520; Selmer v. Smith, 285 Pa. 67; Bockius's Est., 22 W.N.C. 312; McCartney's Est., 79 Pa.Super. 326; Beck v. Uhrich, 16 Pa. 499; Bruner v. Finley, 187 Pa. 389; Harris v. Silvis, 86 Pa.Super. 222.
Before MOSCHZISKER, C.J., FRAZER, WALLING, SIMPSON, KEPHART, SADLER and SCHAFFER, JJ.
McGrann, the plaintiff, became involved financially in 1912. His land was subject to a mortgage of $90,000 and judgments in excess of $50,000. Unsecured creditors for a large amount pressed for payment. For the purpose of saving as much as possible, he agreed to transfer his real estate, as well as such personal property as he possessed, to John Nauman, an attorney, also interested for the People's Trust Company, the holder of the record liens. The land to which he had title was conveyed to Nauman individually, who took possession of this, as well as of the personal property found thereon. In addition, McGrann confessed judgment to Nauman for $25,000, and it is claimed certain other funds were turned over to him by the debtor's wife. The real estate disposed of in 1912 did not net a sum sufficient by far to satisfy the liens, and the remainder of the property, subject to the judgments, with the exception of a tract which was deeded for the consideration of $1 in 1921, was sold at sheriff's sale in 1914, after which McGrann employed other counsel to represent him.
Proceeds of the sale of the personal property, as well as funds secured from loans for temporary use made by Nauman discounting individual obligations, were placed in a special deposit in the People's Trust Company, and upon it checks were drawn for necessary charges and expenses, and in payment of 50% of the claims of unsecured creditors. This account was balanced and closed in 1915. As far as appears no further claim has been made by any of those to whom debts were owing, and none is a party to the present proceeding. McGrann was a resident of Lancaster, where all the parties lived and the transactions took place, and, except for some time spent by him in California, was located in that city during the years following. It is not averred that he made any complaint of the conduct of the trustee, or of his failure to properly expend the funds which came into his hands from 1912 until 1924, though there was ample opportunity to do so, if desired. In the last named year he requested two attorneys to interview Nauman in regard to his affairs, but neither of them asked for any accounting, nor made claim for any sum alleged to be due.
No proceedings were instituted by plaintiff to secure an accounting during the lifetime of Nauman, who died on July 14, 1924. Letters testamentary were granted upon his estate to the executors named, and to one of them McGrann thereafter made a request for the filing of a statement. On December 5, 1925, nearly seventeen months after Nauman's death, plaintiff filed a bill praying that an account be stated by the executors of his trust estate. No averment is made of fraud, nor does any unpaid creditor join in the proceeding. Nor is there any explanation given as to why the delay for 14 years in requesting a settlement occurred. A motion to dismiss the bill because of plaintiff's laches was refused. An answer was filed, setting up the defense of undue delay, and averring in effect that, by reason of the change of circumstances, caused by death, necessary testimony was no longer available, and the presentation of an accurate statement a practical impossibility. After hearing, the court directed an accounting, and defendants have appealed.
We are confronted with the single question as to whether plaintiff has by his conduct lost his right to equitable relief. In passing upon the effect of delay in the assertion of claims as here presented, the determination must rest on a consideration of the facts of the particular case: Selmer v. Smith, 285 Pa. 67; Stevens v. D., L. & W.R.R. Co., 278 Pa. 284. The accounting asked is of an express trust to convert assets and satisfy creditors and the statute of limitations will not bar such an action, nor ordinarily can laches be successfully interposed (Gruber v. Hays, 280 Pa. 489; Kelly's Est., 37 Pa.Super. 320; Horine v. Mengel, 30 Pa.Super. 67), unless there has been a prior repudiation of the obligation: Rist's Est., 192 Pa. 24; Bruner v. Finley, 187 Pa. 389. In the present case, we find an accounting asked after an unexplained delay as against the trustee for twelve years, and a lack of diligence for sixteen months thereafter in proceeding against his estate after his decease, when conditions have changed.
Delay which injures no one will not furnish reason for refusing relief (Selmer v. Smith, supra; Bradly v. Jennings, 201 Pa. 473), but when by reason of a failure to exercise due diligence the rights of the parties have been adversely affected by reason of altered circumstances, the contrary is true. The rule applicable in such cases was thus stated by Lord ELDON, in Foster v. Hodgson, 19 Ves. Jr. 180, 185, cited with approval in Stevens v. D., L. & W.R.R. Co., supra: As stated by another court (Hammond v. Hopkins, 143 U.S. 224): "The rule is particularly applicable where the difficulty of doing entire justice arises through the death of the principal participants in the transactions complained of, or of the witness or witnesses, or by reason of the original transactions having become so obscured by time as to render the ascertainment of the exact facts impossible."
Equity will ordinarily lend its aid to the enforcement of an express trust, and an accounting is not barred by lapse of time. "But even in such cases a court of equity may refuse to enforce a trust on the ground of laches and its inability to do complete justice, where, with actual or constructive knowledge of a breach of trust or assertion of adverse rights, the cestui que trust has inexcusably and unreasonably delayed asserting his rights": 39 Cyc. 601. "The courts will ordinarily refuse to enforce a trust where under the circumstances the lapse of time is such as to give rise to a presumption of discharge or extinguishment of the trust, or to obscure the acts of the parties, or the nature and character of the trust, as where there have been deaths of witnesses, or loss of papers, or there are any matters in the nature of an estoppel, which make it clearly inequitable or unjust to enforce the trust": 39 Cyc. 602.
The equitable doctrine has been applied where an accounting was asked of one holding under an express trust (McKnight v Taylor, 42 U.S. 161; Maggini v. Jones, 223 Pa. 301), a testamentary trust, though the party was ignorant of his rights until shortly before suit brought (Taylor v. Coggins, 244 Pa. 228), when the effort was to enforce a resulting trust (Rhodes v. Good, 271 Pa. 117; Sullivan v. Sullivan, 74 Pa.Super. 396), or where the alleged trustee holds the property under an adverse claim: Stevens v. D., L. & W.R.R. Co., supra. A change of circumstances barring relief has been held to occur when the party, or an essential witness, has died (Dalzell v. Lewis, 252 Pa. 283; Adams's Est., 183 Pa. 134), or evidence has been lost, or is more difficult to procure: Tozier v. Brown, 202 Pa. 359; ...
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