Olympia Min. & Mill. Co. v. Kerns

• Decision Date: 08 September 1913
• Court: Idaho Supreme Court
• Parties: OLYMPIA MINING & MILLING CO., a Corporation, Appellant, v. ABNER G. KERNS, Respondent

135 P. 255

24 Idaho 481

OLYMPIA MINING & MILLING CO., a Corporation, Appellant, v. ABNER G. KERNS, Respondent

Supreme Court of Idaho

September 8, 1913

TRUST-FORMATION OF CORPORATION-DECLARATION OF TRUST-CONDITIONS PRECEDENT-CONTINGENT TRUST-ADVERSE POSSESSION-STATUTE OF LIMITATIONS-STALENESS OF DEMAND-CESTUI QUE TRUST-TRUSTEE-ACTION AGAINST-REPUDIATION OF TRUST-LACHES.

1. Where a contract is entered into for the purpose of consolidating all of the interests in certain mining claims and thereafter forming a corporation to prospect, develop and work the same, and a declaration of trust is thereafter made in which it is declared that K. holds the legal title to certain mining claims for the use and benefit of a corporation to be thereafter formed, to be named the Olympia Mining Company, "provided, Clarence Cunningham of the City of Wallace in the County of Shoshone, State of Idaho, or the said corporation, shall comply with the provisions of an agreement in writing dated the 28th day of May, 1901, between the said Clarence Cunningham and the said Kerns," and Clarence Cunningham, or the corporation to be formed, failed, neglected and refused to comply with the provisions of said contract, no trust is created.

2. Said declaration of trust was based on the consideration that Cunningham, or the corporation to be organized, should comply with the provisions of said agreement, and Cunningham having failed to comply with such provisions, held, that as said trust depended on conditions precedent which were not fulfilled, a trust could not be enforced.

3. As Cunningham and his associates agreed to form the plaintiff corporation "as soon as practicable" after the happening of a certain event, and as they failed and refused to organize such corporation within the time stipulated and until about eight years thereafter, held, that said contingent trust never ripened into an existing or continuing trust.

4. Where an agreement contains conditions to be performed by the beneficiary, or some person for him, the beneficiary can enforce the trust only upon the performance of such conditions.

5. Express as well as implied trusts may be repudiated by adverse possession, and if repudiated, the statute of limitations begins to run from the time the beneficiary has notice of such repudiation.

6. Where the cestui que trust has inexcusably and unreasonably delayed asserting his rights, a court of equity may refuse to enforce a trust on the ground of laches.

7. The doctrine of laches applies to the enforcement of an express trust only when there has been an open breach or repudiation of the trust or assertion of adverse title by the trustee which is so brought home to the actual or constructive knowledge of the cestui que trust as to require him to assert his rights.

8. The general rule is that length of time is no bar to a trust clearly established, and that express trusts are not within the statute of limitations, but that rule is subject to the qualification that time begins to run against a trust as soon as it is openly disavowed by the trustee, which disavowal or repudiation is clearly and unequivocally made known to the cestui que trust.

9. Held, that where the character of the property is such that it is liable to sudden fluctuations in value, such as mining claims, time is generally of the essence of the contract.

APPEAL from the District Court of the First Judicial District, in and for the County of Shoshone. Hon. W. W. Woods, Judge.

Action to enforce a trust. Demurrer to complaint sustained and judgment of dismissal entered. Judgment affirmed.

Judgment affirmed and costs awarded to the respondent.

Featherstone & Fox and Chas. E. Miller, for Appellant.

There is nothing to prevent the owner of property from conveying it to a person in trust to convey to a corporation when organized, and, when the corporation is organized, it may compel the trustee to convey it in accordance with the terms of the trust deed. (Clark & Marshall, Private Corps., sec 111; Hecla etc. Min. Co. v. O'Neill, 65 Hun 619, 19 N.Y.S. 592; African M. E. Church v. Conover, 27 N.J. Eq. 157; Rathbone v. Tioga N. Co., 2 Watts & S. (Pa.) 74; Scadden Flat Gold Min. Co. v. Scadden, 121 Cal. 33, 53 P. 440.)

The cause of action does not accrue and the statute of limitations begin to run until there is some person in being and not under legal disability who can sue or be sued. ( Gent v. Manufacturers' & M. Ins. Co., 107 Ill. 652; Hopper v. Steele, 18 Ala. 828; Everett v. Smith, 62 N.H. 386; Davis v. Garr, 6 N.Y. 124, 55 Am. Dec. 387; Sanford v. Sanford, 62 N.Y. 555; Polk v. Allen, 19 Mo. 467; Ruff v. Bull (Md.), 7 Har. & J. 14, 16 Am. Dec. 290; Commonwealth v. McGowan, 4 Bibb (Ky.), 62, 7 Am. Dec. 737.)

In an action by the cestui que trust against the trustee to enforce an express continuing trust, the defense of the statute of limitations or of laches is never available to the defendant. (1 Perry on Trusts. sec. 82; Ames v. Howes, 13 Idaho 756, 93 P. 35; Jones v. Henderson, 149 Ind. 461, 49 N.E. 443; Pomeroy's Eq. Jur., sec. 1080.)

The statutes of limitations do not bar an action by the cestui que trust against the trustee of an express trust. The reason assigned for the rule is that as between the two, the possession of the trustee is deemed to be the possession of the beneficiary. (Seymour v. Freer, 8 Wall. U.S. 218, 19 L.Ed. 306; White v. Costigan, 138 Cal. 564, 72 P. 178; Reynolds v. Sumner, 126 Ill. 58, 9 Am. St. 523, 18 N.E. 334, 1 L. R. A. 327; Haskell v. Hervey, 74 Me. 192; Condit v. Maxwell, 142 Mo. 266, 44 S.W. 467; Dyer v. Waters, 46 N.J. Eq. 484, 19 A. 129; Merritt v. Merritt, 161 N.Y. 634, 57 N.E. 1117; Owens v. Williams, 130 N.C. 165, 41 S.E. 93; Kimball v. Ives, 17 Vt. 430; Stewart v. Conrad, 100 Va. 128, 40 S.E. 624.)

The plea of laches cannot be invoked in cases brought to enforce a trust against a trustee of an express trust. (Hensel v. Kegans, 8 Tex. Civ. App. 586, 28 S.W. 705; Jackson v. Lynch, 129 Ill. 72, 22 N.E. 246; Citizens' Nat. Bk. v. Judy, 146 Ind. 322, 43 N.E. 259; McKechnie v. McKechnie, 3 A.D. 91, 39 N.Y.S. 402.)

Franklin Pfirman and J. H. Forney, for Respondent.

A party may not make a mistaken election of remedy, or attempt to enforce a right which by his own default does not constitute a cause of action, and then claim the benefit of the time spent in his mistaken litigation as against the running of the statute of limitations. (Finney v. Am. Bonding Co., 13 Idaho 534, 90 P. 859, 91 P. 318; Mills v. Am. Bonding Co., 13 Idaho 556, 91 P. 381; Morbeck v. Bradford-Kennedy Co., 19 Idaho 83. 113 P. 89; Braun v. Sauerwein, 10 Wall. (U.S.) 218, 19 L.Ed. 895.)

A party cannot defer the running of the statute of limitations by his own negligence. (Ryan v. Woodin, 9 Idaho 525, 75 P. 261; Wood on Limitation of Actions, sec. 117; Hobart v. Conn. Turnpike Co., 15 Conn. 145; Lee v. Gause, 2 Ired. (24 N. C.) 440.)

The trust was not absolute, but upon a condition precedent. It was a contingent trust, depending for its operation upon a future event. (39 Cyc. 33.)

Where the agreement contains a condition to be performed by the beneficiary, he may enforce the trust upon performing the condition, but only in that event. (39 Cyc. 65.)

An express trust, as well as an implied one, is repudiated by adverse possession and the statute of limitations begins to run from the time of such repudiation. (Coe v. Sloan, 16 Idaho 49, 100 P. 354; Nasholds v. McDonell, 6 Idaho 377, 55 P. 894; Bradley v. Johnson, 11 Idaho 689, 83 P. 927.)

"Against an express and continuing trust time does not run until repudiation or adverse possession by the trustee and knowledge thereof on the part of the cestui." (Perry on Trusts, sec. 863; Jones v. Henderson, 149 Ind. 461, 49 N.E. 443; 13 Am. & Eng. Ency. of Law, 688; 5 Pomeroy's Eq. Jur., sec. 28.)

The action of the Washington corporation against respondent was commenced May 29, 1905, on substantially the same grounds as the present suit, except the difference in party plaintiff. The present suit was commenced March 28, 1912. Hence there is almost seven years since the repudiation of the alleged trust was judicially acknowledged by appellant and its predecessors in interest. (Speidel v. Henrici, 120 U.S. 377, 7 S.Ct. 610, 30 L.Ed. 718; Raymond v. Flavel, 27 Ore. 219, 40 P. 158; Whitney v. Fox, 166 U.S. 637, 17 S.Ct. 713, 41 L.Ed. 1145; Badger v. Badger, 2 Wall. 87, 95, 17 L.Ed. 836.)

"It has been a recognized doctrine of courts of equity, from the very beginning of their jurisdiction, to withhold relief from those who have delayed for an unreasonable length of time in asserting their claims. (Elmendorf v. Taylor, 10 Wheat. 152, 6 L.Ed. 289; 2 Story, Eq. Jur., sec. 1520; Maxwell v. Kennedy, 8 How. 210, 12 L.Ed. 1051; Patterson v. Hewitt, 195 U.S. 310, 25 S.Ct. 35, 49 L.Ed. 214.) Persons having claims to mining property are bound to the utmost diligence in enforcing them, and there is no class of cases in which the doctrine of laches has been more relentlessly enforced." (Bradley v. Johnson, supra.)

Where mines and mining properties are the subject of the contract, time is of the essence, independent of any express stipulation in the instrument. (2 Lindley on Mines, 2d ed., sec. 859; 2 Snyder on Mines, secs. 1376, 1377; 27 Cyc. 674; Settle v. Winters, 2 Idaho 215 (199), 10 P. 216; Durant v. Comegys, 3 Idaho 204, 28 P. 425.)

"The statement that a corporation is an artificial person, or entity, apart from its members, is merely a description, in figurative language, of a corporation viewed as a collective body. A corporation is really an association of persons, and no judicial dictum or legislative action can alter this fact." (1 Morawetz, Priv. Corp., sec. 227; 1 Thompson Corp., 2d ed., sec. 10; 2 Cook, Corp.,...