Schurman v. Pegau

• Decision Date: 11 July 1939
• Docket Number: 30526.
• Parties: SCHURMAN v. PEGAU.
• Court: Nebraska Supreme Court

286 N.W. 921

136 Neb. 628

SCHURMAN v. PEGAU.

No. 30526.

Supreme Court of Nebraska.

July 11, 1939

Syllabus by the Court.

1. " A trust * * * is a fiduciary relationship with respect to property, subjecting the person by whom the property is held to equitable duties to deal with the property for the benefit of another person, which arises as a result of a manifestation of an intention to create it." Parker v. Bourke, 131 Neb. 617, 269 N.W. 102.

2. " Privity depends upon the relation of the parties to the subject-matter, rather than their activity in a suit relating to it after the event. Participation in the defense because of general or personal interest in the result of the litigation does not make one privy to the judgment. Stryker v. Goodnow, 123 U.S. 527, 540 [8 S.Ct. 203 31 L.Ed. 194]." Old Dominion Copper Mining & Smelting Co. v. Bigelow, 203 Mass. 159, 216, 89 N.E 193, 40 L.R.A.N.S., 314.

3. Where a certificate of stock of 200 shares is indorsed to two separate parties, each apparently owning 100 shares thereof and one of such parties, in a suit for divorce, alleges ownership of the entire 200 shares of stock, and subsequently testifies that, had she succeeded in obtaining judgment on her cross-petition, the other party would have been entitled to one-half of the stock, the latter person, not a party to the divorce action, is not subsequently estopped from bringing an action for the purpose of procuring such party's interest in the stock as evidenced by the indorsement on the certificate thereof.

4. " ‘ Where the obligation is clear, and its essential character has not been affected by the lapse of time, equity will enforce a claim of long standing as readily as one of recent origin; certainly, as between the immediate parties to the transaction.' 13 Am. & Eng. Ency. of Law, 674" Fawcett v. Fawcett, 85 Wis. 332, 55 N.W. 405, 39 Am.St.Rep. 844.

5. The objection of laches is not tenable to defeat an equity cause, where there has been no material change in defendant's position. Felix v. Patrick, 145 U.S. 317, 12 S.Ct. 862, 36 L.Ed. 719.

Appeal from District Court, Douglas County; Rine, Judge.

Action by Josephine O. Schurman against Edward A. Pegau to recover money allegedly held in trust for her by the defendant. From an adverse judgment, the plaintiff appeals.

Judgment reversed with directions to enter judgment in accordance with opinion.

CARTER and JOHNSEN, JJ., dissenting.

O'Sullivan & Southard and Geo. B. Thummel, all of Omaha, for appellant.

Munger & Rhodes, of Omaha, for appellee.

Heard before SIMMONS, C. J., and ROSE, EBERLY, PAINE, CARTER, MESSMORE, and JOHNSEN, JJ.

MESSMORE Justice.

Plaintiff alleges in her amended petition that the defendant, Edward A. Pegau, held in trust for her the sum of $34,239.13, which was the sale price of 100 shares of stock in the Western Auto Supply Company, in which she claimed ownership, and which stock was sold by the defendant in 1920; that defendant had never accounted to her, and that he is entitled to credit for whatever he has expended for schooling, and prays for an accounting. The answer to the amended petition is a general denial, and pleads estoppel, laches and a parol agreement alleged to have been made by and between defendant and plaintiff, which will be more fully set out in the opinion. The reply denies the making of an oral contract and seeks to credit the defendant with the sum of $6,900, disbursed by him for schooling, maintenance and income tax assessment, and contains a plea of estoppel. On the issues the trial court found generally for the defendant and dismissed the plaintiff's action. She has appealed from this order, assigning as error that the court's decree is not sustained by the evidence and is against the great weight thereof. This assignment of error requires an analysis of the pertinent evidence. The record is voluminous, and to set out the evidence in detail would unnecessarily lengthen the opinion. We therefore refer to a brief history and the pertinent facts as developed in the record.

Plaintiff was the daughter of John and Grace Schurman. She was born in Fremont, Nebraska, August 9, 1901. Her brother, John Ernest Schurman, was born March 30, 1906. Her father died in 1906, and her mother, Grace Pegau, married the defendant in 1909. The mother at the time was 37 and the defendant 29 years of age. They subsequently removed to Omaha, where they purchased a home, Mrs. Pegau making the down payment and moving her household goods and equipment to Omaha. In 1913 the defendant and one Kohn purchased the Western Auto Supply Company. The defendant borrowed $5,000 from the City National Bank; his wife signed the note, and, in order to obtain further working capital, Mrs. Pegau borrowed in Fremont on her own note the sum of $3,000. She owned one-fourth interest in the corporation, evidenced by certificate of stock, 100 shares, and was the secretary and a director. The profits of the business retired the notes. Subsequently, the defendant procured Kohn's interest in the business, and in 1915 Arthur Storz bought into the business, and Mrs. Pegau's stock was reassigned or indorsed to her husband, the reason given being that Mr. Storz did not desire to be associated in business with a woman. On December 25, 1919, the defendant indorsed 100 shares of stock to Mrs. Pegau and 100 shares of stock to the plaintiff, evidenced by certificate No. 52. The stock remained in his possession in his safe deposit box. The reason for so indorsing the 200 shares of stock, as given by the defendant, was in order to protect Mrs. Pegau and plaintiff, in the event of his death, and in addition for income tax purposes. Mrs. Pegau always claimed ownership in the stock and requested the indorsement of the 200 shares as hereinbefore stated.

On May 24, 1920, the 200 shares of stock, evidenced by certificate No. 52, were assigned by plaintiff and Mrs. Pegau, each as owner of an undivided half-interest therein, to Arthur Storz, and each consented to the sale and that the consideration therefor be paid to the defendant. The sale of the business was made at that time to Storz, and the consideration for the 460 shares of stock was the release of a note by the defendant to the company for $7,500; $25,000 cash paid on the date of signing the contract May 25, 1920; $25,000 on December 1, 1920; $25,000 on June 1, 1921, $25,000 on December 1, 1921, and $25,000 on June 1, 1922, the deferred payments bearing 6 per cent. interest. The balance of $25,000 was paid at the rate of $1,000 a month, and was for the purpose of requiring the defendant to remain out of business for two years.

Much has been stated in the record as to the finances of this family. We here discuss it, to show the pertinency and association of the family finances with the transaction had, in reference to the indorsement of the stock and the sale of the business. There is a discrepancy in the following testimony: Mrs. Pegau claimed that she and the two children inherited, including life insurance and rents, approximately the sum of $60,000 from her first husband. The figures were fixed in the decree in a divorce action, showing Mrs. Pegau's share of the estate to be $18,286, and the children's share $21,574, which included a 5,000-dollar inheritance to the children from their grandmother, making the total amount of $39,860. In 1918 the family moved to more spacious quarters. The record shows that they lived extravagantly and lavishly, and in this respect they were all transgressors. The inheritance, as above stated, was expended by 1920, apparently for the benefit of the family, and, in addition thereto, a monthly allowance of $150 to $200, given by defendant to his wife. The children at this time were approximately 14 and 18 years of age. They had been educated out of this amount up to that time.

The question to be determined is whether or not the plaintiff owned the 100 shares of stock. It is admitted that none of the inheritance of either Mrs. Pegau or the two children was ever invested in the business, with the exception of the use of Mrs. Pegau's credit in the first instance. The evidence shows that the money received from the stock was at one time placed in a bank or in Liberty bonds. The defendant stated that it was mostly spent. He testified:

" Q. So really, as far as you were concerned, she (referring to plaintiff) owned that one hundred shares of stock, did she? A. Yes. * * * Q. In your estimation at that time did Mrs. Pegau own one hundred shares of stock? A. Yes. * * * A. As far as the stock records were concerned they owned the stock. And they were put,--they were assigned to them in blank for protection and tax purposes. Q. I didn't ask you about the stock records. I asked about as far as you were concerned. Your intention. Did they own the stock? A. Well, my intentions were just as the stock records showed. Q. So that they did own the stock? A. They did own the stock." The foregoing testimony was elicited upon the trial of the divorce action between Mrs. Pegau and defendant. In the instant case, defendant testified on cross-examination: " Q. Now, when you were talking, you didn't deny but what Josephine actually owned this one hundred shares of stock, did you? A. No. Q. That is a fact, that she actually owned that stock? A. That is right, so far as the records go * * * So far as the records of the business were concerned it is absolutely correct. * * * Q. And she did own the stock? A. She owned the stock; yes, sure. * * * Q. Now, you knew all the time that Josephine O. Schurman,--you acting as her agent and Gilchrist Company acting for you,--was claiming the absolute ownership of one hundred shares of this stock; you knew that, didn't you? A. In the first place, I only acted as her agent once in

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