Southward v. Foy

• Decision Date: 21 December 1948
• Docket Number: 3539.
• Citation: 201 P.2d 302,65 Nev. 694
• Parties: SOUTHWARD v. FOY.
• Court: Nevada Supreme Court

201 P.2d 302

65 Nev. 694

SOUTHWARD v. FOY.

No. 3539.

Supreme Court of Nevada

December 21, 1948

Appeal from Second Judicial District Court, Washoe County; Merwyn H Brown, Judge.

Action by Joan J. Southward against John Bernard Foy, executor of the last will of George Morland Southward, deceased, for value of a corporate bond loaned by plaintiff to deceased to be used by deceased as security for a loan. From an adverse judgment, plaintiff appeals.

Affirmed.

H. R. Cooke, of Reno, for appellant.

Thomas F. Ryan, of Reno, for respondent.

BADT Justice.

On June 3, 1926 Joan J. Warren loaned to George M. Southward, among other securities, a $1,000 United States Steel Corporation 5% bond 'to be used as security for a loan.' Over twenty years later, on January 3, 1947, she filed suit against Southward's executor for the value of the bond. In the meantime a number of incidents intervened. About a month after the loan Joan Warren and George M. Southward intermarried.

The United States Steel Corporation called the bond for redemption on November 1, 1929 and the bond was surrendered for redemption (by whom it does not appear) at some time between November 1, 1929 and February 5, 1931, and was redeemed by the payment to an undisclosed person of the sum of $1100. On May 8, 1935, some nine years after the marriage of Joan Warren and George Southward, she sued him for divorce on the ground of his willful desertion of her and on the following day Southward filed in said divorce action a 'waiver and appearance' stipulating that the court might render such judgment as might be just and equitable in the premises, and on May 14, 1935 an absolute decree of divorce was filed dissolving the bonds of matrimony between the parties whereunder each of them was 'forever released from the obligations' thereof. On May 24, 1946 Southward died, and in July John Bernard Foy, respondent therein, was appointed executor of his will. In due course appellant filed her claim for the value of the bond against the executor, which claim was rejected, and the filing of the complaint followed.

The evidence adduced was brief. Upon identification of Southward's signature plaintiff was permitted to introduce, over defendant's objection, the original receipt for the bond, which read as follows:

'Reno, Nevada, June 3--1926

Received from Joan J. Warren the following bonds

One U.S. Steel Corporation #113792-5%-1000.00

One Chicago Ry Co. bond #643-5%-1000.00

One Chicago Ry Co. bond #644-5%-1000.00

One Wabash Railroad Co. bond #11970 5%--1000.00

Above bonds are property of Joan J. Warren and are loaned to me to be used as security for a loan.

Geo M. Southward'

Plaintiff's complaint admitted that Southward had, prior to his death, returned the two Chicago Ry. Company bonds, and plaintiff voluntarily dismissed as to the Wabash Railroad company's bond, which had become worthless, so that the action involved only the United States Steel Corporation bond. Plaintiff also introduced the deposition of an officer of the United States Steel Corporation showing the redemption of the bond as above recited, and rested. Counsel for plaintiff at this time remarked to the court: 'I might say in this connection that the plaintiff at this time is a very sick woman, and I couldn't have her here, even if she could testify; and in view of the Dead Man Rule, I don't think there is anything she could say that could be admitted, so I didn't arrange to have her here. I make that explanation as to her absence.' Other facts above recited were admitted by the pleadings.

The trial court ordered the matter submitted on briefs and thereafter filed a written opinion and decision rejecting plaintiff's claim that the transaction was a bailment that created a continuing trust (whereunder it was asserted that a repudiation thereof, brought to the knowledge of the trustor, was essential to the commencement of the running of the statute of limitations) and held that the failure of Southward either to return the bond or the redemption proceeds thereof to his bailor 'constituted a conversion and was in violation of the express purpose of the bailment. Therefore, the bailment ceased between 1929 and 1932, and a cause of action in favor of the plaintiff accrued,' and that the action was barred by limitations. The trial court further held that even if it could be assumed that the purposes of the bailment could have continued until the divorce action, it then became the duty of the plaintiff to make a demand within a reasonable time and that such reasonable time was before the termination of the divorce action; that she was 'guilty or unreasonable delay' and should have made her demand at the time of the commencement of the divorce action.

The respective positions of the parties with reference to the law involved appear to be the same in this court as described by the learned district judge. Both sides have argued and briefed their positions at great length and with much care and skill. Respondent insists that appellant did not make out a cause of action under any theory of her case; that even assuming proof of delivery of the bond from the receipt admitted in evidence, there was no proof that the bond had not been returned; that the proof that the bond had been called, redeemed and cremated by United States Steel between November, 1929 and February, 1931 was entirely lacking as to the identity of the person who had surrendered it and received the money; that such person might as well have been the plaintiff as the defendant's testator. After careful consideration however, we are satisfied that plaintiff's production of the receipt constituted sufficient prima facie evidence of her ownership of the bond and of the failure of defendant's testator to return the same or pay the value thereof. Potoker v. Klein, 105 N.J.L. 183, 143 A. 375; 48 C.J. 687, Payment, § 189. The rebuttable presumption of nonpayment arising from the obligee's possession of the written obligation has been applied to bills and notes, bonds, mortgages, and receipts for money deposited. See cases cited in footnote id. ^[1]

Appellant relies squarely upon the proposition that the situation indicates a continuing trust, and until the repudiation thereof by the trustee and knowledge of such repudiation brought to the trustor the statute of limitations does not commence to run against the latter; that the rule thus asserted is equally applicable if we call the situation a bailment and that it is equally true if the gist of the action is, as determined by the learned trial judge, the conversion of the bond by the defendant's testator, as the latter had come legally into possession. Appellant further insists that the situation is precisely the same if the plaintiff's cause of action is based upon the written contract of the parties. In any of such cases, it is asserted by appellant, a demand and refusal became essential to the accrual of plaintiff's cause of action so that the statute of limitations would not commence to run until such demand and refusal. ^[2] Many authorities are cited by appellant in support of the forgoing contentions, and we are disposed to agree that they are good law. They are however not conclusive upon the point submitted for our determination. The trial court was 'of the opinion, in view of all the evidence in this case, that the plaintiff certainly failed to make a demand within a reasonable length of time * * * [and] that a reasonable, diligent and prudent person, in the position of the plaintiff, should have made a demand for the return of the bond or the proceeds from redemption at the time of the divorce action.' We are in accord with the view that plaintiff could not, by her own action in withholding a demand, create a situation whereunder she would never be barred by limitations. ^[3] Respondent relies upon the rule laid down in Wright v. Paine, 62 Ala. 340, 34 Am.Rep. 24; Codman v. Rogers, 10 Pick. 112, 27 Mass. 112, and similar cases. In the former case the court said:

'When a demand is essential, as a condition precedent to an action, it must be made in a reasonable time. The party bound to make it, can not postpone it indefinitely, and by his procrastination keep alive claims that would otherwise become dormant, and grow stale, the enforcement of which would be offensive to the policy of the law and dangerous to the rights of his adversary.'

The court then explains the results that would ensue were a plaintiff permitted to delay his demand indefinitely:

'It would be a dangerous precedent; it would endanger the estates of the dead; it would render the rights of the living uncertain and insecure; it would open the door for the introduction of stale claims, which it has been well said, have often more of cruelty than justice in them; and it would be violative of the policy of the statute of limitations, and defeat the purposes it was intended to accomplish, if without an explanation of the long delay in making demand, and the unwarrantable delay in bringing suit, after the fruitless demand, until Winston was dead, the statute was held not a bar.'

Virtually the same thing was said in Codman v. Rogers, supra, where the plaintiff waited seventeen years before demanding an accounting. His equitable remedy was held to be barred by his laches.

Appellant cites the case of Reizenstein v. Marquardt, 75 Iowa 294, 39 N.W. 506, 1 L.R.A. 318, 9 Am.St.Rep. 477, as holding that such rule applies only in cases of contract and not in cases of tort. We do not read the case as holding precisely this, and think that the case was properly decided under its facts. The principle of requiring a demand to be made in a reasonable time and under the facts and circumstances of each case, as hereinafter...