Walsh v. Walsh

• Decision Date: 02 December 1920
• Citation: Walsh v. Walsh, 285 Mo. 181, 226 S.W. 236 (Mo. 1920)
• Parties: JULIA M. WALSH and EDWARD J. WALSH, Appellants, v. JULIUS S. WALSH, MISSISSIPPI VALLEY TRUST COMPANY, WALSH FIRE CLAY PRODUCTS COMPANY, EDWARD W. HUMPHREYS, MISSISSIPPI GLASS COMPANY and FREDERICK VIERLING
• Court: Missouri Supreme Court

226 S.W. 236

285 Mo. 181

JULIA M. WALSH and EDWARD J. WALSH, Appellants, v. JULIUS S. WALSH, MISSISSIPPI VALLEY TRUST COMPANY, WALSH FIRE CLAY PRODUCTS COMPANY, EDWARD W. HUMPHREYS, MISSISSIPPI GLASS COMPANY and FREDERICK VIERLING

Supreme Court of Missouri, First Division

December 2, 1920

Appeal from St. Louis City Circuit Court. -- Hon. Vital W. Garesche Judge.

Affirmed.

Lehmann & Lehmann and Frank Y. Gladney for appellants.

(1) Plaintiffs have pursued the proper remedy. (a) The probate court has no general chancery jurisdiction. State ex rel v. Bird, 253 Mo. 580; Kelley's Probate Guide (4 Ed.), p. 110, sec. 115. (b) This suit is to be distinguished from one against an administrator (and perhaps his sureties) to recover assets reported in his final settlement, but not turned over to the distributees. State ex rel. v Welsh, 175 Mo.App. 303. (c) The circuit court is a court of general original chancery powers. State ex rel. v Dearing, 180 Mo. 64; Arnett v. Williams, 226 Mo. 118-9. (d) It is only a court having original chancery powers that can exercise jurisdiction in such case as this. Butler v. Lawson, 72 Mo. 245; Scudder v Ames, 89 Mo. 521; Estate of Glover, 127 Mo. 163-4; Payne v. Hook, 7 Wall. (U.S.) 425; Prince v. Towns, 33 F. 163. (2) The right, title and interest of the deceased in the fifty-four shares of socalled treasury stock are not affected by the fact that the shares stood in the name of another. Tufts v. Volkening, 122 Mo. 631. (3) The trust company as administrator acquired title to and held all property of the deceased as the trustee of an express trust created by statute, for the benefit of the creditors and distributees. Naylor v. Moffatt, 29 Mo. 128; Scudder v. Ames, 89 Mo. 513; Clyce v. Anderson, 49 Mo. 41; Decouche v. Savetier, 3 Johns Ch. 90. (4) The blind entry on the books of the trust company administrator under date of July 27, 1901, charging itself with only 333 shares of stock, and thereby disowning the remaining 113 shares as the property of the estate, was a fraudulent act of waste and mismanagement sufficient to disqualify it under the statute. R. S. 1899, sec. 42. (5) Failure to include the shares in dispute in the inventory was a fraudulent act and a violation of the statute. R. S. 1899, sec. 64. (6) Under the statute it was the duty of the trust company administrator to file with the inventory a statement of the contract of pledge and option to purchase, signed by deceased and then held by its chief executive officer, Julius S. Walsh, and it violated the statute by failing to do so. R. S. 1899, sec. 70. (7) Under the statute the trust company could only indorse and deliver the certificates of stock pursuant to an order of the probate court and then only (a) to a creditor in discharge of an amount of his claim equal to the amount of such stock, or (b) to the distributees. R. S. 1899, sec. 210; Cape Girardeau Co. v. Harbison, 58 Mo. 94; Chandler v. Stevenson, 68 Mo. 453; Weil v. Jones, 70 Mo. 561; State to use v. Berning, 74 Mo. 96; Mosman v. Bender, 80 Mo. 584; State ex rel. v. Dickson, 213 Mo. 91. (8) The trust company, as administrator, and Julius Walsh and Humphreys, because of their positions of confidence and trust in ascendancy over the plaintiffs, have the burden of proving that the transfer of the stock was honest and fair and that no unfair advantage was taken of plaintiffs, one of whom was a minor. Newman v. Newman, 152 Mo. 413; Cornet v. Cornet, 248 Mo. 234. (9) The blank indorsement of certificate No. 9, for 150 shares made by Edward Walsh, Jr., in 1897, was made for the exclusive purpose of hypothecating the certificate as collateral to the note held by Julius Walsh, and in recognition of the option to purchase by the latter. The right of the pledgee under the pledge and of the optionee under the contract of option to purchase, were never exercised or availed of by Julius Walsh during the lifetime of the deceased. And the answers disclaim that such rights were exercised or asserted after the death of Edward Walsh, Jr. Therefore, the power of attorney conferred by the indorsement of the certificate by Edward Walsh, Jr., was never exercised and for any other purpose whatever the indorsement and delivery was revoked by his death. Clark v. Boyd, 2 Ohio Rep. 281. Burchett v. Fink, 139 Mo.App. 385; Bromage v. Lloyd, 1 Eck. 32, 154 Eng. Reprint, 14; Kern's Estate, 176 Pa. St. 373. And by the transfer of the certificate to himself on the supposed authority of the revoked indorsement Julius Walsh acquired no title whatever. (10) The transfer of the stock in February. 1902, by defendant Julius Walsh to himself bears all the earmarks of fraud. (a) It was fraudulent per se in that he was transferor and transferee, and at the time in a position of the highest trust and confidence. Michoud v. Girod, 4 How. (U.S.) 553. (b) It was preceded and followed by much concealment. Cass County v. Green, 66 Mo. 504. (c) Extraordinary methods were resorted to in (a) keeping the whole matter from the probate court; (b) making not a scrap of writing to show the consent and knowledge of plaintiffs; (c) adopting the form of a revoking indorsement as a means of making the transfer legal in form. Baldwin v. Whitcomb, 71 Mo. 659. (d) Accepting his own statements as true, yet he acted as judge in his own cause, and thereby in his private capacity assumed and exercised to his own gain "the gravest responsibility" of a court of equity. Kinney v. Murray, 170 Mo. 701. To act as a judge in one's own cause is a flagrant violation of the policy of the law and of the sentiment of mankind, Oakley v. Aspinwall, 3 N.Y. 549; Dimes v. Canal Co., 3 H. L. 793. (e) It is when the circumstances are all viewed together, each in relation to all the others, that the fraud most clearly appears. Bank v. Hutton, 224 Mo. 71; St. Francis Mill Co. v. Sugg, 206 Mo. 155. (f) "The very plot is an act in itself." Mulcahy v. Queen, L. R. 3, H. L. 317. "The unity of the plan embraces all the parts." Swift & Co. v. United States, 196 U.S. 396. (11) Plaintiffs are entitled to recover the 2833 shares of stock or the value thereof which is presumptively par. Trust Co. v. Lumber Co., 118 Mo. 447; Momtt v. Hereford, 132 Mo. 513. They are entitled also to recover the sum received as dividends on such shares by defendant Julius S. Walsh. (12) The general denial becomes "mere burnt powder" (Ashton v. Penefield, 233 Mo. 417) in the same answer with the affirmative defense of the oral contract. State ex rel. v. Delmar Jockey Club, 200 Mo. 65. (13) Acquiescence like estoppel cannot be set up unless the person against whom it is asserted had full knowledge not only of the facts, but of his legal rights under the facts. This is peculiarily true in a transaction between trustee and beneficiary. For, the former, when dealing with the latter, is under a positive duty to impart information and advice. Garesche v. Inv. Co., 146 Mo. 436; McPike v. McPike, 181 S. W.; Newton v. Rebenack, 90 Mo.App. 674; Saint Louis Bank v. Kennett, 101 Mo.App. 397; White v. Sherman, 168 Ill. 605; Williams v. Scott, Appeal Cases 1908, H. L., 508; 1 Bigelow on Fraud, pp. 315, 6; 2 Perry on Trusts and Trustees (6 Ed.), pp. 1394, 5. (14) There is not a single element of estoppel in the conduct of the plaintiffs. Blodgett v. Perry, 97 Mo. 272; Bramwell v. Adams, 146 Mo. 83; Kenney v. McVoy, 206 Mo. 58; Fruland v. Williamson, 220 Mo. 231; Troll v. Spencer, 238 Mo. 99. (15) The Statute of Limitations as such never runs between the beneficiary and the trustee of an express trust. The possession and title of the trustee is subordinate to that of the beneficiary, and this continues until the trust is terminated by complete performance or openly repudiated by the trustee. Rubey v. Barnett, 12 Mo. 8; Dillon's Admr. v. Bates, 39 Mo. 301; Elliott v. Machine Co., 236 Mo. 567; Witte v. Storm, 236 Mo. 491; Bent v. Priest, 86 Mo. 488; Case v. Goodman, 250 Mo. 114; Canada v. Daniels, 175 Mo.App. 55. Since Julius Walsh is a trustee ex maleficio the statute does not run as to him. (16) If we accept the answers as tendering a plea of laches in the name of the Statute of Limitations and acquiescence, yet there is no room in the case for the defense of laches. "Laches presupposes not only delay in the institution of proceedings for relief, but such knowledge of the facts on which the claim for relief is bottomed as renders that delay culpable." Butler v. Lawson, 72 Mo. 249. As between the beneficiary and the trustee of an express (as distinguished from an implied or constructive) trust lapse of time cannot begin to run as a bar unless and until the trustee openly disavows the trust and unequivocally makes this fact known to the beneficiary. Smith v. Richards, 52 Mo. 582; Goodwin v. Goodwin, 69 Mo. 621; Ivy v. Yancy, 129 Mo. 507; Andrews v. Smith Co., 191 Mass. 469; Oliver v. Piatt, 3 How. (U.S.) 411; Beecher v. Hohl, 199 Mo. 330; Meriwether v. Overly, 228 Mo. 242; Shelton v. Horrell, 232 Mo. 375; Kellogg v. Moore, 196 S.W. 16; Staunton v. Thompson, 234 Mo. 15. Here there is not only no repudiation of the trust, but instead, the trust company, as trustee, and Julius S. Walsh, trustee ex maleficio, deny that any trust ever existed. Without an antecedent acceptance and acknowledgment of the trust, a repudiation thereof is as inconceivable as treason without the duty of allegiance. It would be "intolerable" to sustain the plea of laches in such circumstances. Chouteau v. Allen, 70 Mo. 343. Moreover, the fraud here, if it is established, is concealed under the guise of an innocent purchase for value, and it would be a perversion of judicial procedure to penalize the plaintiffs for a delay brought about by the fraudulent concealment of the defendants. Prevost v. Gratz, 6 Wheat. 497; Bailey v. Glover, 31 Wall. (88 U.S.) 34...