Opinion
December Term, 1822.
1. On a motion to dismiss a bill on the ground of length of time, the court will confine itself to the facts set forth in the bill, and if from them it can be collected that there was an actual or express trust subsisting between the parties, it adheres to the settled rule that, as between trustee and cestui que trust in such case, length of time has no effect.
2. Aliter in the case of an implied or constructive trust, which must be pursued within a reasonable time.
THE original bill in this case, which was filed in March, 1799, set forth that in 1764 an agreement had been entered into between the complainant therein, William Jones, and one Thomas Person, whereby the said Person was to advance to Jones the sum of £ 120, Virginia currency, and to secure the payment of the said sum with interest thereon the said Jones was to execute to Person a deed in trust for 850 acres of land in the county of Granville; that when the parties were about to execute the necessary writings, Person suggested that the trust on which the land was conveyed might be expressed in a separate writing and not in the body of the deed; and accordingly an absolute deed of bargain and sale to Person was executed by Jones; and on the other half of the same sheet of paper on which the deed was drawn was written a defeasance or condition that, if Jones did not repay the sum of money advanced, with interest thereon, when required by Person, the land should be sold by Person to pay himself, and the surplus, if any, was to be paid to Jones. The papers were executed in the presence of witnesses, who subscribed their names as such. The bill then charged the defendant Person with having fraudulently destroyed that part of the paper which contained the defeasance or condition, and proving only the absolute deed of bargain and sale, whereby the bill of sale only was recorded. The bill further stated that complainant continued in the possession of the lands until April, 1776, after which time Person took possession thereof and received the rents and profits to his own use; that during the time in which complainant (270) had possession Person repeatedly offered him another tract, provided he would remove from the land conveyed; that Person frequently told complainant he would give him more for the land than any other individual would, and thereby diverted the complainant from an advantageous sale, particularly to one Wade; that the complainant repeatedly requested Person to comply with the original contract, sell the land and pay himself, which was always refused by Person, who assigned as a reason for not effecting a sale that the debt had so frequently been changed into proc. and Virginia money that no one would buy with that incumbrance; that in 1791 Person, claiming an absolute right to the land, conveyed the same to one Samuel Williams, who is charged in the bill with notice of the trust and made a defendant. The bill alleged as a reason why earlier application had not been made to the court, poverty and the false promises of defendant.
The defendant, Person, in his answer, insisted that he purchased absolutely and without any condition, the lands mentioned in the bill, for the consideration of more than £ 200; that of this sum he paid the complainant £ 120, and agreed to pay the sheriff of the county the amount of a certain execution which he held against complainant in favor of one Wright, and also a bond on which the said Wright had commenced suit against complainant; that the aggregate amount of this execution and bond made up the balance of the consideration for the sale of the land; that the agreement of the defendant to pay the sheriff and Wright, and complainant's receipt for the sum of £ 120 paid him, were written on the same sheet of paper with the deed of bargain and sale, and (271) constituted what complainant alleged to be a defeasance or condition. The answer admitted that the deed only was recorded without the memorandum of the agreement, and affirmed the payment of the money to the sheriff and Wright, pursuant to the agreement. It alleged that, in 1768 (until which time complainant had been permitted to occupy the land, rent free) complainant became, and continued for some years afterwards, defendant's tenant, under an agreement to pay rent, a very small portion of which had ever been paid. It was admitted that the land had been sold by defendant to Williams, but it was denied that any offer had ever been made to induce complainant to remove from the land. The defendant, in his answer did not insist on the length of time during which the claim had been permitted to lie dormant, otherwise than in the following language, "This defendant cannot but be surprised that, in case any condition had been annexed to said conveyance from complainant to him, that complainant should have suffered the matter to lie dormant so long." Upon the issue joined on the plea of the defendant Williams, the jury found that he was a purchaser for valuable consideration, without notice, and he was discharged.
After the death of the defendant Person the suit was revived against his administrator, and at April Term, 1805, the executors of the complainant were made parties to the suit. It did not appear that any other proceedings had been had in the case until March Term, 1811, when complainants obtained leave to amend their bill.
The complainants, in their amended bill, which was filed in August, 1811, after reciting the substance of the former bill, showed the death of two of the executors of William Jones, and set forth that William Jones, their testator, was illiterate and ignorant; that, at the time of the agreement mentioned in the original bill, Person promised Jones (272) that if he would convey to him the land he, Person, would reconvey it, provided Jones paid him the money advanced, with interest within a certain time; and further, that Person, imposing on the ignorance of Jones, induced him to believe that the condition mentioned in the original bill was contained in the deed which he executed. It further stated that Jones, for the space of twelve years after the execution of said deed, continued in the possession of said land, positively refusing to pay Person any rent, and that at the time Jones executed the deed he was in the power of Person, who, as sheriff of the county of Granville, had in his hands executions against Jones, who, being unable to satisfy them, was in the power and under the control of Person. But it did not charge the defendant with assets. Defendant in his answer to this bill denies that Person ever made to Jones any promise to reconvey, or ever made any representations to Jones of the contents of the deed inconsistent with the truth, and sets out in his answer a copy of the agreement or memorandum which was signed by the parties. Any undue influence on the part of Person is also denied, as is the fact of the poverty or ignorance of Jones, and the possession for twelve years, alleged in the bill, if true, is stated to have been by the permission of Person.
The cause having been set for hearing in the court below, was removed by affidavit into this Court.
Gaston for defendant.
Ruffin and Seawell for complainants.
This is a motion to dismiss the bill on the ground that the (289) complainant has not prosecuted his claim within seven years, in analogy to the statute of limitations which bars an entry after that period. Whether that rule is applicable to this case must be ascertained by a careful examination of the charges contained in the bill which, for the purposes of this motion, must be considered as true. [Here he stated the material parts of the bill.]
These facts present two inquiries: 1. What is the character of the original transaction? 2. Has it undergone any change?
1. By the terms of the contract, made before any writings were drawn, Jones agreed to give Person a deed of trust for a tract of land worth $2,000, to secure the repayment of the money borrowed, which was less than $400. Afterwards when the deed was executed, Person undertook to sell the land, if the money should not be repaid upon demand. His frequent promises to Jones that he would give more for the land than any other person diverted the latter from an advantageous sale, several of which were proposed to him, and particularly one by Andrew, Wade. From the inadequacy of the price a strong inference arises that the sale was not absolute. The repeated promises of Person to make Jones a title for 300 acres of land in Granville if he would surrender the possession and confirm the title could proceed only from a consciousness that Jones had a valid equity; and in addition to this the various endeavors made by Person to procure an acknowledgment of the absolute deed without the trust, and the singular pretext for not effecting a sale, that the debt had so increased by its frequent conversion into proc and then into Virginia currency, that no one would buy with that incumbrance, produce altogether an irresistible conviction that Person was a trustee by his own express assent, and consequently not protected by the lapse of time. 17 Vesey, 97. A court of equity constantly recognizes the settled distinction between actual (290) trusts and trusts by implication; the latter must be pursued within a reasonable time; but in the former, as between trustee and cestui que trust, length of time has no effect; that is very different from the case of a constructive trust, which this Court allows a man to establish by facts and circumstances at any period after it happens. And even where length of time would render it difficult to ascertain the fact, as well as where the fact is easily ascertained, and relief would have been originally given on the ground of a constructive trust, it is refused after long acquiescence; and this from the danger that would otherwise arise to the security of property. "If a trustee is in possession and does not execute his trust, the possession of the trustee is the possession of the cestui que trust; and if the only circumstances is that he does not perform his trust, his possession operates nothing as a bar because his possession is according to his title; just as in the case of a lessee for years, though he does not pay his rent for 50 years, his possession is no bar to an ejectment after the expiration of this term, because his possession is according to the right of the party against whom he seeks to set it up." 2 Schoale Lefroy, 633.
2. Taking it then for granted that Person was, in the inception of this transaction, a trustee by express contract for Jones, has anything occurred to exempt him from the responsibilities of that character? His having committed the absolute deed to registration without the trust or defeasance (I confine myself strictly to the bill) was a fraud too gross and palpable to meet with a construction in the least degree favorable in this Court. There are many cases where a person who is not a trustee originally shall be constituted such by a decree of a court of equity founded on the fraud, and in such cases length of time will bar from the discovery of the fraud. But it would be an absurdity that a fraud superadded to a trust should extinguish or merge it; that men should be encouraged to commit crimes as the certain means of eluding their contracts. Nor can (291) this pretense be reconciled with the doctrine of equity that if a mortgagee, executor, trustee, tenant for life, etc., who have a limited interest, gets an advantage by being in possession, "or behind the back" of the party interested in the subject, or by some contrivance or fraud, he shall not retain the same for his own benefit, but hold it in trust; that a trustee shall gain no benefit by any act done by him as trustee, but that such benefit shall accrue to his cestui que trust; nor shall he purchase part or the whole of the estate of which he is trustee. 1 Ball Beatty, 46, 47; 2 Ball Beatty, 290, 298; 1 Brown, 198; 1 Ch. Cas., 191; 5 Ves., 707.
All these cases proceed on a rule of general policy, to presume the possibility of fraud and abuse since trustees, from their situation and the knowledge it enables them to acquire, may be induced to take advantage of their cestuis que trustent. It might be sufficient to test this by the principles of natural justice and the instinctive suggestions of every man's moral sense, even if there were no decided cases, for every honest mind would revolt at the bare statement of the transaction as set forth in this bill. Jones left the possession in the confidence of Person's promise to make him a title to 300 acres of land in Granville County, and Person obtained the possession by means of that promise. This I take to be the fair construction of the bill, though it is not so stated in precise terms. Now, if Person had complied with his promise, the trust would have been executed, and Person's possession be thence-forward adverse to Jones's; but while it remained unexecuted, Person was still the trustee to Jones under the first agreement. Until he made a deed for the Granville land he was still bound to sell Jones, under the original agreement, and the possession he acquired must enure to the benefit of Jones. The possession comes from the same root with (292) the title and is bound by the same equity, otherwise the nature of the contract might be changed, and the rights of the complainant be destroyed by a trick of the adverse party. If a trustee holds a lease for the benefit of cestui que trust and avails himself of his situation to obtain a new lease, he shall hold it for the benefit of cestui que trust. 1 Douglas, 269. So if a guardian takes a renewed lease for lives, the trust follows the actual interest of the infant, and goes to his heir or executor, as the case may be. 18 Ves., 274; 2 Johns., Ch. Ca., 33.
Under this view of the case, founded on the facts stated in the bill, I am of opinion that Person continued to be a trustee for Jones, under the original agreement, as long as he held the land, and that he is liable as such, notwithstanding the lapse of time.
Let the case be referred and the Court afterwards (295) decreed according to the report of the master, against the defendant, to be satisfied de bonis intestati.