Opinion
January 30, 1934.
March 19, 1934.
Equity — Laches — Death of principal party — Circumstances — Interval of time — Assertion of claim — Claim against decedent's estate — Fiduciaries Act of June 7, 1917, P. L. 447.
1. The rule that equity will not enforce a stale claim is peculiarly applicable where the difficulty of doing entire justice arises through the death of a principal participant in the transaction complained of. [446]
2. The question of laches does not depend, as does the statute of limitations, upon the fact that a certain definite time has elapsed since the cause of action accrued, but upon whether, under the circumstances of the particular case, plaintiff is chargeable with want of due diligence in failing to institute or prosecute his proceeding. [446]
3. In determining whether a person is guilty of laches in prosecuting a claim, it is immaterial that he asserted his rights, if he took no legal steps to establish them. [447]
4. One who asserts an outstanding right against the estate of a decedent must proceed with due diligence within the period indicated as reasonable by the Fiduciaries Act of June 7, 1917, P. L. 447. [446-7]
5. A bill for an accounting of stock, alleged to have been fraudulently sold by the pledgee, will be dismissed for laches where it appears that the plaintiff had knowledge of the sale of the stock almost immediately thereafter and through counsel informed defendant of his claim but did not file his bill until three and a half years after the sale and fifteen months after the death of the pledgee, and the means of fully resisting the allegations of fraud have perished with the decedent. [443-8]
Before FRAZER, C. J., SIMPSON, KEPHART, SCHAFFER, MAXEY, DREW and LINN, JJ.
Appeal, No. 367, Jan. T., 1933, by plaintiff, from decree of C. P. No. 4, Phila. Co., Dec. T., 1931, No. 9329, in case of Percy O. Bangert v. Provident Trust Company of Philadelphia, executor under the will of John J. Tyler, deceased, et al. Decree affirmed.
Bill for accounting. Before BROWN, J.
The facts are stated in the opinion of the lower court, BROWN, J., which is as follows:
I. STATEMENT OF THE PLEADINGS.The bill prays that plaintiff be declared the owner of 83 shares of stock of The Knowlton Turnpike and Bridge Company and of 8 1/3 shares of stock of The Knowlton Bridge Company, which are in possession of the defendant, Provident Trust Company, as executor of the will of John J. Tyler, deceased, and for an accounting, averring, inter alia, that Tyler advanced the sum of $155,000 for the purchase of all the stock of the two companies pursuant to agreement between him, plaintiff, and three other men whereby the profits derived from the sale of the companies were to be divided one-third to him and the remaining two-thirds among the others; that certificates of stock of the companies were issued to the parties in accordance with their respective interests; that on March 17, 1927, plaintiff deposited his certificates with Tyler as collateral security for his note of $25,856.02, payable one year from such date; that on April 16, 1928, Tyler, with intent to defraud plaintiff, obtained from him an option for 30 days to sell his stock at such price or prices as in Tyler's judgment would be proper but not less than what Tyler received for his own stock, which option was extended for an additional period of 60 days from May 8, 1928; and that in pursuance of his fraudulent intention of eliminating plaintiff as a stockholder in the two companies, in violation of the partnership relationship existing between the parties, and without demand for payment of plaintiff's note and without notice to him, Tyler sold plaintiff's stock at public auction on June 6, 1928, and became the purchaser thereof.
The answer denies the existence of any partnership relationship between the parties, that the stock was sold without any previous notice and demand, and also any fraud or fraudulent intent upon Tyler's part, and alleges, inter alia, that plaintiff has been guilty of laches.
From the admissions in the pleadings and the testimony, I make the following
II. FINDINGS OF FACT.1. On March 17, 1927, plaintiff made and delivered to John J. Tyler, his note in the sum of $25,856.02, payable one year after date, with interest at 6 per cent per annum, and deposited with Tyler, as collateral security therefor, certificate No. 29 for 83 shares of the capital stock of The Knowlton Turnpike and Bridge Company and certificate No. 9 for 8 1/3 shares of the capital stock of The Knowlton Bridge Company, with irrevocable stock powers for their transfer.
2. On June 6, 1928, Tyler exposed for sale at public auction, held by Barnes and Lofland, of Philadelphia, these shares of stock, and became the purchaser thereof.
3. On July 18, 1928, Arthur Littleton, Esq., a member of the firm of Morgan, Lewis Bockius, Philadelphia lawyers, representing the plaintiff, discussed the matter with Tyler's attorney, Gerald Ronon, Esq., and informed the latter that plaintiff fully expected to press his claim. He then asked plaintiff to come in so they could take the matter up if there were any pleadings to be prepared, but he did not come in and nothing further was done.
4. In September of 1928, William A. Gray, Esq., also of the Philadelphia Bar, on behalf of plaintiff, communicated with Ronon and inquired into the matter, but made no demand of any kind and proceeded no further.
5. Tyler died on October 29, 1930, having previously executed a last will and testament, wherein he appointed the Provident Trust Company his executor and trustee, which will was duly probated and letters testamentary thereon granted to that company on November 6, 1930.
6. No legal proceedings were instituted by the plaintiff until the present bill was filed on January 29, 1932.
III. DISCUSSION."Nothing can call forth" a court of equity "into activity but conscience, good faith, and reasonable diligence; where these are wanting the court is passive and does nothing. Laches and neglect are always discountenanced, and therefore, from the beginning of this jurisdiction, there was always a limit to suits in this court": Kinter v. Commonwealth Trust Co., 274 Pa. 436, 441.
The gravamen of the bill is fraud alleged to have been committed by John J. Tyler by the sale of the stock on June 6, 1928. That plaintiff had knowledge of the sale almost immediately thereafter is evidenced by his consulting two lawyers, who discussed the matter with Ronon, Tyler's attorney, in July and September, 1928. Although one of them told the latter that plaintiff expected to press his claim, no action was taken until the present bill was filed on January 29, 1932. In the meantime Tyler died on October 29, 1930, more than two years after notice had been given him that plaintiff felt aggrieved by what he had done. Even then plaintiff did not proceed but waited fifteen months. It seems to me that by his conduct plaintiff has lost his right to equitable relief.
"He who would rescind a contract by reason of fraud must act promptly . . . . . .": Kinter v. Commonwealth Trust Co., supra, 439. "Equity will not lend its aid to one who has slept upon his rights until the original transaction is obscured by lapse of years and death of parties": Id., page 440. "The rule [that equity will not enforce a stale claim] is peculiarly applicable where the difficulty of doing entire justice arises through the death of the principal participants in the transaction complained of . . . . . .": Patton et al. v. Commonwealth Trust Co., 276 Pa. 95, 100. See also McGrann v. Allen et al., 291 Pa. 574, 579, 580. Plaintiff had knowledge of what Tyler had done while the latter was alive, and if he had intended to press his claim, he should have done so when Tyler could have defended himself against the charge of fraud. Death has sealed his lips, and he is not here to defend himself against the fraudulent motives attributed to him. Although his attorney may be more or less familiar with what took place, the means of fully resisting the allegations have perished with the man who is charged therewith. By waiting until after his death, plaintiff has not shown good faith, and has prevented exact justice from being done.
"The question of laches does not depend, as does the statute of limitations, upon the fact that a certain definite time has elapsed since the cause of action accrued, but whether, under the circumstances of the particular case, plaintiff is chargeable with want of due diligence in failing to institute or prosecute his proceeding: Townsend v. Vanderwerker, 160 P. S. 171": Kinter v. Commonwealth Trust Co., supra, 443. See also McGrann v. Allen et al., supra, 580. Plaintiff did not act with reasonable diligence, and he has not attempted to show facts such as might excuse his laches. On the contrary, it appears that when Littleton, whom he consulted in July of 1928, after discussing the matter with Ronon, asked him to come in so that they "could take the matter up if there were any pleadings to be prepared," he did not do so. He chose to wait until the mouth of the man whom he charges with fraud was closed by death.
Furthermore, not being content to wait until after Tyler's death, he delayed fifteen months more before instituting this proceeding against his executor. "If we examine the Fiduciaries Act of 1917 (June 7th, P. L. 447), there is found an evident legislative purpose that estates shall be promptly closed, so that the rights of devisees and heirs may be determined. This is shown by the fact that the executor or administrator is required to advertise that all claims must be presented within six months, that an account shall be filed within that time, or may be compelled by the creditors, with the barring of any demand for a share in distribution if not presented at the audit which follows. Likewise, we find that no debt whatsoever shall be enforced against real estate, unless the subject of suit within one year: Kirk v. Van Horn, 265 Pa. 549. As stated by the commissioners who framed the act, the shortening of the time for the adjustment of all demands, and a final accounting, was the result attempted to be attained.
"If there be an outstanding assertable right against the estate, it must be proceeded against with due diligence, and the legislature has indicated the period deemed reasonable": McGrann v. Allen et al., supra, 580, 581.
Plaintiff contends, however, that his claim was presented before Tyler's death, but, whether or not formal demand for the return of the stock was made, he delayed action. "It is immaterial that he asserted rights, if he took no legal steps to establish them: 10 R. C. L. 402; Mackall v. Casilear, 137 U.S. 556": McGrann v. Allen et al., supra, 580.
It seems to me that the following from the opinion of Mr. Justice KEPHART in Hirst's Est., 274 Pa. 286, at page 288, aptly describes plaintiff's bill: ". . . . . . it is a stale claim against an estate, and meets the objection expressed in Gilbraith's Est., 270 Pa. 288, 291, that ' "Claims against a dead man's estate, which might have been made against himself, while living, are always subjects of just suspicion, and our books, from Graham v. Graham, 34 Pa. 475, to Miller's Est., 136 Pa. 239, 249, are full of expressions by this court of the necessity of strict requirement of proof." . . . . . . Experience has demonstrated not only the wisdom of these rules, but the necessity for even more strictly adhering to them, and we propose to use the light thus cast upon our pathway.' See also Donohoe's Est., 271 Pa. 554, 558."
Being of the opinion that plaintiff's bill should be dismissed because of his laches in filing it, I deem it unnecessary to find the facts pertaining to the allegations of fraud or to discuss this and other questions raised by the parties.
I have, therefore, come to the following
IV. CONCLUSION OF LAW:The bill should be dismissed on the ground of laches.
Final decree entered dismissing bill. Plaintiff appealed.
Error assigned, inter alia, was decree, quoting record.
Robert T. McCracken, with him William C. Ferguson, Jr., of Slocum Ferguson, for appellant.
Richard K. Stevens, of Stradley, Ronon, Stevens Denby, for appellees.
Argued January 30, 1934.
This appeal by plaintiff is from a decree of the Court of Common Pleas No. 4 of Philadelphia County dismissing his bill in equity on the ground of laches. Nothing need be added to what has been so well said by the learned judge of the court below in his opinion.
The assignments of error are all overruled and the decree is affirmed on the chancellor's adjudication.