Opinion
18103.
SUBMITTED JANUARY 14, 1953.
DECIDED FEBRUARY 24, 1953.
Equitable petition. Before Judge Nichols. Floyd Superior Court. November 25, 1952.
Dudley B. Magruder Jr. and Wright, Rogers, Magruder Hoyt, for plaintiff in error.
Maddox Maddox and Gary Hamilton, contra.
1. Where an unmarried man who left no children surviving him died intestate, leaving his mother and six brothers and sisters as his only heirs at law, the mother and the brothers and sisters each inherited an undivided one-seventh interest in the realty owned by the intestate at the time of his death, and they became tenants in common as to such realty. Code, § 113-903; Harris v. Mandeville, 195 Ga. 251 ( 24 S.E.2d 23). See also Stonecypher v. Coleman, 161 Ga. 403 ( 131 S.E. 75).
2. Where, following the death of such a person, his heirs at law enter into an agreement whereby one of the brothers, who is the defendant, and who was a partner in business with the deceased, is to take charge of and manage the business and properties of the deceased for a period of seven years, in order to discharge any outstanding indebtedness against the estate, and protect the estate for the benefit of himself and remaining heirs, who are the plaintiffs, such brother is not only a tenant in common with his mother and other brothers and sisters as to the realty belonging to the intestate at the time of his death, but is agent of the others for the purposes of the agreement; and, because of the relationship of principal and agent existing between the plaintiffs and the defendant, the plaintiffs had a right to expect a full revelation of all pertinent facts which might jeopardize their rights in the property entrusted to the defendant, and the failure to reveal such facts by the defendant amounted to such fraud as would extend the right of the plaintiffs to bring an action to recover their property at any time within the period of limitations after the discovery of the fraud. Larkins v. Boyd, 205 Ga. 69 ( 52 S.E.2d 307).
3. Where the estate of the decedent consisted in part of land, and one of the heirs at law of the decedent is in possession thereof under an agreement with his cotenants to act as their agent, and he procures another person to administer on the estate for the purpose of divesting the title of the other heirs at law and obtaining it himself, and thus obtains the title, and conceals his acts and doings with respect thereto from his cotenants and principals, a court of equity would decree such title to be void, and the defendant to hold as trustee for those entitled to it. See, in this connection, Cowart v. Young, 74 Ga. 694.
4. "The relation of principal and agent is a fiduciary one and the latter can not make advantage and profit for himself out of the relationship, or out of knowledge thus obtained, to the injury of his principal; and the agency being established, the agent will be held to be a trustee as to any profits, advantages, rights, or privileges under any contract made and obtained within the scope and by reason of such agency; and where the agent invests such profits in property or places the same to his credit in a bank, he will be held to hold the same as trustee for the principal, and the latter can maintain in a court of equity an action to trace such profits into such investments, and to enjoin the agent . . from selling, disposing of, or encumbering any such profits or any property in which the same have been invested." Stover v. Atlantic Ice Coal Corp., 154 Ga. 228 ( 113 S.E. 802).
5. "Constructive trusts are such as are raised by equity in respect of property which has been acquired by fraud, or where, though acquired originally without fraud, it is against equity that it should be retained by him who holds it." O'Neal v. O'Neal, 176 Ga. 418 (2) ( 168 S.E. 262); Murray County v. Pickering, 196 Ga. 208 ( 26 S.E.2d 287); Hadaway v. Hadaway, 192 Ga. 265 ( 14 S.E.2d 874). The allegations of the petition were sufficient to allege a constructive trust.
6. "The rule that, in cases of fraud, the statute of limitations begins to run only from the time of the discovery of the fraud, will not apply where the party affected by the fraud might, with ordinary diligence, have discovered it. But the failure to use such diligence may be excused where there exists some relation of trust and confidence, as principal and agent, client and attorney, cestui que trust and trustee, between the party committing the fraud and the party who is affected by it, rendering it the duty of the former to disclose to the latter the true state of the transaction, and where it appears that it was through confidence in the acts of the party who committed the fraud that the other was prevented from discovering it." Kirkley v. Sharp, 98 Ga. 484, 489 ( 25 S.E. 562). Where a person sustains towards others a relation of trust and confidence, his silence when he should speak, or his failure to disclose what he ought to disclose, is as much a fraud in law as an actual affirmative false representation. Morris v. Johnstone, 172 Ga. 598 (3) ( 158 S.E. 308).
7. If the sole question is one as to the length of time which has elapsed between the accrual of the right and the institution of the action, the question as to whether the action is barred would be one of law; but where, as in this case, there are facts involving fraud and excuses for delay in discovering the fraud, the question becomes one of mixed law and fact, and is a proper question for determination by a jury under proper instructions from the court. Hickson v. Bryan, 75 Ga. 392; Morris v. Johnstone, 172 Ga. 598, 605 ( 158 S.E. 308); Larkins v. Boyd, 205 Ga. 69 ( 52 S.E.2d 307).
8. "There can be no adverse possession against a cotenant until actual ouster, or exclusive possession after demand, or express notice of adverse possession; in either of which events the cotenant may sue at law for his possession. . . [Code, § 85-1005]. If one tenant in common receives more than his share, he is liable to account to his cotenant for such surplus, and the statute of limitations does not commence to run in his favor, so as to bar an action of accounting by his cotenant, until the tenant begins to hold such surplus adversely to his cotenant and knowledge of that fact comes to the latter." George v. Bullard, 178 Ga. 589 (2) ( 173 S.E. 920).
9. Under the allegations of the petition in this case, the statute of limitations did not begin to run until the plaintiffs had actual notice that the defendant had sought to acquire title to the realty of the decedent at an alleged fraudulent administrator's sale, and was claiming it adversely to them, which they alleged they discovered only six months prior to the bringing of the petition, and that their failure to discover it sooner was due to the trust and confidence reposed in the defendant as their cotenant and agent, and his failure to disclose to them his and the administrator's acts and doings relative to the purported sale of the property. The plaintiffs' cause of action was not barred by the statute of limitations. Code, § 3-807.
10. "There is no absolute rule as to what constitutes laches or staleness of demand, and no one decision constitutes a precedent in the strict sense for another. Each case is to be determined according to its own particular circumstances. . . Laches is not, like limitations, a mere matter of time, but principally a question of the inequity of permitting the claim to be enforced, an inequity founded on some intermediate change in conditions." Equitable Building Loan Assn. v. Brady, 171 Ga. 576, 585 ( 156 S.E. 222); Hadaway v. Hadaway, 192 Ga. 265, 269 ( 14 S.E.2d 874). "The equity of a party who has been misled is superior to that of him who wilfully misleads him." Code, § 37-109. There is nothing in the petition to show any delay on the part of the plaintiffs in bringing their action, after the discovery of the fraud of the defendant, which would render the ascertainment of the truth more difficult; and the ground of the demurrer that the plaintiffs are barred by laches is without merit. Larkins v. Boyd, 205 Ga. 69 (2) ( 52 S.E.2d 307); Bowers v. Dolen, 187 Ga. 653 (3) ( 1 S.E.2d 734).
11. Applying the foregoing principles to the petition in the instant case, it stated a cause of action and is not barred by either the statute of limitations or by laches.
12. Other grounds of demurrer, not specifically dealt with, are without merit.
Judgment affirmed. All the Justices concur, except Atkinson, P. J., not participating.
No. 18103. SUBMITTED JANUARY 14, 1953 — DECIDED FEBRUARY 24, 1953.
The petition as amended, filed July 3, 1952, alleges substantially that J. Fred Brown, who was never married and left no children surviving him, and whose father was dead, died intestate on May 24, 1941, and left surviving him seven heirs at law, consisting of his mother and brothers and sisters, the mother and one sister having since died, the sister leaving as her only heirs at law three children who are named as plaintiffs along with other brothers and sisters, who bring this petition against Joe M. Brown, one of the brothers of the deceased.
It is alleged: that J. Fred Brown and the defendant, Joe M. Brown, were engaged in certain designated businesses, each having an undivided one-half interest, and that they were partners with one F. W. Shropshire in another business known as "Brown-Shropshire Warehouse Company," J. Fred Brown owning an undivided one-third interest therein; that both J. Fred Brown and Joe M. Brown were actively engaged in managing and operating the said partnerships, giving all of their time thereto, none of the plaintiffs having any interest therein; that on the Sunday following the death of J. Fred Brown, the defendant Joe M. Brown asked all of the brothers and sisters to meet with him at his mother's home, and all were then present; that at the meeting the defendant stated that he and his deceased brother had been engaged in businesses together, and each had prepared a will for the benefit of the other, but neither of said wills had ever been executed, and that the estate of his brother would have to be divided among the heirs, but it would be to every one's best interest not to have a forced sale, and stated that, if agreeable, he would take charge of and run said businesses and look after the said estate; that there were some outstanding obligations, but that all of these obligations could be liquidated within seven years if he was given that period of time; and that in the meantime he would see that any emergencies such as sickness or death could and would be taken care of by him; that, having complete confidence in the honesty, integrity, and ability of their son and brother, the defendant, they agreed to the proposition and that he should assume control of the estate and operate the said businesses for said period of time, and that there would be no liquidation of the estate until after said period of time had expired; that none of the petitioners understood that there was to be any administration on the estate, but understood that the defendant was to take possession and operate the same under the agreement entered into at said meeting, and as a result thereof they dismissed the same from their minds and expected their brother to carry out said agreement to look after said estate and to protect their interests therein.
The petition further alleges: that, notwithstanding this agreement, the defendant almost immediately, and on June 30, 1941, filed a petition in the court of ordinary praying for the appointment of a named person as temporary administrator of the estate, and that such person was appointed; that thereafter, and about August 4, 1941, the defendant filed his petition in the Court of Ordinary of Floyd County praying that an administrator be appointed upon the estate of J. Fred Brown, and on his representation that the majority in interest of said estate had agreed to the appointment — which representation was false, as none of the petitioners had any knowledge that any such petition was pending, and none of them had agreed to the appointment, all of which was a part of the scheme and device of the defendant to secure all of the property of J. Fred Brown to the exclusion of the rights of the plaintiffs — a named person was appointed administrator of the estate of J. Fred Brown, and the defendant signed the bond of the administrator as surety thereon; that the administrator thereafter filed an inventory and appraisement of the estate showing both real and personal property, copy of which was attached to the petition as Exhibit "A", and it is alleged that all of the property therein listed was a part of the estate of J. Fred Brown and belonged to him at the time of his death, as well as other property.
It is further alleged: that thereafter, at a purported sale of the lands and property described in the inventory, the defendant, Joe M. Brown, purchased the same from the administrator for a purported price of $21,134.52; but that this sum was never paid by the defendant to the administrator, and the only sum ever paid by the defendant was the cost of administration, amounting to $2171.93; and that none of the plaintiffs ever received any part of their distributive share in the estate of the deceased, because the defendant represented to the administrator that all of the interests of the plaintiffs had been assigned and belonged to him, all of which was untrue.
The petitioners allege that they never had any notice or knowledge of the administration on the estate, or of any of the acts and doings of the administrator or of the defendant with respect thereto, until about six months prior to the filing of the present petition; that neither the administrator nor the defendant ever informed the plaintiffs of any of their acts and doings with reference to the said estate.
The petition alleges: that the acts of the defendant in acquiring the properties belonging to the estate of their deceased brother constitute a fraud; that, on account of said fraudulent acts, he obtained title to the property described in the inventory which rightfully belongs to the plaintiffs, with the exception of a one-sixth interest therein, belonging to the defendant as an heir at law of his deceased brother and mother; that, on account thereof, a trust was implied, and the defendant is holding the same, with the exception of said interest, in trust for the plaintiffs; that they are informed and believe that all of the real estate belonging to the estate of J. Fred Brown is still owned and in the possession of the defendant, but, should it appear that he has sold any part thereof, that he be required to account to the plaintiffs therefor, together with interest thereon at the rate of seven percent; that they are informed and believe that the partnership business known as "County Line Liquor Store" has been liquidated, and that the defendant received therefor a sum in excess of what is shown as the purchase price at the purported administrator's sale; and that the business known as "Brown Transfer Storage Company," together with its franchises, certificates of right to do business, and physical properties have been sold by the defendant at and for approximately $100,000; and that the defendant has continued the other partnership business known as "Brown-Shropshire Warehouse Company," from which large sums have been earned and received by the defendant; that all sums which were expended by the defendant in acquiring possession of the property and which were a legal claim against said estate have been fully paid from rents, issues, and profits of said property; but that, if they have not been paid, the petitioners desire to do equity, and that in an accounting the defendant should receive credit for any and all amounts which were expended by him and which are legally due to him.
The petition prayed: for process; that the court decree that the defendant is and was holding said property described in Exhibit "A" in trust for their benefit, and that they are and were the owners of interests therein as set forth in the petition, and any such property as may now be in possession and control of the defendant coming from the estate of J. Fred Brown; for an accounting between the parties, and for a judgment against the defendant for such sums as might be found to be due them and each of them; that the defendant be temporarily and permanently restrained and enjoined from selling, transferring, or in any way changing the status and title to any of said property, or the proceeds therefrom, until final adjudication of this proceeding and the payment of any judgment that might be rendered against him in favor of the plaintiffs; and for general relief.
To this petition the defendant demurred on the grounds: (1) that the petition fails to state a cause of action; (2) that any cause of action which the plaintiffs might have had against the defendant by reason of the facts alleged is now barred by the statute of limitations; (3) that any cause of action which the plaintiffs might have had against the defendant by reason of the facts alleged is now barred and cannot be maintained because of the lapse of time shown by the petition, the same being barred by reason of the equitable doctrine of laches; (4) that any cause of action the plaintiffs have should be brought against the administrator and not against this defendant. There were several other grounds of demurrer to various portions of the petition raising these same issues, and certain special demurrers, all of which were overruled by the trial court; and to this judgment the defendant excepts.