Weaver v. Leiman

Miller, J., delivered the opinion of the Court. Litigation in various forms respecting certain property which originally belonged to Conrad Leiman, has been before this Court on former occasions. By agreement, the records in those cases have been made evidence in this, and a brief statement of some of the prominent facts they disclose, is necessary to a proper understanding of the present controversy. In September, 1852, Leiman conveyed certain leasehold property in Baltimore City, improved by several houses, to Harman Schafferman, and in May, 1854, applied for the benefit of the insolvent laws, returning in his schedule no property.

William Seip was appointed his trustee, and he obtained his final discharge in due course in September, 1854. After this, in January, 1857, Schafferman re-conveyed the property to Leiman by a deed which was withheld from record until June, 1860. In March, 1860, before this deed was recorded, Schafferman sold and con ⁷¹¹ veyed the property to William H. Weaver, who thereupon entered into possession, and, as is alleged, received the rents and profits thereof, until June, 1868. In May, 1861, more than a year after the conveyance to Weaver, Leiman, for the consideration of one dime, conveyed all his estate in the property to his son, George W. Leiman, the present complainant, who was then an infant, under the age of twenty-one years, and it is upon the title acquired hy this deed that he has filed the hill in this case.

Having thus given the conveyances according to their dates, we must recur to the litigation, pending which most of them were executed. In December, 1857, one of the creditors of Leiman, (Seip, the trustee, in insolvency, having refused to do so,) filed a hill in equity to set aside the deed of September, 1852, from Leiman to Schafferman, as fraudulent and void as against the creditors of the grantor. Upon this hill a long litigation ensued, and the conveyance was finally condemned as fraudulent by the judgment of this Court in April, 1868, (Schafferman vs. O’Brien, 28 Md., 565 ,) and the property directed to he sold. Two days after this decision was rendered, William H. Dawson was appointed trustee hy the Insolvent Court in place of Seip, who had previously died.

The new trustee proceeded at once to sell the property, and sold the same on the 15th of June, 1868, for $4500. The money having been brought into Court for distribution, numerous creditors presented their claims, and various questions thereupon arose, which were settled hy this Court in the case of The Insolvent Estate of Conrad Leiman, 32 Md., 225 , the opinion in which was delivered in March, 1870. One of the questions presented in that case was, who had title to the surplus of the fund, if there should he any, after payment of creditors? Weaver claimed it under his deed from Schafferman of March, 1860, and George W. Leiman claimed it under the deed from his father of May, 1861.

The Court held that Weaver had knowledge ⁷¹² in fact, of the prior unrecorded, deed of January, 185 7,. from Schafferman to Leiman, and was not therefore a bona, fide purchaser without notice; and accordingly decided that George W. Leiman was entitled to such surplus. The case was then remanded with directions for an account to he stated, distributing the fund in accordance with the views of the Court expressed in that opinion. Upon the remanding, further exceptions were taken to the allowance of several claims and the case again came up, and was decided by this Court in an opinion which is not reported. Being again remanded, a further account was stated.

Then still further exceptions were taken to certain claims and they were disallowed. Finally, an account was stated showing a small surplus, and this account, after another appeal which was dismissed, was eventually ratified, and in December, 1871, this surplus was paid over to George W. Leiman, in accordance with the decision in 32 Md., 225 . Having thus briefly stated the previous litigation and its results, we are prepared to consider the case now before us. The hill was filed on the 27th of April, 1872, after the whole proceeds of sale of this property had been thus disposed of under the proceedings in insolvency.

It was filed by George W. Leiman, who bases his claim and right to sue, upon the deed to him from his father, Conrad Leiman, of May, 1861. The defendants are Weaver, and Dawson, the trustee in insolvency, hut it is not pretended that any relief can he had against the latter, and it is. admitted he was a mere nominal, if not an unnecessary, party. We shall therefore treat the case as if it were a proceeding against Weaver alone. The hill charges that Weaver had possession of this, property from March, 1860, until June, 1868, and during that period, received and enjoyed the rents and profits, therefrom, amounting in the aggregate, as complainant believes, to some five or six thousand dollars or more, and ⁷¹³ that during the whole of this period complainant was a minor under age, and not competent to assert or protect his rights; that he is advised he has a just claim against Weaver for the amount of the rents and profits he so received, from the date of complainant’s deed of May, 1861, or, that hut for his wilful neglect or default might have been so received; and the hill prays that an account may he taken of the rents and profits received hy Weaver during his possession of the premises from May, 1861.

In his answer, Weaver, after denying that the complainant is entitled to an account, pleads the Statute of Limitations as a full and complete bar to the suit; and hy a special replication to this plea, the complainant avers that when the cause, of complaint and right of action accrued, he was an infant under the age of twenty-one years, and that the suit was instituted within three years next after he arrived at the age of twenty-one. Most of the testimony in the case relates to the age of the complainant, hut before considering it, some preliminary questions must be disposed of. Without attempting a review of the authorities, or the reasons on which they are founded, it is safe to state that the following propositions are clearly established: 1st. As a general rule the Statute of Limitations is a bar to a hill in equity for an account, just as it is a bar to an action of account in a Court of law, Wilhelm vs. Caylor, Ex’r of Riael, 32 Md., 151 ; McKaig vs. Hebb and Brengle, Ex’rs of Booze, 42 Md., 227 . 2nd.

But if a cestui que trust demands in equity an account from the trustee, and there is an express, subsisting, and recognized trust,, neither the period of limitations prescribed hy Statute, nor length of time, is a bar to relief. 32 Md., 239 ; Lewin on Trusts and Trustees, 612; Hovenden vs. Lord Annesley, 2 Sch. & Lef, 633; Needles, et al. vs. Martin, 33 Md., 619 . 3rd. If however there is merely an implied or constructive trust, arising hy operation of law, Courts of equity ⁷¹⁴ will, as a general rule, follow and obey tbe law by applying tbe statutory limitation of time. McDowell vs. Goldsmith, 6 Md., 337 ; 2 Md. Ch. Dec., 391; 32 Md., 240 ; 2 Perry on Trusts, sec. 865.

We fail to discover in the present case any express trust which prevents tbe operation of the Statute upon the complainant’s claim. It was decided in the insolvency case ( 32 Md., 225 ) that there was an express trust as between the trustee and the creditors, which would prevent the running of the Statute as against their claims, but it was not decided, nor even intimated, that there was any such trust, as between the trustee and the complainant, who claimed the surplus remaining after creditors had been paid, as assignee of the insolvent. It was simply declared that he had title to such surplus and it was afterwards paid to him. Looking to the scope and purpose of the insolvent laws it is plain, they neither provide nor contemplate that the trustee shall become a trustee for the benefit of the insolvent himself or his assignee.

True it is, that upon his appointment and giving bond, title to all the insolvent’s property is immediately vested in the trustee, but he holds that property, and is bound to administer it, for the benefit of creditors only. That is the duty which the law requires, and that is the sole trust it creates and reposes in him. The fact however, that a petitioner is not actually insolvent, does not affect the validity of his discharge, nor oust the jurisdiction of the Insolvent Court. The surplus remaining in the hands of the trustee, after payment of debts, simply belongs to the insolvent by way of a resulting trust, and the Insolvent Court will direct it to be paid to him.

Buckey vs. Culler, 18 Md., 432 . But whether in the present case the trustee holding, as he undoubtedly did, the title to this property, had the right, and the exclusive right, to sue for and collect these rents and profits, is a very different and much more difficult question. But ⁷¹⁵ according to the view we have taken of the case, that question need not be decided. If the right of action for these rents was in the trustee alone, then he was competent to sue for them and protect the trust estate.

Hot having done so, (or at least not effectually) it is very clear that limitations had run and become a bar in favor of Weaver, the possessor of the premises and a stranger to the trust, notwithstanding the complainant may have been a cestui que trust under the disability of infancy. Crook vs. Glenn, 30 Md., 55 ; 2 Perry on Trusts, sec. 858; Wych vs. East India Co., 3 Peere Wm’s., 309. To meet this objection the complainant must take the position that the right of action was vested in him, and the case will he disposed of upon the assumption that it was so vested. At the time the complainant's title accrued under the deed of May, 1861, he was unquestionably an infant and remained so for some years thereafter.

Hence it is argued that Weaver became an intruder upon an infant’s estate, and it is said that whoever enters upon the estate of an infant will he considered in equity as guardian for such infant, who may after his majority recover the rents and profits by a hill in equity, and if the person entering, continues the possession after the infant comes of age equity will decree an account against him as guardian, and carry on such account after the infancy is determined. Drury vs. Conner, 1 H. & G., 230 . This, without doubt, is a well settled and most salutary principle, and it is cited as well to sustain the jurisdiction in equity, as to affect the operation of the Statute of Limitations. There is some force in the objection on the other side, that Weaver cannot be regarded as entering or intruding upon the infant’s estate, inasmuch as he derived title, and went into possession of these premises more than a year before the infant acquired his title to them.

But waiving this, and conceding he was such intruder, what is the result? Simply that he thereby became constructively a guardian or ⁷¹⁶ trustee of the infant. All the authorities concede this, and, as we have shown, against such a constructive trust, limitations will run. To avoid the har of the Statute, the bill must be filed within three years after the infant arrives at age.

This was done in Drury vs. Conner, 1 H. & G., 220 , and hence no question of limitations arose in that case. But apart from infancy and the existence of a trust, various reasons why the plea should not prevail in this case have been relied on, and it is insisted: 1st. That the Statute did not begin to run against the complainant until the insolvent trust was completed in January, 1812, because until then, or shortly before, it was uncertain whether there would be a surplus or not: 2nd. That at most it did not begin to run until March, 1810, when the question of title to the surplus, as between Weaver and the complainant was settled by the decision of this Court: 3rd.

That through all the previous litigation Dawson, the trustee, was acting as attorney for Weaver, and doing all in his power to protect him from this very claim for rents and profits: 4th. That when the trustee did, in July, 1810, at the request of the complainant and upon his giving him a bond of indemnity for costs, file a bill to collect these rents. Weaver in his answer set up, inter alia, the defence that the trustee had funds enough, and that suit against him could only be maintained by the party entitled to the surplus, and that suit was afterwards dismissed. No doubt the complainant might, and probably would, have encountered some embarrassment and difficulty in the assertion of his claim at a much earlier period, but an examination of the records in the previous cases, as well as in this, has satisfied us that the objections stated, are not entitled to as much weight as has been ascribed to them by his counsel in argument.

It is not stated for what reason the bill filed by Dawson was dismissed, but, ⁷¹⁷ as we understand the agreement of counsel in the present record, it was dismissed hy the complainant himself, on the 10th of May, 1872. He, in fact, instituted that suit in the name of Dawson, and then dismissed it after he had filed the present hill in his own name. It was, therefore, his own fault if he sustained any harm, either hy the institution or dismissal of that suit. It was competent for Weaver to set up all the defences he could to that bill, and it is quite clear, that by asserting in his answer to that suit, that he was liable only to the party entitled to the surplus, he is not estopped from pleading limitations to this.

Then as to the acts and