Manaudas v. Mann

Strahan, C. J.

At the trial of this cause in this court, respondent’s counsel argued both the grounds specified in his demurrer. Their examination, therefore, becomes necessary to a proper disposition of this case. In Manaudas v. Heilner, 12 Or, 335 , much of the history of this controversy is noted. In that case, it appeared that the appellants Heilner & Cohn had sold the barber shop for six hundred *529 and seventy-five dollars. It did not then appear, it seems, that the barber shop included lot two in block two in Fisher’s addition; but inasmuch as the appellants had credited the plaintiff with six hundred and seventy-five; dollars on their exhibits, he should not have the property-back unless he paid the appellants that sum. This adjudication fixed the amount that the appellant was to pay in order to be entitled to a re-conveyance of his property;- and it is alleged in the complaint, and admitted by the-demurrer, that he did pay to said Heilner & Cohn the said; sum of six hundred and seventy-five dollars, on the fourteenth day of November, 1885, and that on that day they-executed to plaintiff a deed for said premises. If Heilner & Cohn had not, prior to that date, conveyed said property to Mann, the effect of their deed to the plaintiff would have been to restore to him his property. It is now insisted that whatever title Heilner & Cohn had in said property had-been transferred by them to the defendant; that their-interest was six hundred and seventy-five dollars; that by their deed that interest was conveyed to Mann, and that sum must be paid to the defendant before the commencement of a suit against him; in other words, the payment of this money to him is a condition precedent to the plaintiff’s right to be heard in a court of equity. The defendant Mann, after he had performed his agreement with the-plaintiff to convey this property to the plaintiff or his assigns, by actually conveying the same to Heilner & Cohn, had no further interest or concern in the business. His connection with the transactions then properly terminated. If he thereafter interfered in the matter, he is in the same situation any other person would have been in who undertook to purchase of Heilner & Cohn what they had no right to sell or convey.

In this case, the defendant Mann took the deed from Heilner & Cohn with knowledge of all the facts and circumstances under which Heilner & Cohn held the same. *530 Whatever right he acquired under the deed was for the plaintiff’s use and benefit, and he held simply as the ¡trustee for the plaintiff. He has been in the possession of ¡the property for a long time, receiving the rents and profits. It stands admitted on the record that the amount of the ¡rents and profits which he has actually received exceeds ifive thousand dollars. In such case he is in no condition .to demand the payment to him of this six hundred and seventy-five dollars before the plaintiff can have a standing in court. He already has a large amount of the plaintiff’s money in his -hands, for which he is liable to an account, and it does not appear to us that Mann is in a situation to demand the payment of this money. The first cause of demurrer is therefore not well taken.

The other objection presents the question whether or mot the plaintiff’s suit is barred by the statute of limitations. In determining this question, something depends • on the character of the title to the property which Heilner & Cohn acquired and the capacity in which they held the -same. It was not contended that they owned the property -.absolutely; but it is claimed by the plaintiff that the -property in their hands constituted an express trust, while ■the defendants claim that the trust was only implied. “All possible trusts,” says a learned American author, “whether of real or personal property, are separated by a principal line of division into two great classes—those created by the intentional act of some party having dominion over the property, done with a view to the creation of a trust, which are express trusts; those created by operation of law, where the acts of the parties may have no intentional, reference to the existence of any trust—implied or resulting, and constructive trusts.” (2 Pom. Eq. Jur. § 987.)

Without entering more minutely into a discussion of the various classifications of trusts, this most general division suffices for the present. The trust in this case was created by the intentional act of the plaintiff in *531 making the assignment to Heilner & Cohn, hy1 means of which they were authorized to demand of Mann the conveyance of the legal title to the property, pursuant to the terms of his bond. The legal title, when thus acquired, was held by them in trust for the plaintiff under and pursuant to the express authority they had for its acquisition. When Mann took the title to this property from Heilner & Cohn, it was with full knowledge of the capacity in which they held it, and of the plaintiff’s rights therein; and, therefore, he took it impressed and affected by the same trusts by which it was affected when Heilner & Cohn held it. The deed of Heilner & Cohn to Mann did not change or affect the rights of the parties in this property in any way except that by that conveyance Mann became the trustee instead of Heilner & Cohn.

Having said this much as to the nature of this trust, it remains to ascertain whether or not the plaintiff’s rights are barred by the statute of limitations. This question was considered in Decouche v. Sevetier, 3 Johns. Ch. 190 ; 8 Am. Dec. 478 , and it was there held that no time bars a direct trust as between the trustee and cestui que trust. The Chancellor added: “ The settled rule is (and so it was recently declared by the Master of Rolls, in Cholmondeley v. Clinton, 2 Mer. 360,) that so long as the trust subsists, the right of the cestui que trust cannot be barred by the length of time during which he has been out of possession, and that he can only be barred by barring and excluding the estate of the trustee.” So it was held in Prevost v. Gratz, 6 Wheat. 482 , that, generally, length of time is no bar to a trust clearly established to have once existed; and where fraud is imputed and proved, length of time ought not to exclude relief. The principle is stated as elementary, that as between trustee and cestui que trust in the case of an express trust, the statute of limitations has no application, and no length of time is a bar. (2 Perry on Trusts, 863.) Many reasons might be given for this rule, but one seems entirely satisfactory to us. *532 The trustee holds in right of the cestui que trust, and the law will not permit him to begin to hold adversely until he shall first have returned the property to the real owner, and given notice of his own interest. As long as he holds in the right of the cestui que trust, his possession cannot be hostile or adverse.

These conclusions require a reversal of the decree, and it remains to make some suggestions as to the decree to be entered. The defendant stands in the shoes of Heilner & Cohn; and the plaintiff in the former litigation with them established his right to the relief which he seeks as against them, and we are not disposed to send the case back with leave to the defendant to answer generally. A decree will therefore be entered here that the defendant convey the property in controversy, by good and sufficient deed, to the plaintiff within sixty days after the entry of the decree in the court below; and that in default thereof, the decree operate to transfer the title and stand in lieu of such deed.

It does not appear from the complaint that Mann actually paid Heilner & Cohn the six hundred and seventy-five dollars; but if he did, he knew the property belonged to the plaintiff, and did so in his own wrong. If Mann paid to Heilner & Cohn the six hundred and seventy-five dollars, then they have received it twice,—once from the plaintiff under the order of this court, and once from Mann. We do not think Mann’s conduct in these transactions put him in a favorable light, or recommend him to the favor of a court of equity. If he paid this money to Heilner & Cohn, he must pursue such remedy as the law affords, if any, to reclaim it from them.

The cause will be remanded to the court below, with the suggestion that the defendant Mann be permitted to answer in relation to the rents'and profits he has received, and also as to the value of any improvements he may have placed upon the lot, taxes paid by him, etc.; that an account *533 be taken between the parties, and that the court make such further decree thereon as equity and justice shall require.

[On a rehearing of this case, the respondents were permitted to apply to the court below for leave to answer on condition that they deposit with the clerk there the sum of six hundred and seventy-five dollars and interest thereon since the payment thereof to Heilner & Cohn by the appellant, the same to remain on deposit there until otherwise disposed of by order of the court below.— Reporter.]