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Timestamp: 2019-04-22 10:08:40+00:00

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ADOLPH C. STUCK, administrator de bonis non, vs. GEORGE B. SCHUMM.
The right to maintain a suit in equity for an accounting of money held in trust by one who, after the death of the beneficiary of the trust intestate and previous to the enactment of St. 1 1934, c. 116, amending G. L. (Ter. Ed.) c. 230, s. 5, repudiated the trust, was in the administrator of the beneficiary's estate and not in his next of kin, so that the repudiation did not start the period of limitation upon that right running until the repudiation became known to the administrator; knowledge thereof on the part of one of the next of kin was not sufficient to start it running.
Where one entrusted money to another for investment and it was contemplated by the parties that the trust should continue for a considerable period, no definite time for its termination or for an accounting by the trustee being specified, that determination of the times for distribution of the trust fund to the beneficiary should rest largely in the discretion of the trustee and that the beneficiary should be under no obligation to demand distribution at any particular times, the period of limitation upon the beneficiary's right to maintain a suit in equity against the trustee for an accounting of the trust fund did not start running until the trustee, to the knowledge of the beneficiary, repudiated the trust.
So long as the beneficiary of a trust is without knowledge of wrongdoing on the part of the trustee and is not at fault in failing to discover it, it cannot be said that he is guilty of laches to enforce his rights.
Although it appeared, in a suit in equity by an administrator for an accounting of money held by the defendant in trust for the plaintiff's intestate, that one of the next of kin of The intestate, after big death and more than six years before the commencement of the suit, but previous to the enactment of St. 1934, c. 116, amending G. L. (Ter. Ed.) c. 230, s. 5, had had notice that the defendant repudiated the trust, the plaintiff was entitled to recover the full amount of the trust fund; it was error to enter a final decree adjudging that such next of kin was not entitled to recover his share of the trust fund and ordering the defendant to pay the plaintiff, for the benefit of the other next of kin, only the balance left after deducting the amount of that share from the total amount of the trust fund.
Where it appeared, in a suit in equity for an accounting of money entrusted to the defendant for investment and invested by him, mingled with his own funds, that the amount of the profits made or the interest earned by the use of such money was not ascertainable, it was error to award the plaintiff interest to the time of the commencement of the suit at the rate of only four per cent; in the circumstances, the general rule should be applied and interest should be computed at the rate of six per cent, which is the rate chargeable for the use of money when the parties have not by agreement fixed a different rate.
BILL IN EQUITY, filed in the Superior Court on April 7, 1930, with a writ of summons and attachment dated February 27, 1930.
The suit was referred to a master. Material facts found by him are stated in the opinion. By order of Hanify, J., there were entered an interlocutory decree confirming the master's reports and the final decree described in the opinion. Both parties appealed from each decree.
G. B. Goodman, for the plaintiff.
F. Vera & A. P. Doyle, for the defendant.
DONAHUE, J. Anna M. Stuck died intestate on September 15, 1921, leaving a husband and three children. An administrator of her estate was appointed on October 7, 1921. He resigned on December 14, 1929, and on January 24, 1930, the plaintiff, a son of the intestate, was appointed administrator of her goods and estate not already administered. Shortly afterwards he brought this bill in equity in the Superior Court praying for an accounting by the defendant of property held by him in trust for the intestate, for the conveyance of any real estate appearing of record in his name as trustee for her and for damages to the estate from the failure and refusal of the defendant to turn over property held by him in trust for the intestate. The defendant denied substantially all allegations of the bill and pleaded the statute of frauds, the statute of limitations, laches on the part of the plaintiff and that the estate had been duly administered and closed.
ing the report and from the final decree. There were matters open to the parties on the pleadings and in issue at the trial before the master and at the hearing before the judge on the entry of the decrees appealed from, which have not been argued before us. We treat such matters as waived. The contentions argued before us by the defendant were that the statute of limitations was a bar to the plaintiff's claim and that the plaintiff was guilty of laches. The plaintiff contended that the final decree was erroneous in that the amount awarded should have been larger and that a different rule for the computation of interest should have been adopted.
The defendant lived in the family of the plaintiff's intestate, to whom he was not related, for many years prior to her death. He was known to her children and to the community as the intestate's brother. He had acquired a dominating influence over all the members of the family. He was employed at a large salary, had accumulated a substantial sum of money and was an experienced and shrewd investor in real estate and in real estate mortgages. The members of the family were untrained and inexperienced in business affairs. During a period of years prior to her death the plaintiff's intestate from time to time handed over to the defendant sums of money for investment. These sums of money were accepted by the defendant not as loans, but in trust for investment. The money was used in making loans and purchases represented by mortgages and deeds taken in his name as trustee for her. The master was unable to find that the plaintiff's intestate furnished the entire consideration for any one purchase or loan, or what amount of her money was used in any one of the purchases or loans. He did find that the defendant's own money furnished the greater part of the consideration for such purchases and loans.
sented any of the family but had acted as attorney for the defendant, was intimate with him and had, prior to the death of the plaintiff's intestate, borrowed from him large sums of money. The defendant had in his possession and delivered to the lawyer bank books of the plaintiff's intestate representing deposits aggregating $1,059. By agreement of the heirs the lawyer was appointed administrator of the estate and the defendant became a surety on his probate bond. The inventory when filed made no mention of any claim against the defendant.
At or about the time of the death of the plaintiff's intestate the heirs knew that the defendant had funds belonging to their mother but they did not know how much had been given him or how it was invested. A few days before the lawyer was appointed administrator the heirs asked him about the money in the hands of the defendant. On the question of laches only the master admitted testimony that the lawyer told them that the defendant would make distribution of those funds but that the defendant had said that it would take five years before he could liquidate the investments. About a year after the death of the plaintiff's intestate one of the heirs, her son Adolph, asked the defendant Schumm "for his share of his mother's money and Schumm denied having any money, and shut the door in his face."
1929, when he was paroled and later received a full pardon. The money which was the subject of the larceny was not connected with the trust fund which is the subject of the present suit. From the time of his appointment until his resignation as well as during the period of his confinement the administrator was for substantial periods of time not in New Bedford. While there he gave little time to his practice and the master found that he was very inaccessible to the heirs of the intestate until 1930.
The finding of the master that money to the amount of $5,265 had been paid by the plaintiff's intestate and received by the defendant not as a loan but in trust for investment by him established an express trust in personal property. Jameson v. Hayes, 250 Mass. 302, 307, 309, and cases cited. "Express trusts in personal property may be created and proved by parol; and the statute of limitations does not begin to run, in favor of a trustee against his cestui que trust, till the trustee has repudiated the trust, and knowledge of the repudiation has come home to the cestui que trust." Davis v. Coburn, 128 Mass. 377, 380. A repudiation by the trustee must be open and notorious in order to start the operation of the statute. Amory v. Amherst College, 229 Mass. 374, 386. St. Paul's Church v. Attorney General, 164 Mass. 188, 199. Currier v. Studley, 159 Mass. 17, 20.
given such a right until the passage of St. 1934, C. 116, amending G. L. (Ter. Ed.) c. 230, s. 5, after this suit was brought. It was to the administrator and not to the heirs of the plaintiff's intestate that the defendant after her death owed the duty to account for the trust fund. A repudiation of the trust by the defendant would not start the running of the statute of limitations until his disavowal had become known to the administrator, who after the death of the intestate occupied with relation to the trustee the position of beneficiary.
was not such a repudiation as to start the running of the statute. The defendant relies on Amory v. Amherst College, 229 Mass. 374, 389, in support of his contention that this was an adequate repudiation of the trust. In that case the facts were materially different. There a formal demand was made on the trustee by an authorized agent of each of the beneficiaries under the trust and the trustee gave notice to the agent that no demand would be complied with, at least without litigation.
There is nothing in the record to warrant the inference that the conversation between Adolph and the defendant was brought to the knowledge of the administrator. There appears no refusal by the defendant to pay over trust money to the administrator on demand, for no such demand was made. In the arrangement under which the intestate paid her money and the defendant received it there was no time fixed when the trust should terminate, when any repayment was to be made to her by the trustee or under what conditions or when an accounting was to be made. Their relationship was close, they lived as members of one family and it is manifest that she had great confidence in him. He was versed in business affairs and she was not. It was left to him to determine how and when her funds mingled with his own should be invested and reinvested. He chose to invest the mingled moneys in real estate and in real estate mortgages, types of investment where ordinarily moneys are allowed to stay for some length of time. It is manifest that it was within the contemplation of the parties that the trust should continue for some considerable period, that there was no obligation on her to demand repayment at any particular or definite time or times and that the time of distribution of the trust fund or any part of it should rest largely on the judgment of the defendant, who made the investments. Under such a trust arrangement the failure of the beneficiary to demand the funds is not significant and the statute of limitations is not applicable until and unless the trust is terminated by the defendant by adequate repudiation through speech or conduct. Pierce v. Perry, 189 Mass. 332, 336.
Schmidt v. Schmidt, 216 Mass. 572, 577. McGuire v. Devlin, 158 Mass. 63, 67. Campbell v. Whoriskey, 170 Mass. 63.
There is nothing in the record to show that after the death of the plaintiff's intestate any new or different arrangement was made with the administrator for the holding of the trust funds. For some years at least, it would appear that the defendant continued to deal with the trust funds and the management of investments in much the same manner as he did in the life time of the intestate. Until 1927 he continued to hold title to parcels of real estate in his name as "Trustee" for her. We see no basis for a finding that there was earlier any conduct on his part indicating that he had disavowed the trust and was holding the trust fund adversely to the beneficiary. On all the evidence we think that the inference was warranted that the defendant after the death of the intestate continued to hold the trust fund under the original arrangement and that there was no repudiation of the trust brought to the knowledge of the beneficiary which would make the statute a bar to the present action.
There is no laches on the part of a beneficiary so long as he has no knowledge of a wrongful act of his trustee and no fault in not discovering the wrong. O'Brien v. O'Brien, 238 Mass. 403, 411. We think that on all the facts appearing the inference is warranted that this was the situation in the present case. Nor may an inference be reasonably drawn that delay in bringing an action was prejudicial to the trustee. Calkins v. Wire Hardware Co. 267 Mass. 52, 69. Mascari v. Mascari, 255 Mass. 92, 98. Alvord v. Bicknell, 280 Mass. 567, 572. The facts found do not indicate that the defendant was any more at a disadvantage because the bill in equity was filed when it was, than if action had been brought the day after the original administrator was appointed.
was not entitled to recover his share of the trust money due the estate from the defendant and that his share, stated to be $1,170, must be deducted from the total amount of $5,265 due from the defendant. The decree orders the defendant to pay the difference, $4,095, to the plaintiff for the benefit of the intestate's heirs other than Adolph C. Stuck. As earlier pointed out, while G. L. c. 230, s. 5, permitted a creditor or legatee having an interest in a claim in favor of an estate, which an executor or administrator refuses to prosecute, to bring a suit in equity for the benefit of the estate, not until 1934 was such right given to an heir. Since Adolph as an individual heir had no right to maintain an action against the defendant the statute of limitations did not run against him. He as an individual had no enforceable claim against the defendant and he is not in his individual capacity here a party. The plaintiff is the only person entitled to an accounting from the defendant and the fund in its entirety must be paid to him. When paid it will be an asset of the estate and its distribution in accordance with the statutes governing intestate estates is within the sole jurisdiction of the Probate Court. The fund cannot be divided and allocated by decree of the Superior Court. It follows that the decree must be modified by ordering that the sum of $5,265 with interest be paid to the plaintiff.
be computed at the rate of six per cent, which is the rate chargeable for the use of money when the parties have not by agreement fixed a different rate. Parker v. Nickerson, 137 Mass. 487, 495-496. Forbes v. Ware, 172 Mass. 306, 310.
The final decree is reversed and a new decree is to be entered ordering the defendant to pay to the plaintiff the sum of $5,265 with interest computed at the rate of six per cent per annum, and with costs including costs on this appeal.

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