Court Opinion

ID: 7914687
Source: CourtListenerOpinion
Date Created: 2022-09-08 22:09:33.658867+00
Date Added: 2024-06-11T16:32:44.945912
License: Public Domain

Allen, J.
(dissenting): In 3 Scott on Trusts, page 2355, it is said:
“As has been stated, the beneficiaries of an express trust are not barred bylaches or by the statute of limitations from enforcing the trust merely because of lapse of time; and it is only where the trustee has repudiated the trust to the knowledge of the beneficiaries that they may become barred from enforcing the trust. So, also, by the weight of authority the beneficiaries of a resulting trust will not be barred from enforcing it merely because of the lapse of time if the trustee has not repudiated the trust to his knowledge. On the other hand, a constructive trustee ordinarily holds the property adversely to the beneficiary, and if the beneficiary knows of the circumstances giving rise to the constructive trust, he may be barred by laches if he fails to sue within a reasonable time. Much depends, however, upon the circumstances on which the constructive trust is based. If it is based upon fraud and there is no fiduciary or confidential relation between the parties, the defrauded person will be barred if he does not sue with reasonable promptness after discovering the fraud. Indeed, where the defrauded person has received consideration for the property, he must with reasonable promptness elect whether to rescind or ratify the sale, and he will not be permitted to speculate on a possible rise or fall in the value of the property. Similarly, where a person has sold property under a mutual mistake, he cannot set aside the sale unless he elects to do so within a reasonable time after discovering the mistake. In cases like this, where there is an election of remedies, the right to set aside the sale must be exercised promptly or it is lost.
“Where the situation does not involve an election of remedies the right to enforce a constructive trust will not be so quickly barred. In such a case, if the holding by the constructive trustee is adverse to the beneficiary, the beneficiary will normally be barred by laches if he knows or ought to know of the circumstances and fails to sue within a reasonable time. Ordinarily he will be barred after the lapse of the period fixed by the statute of limitations for actions at law in analogous cases. Indeed, in some jurisdictions the statute of limitations is expressly applicable to proceedings in equity to enforce a constructive trust.
“Where, however, the beneficiary of a constructive trust has no reason to believe that the constructive trustee is holding the property adversely, the bene ficiary will not be barred by laches even though he knows of the circumstances giving rise to the constructive trust. Thus, where A conveys land to B who orally agrees to reconvey it to A, and B is in a confidential relation to A, B. holds the property upon a constructive trust for A. In such a case A is not-guilty of laches in failing to sue as long as B has not repudiated his promise ”
The trial court found the conveyance was made under mutual mistake. Clearly the father held the title as trustee of a constructive^ trust. (Restatement, Restitution, section 163.) Under the circumstances the son was not required to make an election of remedies.. As he had no reason to believe that his father was holding the property adversely, he was not barred by laches or the statute.
*722The broad proposition that the beneficiary of a constructive trust is barred by the statute of limitations regardless of circumstances is not supported by the decided eases or by the authoritative text writers. (Restatement, Restitution, section 148 and comment.) See cases cited in 2 Perry on Trusts (6th ed.), section 865, note a.