Court Opinion

ID: 3851122
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:31:13.71956+00
Date Added: 2024-06-11T14:14:35.937476
License: Public Domain

I cannot concur in the conclusion reached by the majority opinion.
The relevant facts may be briefly recounted as follows: Decedent was in charge of the administration and settlement of at least four trusts and estates, of which plaintiffs, sisters of decedent, were beneficiaries. On March 1, 1922, decedent misappropriated funds of one of the trusts to meet in part the purchase price of real estate taken in the name of his wife, the present defendant. The evidence and the chancellor's findings show that plaintiffs did not know of this breach of trust until some time after their brother's death on October 7, 1925. The discovery was made by counsel whom they had employed to protect their rights. The evidence shows that they had repeatedly requested their brother to account for the various funds in his possession, both before and after the fraud was committed. He and his wife made various excuses, but assured plaintiffs that the estates were being properly handled and that they would be settled as soon as possible. Thus plaintiffs were led to believe that everything would be disposed of in due course. With the trustee's death they took steps toward investigation. It was only then that they became aware of the misappropriation. Nor were they aided in their efforts by defendant. The latter, immediately after her husband's death, submitted statements containing incorrect items. Approximately two years after they became aware of the fraud, plaintiffs filed the present bill.
Section 6 of the Act of April 22, 1856, P. L. 532, provides that no action shall be maintained to enforce any implied or resulting trust as to realty except within five *Page 313 
years after such trust accrued, "Provided, That as to anyone affected with a trust by reason of his fraud, the said limitation shall begin to run only from the discovery thereof, or when by reasonable diligence the party defrauded might have discovered the same." The majority opinion erroneously concludes that the effect of the statute is to bar plaintiffs "if by reasonable diligence they might have discovered [the fraud] within five years after the trust accrued." This is a manifest misconstruction of the plain wording of the act. The language of the statute is clear that where fraud is the basis of the trust the five-year limitation begins to run (1) "only from the discovery thereof," or (2) from the time "when by reasonable diligence the party defrauded might have discovered the same." If in the exercise of reasonable diligence the fraud could not be discovered until nearly four years after its commission, the five-year period would begin to run only at that time. The statutory period would be suspended during the interim of justifiable ignorance.
In the instant case the wrongdoer was a fiduciary, in whom plaintiffs, as beneficiaries of the trust, were entitled to put their confidence. The control and management of the property had been entrusted to him. In the absence of circumstances tending to arouse suspicion or awaken inquiry, plaintiffs were entitled to assume that he would carry out the purposes for which the property had been given to him. "The words of the act of assembly are not 'when the party defrauded might have discovered the same,' but when 'by reasonable diligence' he might have done so. These words are surely not to be rejected and the act construed as if they were not in it. There are very few facts which diligence cannot discover, but there must be some reason to awaken inquiry and direct diligence in the channel in which it would be successful. This is what is meant by reasonable diligence": Maul v. Rider, 59 Pa. 167, 171,per SHARSWOOD, J.; see Madole v. Miller, 276 Pa. 131, 136-7. There were absolutely *Page 314 
no facts or circumstances in the instant case which would tend to arouse the suspicion of a reasonable beneficiary that there had been wrongdoing on the part of the fiduciary.
The majority opinion is in error in so far as it impliedly requires that the fraud be affirmatively concealed. There is no such requirement in the Act of 1856, supra. Smith v. Blachley,198 Pa. 173, cited by the majority, was decided under a different statute which contained no express exception in cases of fraud. But even if such a requirement is to be read into the Act of 1856, the repetition of excuses for delay and assurances that the trust was being handled properly constituted active concealment of the fraud with a view to prevent disclosure: Madole v. Miller, supra. Plaintiffs' excusable delay resulted in no prejudice to defendant, and equity should now compel restitution. To hold otherwise on the facts of this case would be to put a premium upon fraud. I would affirm the decree of the court below.