Court Opinion

ID: 8805380
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:46:32.830866+00
Date Added: 2024-06-11T17:04:04.624590
License: Public Domain

AESCHULER, Circuit Judge
(after stating the facts as above). Three questions are in the main presented: (1) Does liability attach to appellee by reason of the action of the National Bank of Commerce of New York, its transfer agent, in accepting trustee Muirhéid’s cancellation and surrender of the stock certificates, and issuing new ones to Muirheid’s transferees, involving primarily the question of the right of Muirheid as trustee to dispose of the stock ? (2) Is appellant bound by the outcome of the litigation in the New York courts in the suit brought there by the Toronto General Trusts Company against appellee and the National Bank of Commerce? (3) Is appellant’s right of action, if any he had, barred by his laches ?
In view of the conclusion we have reached respecting the second and third propositions, discussion of the first will be quite unessential to the disposition of the appeal. We have, however, carefully considered that proposition, and its elaborate presentation by counsel, and are impressed with the apparent rectitude of the conclusion reached and disposition made of that issue by the New York General Term, arising, as the question did there, on appeal from a judgment of the Special Term holding the bank liable, but dismissing the railroad company. The General Term, in a somewhat extended opinion, reversing the Special Term, concluded that Muirheid, trustee, had full power to sell the stock, and that the bank properly accepted the surrender and made the transfer by issue of the new certificates to the purchaser. Toronto General Trusts Co. v. Chicago, Burlington & Quincy R. Co. and National Bank of Commerce, 64 Hun, 1, 18 N. Y. Supp. 593, affirmed by the Court of Appeals on the appeal of the trustee. Toronto General Trusts Co., as Trustee, v. Chicago, Burlington & Quincy R. R. Co., 138 N. Y. 657, 34 N. E. 514, and Toronto General Trusts Co. v. National Bank of Commerce, 138 N. Y. 657, 34 N. E. 514.
[1] Respecting the proposition that the determination in the New York suit is binding here on appellant, it is contended for him that the *398trustee bringing that action was not a trustee for appellant, that appellant was not a party to that litigation, and is therefore in no way bound by it. Without going into the much mooted question of whether or not appellant was in law a cestui que trust under the codicil, we do1 not thinlc that the particular facts here warrant so restricted a view of appellant’s relation to the New York litigation as to give dominance •to his precise relation to the trust as created. While the New York suit was nominally brought by the trustee, it is plain that it was brought on tire behest of, and for the benefit of, appellant, and no one else. His mother as executrix had made absolute assignment of the stock to Muir-heid as trustee, thereby investing him with the full legal title thereto (if indeed under the-will he did not without such assignment have the legal title), and in her individual capacity she had requested and consented to Muirheid’s sale and transfer of the stock, and reinvestment of the proceeds, and was in no position to complain of that transaction. The only person who- then was beneficially interested in any controversy concerning the transfer of the stock was appellant. For him a guardian ad litem was duly appointed in a proper proceeding in the Canadian court, and it was on his petition that the new trustee was appointed, first with power only to collect, and on further petition of appellant by his guardian ad litem, with full powers as trustee. And it was on petition of appellant by his guardian ad litem that the Canadian court authorized an investigation at the expense of the trust estate, into the advisability of bringing suit in New York to recover the transferred stock or its value. And before the suit was brought appellant’s guardian ad litem joined in an agreement with counsel respecting the amount and payment of the lawyers’ fees for the prosecution of the New York suit; and appellant’s knowledge of and participation in the conduct of that suit appears further from the action of the Ontario court, on appellant’s petition through his guardian ad litem, some years after the New York suit was begun, authorizing compromise of that action on certain proposed terms. The High Court of Justice of Ontario had full jurisdiction over the rights of appellant, and appellant, by his duly appointed guardian ad litem, in proceeding with the suit in New York in the name of the trustee, was not less a party in interest there because the trustee only appeared as complainant, and the infant was not named as a party. That suit having been instituted by appellant acting by his guardian ad litem, in the name of the trustee, upon the theory that the trustee, if anybody, was' lawfully entitled to the possession of the stock for the use and benefit of appellant, and therefore to' maintain the suit, and defended as it was with ultimate success upon the ground that the first trustee, having lawful possession and title to the stock, had the right to dispose of it, we are not impressed with the contention that its determination is binding only upon the trustee, and not upon appellant, at whose instance, on whose behalf, and for whose sole benefit it was brought, and under whose direction it was maintained. We are of the opinion that, under the state of facts here appearing, the decision in the New York suit is so far binding on appellant that he cannot be permitted here to maintain the very same kind of action which in the New York suit was thus determined adversely to his interest. Thompson v. Maxwell Land *399Grant Co., 168 U. S. 451, 18 Sup. Ct. 121, 42 L. Ed, 539; Green v. Bogue, 158 U. S. 478, 15 Sup. Ct. 975, 39 L. Ed. 1061; Plumb v. Goodnow’s Admr., 123 U. S. 560, 8 Sup. Ct. 216, 31 L. Ed. 268; Richter v. Jerome, 123 U. S. 233, 8 Sup. Ct. 106, 31 L. Ed. 132; Corcoran v. Canal Co., 94 U. S. 741, 24 L. Ed. 190; James v. Germania Iron Co., 107 Fed. 597, 46 C. C. A. 476 (8 C. C. A.).
[2] Regarding the issue of laches, it appears that, on the date of the affirmance by the New York Court of Appeals of the decision of the General Term, appellant was 22 years of age. Presumably he then knew that his mother had barred herself from ever questioning the sale of the stock by Muirheid, and that in any event, as to1 her, the outcome of the New York litigation was final, and that, if any right- of action remained by reason of the transfer of the stock, appellant alone was its beneficiary; and yet upwards of 20 years further elapsed before the beginning of this suit. It appears that in the meantime a suit was begun by appellant in the state court at Chicago, but nearly 11 years had passed at the time of its commencement, and it was finally dismissed for want of prosecution after pending for a number of years. It is insisted — and authorities in support are cited — that, while appellant might have brought the suit, the right of action was primarily in the trustee, and that áppellant’s failure to bring the suit would not be laches on his part, nor in any manner impair his right to bring it pending or on the termination of the trust. But notwithstanding the fact that his mother is still living, it appears that the trust was absolutely terminated by the proceedings of June, 1899, by the court in which it was pending, and which had appointed the Trusts Company as trustee. This termination of the trust was upon the petition of appellant, who was then 28 years of age, and of his mother. The order of the Ontario court terminated the trust, discharged the trustee, and recited, as was stated in appellant’s petition for the order, that the trustee had conveyed toi appellant and his mother all the trust property — including presumably any and all rights of action for the benefit of the trust estate which the trustee then had. Thenceforth it .was in himself alone, and not longer in a trustee, that any right of action inhered; and yet since such termination of the trust more than 15 years passed by before this suit was commenced. The record does not disclose that appellant was laboring under any disability during all those years; indeed, the presumption of his intellectual equipment in at least ordinary degree is heightened by the record fact that be is assistant cashier in one of Chicago’s largest banks. The alleged wrong, out of which the asserted right of action arose being primarily the wrong of appellee’s agent the bank, if recovery were had against appellee, ordinarily it could have recourse for its loss against the agent who caused it. But any right of appellee against the bank is long ago barred by limitation, whereby, through appellant’s, unreasonable delay before beginning the suit, appellee would now be unable to impose the ultimate loss upon its responsible agent. We find present all those elements essential to sustain the defense of laches as a bar to appellant’s asserted cause of action. Johnston v. Standard Mining Co., 148 U. S. 360, 13 Sup. Ct. 585, 37 L. Ed. 480; Twin Lick Oil Co. v. Marbury, 91 U. S. 587, 23 L. Ed. 328; Venner v. Trust Co., 204 Fed. 779, 123 C. C. A. 591 (2 C. C. A.); Continental Nat. Bank v. Heilman *400et al., 86 Fed. 514, 30 C. C. A. 232 (7 C. C. A.); Spoor v. Wells, 3 Barb. Ch. (N. Y.) 199; Jackson’s Admnr. v. King’s Admnr., 12 Grat. (Va.) 499.
The decree of the District Court is affirmed.