Court Opinion

ID: 9336192
Source: CourtListenerOpinion
Date Created: 2022-12-15 21:50:19.225054+00
Date Added: 2024-06-11T17:15:12.007641
License: Public Domain

SANBORN Circuit Judge
(dissenting'). This is a bill brought by the appellants against their co-partner Latin for a dissolution of the partnership and for an accounting. It is not material here that they sought other relief against other parties, for the demurrer cannot be sustained if they are entitled to any relief against any party. The question is therefore •whether or not, by a delay of two years after they discovered the faithlessness of their co-partner, they are estopped by laches from obtaining an accounting or any other relief from him. The ajjpeliee Lakin held the partner-shin property in his own name, in trust for his partners' and himself. No time runs against an express trust, until it is openly repudiated, and notice of the repudiation is brought home to the cestuis que trustent. Speidel v. Henrici, 120 U. S. 277, 386, 7 Sup. Ct. 610; Swift v. Smith, 23 C. C. A. 154, 159, 79 Fed. 709, 714, and 49 U. S. App. 188. It is conceded in the opinion of the majority that notice of the repudiation of this trust was not received by the appellants until two years before this suit was commenced. The statutes of 'Utah, as construed by its supreme court, expressly permit cestuis que trustent to maintain an action for an enforcement of the trust, against a trustee who has repudiated it, for four years after the repudiation becomes known to them, when the trust was created by a written agreement, as in the case at bar. Rev. St. Utah 1898, §8 2876, 2883; Thomas v. Glendinning, 13 Utah, 47, 53, 56, 44 Pac. 652, 654, and cases there cited.
In support of the view that this suit is barred by laches in two years after the partner Lakin repudiated his trust, although the statutes of Utah permit such a suit for four years thereafter, the cases for the rescission of contracts for fraud or mistake are cited in the opinion of the majority. It appears to me, however, that the reason which requires lúe early application of laches to such cases has no application to the suit of partners against their co-partner for an accounting of proceeds of firm property, and that, the reason ceasing, the rule ceases. That reason is that a contract induced by fraud or mistake is voidable, not void, and it appears to be valid. The parties to it and others may change their position, and incur liability to loss in reliance upon its validity. Hence he who would avoid it must make his attack at once upon his discovery of the fraud or mistake, or he will be estopped by his silence from denying its .legality. Rugan v. Sabin, 3 C. C. A. 578, 580, 53 Fed. 415, 418, and 10 U. S. App. 519, 530, and cases there cited. But the partner who holds the property of his firm in trust, and who disposes of it and appropriates its proceeds to his own use, cannot be deceived or misled by the silence or delay of his partners. He is aware of his relation to them. lie knows his liability to them, and it seems to me that there is no sound reason why he should be relieved from responding to it, within the time fixed for its enforcement, by the statute of limitations of the state in which he is sued. *258In Naddo v. Bardon, 2 C. C. A. 335, 340, 51 Fed. 493, 498, and 4 U. S. App. 642, 685, Mr. Justice Brewer, in delivering tbe opinion of this court, said: “It is doubtless true that, where an express trust is once shown to exist,’it is presumed to continue, and therefore no lapse of time will defeat an action to enforce rights under it. But when that trust is repudiated, and knowledge of the repudiation is brought home -to the cestuis que trustent, the case is brought within the ordinary rules of limitation and laches.” The doctrine of laches is applied by courts of equity, in analogy to the statute of limitations at law, to promote, and not to defeat, justice. Under the statutes of Utah cited, the appellants were allowed at least four years, after they learned that their partner had repudiated his trust, in which to institute a suit against him for a dissolution of their partnership and an accounting, and, in my opinion, their delay of two years ought not to be fatal to it. Bogan v. Mortgage Co., 11 C. C. A. 128, 135, 63 Fed. 192, 199, and 27 U. S. App. 346; Kelley v. Boettcher, 29 C. C. A. 14, 21, 85 Fed. 55, 62, and 56 U. S. App. 363, 383.