Court Opinion

ID: 8187477
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:10:10.493725+00
Date Added: 2024-06-11T16:40:28.511070
License: Public Domain

Oassoday, C. J.
(dissenting). It is well settled that so long as there is a continuing and subsisting trust, acknowledged or acted on by the parties, the statute of limitations are not available to a trustee. Kane v. Bloodgood, 7 Johns. Ch. 90, 123, 124. The reason for the rule is that the trustee being clothed with the legal title or possession of the property, and charged with the duty of caring for and preserving the same for the benefit of the cestui que trustj the latter has the right to assume that the trustee will perform such duty, unless he has knowledge that the trustee has denied his right, or claimed the possession of the property adversely to him. Id. Until such denial or adverse claim, the possession of the trustee is, in equity, deemed to be the possession of the cestui que trust. Smith v. Combs, 49 N. J. Eq. 420, 24 Atl. 9; Lindsley v. Dodd, 53 N. J. Eq. 69, 84, 30 Atl. 896. True, the officers and directors of a corporation are not regarded, in law, as having the title or possession of the property of the corporation, both of which are deemed to be vested in the corporation itself. Nevertheless they have the actual care and custody of such property, and are chargeable in equity with an active duty in respect to the same, not only for the benefit of the corporation, but also for the benefit of the cestui que trust. When, therefore, such officers and directors, in violation of such duty, convert a large portion of the property of the corporation to their own private use, and there is no publicity of the fraud, they necessarily become chargeable in equity, as trustees of the property so fraudu*189lently converted, for the "benefit of the cestui que trust. As to-the property so converted, they hold the same as a continuing- and subsisting trust, assumed and acted upon by themselves-in violation of the duty to the cestui que trust. The mere-fact that an action might have been maintained in the name-of the corporation which was managed and controlled by the-wrongdoers, against such wrongdoers, to recover hack the-money or property so converted, immediately after the conversion took place, is no ground, in my judgment, for holding that the statute of limitations commenced running in-favor of such wrongdoers and against the plaintiffs at the-time of such conversion. Thus, it is held in New Jersey:
“The managers of a savings hank stand in the relationship of trustees to the depositors, so that the statute of limitations will not he a bar against a charge of mismanagement on their part which had occurred more than six years before the filing-of the bill.” Williams v. McKay, 40 N. J. Eq. 189.
Again: “The treasurer of a savings bank, who was at the-same time one of its managers, was charged by the receiver of the bank with dereliction and malfeasance in office. Held, that his position as manager made him a trustee, and that consequently the statute of limitations was not a defense to-the bill.” Williams v. Reilly, 41 N. J. Eq. 137, 3 Atl. 692.
These cases were followed in Somerset Co. Bank v. Veghte, 42 N. J. Eq. 39, 42, 6 Atl. 278; Williams v. McDonald, 42 N. J. Eq. 392, 396, 7 Atl. 866. So in a.case in Illinois it is-said in the opinion of the court:
“Ordinarily an express trust is created by a deed or will but there are many fiduciary relations established by law,, and regulated by settled legal rules and principles, where all the elements of an express trust exist, and to which the same legal principles are applicable, and such appears to be the-relation established by law between directors and the corporation.” Ellis v. Ward, 137 Ill. 509, 520, 522, 25 N. E.. 530. See, also, Coxe v. Huntsville Gaslight Co. 106 Ala. 373, 17 South. 626; European & N. A.m. Ry. Co. v. Poor,. 59 Me. 277, 278; Butts v. Wood, 38 Barb. 188; Williams v. Page, 24 Beav. 654.
*190In my judgment, there is less reason for holding that tbe statute of limitations runs in favor of sucb officers and directors in tbe case at bar than in a number of cases in this court wherein it has been held that tbe statute did not run by reason of sucb fiduciary or trust relation. Sheldon v. Sheldon, 3 Wis. 699; Spear v. Evans, 51 Wis. 42, 8 N. W. 20; Bostwick v. Dickson, 65 Wis. 593, 26 N. W. 549; Second Nat. Bank v. Merrill, 81 Wis. 151, 50 N. W. 505; Williams v. Williams, 82 Wis. 393, 52 N. W. 429; Fawcett v. Fawcett, 85 Wis. 332, 55 N. W. 405; Taylor v. Hill 86 Wis. 106, 56 N. W. 738.
Sucb is a brief statement of a few of my reasons for dissenting from tbe decision on tbe motion for a rehearing in this case.
Tbe following additional opinion was filed April 17, 1903 :
Pee Cueiam:.
One point suggested upon the rehearing is not mentioned in the foregoing opinion and deserves brief consideration. It is said that the defendant John S. Owen, a director of the corporation, who is charged with liability by the amended complaint, was a party to the action from the beginning, and hence that as to him the statute of limitations is not available as a defense. It is true that Owen was one of the plaintiffs in the action as originally brought in bis capacity as an alleged creditor of the corporation; but the difficulty with the contention is that the action as originally brought was simply a plain action to wind up the corporation and distribute its assets, and did not include any cause of action against Owen> or any other officer, for maladministration, or to recover assets converted. No sucb cause of action was incorporated into the complaint until the reorganization of the action in May, 1900, when Owen and bis co-plaintiff were made defendants, and the amended complaint was served. Therefore no action to enforce sucb liabilities *191•can logically be beld to have been commenced against Owen until such amended complaint was served. It is well settled that, when an amendment to a pleading introduces a new ■cause of action, the statute of limitations runs until the making of the amendment. 1 Ency. Pl. & Pr. 622, and cases cited in note 1; Gager v. Paul, 111 Wis. 638, 87 N. W. 875. See, also, C. R. I. & P. R. Co. v. Young (Neb.) 93 N. W. 922.