Court Opinion

ID: 8767855
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:32:19.77728+00
Date Added: 2024-06-11T17:02:00.269606
License: Public Domain

GILBERT, Circuit Judge
(after stating the facts as above). This is a suit brought upon Dupont street bonds of the same issue as those which were involved in the decision of this court in Mather v. City and County of San Francisco, 115 Fed. 37, 52 C. C. A. 631. In that case a bondholder brought an action at law upon certain bonds in order to obtain a judgment preliminary to an application for mandamus to the officers of the city and county for the collection of *444the taxes for the payment of the same. The present case is a suit in equity, the purpose of which is to charge the appellee as a voluntary trustee of the appellant for the collection of the taxes provided for In the act authorizing the widening of Dupont street, and it is the contention of the appellant that Such a suit is maintainable under the authority of Warner v. New Orleans, 167 U. S. 467, 17 Sup. Ct. 892, 42 L. Ed. 239, and New Orleans v. Warner, 175 U. S. 120, 20 Sup. Ct. 44, 44 L. Ed. 96. We find it unnecessary to decide whether the doctrine applicable to the present case is found in those decisions, or in the case of Peake v. City of New Orleans, 139 U. S. 342, 11 Sup. Ct. 541, 35 L. Ed. 131, which is cited and relied upon by the ap-pellee. Assuming that by exercising the option granted to it by section 21 of the act, and adopting the resolution which it was thereby authorized to adopt, the appellee became a voluntary trustee for the collection of the taxes and the .payment of the same to the bondholder, we are of the opinion that the facts alleged in the bill affirmatively show that the appellant’s prayer for equitable relief must be denied on account of'her laches. From the bill it appears that the principal of the bonds became due and payable January 1, 1897, and that the 35 unpaid interest coupons attached thereto became due and payable semiyearly from the year 1879 to the year 1897; in other words, at the time of the commencement of the suit nearly 8 years had elapsed since the accrual of the cause of action on the bonds, and 25 years had elapsed since the accrual of the cause of action on the first unpaid coupon. In New Orleans v. Warner, 175 U. S. 120-130, 20 Sup. Ct. 44, 48, 44 L. Ed. 96, the court said:
“Having thus voluntarily assumed the obligations of a trustee with respect to this fund, it cannot now set up the statute of limitations against an obligation which, as such trustee, it had undertaken and failed to perform. The rule is well settled that in actions by cestuis qui trust against an express trustee, the statute of limitations has no application, and no length of time is a bar. While that relation continues, and until a distinct repudiation of the tr.ust by the trustee, the possession of one is the possession of the other, and there is no adverse relation between them. * * * To set the statute in motion the relation of the parties must be hostile, and so long as their interests are common, or their relations fiduciary, as in the case of landlord and tenant, guardian and ward, vendor and vendee, tenants in common, or trustee and cestuis qui trust, the statute does not begin to run. This language of the opinion is expressly relied upon by the appellant in this ease; but it is to be observed that in the case then under consideration the court proceeded to say that the trust had never been repudiated by the city, and pointed to the fact that one of the defenses set up in the answer was that the city had applied itself with great diligence and to the full extent of its ability to improve and make serviceable the drainage work and to proceed with the collection of the drainage taxes, and did all in its power to prosecute the collection of the same. ‘Indeed,’ said the court, ‘the whole gist of the answer' is that the city has executed its trust faithfully, so far as it was possible to do so, by collecting assessments against private persons, but has not accounted for taxes assessed against itself because it is not legally responsible therefor. There is no claim throughout the answer that the city disavowed the trust.’ ”
Such is not the case presented upon the bill now under consideration. It is true that the appellee has not answered setting forth its attitude to the subject-matter of the suit; but it is well settled that, where the *445bill shows upon its face that the plaintiff by reason of lapse of time and of his own laches is not entitled to relief, the 'objection may be taken by demurrer. Maxwell v. Kennedy, 8 How. 210, 12 L. Ed. 1051; National Bank v. Carpenter, 101 U. S. 567, 25 L. Ed. 815; Lansdale v. Smith, 106 U. S. 391, 1 Sup. Ct. 350, 27 L. Ed. 219.
Turning to the bill in the present case, we find therein the allegation that “at divers and sundry times since the year 1877 and the commencement of this suit” the appellant has demanded payment of the bonds and the interest coupons, and that payment has been refused; that the appellee, “in violation of the terms of said trust and its. duty and obligation thereunder, did not keep and perform the conditions and obligations of said trust, and has wholly abandoned the same without notice of any kind to this plaintiff, and did not perform the duties imposed upon it as trustee as defined in said act, but, on the, contrary, failed and neglected, during the time specified in said act, or at any time, to assess, levy, and collect, or cause to be assessed, levied, and collected, from the property specified in said act or otherwise, taxes sufficient to pay the interest coupons, and to redeem the said bonds.” The bill proceeds to set forth the excuses proffered by the appellee for failing to fulfill the obligations imposed upon it by the act of the Legislature, which excuses are, among others, that suits were brought in 1880 to' enjoin the tax collector from selling property in said district for payment of taxes assessed for the purpose of carrying out the scheme of the act. In brief, the bill presents a case where the alleged trustee had 25 years before the commencement of this suit ceased and refused to perform any of the acts required to be performed by it under the terms of the statute, and, while it alleges affirmatively that the appellee never at any time asserted to the appellant that it was not liable as trustee or otherwise upon such bonds and coupons, it makes no allegation that the default and refusal of the appellee to collect taxes and pay coupons which accrued 25 years before the commencement of the suit was not well known to her at the time. In fact, the contrary appears from the bill. The allegation is that, although the trustee repudiated the trust, it never advised her personally of that fact. This is clearly insufficient to excuse appellant’s laches, and her waiting all these years before .taking any step whatever to enforce her rights.
It is true it is well settled by the authorities that the statute of limitations has no application to an express continuing trust not disavowed to the knowledge of the cestui que trust. But when the trust is repudiated, and knowledge of the repudiation is brought home to the cestui que trust, the case is brought within the ordinary rules of limitations and laches. In the leading American case of Kane v. Bloodgood, 7 Johns. Ch. (N. Y.) 90, 11 Am. Dec. 417, Chancellor Kent expressed the rule which has since been followed in numerous decisions:
“file trusts intended by the courts of equity not to be reached or affected by the statute of limitations are those technical and continuing trusts which are not at all cognizable at law, but fall within the proper peculiar and exclusive jurisdiction of this court.”
In Speidel v. Henrici, 120 U. S. 377, 7 Sup. Ct. 610, 30 L. Ed. 718, the court said:
*446“Independently of any statute of limitations, eourts of equity uniformly decline to assist a person wlio lias slept upon ’liis rights and shows no excuse for his laches in asserting them.”
That language was used in a case in which it was held .that a bill in equity against persons holding a fund in trust for the common benefit of the members of a voluntary association living together as a community cannot, whether the trust is lawful or unlawful, be maintained by one who has left the vicinity and for 50 years after-wards has taken no step to-claim any interest in the fund; and the court quoted the language of Lord Camden in Smith v. Clay, 3 Bro. Ch. 640, as follows:
“A court of equity has always refused its aid to stale demands, where the party slept upon his rights and acquiesced for a great leugth of time. Nothing can call forth this court into activity but conscience, good faith, and reasonable diligence. Where these are wanting, the court is passive, and does nothing. Laches and neglect are always discountenanced; and therefore, from the beginning of this jurisdiction, there was always a limitation to suits in this court.”
In 28 Amer. & Eng. Ency. of Law, 1134, it is said:
“But when the trust relation is terminated in any way, as by the open repudiation and disavowal of the trustee, or by some default, on his part, or by vesting of the legal title in the cestui, or in some other way, and such termination is known to the, beneficiary, then, and not until then, the possession of the trustee becomes adverse and the statute begins to run in his favor.”
In Boyd v. Munro, 32 S. C. 249, 10 S. E. 963, the court said:
“For it is well settled that even in cases of express technical trusts, where a trustee does an act expressive of an intention to repudiate, tile trust, the knowledge of which is brought home to the eestuis que trust, the statute will commence to run at that time.”
The obligation resting upon the appellee was not a mere naked trust to hold property for a cestui que trust. The trust, if there were a trust, was an active one — one which required of the appellee the prompt and diligent performance of certain prescribed acts. According to the bill it not only failed to perform these duties, but at least as early as 1881 it failed to protect the interest of its eestuis que trust-ent and to intervene in defense of a suit to enjoin its tax collector from collecting the assessments. All these acts, public as they were, and not alleged to have been unknown to the appellant at the time thereof, constituted a repudiation of the trust, and imposed upon the appellant the duty of timely action to protect her interests. The application of the doctrine that equity will withhold relief from those who have delayed the assertion of their rights depends upon the circumstances of each case. It does not always depend upon mere lapse of time. It involves, also, the question of change of situation which occurring during neglectful repose may render relief inequitable. The real parties in interest here, the parties to be affected by the relief which is sought, are the owners of the land included in the district made taxable for the improvement. In the years that have passed since the maturity of the bonds and coupons it is reasonable to assume that a very considerable portion of that land may have been conveyed or *447Incumbered and that extensive improvements may have been made thereon. There was evidently nothing of record to indicate that, when so sold or incumbered or improved, such lands were to be subjected to the taxation which the appellant now seeks to impose upon them. Every consideration of justice and equity required the appellant to move more promptly for the protection of her rights. More than a score of years before this suit was commenced she had her legal remedy by an action at law to obtain judgment upon the unpaid coupons preliminary to compelling the collection of taxes for their payment. Instead of so doing, she chose to wait until the great lapse of time and the changed situation of the parties in interest have rendered inequitable the interposition of a court of equity in her behalf.
The decree is affirmed.