Burke v. Maguire ( 1908 )

A rehearing was granted in order to consider more fully the question whether or not the second count of the complaint, although insufficient as a complaint on a debt against the estate of Bridget McDermott, could be held good as a complaint in equity to follow a trust fund and obtain an order upon Maguire, either personally, or as administrator, to pay over to plaintiff the fund claimed by her, or her share of it, as money belonging to her which has come into his possession or control.

The complaint is clearly insufficient for that purpose. The general rule as to charging trustees is thus stated: "The general rule is that a plaintiff who seeks to charge a trustee with a breach of trust is bound to state a clear case upon his bill. Therefore acts of a trustee which may, or may not, be breaches of trust must be so alleged that they necessarily appear to be breaches, or a demurrer will be sustained. The presumption is in favor of the performance of his duty by the trustee; the plaintiff must therefore allege and prove affirmatively a breach of the trust." (2 Perry on Trusts, sec. 890.) "All the facts necessary to rebut these presumptions must be specifically averred." (2 Beach on Trusts, sec. 756.)

No breach of trust, either by Bridget McDermott in her lifetime, or by her administrator, is shown. At the time of the distribution of the estate of her husband, Hugh McDermott, she had on hand the sum of $1593.66 which she was directed by the decree to pay to Byrnes and Maloney as trustees, upon the execution by them of a sufficient bond, the said sum to be by them kept during her lifetime and the income thereof paid to her, and at her death the principal to be paid to the several plaintiffs in these actions, as provided in Hugh McDermott's will. Byrnes and Maloney never qualified as such trustees, nor did other trustees in their stead, and hence Bridget McDermott could not pay the money to them, but was obliged to keep it herself. It is alleged that until the date of her death, some eight years afterward, she "retained possession thereof as executrix" of her said husband's will. Under the circumstances, this was her duty. It is not alleged that it was mingled with her own property, or converted to her own use. Neither of these facts can be presumed. Being entitled to the income from it, she had the right to invest it so that it would produce an income, using due care to invest safely. It is presumed that she did her duty as trustee of the fund and, hence, we must assume that she kept it separate from her own property and that, if she invested it, she did so in such manner as to show on its face that it was not her own, but belonged to others and was held by her in trust for them. If the trustees mentioned in the will had qualified and upon their demand she had refused to pay over the fund to them, they could, under the provisions of section 1666 of the Code of Civil Procedure have maintained an action against her to recover it as a debt. Perhaps, after her death, the beneficiaries could claim the same right under that section and could demand the sum of her administrator and sue for the same as a debt of her estate, although it had not been converted by her to her own use. It seems perfectly clear that the complaint was framed on this theory and that the omission in the second count to aver a presentation of the claim to the administrator was accidental. But however this may be, it is certain that without a showing that the trust fund is mingled with some part of her estate into which it can be traced, no action in equity can be maintained to have it declared a lien thereon and to have it or its equivalent paid over to the beneficiaries, and that without averments of a conversion, or some other breach of trust by her, no action at law can be sustained against her estate without averring a presentation of a claim therefor.

With respect to the liability of the administrator, personally, the complaint is equally defective. It is not averred that the fund, or any note, mortgage, or chose in action representing it, or any property into which it had been converted, ever came into his possession. It was no part of her estate and, being segregated from the estate, as we must assume, it was not his duty to take possession of it as administrator of her estate. It was held by her as executrix of the estate of Hugh McDermott; he did not succeed to her rights or duties as executrix of that estate, and he had no authority to act in that behalf. Our law so provides. (Code Civ. Proc., sec. 1353; Chevassus v. Burr,134 Cal. 434, [66 P. 568]; Bush v. Lindsey, 44 Cal. 124.) Upon her death the trust ceased to be active and nothing remained to be done under it except for the beneficiaries to take possession of the fund. Under these circumstances, if the administrator of her estate took possession of it he would have no title or right in it, but would be a mere custodian or depositary, to keep it until the persons entitled applied for it and thereupon to deliver it to them. His duty with respect to it in that case would be the same as with respect to any other property of another which might come lawfully into his possession without title or right to keep it against the rightful owner. If there is any presumption that he did take possession of it, which we do not say, it would be a presumption of fact, not of law, and if the plaintiff desired to rely upon it as a fact necessary to complete the statement of a cause of action against the administrator personally, the rules of pleading require that she should aver the fact. Furthermore, one lawfully in possession of property which he does not claim and which he has not converted to his own use, but is holding for the rightful owner with the intent to deliver it to him on demand, is entitled to an opportunity to comply with his duty before being subjected to a suit to recover it, — that is, to a demand for its delivery. Such demand, in such a case, is a condition precedent to the right to maintain an action to follow the specific property, or recover it, and it must be alleged and proven. (13 Cyc. 806; 1 Cyc. 408, 694; Bushnell v. McCauley, 7 Cal. 421; Campbell v.Jones, 38 Cal. 507.)

The case of Lathrop v. Bampton, 31 Cal. 17, [89 Am. Dec. 141], is almost parallel. The complaint there did not allege the presentation of a claim and hence was held insufficient as a complaint on a debt against the estate. A rehearing was granted to consider again whether or not it could be upheld as a complaint to enforce a trust. The court then said: "The defendant cannot be charged and held to account as trustee, except upon the averment that he has come into possession of the trust fund, or its substitute. If, at the time of his death, the defendant's testator was in possession of the trust fund, or other property into which he may have converted it, and such fund or otherproperty had come into the possession of the defendant, he would have held it upon the same terms as his testator held it. . . . Such fund would have constituted no part of the testator's assets, and the defendant would not have held it in his capacity as executor, but in his capacity as succeeding trustee to the plaintiff's ward, and might have been compelled to account as such." (Italics ours.) (See, also, Rowland v. Madden, 72 Cal. 17, [12 P. 226, 870].)

It is suggested in the petition for rehearing that the case ofElizalde v. Elizalde, 137 Cal. 634, [66 P. 369, 70 P. 861], is authority for the claim that the complaint herein states a cause of action in equity to enforce a trust. That case is clearly distinguished from the present case by the material fact, there distinctly alleged, proven, and found, that the trust fund in controversy had been by the testator mingled with money of his own which, including the trust fund, had come into the possession of the executor, facts which are entirely wanting here. The opinion cites Lathrop v. Bampton with approval and it does not hold, or intimate, that it was not necessary in a suit in equity to aver that the administrator had come into possession of the trust fund which he was to be required to pay over.

James Maguire is not made defendant in his personal capacity, but solely in his capacity as administrator. The prayer of the complaint is applicable jointly to both counts and it does not ask for the enforcement of any trust, but does ask specifically for judgment "against said defendant" for a stated sum covering the demands set forth in both counts, "all to be made payable in due course of administration," which is the appropriate prayer in an action to recover a debt from an estate. These formal indications of intent to plead a mere debt might be disregarded and the complaint held good upon a different theory, in the interests of justice, if the facts alleged would warrant it. But the facts do not authorize it, and these forms of expression serve to emphasize what is reasonably apparent from the complaint as a whole, including both counts, that plaintiff's counsel believed that some advantage, possibly a jury trial, could be obtained by drafting the complaint as for a debt, instead of as a bill of equity, and that, with that end in view, the averments which might make it possible to hold it good as a cause of action to enforce a trust were purposely omitted.

We adhere to the opinion heretofore rendered in Department and adopt it as the opinion of the court in Bank.

Angellotti, J., Sloss, J., Henshaw, J., and Lorigan, J., concurred.