Way v. Hooton

Orinion by

Mu. Justice Green,

We are clearly of opinion that this case was correctly decided by the master and learned court below. The real estate which is the subject of the present contention was never impressed with any trust on the face of the title. It is not a case in which a trustee has purchased the land which was the subject of the trust, nor is it the case of a trustee acquiring title in himself to the trust estate by any act of purchase or release from the cestui que trust. Nor yet is it a case where a trust fund was used by the trustee in the purchase of the entire title to the land in question. In its largest and best aspect for the plaintiff, it is a contention which arises upon a pure resulting trust, growing exclusively out of the use by a trustee of a portion of a trust fund, in paying for the tract of land in dispute, which was purchased by the trustee from strangers to the trust, for a consideration nearly three times as large as the amount of the trust money which was used in paying the price of the land. The title to the land purchased was necessarily taken in the name of the purchaser, Peter Supplee, Jr., who paid or secured all the remainder of the purchase money by other means than by the use of any of the trust money in his hands. Peter Supplee, Jr., the trustee of the Way children and their father, purchased the land in question on March 9,1880, for $14,983.59, and, although he used $6,700 of the trust fund in paying for the land, by subsequent payments on account of the trust fund he reduced the amount for which he is accountable as trustee to $4,502.23, as appears by the settlement of his account as trustee confirmed by the orphan’s court on Sept. 8, 1890.

The title of the defendant originated in a judgment confessed by Peter Supplee, Jr., in favor of Robert Neely to secure a loan of $4,500 made by Neely to Supplee on February 1,1884. This judgment was duly assigned to James S. Neely, who was Robert Neely’s son, and was regularly revived so as to continue the lien until, and after, the sale of the land by the assignee of Peter Supplee, Jr. At the time of the loan of the money by Robert Neely to Supplee the record showed that the title to the land in fee simple was in Supplee, and he was, and had been, in full possession of the land as the owner thereof, from the time of his purchase of the title. There is not the least pretence, anywhere on this record, by any testimony or any finding, that Robert Neely ever had any notice, actual or constructive, of the secret resulting trust which is now set up against the Supplee title. Had he taken a mortgage instead of a judgment for the security of his loan, his title would have been indefeasible by this trust in any event. James S. Neely died in May, 1890, leaving a will upon which letters testamentary were granted to the defendant, Francis C. Hooton. On April 3, 1890, Peter Supplee, Jr., made an assignment of all his property for the benefit of his creditors, and on April 25, 1890, this land was sold at public sale and the defendant, Hooton, bought it in his capacity as executor, for the purpose of protecting the interests of his testator’s estate. Two days before the sale he was notified of the plaintiff’s claim under a resulting trust in favor of her wards. It will be seen therefore that the right under which the defendant’s title originated was an entirely innocent right, untainted with any laches or with any failure of duty on the part of Robert Neely, who loaned his money on the faith of the title in Supplee, who had not only a complete and, apparently, perfect legal title, but was in the full and exclusive possession of the land at the time the loan was made. No circumstance is disclosed on this record, which did or could put him upon inquiry for any such secret trust as is now set up against him. The notice which was given him just before the sale neither added anything to the right of the plaintiff, nor detracted anything from the right of the defendant. If the bar of the statute of 1856 was a good defence it had already closed against the plaintiff’s title, and the notice could not restore it; neither could it take from the defendant the right to set up the statute as a defence.

In the light of the facts as above stated and as found by the master, it is manifest that the plaintiff’s claim is founded only upon a resulting trust pure and simple. The master and the court below found that there was such a trust to the amount of the trust money used in the purchase of the land, but they also found that the claim of title based upon the trust was barred by the sixth section of the act of 1856. They held that the act was a statute of repose and could be used without being pleaded specially, and also that the minority of the plaintiff’s wards was not a protected disability. Upon both points the authorities are clearly with the defendant. The master found as a fact that the plaintiff knew from the very beginning that the trust money was being used by Supplee, who was her sister’s husband, in part for the payment of the purchase money of the farm. She so testified herself. She said: u I knew that Peter was paying $80 per acre for his father’s place. I knew that he was buying it in part with this trust money. I knew that he was paying the other heirs their shares of the purchase money of the farm out of this trust money.” All this was in 1880, and it was not until 1891 that the resulting trust was set up against the title acquired by the defendant. Of course it could have been asserted in 1880, and had the plaintiff then demanded what she demands now she could easily have obtained adequate security for the money. But she did not do so. She reposed confidence in her brother-in-law, and continued to do so, until eleven years later, when he made an assignment for the benefit of his creditors, and then for the first time set up the resulting trust.

The sixth section of the act of 1856 expressly provides, “ that no right of entry shall accrue, or action be maintained, .... to enforce any implied or resulting trust as to realty but within five years after such contract was made or such equity or trust accrued.” The present case comes precisely within the operation of this act, and there could not be a more forcible illustration of the wisdom and justice of the law than is afforded by the undisputed facts of this very case. By the sheer neglect of the plaintiff to assert her title when she should have done so, an entirely innocent person was induced to lend $4,500 upon the faith of an apparently perfectly good title as it stood on the record, and it would be rank injustice to allow her to assert it now, after eleven years delay, and six years after a beneficent and highly just law has closed upon her claim. Said Thompson, J., in Clark v. Trindle, 52 Pa. on page 495: “ The words, ‘ with right of entry ’ at the end of the clause I esteem as material to be considered in construing it. The expression evidently means, I think, that if there be neither entry nor possession taken by the party, in whose favor the trust results, within five years after it accrues, and no acknowledgment in writing, the trust can not thereafter be asserted in law against the trustee. It means this or nothing, and we may not urge the latter, if the words are susceptible of a definite meaning.”

A point was made on the argument and in the court below that as the statute was not specially pleaded it could not be interposed in defence. But the master and the court below correctly held that the statute is not merely an act of limitations which requires to be specially pleaded, but that it is a statute of repose. This has been so often held by this court that a very slight reference to the authorities will suffice. In Kenyon v. Stewart, 44 Pa. 179, Mr. Justice Woodward, in an opinion construing the seventh section of the act on this same subject, said: “ The act of which this section is a part was planned to assure the people of greater certainty of title and to make them more secure in the enjoyment of real estate. It is founded in highest considerations of public policy. It is a statute of peace, security and repose. It is entitled therefore to a liberal construction from the courts.” This language was repeated with approbation by Sharswood, J., in delivering the opinion of this court in Hegarty’s Ap., 75 Pa. 503.

In the case of Cochran v. Young, 104 Pa. 333, this subject was carefully and fully considered, and the quality of the act of 1856, as affecting the title to land, and not merely the remedy, was authoritatively announced. Mr. Justice Clark, in stating several conclusions arising under the seventh section but relating to the whole act, said : “ It is not to be regarded simply as a statute of limitations, it is a provision for the greater certainty of title. Statutes of limitations affect the remedy only, but this section of the act of 1856, as we have said in Warfield v. Fox, 3 P. F. S. 382; Hegarty’s Ap., 25 P. F. S. 517, and McCort’s Ap., 2 Out. 33, lays down a rule of evidence which, after the lapse of five years without caveat or action at law duly pursued, makes that conclusive which before was prima facie only; it therefore affects the title to the land and not merely the remedy for its recovery. . . . These are the deliberate conclusions of this court after a careful study of this statute, and we are unwilling to modify or change them. Individual cases of special hardship may, and doubtless will, occur, which, at first blush, may appear to bring in question the wisdom of these rulings, but we believe this construction to be in accord with the purpose and design of the statute.”

Although this case arose under the seventh section of the act which protects titles to real estate under wills after five years from the probate, yet precisely the same considerations are applicable to the sixth section which protects titles to real estate from secret trusts after five years from their inception.

The next case cited is one arising under the sixth section: Christy v. Sill, 95 Pa. 380. It was a trust arising from an alleged fraud, which was found by the jury, but the action was brought more than five years after the trust arose. Mr. Justice PAXSON delivering the opinion of this court, said: “ The sixth section of the act of 1856 is not, strictly speaking, an act of limitation but rather of repose. So much was said by the present Chief Justice in Douglass v. Lucas, 13 P. F. Smith, at page 12. It is ‘An act for the greater certainty of title and more secure enjoyment of real estate,’ the preamble of which declares its object to be that, ‘ the people should, acquire, hold and improve their homesteads and estates in the confidence that they will not be lost, by secret and unknown claims, or by fraud and perjury. . . . We have here an ejectment brought in 1875 for a valuable property, and a recovery upon the ground of a fraud committed in 1863 by the purchaser at a sheriff’s sale. . . . There must be some point of time when a purchaser of real estate at a judicial sale shall not have his title cut up by the roots by mere parol evidence of what took place at such sale; or by a secret trust disentombed after the lapse of years, and set up by the uncertain recollection of witnesses as to remote transactions. The act of 1856 was evidently intended to prevent titles being disturbed in this manner. It is a highly beneficial statute, and ought to be liberally construed. ... We are of opinion that the defendants are protected by the act of 1856.”

Further citations are unnecessary. Although that was a case of fraud and it was vigorously contended that the title was absolutely avoided, yet we held, that the title by force of the fraud must be set up within the five years after it arose, or it must fail under the statute. By much greater force must the title alleged in the present case, being a resulting trust merely, fail after eleven years delay.

It was also contended here and in the court below, that the plaintiff’s wards being minors, the statute cannot be used against them until five years after attaining their majority. But this ground is entirely untenable under repeated decisions of this court. The act contains no exception in favor of persons under disabilities and therefore such persons are bound by the act in ■ the same manner as other persons sui juris. This doctrine was emphatically declared in Warfield v. Fox, 53 Pa. 382, overruling Miller v. Franciscus, 40 Pa. 335, in which a contrary ruling was made. Strong, J., said: “ The plaintiffs insist that notwithstanding the seventh section of the act (1856), they are not concluded by the probate of the will because Hannah Warfield was at the time under the disability of infancy, and Mrs. Ferrel was under that of coverture, and they claim that the proviso to the act of March 26, 1785, enabled them to contest the probate at any time within ten years after the disabilities ceased, and this though they were uuder no disability when the act of 1856 became a law. This position, however, is untenable. The seventh section of the act applies to all persons. It includes those who are under disabilities as well as those who are not. It makes no exception in favor of minors and those who are femes covert. ... A saving from the operation of statutes for disabilities must be expressed or it does not exist: Mobley v. Oeker, 3 Yeates, 202; Beckford v. Wade, 17 Yesey, 94. A law general in its nature binds minors and femes covert, and there is a multitude of statutes by which the rights of such persons are affected, though they are not specially named.” Speaking of minors, married women and persons of unsound mind, he said: “ Ordinarily they have guardians or committees; if covert, they have husbands who maintain their rights, whose interest and duty it is to assert them. The danger of loss resulting from such disabilities is far more than overbalanced by the mischiefs that flow from a continuing uncertainty (it may be for thirty years) whether any claim will be asserted, especially when the claim is one only in equity, which a chancellor always requires to be promptly enforced, or when it is against the prima facies of a record. . . . While all claims against one holding adversely were restricted in duration to thirty years, claims of the kind described in the sixth and seventh sections were barred in five years without any exception for disability.”

This case has been followed ever since, and is the undoubted law of the commonwealth to-day: See Pratt v. Eby, 67 Pa. 396; Folmar’s Appeal, 68 Pa. 482; Hunt v. Wall, 75 Pa. 413; Hollinshead’s Appeal, 103 Pa. 158; Cochran v. Young, 104 Pa. 333.

We conclude therefore that the resulting trust set up by the plaintiff in this case in favor of her wards is barred by the sixth section of the act of 1856, and that the plaintiff’s bill must be dismissed.

The contention that the possession of the trustee affected by such a trust is the possession of the cestui que trust, aud therefore notice to all, of the title under the trust, is hardly worth mention, as such a doctrine would entirely defeat the operation of the act in all cases.

The decree of the court below is affirmed, and the bill is dismissed at the cost of the plaintiff.