If one deals with an agent as principal and the right of action
against the agent becomes barred by the statute of limitations, it
is also barred against the principal unless circumstances of equity
are shown to prevent the operation of the statute or unless it
appears that there was fraud in the concealment of the agency.
Page 111 U. S. 171
The circumstances of this case disclose no trust in favor of the
complainants.
The heir at law of a deceased person is not the proper party to
enforce an alleged trust in personal property made for the benefit
of the deceased.
The facts making the case are stated in the opinion of the
Court.
MR. JUSTICE MATTHEWS delivered the opinion of the Court.
This is an appeal from a decree dismissing a bill in chancery
upon general demurrer for want of equity.
The complainants, also appellants, are the heirs at law of David
White, deceased, citizens, respectively, of Alabama and Florida;
the defendant, the appellee, is alleged to be a corporation,
incorporated by an act of the Congress of the Republic of Texas and
a citizen of that state.
It is alleged in the bill, which was filed October 11, 1880,
that the republic of Texas, on January 25, 1838, issued a patent to
Michael B. Menard, in consideration of $50,000, for one league and
labor of land on and including the east end of Galveston island;
that David White, the ancestor of the complainants, advanced and
paid that sum for Menard, to secure repayment of which the latter
executed and delivered his mortgage on the land to White. Menard at
the time had associates, jointly interested with him in the
purchase, and others became so subsequently, and the association
was a partnership, with a view of organizing a joint stock company
for the sale of the land for profit, in lots, and distribution of
the net proceeds as dividends to shareholders, Menard being,
however, the managing partner, and until April 18, 1837, holding
the legal title, the indebtedness to White having been incurred in
his own name, and the mortgage executed by him individually for the
repayment of the same. About the date last mentioned, Menard
released to one Triplett 640 acres of the land to compromise a
conflicting claim of
Page 111 U. S. 172
title, and afterwards, about June 15, 1837, the whole original
tract, including that released to Triplett, was conveyed by all
parties in interest to trustees in trust for the purpose of
carrying into effect the original plan, Triplett and those
interested with him becoming co-associates with Menard and his
associates. To that end, the trustees were to issue 1,000 shares of
stock, of which 400 were set aside to provide for certain
certificates previously issued under the Menard interest, and the
remaining 600 shares were to be sold and the proceeds applied first
to the payment of expenses, and then to be divided, one-third to
the Triplett interest and two-thirds to the Menard interest, but
the debt to White was to be provided for out of the Menard shares,
and provision was made for issuing trustees' certificates to the
individual owners of interests, which was in fact done, and the
holders of certificates, which were assignable, became associated
as the Galveston City Company.
It is alleged, however, that out of the 600 shares, a number
deemed sufficient for which no certificates were issued, but part
of those which otherwise would belong to the Menard interest were
reserved to be sold for the purpose of paying the debt to White, so
as to relieve the Triplett interest from any charge on that account
and so as also to indemnify Menard individually against his
liability therefor. The precise number of the shares thus set apart
and appropriated, it is alleged, is not known, but it is charged
that on March 10, 1851, twenty-nine shares of the original number
so appropriated still remained in the hands of the company
undisposed of.
On April 13, 1838, the holders of these certificates seem to
have organized, as stockholders of a future corporation, the
Galveston City Company and elected five directors, to whom, as
directors of the association, the legal title to the land was
conveyed by the trustees. Thereafter the outstanding trustees'
certificates were called in and "renewal certificates," so called,
were issued in exchange, which represented the shares of the
company.
It is further alleged that about November 7, 1838, the company,
by Menard, its President and agent, but in his individual name,
paid White $25,000 on account of the debt due
Page 111 U. S. 173
to him out of the proceeds of the stock reserved for that
purpose, and about the same time entrusted Menard, as agent of the
company, with fifty shares of the reserved stock, for sale, to pay
the remainder of the debt to White. Menard sold twenty-one of these
shares and paid to White the proceeds thereof, being $10,550, in
1839, which, with the previous payment, is all that has been paid
on account of the debt due to him, leaving $14,450 of the principal
sum unpaid.
On February 5, 1841, the stockholders of the association became
incorporated by an act of the Congress of the Republic of Texas as
the Galveston City Company, the defendant below.
Long after the organization of the corporation, on March 10,
1851, Menard made a written report to the company of his agency in
the sale of the fifty shares entrusted to him for the purpose of
paying the debt to White. In that report, he recounted the
circumstances of the history of the transaction and the facts as to
the sale of the twenty-one shares, and the payment made to White,
showing the balance due, as above set forth, for which he stated a
suit was then pending against him individually, and for which he
held the remaining twenty-nine shares of stock. Valuing them at
$5,800, which he estimated to be their market value, there would be
a deficiency of $8,650 to provide for on the amount due to White.
He also claimed that he was in advance for the company in the sum
of $13,000, on other accounts, and asked that the company make
provision for his reimbursement by a par credit on its books for
the full amount of $21,650. The board of directors, by resolution,
admitted the correctness of Menard's statement of his account and
ordered a credit to him on its books for the amount stated.
The suit referred to by Menard as pending against him had been
brought in the name of one Lipscomb, administrator of White, the
latter having died December 10, 1841, to recover the balance due to
White's estate and to enforce the lien of the mortgage upon the
land. To this action Menard had pleaded the statute of limitations
as a bar, and about May 20, 1951, it was dismissed, on his motion,
for want of prosecution.
Page 111 U. S. 174
It is alleged that nothing further has ever been done by Menard,
who died insolvent in 1856, nor by the defendant, toward the
payment of the debt due to White's estate, and that neither the
plaintiffs nor the personal representatives of White had any
knowledge or by reasonable diligence could have learned of the
facts, of which they obtained information only within two years
prior to the filing of the bill, in reference to the liability of
the corporation as the principal, for whom Menard acted as agent,
to pay the debt due to White, nor of the acknowledgment made of it
by the company in 1851, as already detailed, nor of the trust of
the twenty-nine shares of stock appropriated for that purpose, and
that in fact everything that would lead to such knowledge has been
studiously concealed from them by the defendant, its officers, and
agents.
The bill prays for an account of what is due; that the amount be
decreed to be a lien on the land of the defendant; that the
twenty-nine shares of stock alleged to have been reserved for the
purpose be sold for the payment of the amount found to be due, and
for general relief.
It seemed to be supposed in argument that some support for this
bill may be found in the allegations that charged the defendant as
the successor in law, liable for their obligations, of the
associates who were the undisclosed principals on whose behalf
Menard contracted the debt with White. But manifestly the statute
of limitations that barred the claim against Menard, and the
express lien of the mortgage, a defense not denied to have become
perfect as to them, would equally protect those on whose behalf
Menard acted as agent, there being no circumstances of equity to
prevent the operation of the statute in their favor. None such are
alleged; the mere ignorance of the appellants, and even the
concealment of the fact that Menard was merely an agent, and of
those for whom he was agent, there being no fraud on their part
charged, manifestly is insufficient for that purpose.
It is equally plain that there is no trust as to the 29 shares
of stock alleged to have been placed in Menard's hands as a fund
for the payment by him of the debt to White. That arrangement is
stated to have been intended as an indemnity
Page 111 U. S. 175
to Menard against his own personal liability and as a guarantee
in favor of the Triplett interest. And when in 1851 Menard made his
report and its recommendations were adopted by the company, the
trust as stated seems rather to have been an out and out sale to
him of these shares, for he has credit upon the books of the
company for the amount of his advances and liabilities, and thus,
as between himself and the company, becomes the principal debtor,
and there is no ground for an inference that the shares in question
were or continued to be in the control of the company.
But even were this otherwise, it would be impossible to construe
the arrangement into a trust for the benefit of White's estate.
There was no privity and no notice, and the arrangement obviously
was merely an adjustment, made among the parties for their own
convenience, of the accounts between them, not intended to confirm
or to confer any rights upon the appellants.
The objection that the suit should have been brought by a
personal representative of White and that it cannot be maintained
by his heirs at law seems also to be well taken, as no sufficient
reason is alleged why the administrator, who prosecuted the suit
for the foreclosure of the mortgage, might not have been
complainant in the present suit.
The claim itself, both as a debt and a lien upon the land,
against the party with whom it was contracted, as we have said, is
admitted to be barred by the lapse of time; there is no ground
stated in this bill why, in equity, it should be revived against
the appellee.
The demurrer was properly sustained, and the decree dismissing
the bill is accordingly
Affirmed.