not change its character, because the parties happen to be merchants. It is a special contract, whereby a compensation is stipulated for a service to be performed, and not an account concerning the trade of merchandise. It is no more an "account," and no more connected with "the trade of merchandise," than a bill of exchange, or a contract for the rent of a house, or the hire of a carriage, or any other single transaction which might take place between individuals who happened to be merchants. An entry of it on the books of either could not change its nature, and convert it from an insulated transaction between individuals into an account concerning the trade of merchandise between merchant and merchant. This must depend on the nature and character of the transaction, not on the book in which either party may choose to enter a memorandum or statement of it. If the court, the learned judge remarked, were to decide the case on the words of the statute, they should not think that the plaintiffs had brought themselves within the exception. They should not consider the action as founded on "such an account as concerns the trade of merchandise between merchant and merchant." 1 162. Demands for money growing out of the trade of merchandise between merchants may form a part of their mutual dealings; but the exception cannot be applied to transactions between banking institutions, for they are embraced neither by the letter nor the spirit of the saving. Moreover, the interest of such institutions, as well as of the public, requires that liquidation of balances between banks should be regular and frequent.3 163. In Foster v. Hodgdon (where it appears that the dealings were between merchants on the one side, and bankers on the other), Lord Eldon makes the observation: "This bill has no allegation, that the foundation of the suit is accounts between merchants relative to merchandise between merchant and mer [So an account between two joint owners of a vessel was held not to be an account between merchant and merchant, or relating to the trade of merchandise, within the meaning of the statute. Smith v. Dawson, 10 B. Mon. (Ky.) 112. Nor is an account between partners. Manchester v. Matthewson, 3 R. I. 87; Leavitt v. Gooch, 12 Texas, 95; Bradford v. Spyken, 32 Ala. 134. Nor is a single transaction between two merchants within the exception. Marseilles v. Kenton, 17 Penn. St. 238. Nor is an account with several debits for goods, and one credit of cash, such an account. McCulloch v. Judd, 20 Ala. 703.] 2 Bass v. Bass, 8 Pick. (Mass.) 187; M'Clellan v. Croften, 6 Greenl. (Me.) 308. * Farmers and Mechanics' Bank v. Planters' Bank, 10 Gill & Johns. (Md.) 442. 4 Foster v. Hodgdon, 19 Ves. 180. chant, unless it is considered as alleging that, by implication, from the statement of the character in which the plaintiffs stood, and the business carried on." And his lordship considered that that inference could not be drawn. This observation was cited by the Vice-Chancellor, in Forbes v. Skelton, as an authority in deciding, that the account kept by the joint owners of a plantation in Java, which they worked in copartnership with certain merchants and agents at Bombay, to whom they became largely indebted, in respect of moneys advanced and paid for their use, was not a mercantile account within the meaning of the exception in the statute. 164. Accounts between one partner and another, for a settlement of the partnership accounts, do not concern the trade of merchandise between merchant and merchant, and are not embraced by the exception in the statute; 2 and it was held, in a suit in equity, by an executor of one partner against the survivor for an account, that it did not concern merchants' accounts, and so was not within the exception in the statute, respecting such accounts.3 165. It seems, indeed, very clear, as it has been declared, that the parties must both be merchants at the time of action accrued ; that the account must be a mutual or reciprocal one, consisting of debts and credits; and that it must have originated in articles of merchandise. 1 Forbes v. Skelton, 8 Simmons, 335, and 11 Eng. Con. Ch. 466. 2 Coalter v. Coalter, 1 Rob. (Va.). 7, cited in 3 Am. Law Mag. 210. 3 Codman v. Rogers, 10 Pick. (Mass.) 112. 4 Fox v. Fiske, 6 How. (Miss.) 328. CHAPTER XVI. TRUSTEES OF PERSONAL PROPERTY GENERALLY. 166. TRUSTS, in their strict and technical sense, are known only in equity; and falling, as they do, in such a sense, within the peculiar and exclusive jurisdiction of a court of equity, the doctrine has been long established, that so long as they subsist they cannot be reached, as between trustee and cestui que trust, by the statute of limitations. The doctrine, says Mr. Justice Story,1 seems to be admitted ever since the great case of Cholmondeley v. Clinton. It will be found learnedly and elaborately discussed by Chancellor Kent, in the notable case of Kane v. Bloodgood,3 by which it appears that it has had the full support of Lord Macclesfield and of Lord Hardwicke and his successors, in a series of decisions. The equitable principle upon which the doctrine is founded is succinctly stated by Lord Redesdale, when Chancellor of Ireland. "If a trustee," he says, "is in possession and does not execute his trust, the possession of the trustee is the possession of the cestui que trust; and if the only circumstance is, that he does not perform his trust, his possession operates nothing as a bar, because his possession is according to his title."4 To exempt a trust from the bar of the statute, it must be, first, a direct trust; second, it must be of the kind belonging exclusively to the jurisdiction of a court of equity; and, third, the question must arise between the trustee and the cestui que trust.5 1 Baker v. Whiting, 3 Sumn. (Cir. Co.) 486. 2 Cholmondeley v. Clinton, 2 Jac. & Walk. Ch. 1. Kane v. Bloodgood, 7 Johns. Ch. (N. Y.) 90. [Shibla v. Ely, 2 Halst. (N. J.) Ch. 181; Zacharias v. Zacharias, 23 Penn. St. 452. But see Jayne v. Mickey, 55 Penn. St. 260.] 4 Hovenden v. Lord Annesley, 2 Scho. & Lef. Ch. 607. And see post, as to the effect of possession of land, as between trustee and cestui que trust; and Trevost v. Gratz, 6 Wheat. (U. S.) 481. 5 Lyon v. Marclay, 1 Watts (Penn.), 275. [White v. White, 1 Md. Ch. Dec. 53; Thomas v. Brinsfield, 7 Ga. 154; Tinnen v. Mebane, 10 Texas, 248. But it has been recently held, in Mississippi, that the stockholder of a bank, who has not paid his subscription, is in the nature of a trustee for the amount due from him, and cannot plead 167. It was in accordance with the principle stated by Lord Redesdale, and upon the conclusions arrived at from the abovementioned case of Kane v. Bloodgood, and from the case of Decouche v. Savatier, Goodrich v. Pendleton,2 and Coster v. Murray, in the Court of Chancery of the State of New York, that the chancellor of New Jersey decided, that where A. executed a power of attorney to J. W., and thereby placed her whole property at the disposal of the attorney, with full power to collect her choses in action, and to make sale of her goods and chattels, and out of the principal as well as interest of the proceeds, to maintain and support her, with a provision that J. W. should account when required, it was a direct trust, to which a plea of the statute was not applicable. The statute cannot be pleaded by trustees in answer to a charge of breach of trust, to defend them from the consequences of neglecting their duty in having sold an estate charged with the payment of a sum of money, without satisfying that demand. The defendants, the trustees, were the statute of limitations in bar to a bill by a creditor of the bank to subject the amount to his debt. At all events, the statute does not begin to run till the bank ceases to elect a directory. Payne v. Bullard, 23 Miss. (1 Cush.) 88. And where property is held in trust for another, subject to the decision of a claim in suit against the cestui que trust, the statute does not begin to run against the cestui que trust till the final settlement of the suit. Soggens v. Heard, 31 Miss. (2 George) 426. And if a sheriff and a judgment creditor hold money in trust to pay over to other creditors who have appealed from the judgment, they cannot avail themselves of the bar of the statute. Gay v. Edwards, 30 Miss. (1 George) 218. A husband intrusted, as her agent, with property given to his wife, cannot set up the plea of the statute on a question of title between them. Meadows v. Dick, 13 La. An. 377.] 1 Decouche v. Savatier, 3 Johns. (N. Y.) Ch. 216. 2 Goodrich v. Pendleton, Ib. 387. 3 Coster v. Murray, 5 Ib. 522. The well-established doctrine, in the courts of chancery of South Carolina, based on the authority of the English chancery, is that the statute of limitations will not bar a demand growing out of a direct trust, but will a demand arising out of a trust raised by implication of law. Burham v. James, 1 Speer (S. C.), Eq. 375. The following cases, in the same State, are cited: Alexander v. Williams, 1 Hill (S. C.), 522; Mussey v. Mussey, 2 Hill (S. C.), Ch. 496; Tucker v. Tucker, 1 M'Cord (S. C.), Ch. 176; Miller v. Mitchell, Bail. (Court of Appeals, S. C.) 437. [Presley v. Davis, 7 Rich. Eq. (S. C.) 105.] In Massachusetts, Farnham v. Brooks, 9 Pick. (Mass.) 212. In Pennsylvania, Finney v. Cochran, 1 Watts & Serg. (Penn.) 118; Walker v. Walker, 16 Serg. & Rawle (Penn.), 379; Lyon v. Marclay, supra. [McDowell v. Goldsmith, 6 Md. 319; Prewett v. Buckingham, 28 Miss. (6 Cush.) 92; Paff v. Kenney, 1 Bradf. (N. Y.) 1; Carter v. Bennett, 6 Fla. 214; Manton v. Titsworth, 18 B. Mon. (Ky.) 582; Blount v. Robeson, 3 Jones, Eq. (N. C.) 73; West v. Sloane, Ib. 102; Sagles v. Tibbitts, 5 R. I. 79; Martin v. Bank, 31 Ala. 115; Marsh's Executors v. Oliver's Executors, 1 McCarter (N. J.), 259.] 4 Administrators of Allen v. Wooley, 1 Green (N. J.), Ch. 209. stakeholders of a fund, with knowledge of the claims which existed against it, and that was averred in the bill, as well as that they had recognized the plaintiff's claim. The statute does not run against the creditor of a bankrupt, as a commission of bankruptcy constitutes a trust for all the creditors. This was held by the Master of the Rolls, and afterwards, on appeal, the decision was confirmed by the Lord Chancellor, who said, that the effect of the commission clearly was to vest the property in the assignees for the benefit of the creditors; and that they, therefore, were in fact trustees; and that it is an admitted rule, that, unless debts are already barred by the statute of limitations when the trust is created, they are not afterwards affected by lapse of time. The principle has been lately applied to the insolvent act of Massachusetts. The statute does not run against a claim upon an insolvent debtor, after the publication of the messenger's notice of the issuing of a warrant against the debtor, under statute, 1838, c. 163. A claim, not barred by that statute, when such publication is made, may be proved at a meeting of the creditors, held after it would otherwise have been barred.4 168. The most common mode of creating direct trusts, not cognizable at law, is by the appointment and qualification of executors and administrators. Executors who are precluded from taking beneficially, and administrators claiming merely as such, cannot, by virtue of lapse of time merely, set up a title to the 1 Milnes v. Cowley, 4 Price (Ex.), 103. 2 Ex parte Ross in re Coles, 2 Glyn. & Jam. 46 (in 1825). 3 Ibid. 330 (in 1827). 4 Minot v. Thacher, 7 Met. (Mass.) 348. It seems that after an insolvent debtor made an assignment of his property, under statute 1836, c. 238, the statute of limitations ceased to run against the claims of those who were his creditors at the time of the assignment. Willard v. Clark, Ib. 435. [Prescription is interrupted by a cessio bonorum made by the debtor. West v. Creditors, &c., 1 La. An. 365. And see Heckert's Appeal, 24 Penn. St. 482. So also by bankruptcy. In re Eldredge et al. U. S. D. C. East Dist. Va. 12 N. B. R. No. 12, 1875. Nor is the statute applicable to the account of a guardian against his ward, while the relation subsists; and, after its termination, lapse of time will not bar the guardian's claim where the delay is sufficiently explained by the circumstances of the case. Kimball v. Ives, 17 Vt. 430; Mathes v. Bennett, 1 Foster (N. H.), 204. By the Rev. Stat. of Massachusetts, c. 68, § 20, where assets come into the hands of the administrator of an insolvent estate, after the closing of the commission of insolvency, the commission may be opened, and the claim of a creditor, in whose favor the commission is thus opened, is not barred by any of the statutes of limitation in consequence of the lapse of time subsequent to the closing of the first commission. Ostram v. Curtis, 1 Cush. (Mass.) 461; Sharts v. Same, Ib.] |