The view which I have taken of the law and of the evidence in this case compels me to dissent from so much of the opinion of the majority of the court as establishes a resulting trust in accordance with the prayer of the complainant. *Page 359
The case is not a novel one in principle, nor do the facts as alleged on either side take it out of the ordinary range of similar claims. The complainant seeks to establish an interest in real estate, not only without a deed, but in opposition to the written and recorded title of another, and courts of equity have been for so many years and so frequently called upon to consider and decide like cases that the principles governing this class of claims have become well defined and settled. So well is this understood that, in the argument before this court, there was no dispute over these principles except as to the lapse of time necessary to bar a claim for a resulting trust. The question to be decided, therefore, is more one of fact than of law, to wit: Did Achilles Hollingsworth purchase the real estate for himself individually or as a member of the first firm of Hollingsworth, Harvey Co., with the partnership money and for the partnership use and benefit? In other words, was there a resulting trust in Achilles Hollingsworth for the use of Hollingsworth, Harvey Co.?
A brief consideration of the law on the subject of resulting trusts of the character set up by the complainant's bill will here be in place, before examining the evidence, in order to reach a satisfactory conclusion. As already intimated, there is little, if any, difference of opinion as to the definition of a resulting trust. Indeed, the only variance to be found in the textbooks and in recent reports is one of phraseology, and not of substance. To constitute such a trust it is necessary, first, that the person in whose right the trust is claimed must have advanced the purchase-money or incurred a personal liability for its payment; second, that the purchase-money must have been paid, or the liability incurred, at the time and as part of the original transaction, and the trust must attach, if at all, by virtue of the circumstances of the transaction itself, and cannot be raised from subsequent matter arising ex post facto. (2 Sugd., V. P. 131.) The law is well stated by Chief Justice John M. Clayton in Newells v. Morgan, 2 Harr. 229, which, like the present case, was an appeal from Chancery. The chief justice says, citing Dyer v. Dyer, 2 Cox 92: "Soon after the statute of frauds passed it was determined that if *Page 360 an estate be purchased with the money of A., and the estate is conveyed to B., B. will be a trustee for A., and it is such a resulting trust by implication of law as is saved by the statute and needs no declaration. The substance of the cases on this subject appears to be that the trust of a legal estate * * * whether taken in the names of the purchasers and others jointly or in the name of others without that of the purchaser; whether in one name or several; whether jointly or successively, results, to the man who advances the purchase-money; and this in analogy to the rule of the common law that where a feoffment is made without consideration the use results to the feoffer.' But the trust must have been coeval with the deeds or it cannot exist at all. The resulting trust not within the statute of frauds, and which may be shown without writing, is when the purchase is made with the proper moneys of the cestui que trust and the deed not taken in his name. The trust results from the original transaction at the time it takes place and no other time, and it is founded on the actualpayment of money and on no other ground. (Chancellor Kent inBatsford v. Barr, Johns. Chy. 405.) It cannot arise from a loan — that is, where the grantee has borrowed the money with which to pay for the property and takes the deed in his own name; and if the deed is made in the name of the lender by way of security for the repayment of the loan, the equitable title will vest in the borrower. (Boyd v. McLean, 1 Johns. Chy. 590.)
It is well settled that a trust of this character may be proved by parol evidence, but with this doctrine is indissolubly connected another and vitally important one, to wit, that such evidence must be clear, full, and satisfactory. Says Chancellor Kent, in Boyd v.McLean, just referred to, "the cases uniformly show that the courts have been deeply impressed with the danger of this kind of proof, as tending to perjury and insecurity of paper title; and they have required the payment of the cestui que trust to be clearly proved;" and he cites the case of Lench v. Bench, 10 Yes. 511, where Sir William Grant did not deem the unassisted oath of a single witness to the mere naked declaration of the trustee admitting the trust as sufficient, and there were no corroborating circumstances in the case. He thought *Page 361 the evidence too uncertain and dangerous to be depended upon The doctrine of resulting trusts is admitted to be a very dangerous and questionable one, and is acted upon only with great caution, especially after much time has elapsed. In several of the States it has been done away with by legislation, except in cases of fraud, to the extent that no resulting trust shall arise or be claimed where the deed has been made to and in the name of the grantee with the knowledge and consent of the person paying the consideration. The history of the law on this subject is one of slow, hesitating, and cautious progress. At first it was doubted whether parol evidence could be received to impeach and contradict the written terms and meaning of a deed of conveyance executed with all the formalities belonging to an instrument of that nature. It was at length decided that such evidence could be admitted, not to contradict and control the written terms of the deed, but to engraft a trust upon the legal title, and that to do this the payment of the money must be clearly proved, as by evidence going directly to the fact of payment or by admissions of the nominal purchaser. The next question that came up was, whether such evidence could be admitted under any circumstances against the answer of the. nominal purchaser denying the facts on which it was attempted to establish the trust; and this stage having been reached, another subject of controversy arose on the point whether, after the death of the nominal purchaser, parol was admissible to prove a resulting trust. The negative of this last proposition has been maintained by able lawyers (1 Saunders on Usesand Trusts 354; Roberts on Frauds 99), while in Hill onTrustees 95 it is guardedly laid down that, "Upon the whole, the preponderance of authority seems to be in favor of the admissibility of parol evidence to support a resulting trust, as well after the death of the nominal purchaser as in his lifetime, although the purchase deed expressly state the money to be paid by the nominal purchaser;" but the author carefully adds, "however, it is to be observed that where the evidence is merely parol, it will be received with great caution, and the court will look anxiously for some corroborating circumstances in support of it; and in *Page 362 cases of this nature the claimant in opposition to the legal title should not delay the assertion of his right, as a stale claim would meet with little attention." And last of all came the question as to the lapse of time and the operation of the statute of limitations in defeating the execution of a trust. On this point there is some discrepancy of opinion among the authorities, the only well-recognized principle being that where the trust is created merely by implication or construction of law, the plea of lapse of time will be more readily admitted as a bar to any claim by the cestui que trust than in the case of an express trust. (Hill on Trustees 265.)
After this cursory review of the law defining the elements of and the incidents to a resulting trust of the nature claimed by the complainant, the inquiry may now be made, Has he furnished a sufficient proof of facts in support of a trust to entitle him to a decree in his favor?
The evidence produced by him to establish this part of his case may be arranged in the following order:
1. Entries on the books of Hollingsworth, Harvey Co., made by
Achilles Hollingsworth, and as such, being admissions that the
purchase was made with the funds of the firm, and for its use and
benefit.
2. The occupation of a principal portion of the property by the firm
from and soon after the time of purchase as adapted to and fitted
for their business, and the absence of any claim or charge for the
rent of the same by Achilles Hollingsworth.
3. The paper A, in the handwriting of Achilles Hollingsworth, setting
forth a statement of the assets and liabilities of the firm, and
including the estimated value of the real estate as a part of such
assets.
4. The testimony of Messrs. James Hollingsworth, Teas, and Valentine,
and of Mr. Patton.
1. The first entries on the firm books in which mention is made of real estate are under the date of December 31st, 1849, and are as follows: *Page 363
Achilles Hollingsworth (for real estate) Dr.
To cash for ten hundred and four dollars which he
paid to Isaac Grubb, Sheriff, in October last,
being ten per cent. of the purchase-money on
the property late of James Hollingsworth and
Joseph Teas, which he purchased at sheriff's
sale in August last, ..................................... $1,004 00
For ten dollars paid interest on the above account
for sixty days, .......................................... 10 00
For eleven 50-100 dollars paid Thomas J. Mahaffy,
tax against Hollingsworth and Teas property, ............. 11 50
For sundry expenses to New Castle, ......................... 3 50
For three dollars paid Isaac Hollingsworth for fastening
up shop, ................................................. 3 00
For nine dollars and twenty-six cents paid insurance
company, October 14th, last .............................. 9 29
For two dollars and twelve cents paid Biddle,
Prothonotary, ............................................ 2 12
For twenty dollars paid Mrs. Ann Billany, for
interest on bond, ........................................ 20 00
It is contended, on the part of the complainant, that these entries conclusively fix the character of the transaction to which they relate, and are equivalent to acknowledgments by Achilles Hollingsworth that the real estate was bought with the money of the firm and for the firm. In support of this interpretation of their meaning, the testimony of five witnesses, who were examined as experts in the science of bookkeeping, was offered, and they, without exception, were of the opinion that the entries indicate that the real estate was bought for the firm by Achilles Hollingsworth, and that it was a "real estate account" and "a firm account." One witness says, "A. H. was the agency through which the transfer of cash was made to the sheriff." The same witness adds: "From the connection of A. H.'s name alone with the entry, it tends to complicate it. From a bookkeeper's standpoint, I can see no object of associating the *Page 364
name of A. H., except to set forth the fact that he was the agent of his firm in the transaction" * * * * "personal transactions are never properly attached to partnership accounts. (W. G. Gibbon's test.,p. 76.) On p. 81 of complainant's testimony, Mr. Woolley, a well-known accountant, says: "I have examined all the accounts and original entries referred to in the interrogatory. The nature of the account in my opinion is real estate belonging to the firm." On cross-examination he admits that a private venture in real estate by one partner on his individual account might be kept on the firm books with the consent of the firm, and that the entries A. B. (the individual member) for real estate Dr. to Cash, and Cash Dr. to A. B. for real estate, would be the proper ones, and would apply to money borrowed from the firm from time to time to pay liens, interest on liens, repairs, taxes and insurance, and to money received for rents from portions of the real estate. George W. Elliott is equally positive that "these entries clearly indicate firm property" (p. 95), and J. Groesbeck, another expert, says: "Most decidedly, it is the firm's business, and that includes the ownership of the real estate. These entries signify firm's real estate" (p. 106). The last two witnesses agree that an individual account of a real estate venture may be kept on the firm books with the consent of the firm.
J. Taylor Gause is the first witness produced on the part of the defendants as an expert, who, to use his own words, has-"had a good deal to do with the science and practice of double entry bookkeeping since 1843." He testifies that the account as opened on the books is perfectly correct and proper. "I consider it an individual account with the firm.""I have examined several of the entries as posted on folio 37, and find charges for interest paid on liens against the property, repairs done to buildings, rents collected, all of which indicate that A. H. was the owner of the property." He also says that it is consistent with the science of double-entry bookkeeping for a member of a firm to have a dozen accounts, if the nature of the transactions require them. Eli Garrett has been concerned in bookkeeping since 1855. In his judgment the entry in Book D signifies that "Mr. Hollingsworth was the owner of that real estate — this is the *Page 365 story of the transaction;" and that it is not inconsistent with correct bookkeeping for a member of a firm to have two or more acacounts on the firm ledger. He keeps several such accounts. In addition to Messes. Gause and Garrett, five other practical bookkeepers testify as decidedly and directly to the same effect. These entries are mostly in the handwriting of Achilles Hollingsworth, who had charge of the books, which were at all times during the existence of the partnership subject to the inspection of all the partners. What, then, do they mean? If there was no other testimony in the cause, would they be sufficient to sustain the charge that the real estate was bought for the firm and belonged to the firm? Clearly, not; and this conclusion is confirmed by the testimony of Charles S. Robb, whose veracity, although it has been seriously questioned, has not been successfully impeached, and who, as far as we may judge from the papers filed in the cause, is entitled to equal credit and consideration with the other witnesses whose testimony has been admitted. He was in the employ of the firm as an apprentice as early as 1853, and was afterward engaged as bookkeeper from 1856 or 1857 to 1865, that engagement ceasing in September, after the death of Achilles Hollingsworth. Mr. Harvey gave his attention to the mechanical part of the business, while A. Hollingsworth acted as financier and correspondent. Mr. Rice was not known to Robb as a member of the firm. Mr. Harvey had the same access to the books that Mr. Hollingsworth or witness had and frequently examined them. In 1865, sometime after the death of Mr. Hollingsworth, Mr. Harvey took the books and papers of the firm to his private residence. The important part of the testimony of this witness is, that he was directed and instructed by Mr. Harvey, in the latter part of July or August, 1865, to make a settlement of the partnership accounts upon the basis that all the expenses connected with the real estate should be charged to Mr. Hollingsworth, and that all the rents for the same which had been received by the firm should be entered on A. H.'s real estate account, together with the old boiler and shafting that had been taken out at or about the time of the purchase; and that A. H.'s real estate account should be credited with six hundred dollars per annum for rent *Page 366 of that portion of the property occupied by the firm in carrying on their business.
Robb further testifies that during the lifetime of A. H., "Mr. Harvey has paid to me to be handed to Mr. Hollingsworth as his property rents from this real estate in controversy. That occurred often. It was always understood to be his property." (Deft.'s test., p. 16.) On this point of the receipt and appropriation of the rents, Robb does not stand alone. Jarrett Megaw, who was in the employ of the firm for many years, and part of the time as the special agent of James Rice, says that "when rents were paid I would receipt in the name of Mr. Hollingsworth and hand it over or put it in the fire-proof and report to him that I had collected so much. I signed the receipts `A. H. per Jarrett Megaw.'" (Deft.'s test., p. 50). Finally, on the sale of the firm's personal property to Megaw Billany for seventeen thousand dollars, Mr. Harvey said, according to Robb, that the surplus, after paying the debts of the firm, would be to divide, and that he did hand over to W. G. P., the excutor of A. H., a bond of Megaw Billany for some four thousand dollars, on account of what might be due him as executor from the proceeds of sale. (Deft.'stest., p. 19.) There is nothing at all improbable or unreasonable in what Robb has said of the instructions, conversations, and actions of Harvey, nor does his testimony appear to have been successfully contradicted or impeached.
Now, if Robb's statements are worth anything, and are taken in connection with the testimony of the defendants' experts and with the intrinsic evidence of the book entries, the conclusion is almost irresistible that the real estate account was the individual and personal account of Achilles Hollingsworth. In corroboration of Robb are the undisputed facts that at the time of the purchase Achilles Hollingsworth paid to the sheriff only ten per cent, of the purchase-money in cash; that before the sale, the property had been subject to a number of liens, but no money over the ten per cent. was paid to the sheriff or applied to the liens, and that on the 28th of December, 1849, Achilles Hollingsworth gave his own bonds and mortgages, in substitution of the liens as they stood in priority, up to the amount of the purchase-money — ten thousand and forty-nine dollars *Page 367 and sixty-four cents. These bonds and mortgages were as follows:
To the Wilmington Savings Fund Society, ................. $ 2,400 00
To Ann Billany, ......................................... 700 00
To Delaware Fire Insurance Company, ..................... 450 00
To Farmers' Bank, afterward ass'd to Sav'gs Fund
Society, .............................................. 2 100 00
To McDaniel Harvey, afterward ass'd to Jesse
Lane, ................................................. 1,800 00
To John Rice, a judgment bond, .......................... 1,595 64
__________
$ 9,045 64
Which, with 10 per cent ................................. 1,004 00
__________
Makes the entire purchase-money ....................... $10,049 64
About three thousand dollars of the principal of these securitie was paid off during the lifetime of Achilles Hollingsworth for the most part out of the partnership funds, and charged to his real estate account, together with the interest as it became due, and after his death the sum of one thousand nine hundred and fifty dollars was paid out of his estate, leaving a balance of four thousand dollars still unpaid, and for which his estate is liable.
2. The possession and improvement of a large portion of the property by the firm are relied on to prove the equitable ownership of H., H. Co. But neither possession nor outlay for improvement can avail against the payment of rents and Robb's testimony. The expenses for repairs and alterations were charged against the real estate account of A. H., and the rents of the dwelling-houses placed to his credit, while on the settlement of the partnership affairs by Harvey's direction the estate of A. H. was to be allowed six hundred dollars per annum for the use of the shops and buildings occupied by the firm. From whichever side then these accounts may be examined, they either prove title and estate in A. H. or they leave the question of ownership so much in doubt as to prevent a clear understanding *Page 368 of what they do mean. There is no doubt that use, occupation, and outlay of money for permanent improvements without payment of rent or its equivalent may be, under some circumstances, presumptive evidence of ownership or of interest in the property beyond that of a tenant. Here, however, the legal owner was the active partner, financier, and bookkeeper of the firm. The books are admitted to have been carelessly kept, the firm was declining toward insolvency for several years, no balance sheet was taken off, and A. H. may have thought that there would be time enough to make charges for rent when the firm had settled with and paid off its outside creditors. Be this as it may, Harvey, the surviving partner, and who ought to know the history of the firm's business, directed that the yearly rent of six hundred dollars should be credited to the account of his deceased copartner, A. II.
3. The next matter relied on to prove the trust is the paper A, containing what is claimed to be an exhibit, in the handwriting of Achilles Hollingsworth, of the liabilities and assets of the firm, including among the former the mortgages and liens against A. H., and among the latter the estimated value of real estate. This paper is without date, signature, or indicia of any kind to explain its true character and purpose, which are thus left to conjecture. Chancellor Bates, in his opinion in the first case of Harvey against his two co-defendants in the present suit, in endeavoring to reach a solution of its meaning, says: "There is nothing whatever on the paper or any collateral evidence to show the occasion or object for which this statement was made."
* * * "We must rather conclude that at sometime while there remained an expectation that the firm would take the property, or pending some proposal to that end, this statement was made in order to show in what condition the assumption of the property by the firm should it be taken would place its liabilities and assets: Its form and appearance indicate that it was made for some transient use or purpose which was not effectuated; for we can hardly suppose that any statement made as an exhibit of the film's interest in this real estate and of its liability for its liens would not have been entered on its books. Further, the statement, in addition to the mortgage against Hollingsworth, *Page 369 includes also a debt to be added to the original debts of the firm, a mortgage of four hundred dollars to Robert E. Poole, a mortgage which had no connection with this real estate. The presence of this mortgage alone demonstrates that the statement was made in contemplation of some arrangements then executing and not afterward carried into effect. For it is certain that the firm did not in fact by proper conveyances take this property or assume the liabilities set forth, nor did they at any time cease to charge Hollingsworth with payments made on account of the liens. There may have been some omissions to charge him, but they must be treated as accidental."
The defendants' counsel assigns another, and, perhaps, equally natural and reasonable cause for the existence of the paper: "Mr. Hollingsworth's purpose was evidently to show that with what the firm had and what he had, he, as the financial member, could probably meet its liabilities if an extension was granted." It would not be the first or only instance of a member of a quasi insolvent firm contributing his individual property and credit to sustain the sinking fortunes of a partnership. Thus it is seen that at every stage of the investigation of this case the pathway, instead of becoming more open and leading more directly to the point on which the complainant depends to establish his charge, is, as we advance, more and more beset with difficulties, uncertainties, doubts, and conjectures, for the burden of proof is on him by clear, full, and satisfactory evidence to engraft upon the legal title of Achilles Hollingsworth a trust in favor of Hollingsworth, Harvey Co.
4. The testimony of Valentine, Teas, and James Hollingsworth throws no additional light on the original transaction which has given birth to this suit. They speak of no facts that bear directly on the question. Their impressions, besides being too vague to depend on, are not evidence. Teas mentions conversations between Achilles Hollingsworth and James Hollingsworth in reference to the purchase of the real estate, "both before and after the sheriff's sale, of which J. Hollingsworth has no recollection. Their impressions were, at the time of the sale, that the property was bought for the firm. Not one *Page 370 of them can testify to the actual fact. Everything is indefinite. They refer to acts, expressions, and events which occurred more than twenty years ago, and after the lapse of so much time it would be perilous indeed to place any reliance on the mere impressions left upon the minds of the witnesses after the facts which created them have been totally forgotten or are but dimly remembered. The facts, if they could be recalled with certainty and distinctness, might bear a very different construction" from the one now sought to be attached to them. Facts can be investigated and explained — impressions cannot; and Sir William Grant, in Lench v. Lench, 10 Ves. 517, declares that to be the most unsatisfactory evidence which can be fabricated with facility and is incapable of contradiction. Mrs. Patton's memory is equally unreliable. She was a tenant of one of the dwelling-houses, and the rent (one hundred and twenty dollars) was set off against the annual interest of a debt of two thousand dollars which H., H. Co. owed to her husband's estate. A. H. negotiated the business with her. Wishing to buy, she inquired of A. H. what he would take for the house, and he replied that they would sell it for one thousand eight hundred dollars, but that they could not give a good title. On further examination, she was uncertain as to the expression used, whether he said "clear title" or "good title," and whether he spoke for himself or for the firm. It is very apparent that, with incumbrances to the amount of nine thousand dollars on the whole property, it might not have been convenient or feasible for the legal owner to convey a clear title to any portion of it, even on the most tempting offer.
Though there is not the slightest ground for questioning the good faith of any of the witnesses, the evidence, on the whole, is contradictory, uncertain, and defective, and does not come up to the full measure of proof required. It will bear more than one construction and is capable of supporting more than one theory. Robb, whose testimony has been freely criticised, is corroborated again and again by Megaw, who says that, after the separation of the personal from the real estate of H., H. Co., and the sale of the former to Megaw Billany, the last-named *Page 371 firm rented the shops and buildings from Mrs. Hollingsworth, and this with the consent, or, at least, without protest from Harvey. Megaw had been in the employ of both the first and second firms of H., H. Co. during the existence of each.
The chancellor, in dismissing the bill, adopted the view of his predecessor in office, and interprets the meaning of the book entries to be that A. H. borrowed the purchase-money from the firm, charging himself with the sums taken from the partnership funds for that purpose, and also with the moneys taken from time to time to pay off liens, interest, repairs, etc., and thereby became a debtor to the firm for the amounts so charged. Chancellor Bates, in the Harvey case, thought that the real character of the payments was that of a loan to Hollingsworth, for which the firm became not cestuis que trust of the real estate but creditors, and that the firm could not be both the owner of the real estate and Hollingsworth's creditor for payments made on account of it.
Why the purchase was made by A. H., and title taken in his name, while the main object seems to have been to benefit the firm by change of location and increased facilities for doing business, may be accounted for in the common experience of partnership concerns. Members of a firm do not always and at once agree upon what is best for their joint interest, and an individual partner, with clear foresight and strong convictions, may determine to assume a responsibility in which his partners refuse to unite; and it is doing no violence to admitted facts to suppose that A. H. may have bought the real estate under such circumstances with the design of having the firm profit by the transaction in the use of the shops and buildings, and with the expectation, also, that the firm would take the real estate off his hands, or, at least, so much of it as should be occupied by them, whenever the partners should consider it to their advantage to do so. But assuming this state of facts to be true, it would by no means leave it optional with the firm, or a surviving partner, or the representative of a deceased copartner, to set up a trust, either before or after the death of the legal owner.
But to recur to the law. The doctrine of resulting trusts *Page 372 being deemed "questionable,""dangerous," and as "one of the mistakes of equity," except where fraud is alleged on the part of the purchaser named in the deed, it is most reasonable to require that the burden of proof should fall upon him who attempts to set up the trust, and that the evidence in support of such claims should be clear, full, satisfactory, and convincing; and that after the lapse of many years and the death of the nominal purchaser, still greater caution should be exercised in admitting and weighing the evidence. All the authorities are at one as to the high standard of proof necessary in such cases. The evidence must not only be distinct and credible, but preponderate, and if it does not the presumption is in favor of the party who has the deed. The payment by the claimant must be proved explicitly, and not be a mere inference or deduction from facts and circumstances. (46Mo. 423; 13 P. F. Smith 229; 2 Md. 366.) After the legal title has once passed to the grantee by deed, it is impossible to raise a resulting trust so as to divest that legal estate by the subsequent application of the funds of a third person to the improvement of the property or to satisfy the unpaid purchase-money. The resulting trust must arise, if at all at the time of the execution of the conveyance. (Rogers v. Marray, 3 Paige 390.) In Forsyth v. Clark Stewart, 3Wendell 937, it was held that the appropriation of the joint funds of a copartnership by one of the members of a firm to the purchase of real estate conveyed to such partner in his own name will not create a resulting trust in favor of his copartner, unless the funds were so appropriated in pursuance of an agreement between the parties at the time of the purchase. In that case it was alleged that Clark had purchased certain real estate with funds belonging to Stewart, and that by operation of law there was a resulting trust to Stewart in the property. In commenting on the evidence, Mr. Justice Marcy says: "It is said Stewart furnished the funds with which Clark made the purchase. This assumption is not borne out by the facts of the case. Clark, in the first instance, used no funds for that purpose: his own bond was substituted for the payment of the consideration money. In discharging the old incumbrance, he used no funds, for that was done by giving his individual bond *Page 373 and mortgage to Roberts. If he afterward appropriated the funds in his hands, belonging jointly to himself and Stewart, to discharge the obligations which he had in the first instance laid himself under in making this purchase, a resulting trust would not be thereby created unless it was unequivocally shown that there was an agreement at the time of the purchase that these funds should be so appropriated." The evidence in that case was much stronger in support of a trust, not only from the circumstances surrounding the purchase, but in the proof of fraud, than in the present one, and yet the court affirmed the decree of the chancellor dismissing the bill. The analogy between the two cases is still more remarkable in the difficulty which the court finds in the cited case of accounting for the disposition of the rents which were carried to the credit of Clark Co. on the books of the firm, and the remarks of Justice Marcy in that connection may be applied with great appropriateness to the paper A, to which so much weight has been given. When exploring transactions suspected to be fraudulent," says the learned judge, "it often becomes necessary to build our conclusions upon an accumulation of circumstances, and such conclusions are strong or weak according to the number and character of the circumstances by which they are sustained. Circumstances which are inconsistent with one state of facts do not, however, necessarily prove another state of facts with which they may be made to harmonize. Combine those which this case presents to us as we may, doubts and difficulties, I apprehend, will arise as to the simple question whether Stewart wasa joint purchaser with Clark of the west half of the old Tontine Coffee House. Most of the pretenses that have been set up in opposition to such a conclusion have been scattered, yet competent proof is still wanting to create in the mind a confident reliance on its truth." The opinion of Judge Story, in Hoxie v. Carr et al., 1 Sumner, cited by complainant's counsel, does not controvert any of the foregoing authorities. The evidence there was not defective. Real estate, bought with the partnership funds, had been conveyed to the several partners in their individual names, and the property thus purchased was almost immediately occupied, used, and improved for the partnership *Page 374 business. There was no entry in the firm books of any charges for the real estate against the several members as upon a purchase made on their individual accounts. On the dissolution of the firm, which was heavily in debt, the question arose whether the real estate belonged to the several partners as tenants in common or was to be held as partnership assets. One of the partners had undertaken to sell his share of the realty to the defendants, and the latter declared that they had purchased without notice either express or constructive, that it was partnership property. The only defect in the proof was as to the knowledge of the defendants at the time the conveyance was made to them of the true situation of the firm's affairs, and of this there was strong presumptive proof. Judge Story says: "Some things may, in the present discussion, be assumed as settled, because both upon principle and authority they may now be treated as reasonably free from doubt. In the first place, property purchased with partnership funds does not of necessity become partnership property if that is not the intention of the parties, at least in all cases steering wide of fraud and breach of trust. One partner may certainly withdraw a part of the partnership funds for a separate purchase on his own account, and all may join in a purchase of real estate for purposes wholly independent of the partnership, intending to hold their shares severally on their individual account." The proof, however, of the partnership purchase in that case was too clear and direct to be resisted, and the court, although not finally deciding the cause, on account of the want of proper parties to the bill, intimated what the decision would be. InLe Fevre Appeal, Judge Sharswood says: "Partners have an unquestionable right to deal with the funds of the firm as they please; and if with their consent or knowledge or acquiescence a portion of their funds is applied to the purchase of real estate in the name of an individual member and as his private property, there is in such case no resulting trust. He is charged or chargeable with what is so withdrawn and appropriated in account. So if with the knowledge and consent of all the partners partnership funds are applied to the improvement of the real estate of one or more members of the firm." 69 Penna. S. Rep. 122. *Page 375
The opinions of these eminent judges and the adjudged cases before cited all concur in recognizing the right of a partner to apply the partnership funds to his individual use with the consent of his copartners, and that a separate account of his individual purchases and speculations may be kept in the books of the firm; and they also exhibit in a very clear light the great danger of admitting uncertain, equivocal, and purely circumstantial evidence to overthrow a deed or to engraft upon the legal title a trust which perhaps may never have been contemplated by any of the parties. Here there is so much to excite doubt about the true history of the sheriff's sales on the 18th of August, 1849, from the absolute failure to prove any agreement or understanding between the copartners, as alleged in the bill (this court being unanimous in ruling out Harvey's deposition), and by the reflection that the only support for the claim now made is on the book entries, the occupation of a part of the premises by the firm, and the paper A, each and all of which may be and are subject to different and opposite constructions, that it would be extremely hazardous, after the lapse of so many years from the day of sale, and after two of the three copartners have long since died, to make a decree establishing a resulting trust. The difficulty of coming to such a conclusion is increased when it is considered that James Rice lived for several years after his withdrawal from the firm, and though out of business and insolvent, made no demand for any share or interest in the real estate during that time, nor informed any one that he was entitled to such interest; then came the complainant who as the legal representative of James Rice, was empowered to demand and compel a settlement of the partnership affairs and to receive what might have been found due to his intestate, and yet he slept on this claim until 1873, making in all nineteen years from the dissolution of the first firm of H., H. Co., and upward of twenty-four years from the day of the sheriff's sale. During all this time the actors in the original transaction were passing away and the memory of the survivors becoming more oblivious and uncertain, until at this late day it is attempted to set up a trust unsupported by written proof, and depending on evidence which, viewed in the most favorable *Page 376 light for the complainant, reasonably admits of a conclusion that defeats his claim.
This leads us to the second branch of the defense — the plea of the statute of limitations.
Although a court of equity is said to be exempt from the compulsory force of the statute, and the operation of the bar is not governed by the same uniform and inflexible rules which prevail in actions at law, yet that court, acting in analogy to the statute, will in a proper case, after the expiration of a great length of time, refuse to enforce a claim which, without neglect, could have been sooner made. Where fraud enters into the transaction, the statute does not run except from the time of its first discovery, or when with reasonable diligence, it might have been discovered. The principles upon which equity applies the statute are here stated within the narrowest limits, for courts of equity have gone so far as, in every case free from fraud, to give the same effect to the statute as is done at law. The policy of the law is, for the welfare of the community, to fix a barrier to litigation, to render individuals secure in the undisturbed possession of their property, and for these objects to extinguish dormant claims. Another reason for the enactment of the statute was found in the difficulty of doing entire justice when original transactions have become obscure by time and the loss of evidence. The statute having been enacted on these grounds, there would seem to be no good reasons why, in the administration of justice, there should be any difference between the courts of equity and the courts of law in the operation of the bar, except in cases of fraud or of peculiar hardship, relief from which it is the special province of equity to afford.
In Delaware an action at law for the recovery of land must be brought within twenty years from the time when the cause of action accrued.Amend. Stats. 727. In applying the statute here, a distinction is to be observed between an express trust, constituted by the act of the parties, and a resulting trust, which is created by implication or construction of law. As between trustees and cestui que trusts, an express trust will not be barred, because in such cases there is no adverse possession, the possession of the trustee being the possession of the cestui que trust; *Page 377 but where the trust is a resulting one, the lapse of time will be more readily admitted as a bar to any claim by the cestui que trust against the trustee. "In such cases the possession of the trustee is usually to a certain extent adverse to the cestui que trust; for it rarely happens that such a trust is expressly recognized or admitted by the parties. Though in strictness the statute of limitations can scarcely be said to apply to these equitable cases, court of equity have always admitted the validity of a defense founded on the analogy of the statutes, and have refused relief where a party with full knowledge, or being in a situation to have full knowledge, of his rights, has delayed for twenty years to prosecute his claim. On more than one occasion a delay of eighteen years in enforcing a claim founded on a constructive trust has been held a sufficient reason for dismissing the bill." Hill on Trustees 265. In Angell onLimitations, chap. 16 et seq., it is said: "Where the trust, however, is merely implied, or constructive, there has been some disagreement among the cases, but the better opinion appears to be that, as in general the facts out of which such trust arises from their very nature presuppose an adverse claim of right on the part of the trustee by implication, from the beginning the statute will commence to run against the cestui que trust, from the period from which he could have vindicated his right of action or otherwise." (See Hill on Trustees 264, note 2.) In Strimpfter v. Roberts, 18 Penna. S. Rep. 283, Chief Justice Black says the doctrine of resulting trusts is not to be favored in ordinary cases, and that a trust resting in a parol is taken to be extinguished after twenty-one years; that "the whole doctrine is a violation of the sound principles on which the statute of frauds is placed and ought not to be favored except when the trust originated in the bad faith of the nominal purchaser. The extension of it to cases in which thecestui que trust has voluntarily placed his rights in such a condition that he can only establish them by parol is of doubtful policy, and, like other departures from the statute of frauds, has probably done more mischief than it has ever corrected." * * * "No man," says Mr. Justice Sergeant, "ought to be permitted to lie by while his rights can be fairly investigated and justly determined *Page 378 until time has involved them in uncertainty and obscurity and then ask for an inquiry. For such reasons as these it is that every civilized society has fixed a limited time within which all rights must be prosecuted. Where this is not done by positive enactments of the legislature, the judiciary calls in the aid of presumption; and courts of equity, though not bound by the statutes of limitations, close their doors against stale demands as sternly as the courts of law." * * * "Courts of equity will not listen to claims so old that they would be barred at law by the statute of limitations. If this rule, which is in itself so just and wise, needed the authority of great names to support it, Lord Talbot (3 Atkyns 325), Lord Redesdale (2Schy. Lefroy 71), Chief Justice Marshall (10Wheaton 152), Chancellor Kent (3 Johns. Chy. 129), and Judge Storey (1 Eq. p. 529) ought to be sufficient for the purpose."
The principles to be drawn from these authorities are too obvious, — and their application to this case are too apparent, to need elaboration. The decisions in England and the United States on the effect of the lapse of time in defeating ancient demands are uniform and conclusive almost without exception. Courts are always reluctant to overthrow written titles and legal estates by parol, or to encourage litigation by listening to stale claims, more particularly after the death of the party whose actions are brought under review, and who, if living, could perhaps explain them in such a way as to remove all cause for controversy.
There was no fraud in the manner of making title by A. II.; it was done with the knowledge of the firm as the bill admits; nor are there any circumstances of peculiar hardship in the complainant's case on his own showing to entitle him to relief. But, it has been replied that this case is taken out of the operation of the statute by the book entries made in the handwriting of Achilles Hollingsworth up to or near the time of his death, in 1865, and which constitute so many admissions by him that he was the trustee of the firm. This, however, even if sufficient for that purpose, is the assertion of a fact which has not. in my judgment, been satisfactorily proved. It is taking for granted that the evidence has established the fact that the personal account of A. H. is a firm *Page 379 account, and that each entry on the debit or credit side having reference to the real estate is an acknowledgment that the equitable title to the property is in H., H. Co. Neither the books, nor the contradictory opinion of the experts in relation to their meaning, or any circumstance proved in the depositions, warrant that assumption. The trust, if there was one, commenced on the day of the sale, or, at the latest, on the 29th of December, 1849, the date of the execution and delivery of the deeds, and there being no element of fraud or of peculiar hardship to prevent the operation of the statute, the complainant's claim is barred.*
For these reasons, I am of the opinion that the chancellor's decree, denying the claim of a resulting trust as well as the other demands made by the bill should be affirmed.
* The chancellor having decided that the trust was not sustained by adequate proof, did not, in his opinion, consider the plea of the statute. *Page 380