The parties stand in this court in an order the reverse of that held in the court below, but for convenience will be designated as plaintiffs and defendant, as they stood in that court.
The plaintiffs are the duly appointed and qualified testamentary trustees of Joseph C. Gilchrist, who died in May, 1919, leaving a last will and testament, which was admitted to probate in the Probate Court of Lake county, Ohio, and under the terms *Page 88 of which the residue of his estate, after payment of debts and prior charges, was to be turned over to said trustees. The persons appointed trustees were also nominated and appointed as executors of the estate.
The defendant is trustee of the property and assets of one Frank W. Hart, an individual, and Hart Co., a partnership composed of said Hart and others, under a trust agreement made on February 28, 1908, by said Hart, said Hart Co., and several banks in the city of Cleveland, which trust was created for the purpose of preserving, liquidating, and adjusting the indebtedness of Hart and Hart Co. By the terms of the agreement all the property of said individual and said partnership was turned over to the Superior Savings Trust Company, the predecessor of the defendant, to be applied by it in the payment of Hart's personal debts and the debts of said partnership.
On September 12, 1907, the decedent, Gilchrist, loaned to Hart Co. $25,000, and concurrently therewith took their note for said amount, payable some time thereafter, with interest. The daughter of said Hart married John D. Gilchrist, one of said trustees and a son of said Joseph C. Gilchrist, and he acted, in a large measure, as the agent of his father from approximately the time of the giving of said note until the death of said Joseph C. Gilchrist. In July, 1909, said John D. Gilchrist, as the agent of his father, presented said partnership note to said Frank W. Hart for payment of interest, at which time said Hart obtained possession of the note, destroyed it, and in its place gave his own note for $27,000, dated July 12, 1909, *Page 89 which was payable to the order of the decedent, Gilchrist, one year after its date. In October, 1909, and in January, 1910, Hart gave two notes of $400 each to the said Joseph C. Gilchrist for the payment of interest on said note.
The said Frank W. Hart died in 1910, before August 1st, on which date Joseph C. Gilchrist swore to an affidavit claiming that said three notes represented debts of said Frank W. Hart's estate, and filed said affidavit as a claim with the executors of his estate.
Upon this state of facts the plaintiffs, as said trustees, brought their suit for an accounting against said defendant on May 21, 1923, to which the defendant filed an answer setting up, first, a general denial; second, that if Hart Co. executed and delivered said note, the note had long since been extinguished, canceled, and discharged by the personal note of Frank W. Hart; and, third, the statutes of limitations of 10 and 15 years. Upon these pleadings the case went to trial, and a judgment was rendered in favor of the plaintiff, and the case is now here on error to reverse that judgment.
Defendant claims in this court, first, that the plaintiffs, as trustees, do not have capacity to sue; second, that the terms of the alleged loan of $25,000 have not been adequately established; third, that the statute of limitations has run; fourth, that the note of $27,000 was made by said Frank W. Hart individually, and accepted by said John D. Gilchrist in payment of and discharge of the earlier debt and note of Hart Co.
As to the first claim of the defendant, the competent *Page 90 evidence shows the terms of the will of Joseph C. Gilchrist, deceased, and the nomination and appointment of the executors and testamentary trustees, and that they are the same persons, but the record does not disclose that an account was filed showing distribution to have been made by the executors to the trustees in accordance with the terms of said will, nor that an order of distribution in kind was made by the probate court of Lake county. Therefore the defendant asserts that the plaintiffs do not show title to the claim upon which their suit is brought. But with this contention we do not agree.
By the will of the decedent all of the remainder of his estate, both real and personal, after the payment of his debts and prior charges, was to be given to the plaintiffs, as trustees, for the purposes named in the will.
From the evidence contained in the record, and the length of time which elapsed between the date of the appointments of the executors and trustees, and the bringing of the suit by the plaintiffs, the only reasonable inference to be indulged is that the debts and prior charges had been fully paid, and that the executors distributed the residuary estate to the trustees voluntarily, and in accordance with the terms of the will, at their own risk, and without having previously obtained an order from the probate court, and that an order of that court was not thereafter made approving said distribution.
In this state, when a person makes a valid will, as was done in this case, it is the source of title of the property given to devisees and legatees *Page 91 therein named. The title of the real estate devised vests immediately in the devisees upon the probate of the will, and relates back to the time of the death of the testator.
The title of the personal property passes by the will to the executor, as trustee, for the benefit of the creditors, legatees, and distributees, and, after the payment of the debts of the estate, the executor, as trustee, may, if he so desires, deliver the remaining personal property to those entitled by the will to receive it, thus vesting the legal as well as the beneficial ownership in the distributees.
We are, therefore, unanimously of the opinion that, in this case, upon the facts shown by the record, an order of distribution precedent to the distribution of the assets of said estate to the testamentary trustees was unnecessary, as were the filing and approval of a final account of said executors, and that said testamentary trustees did have capacity to bring said suit, if there was a legal claim upon which to base the same. See opinion of Judge Davis in the case of Henry, Ex'r., v. Doyle,Ex'r., 82 Ohio St. 113, at the bottom of page 119, 91 N.E. 990, 137 Am. St. Rep., 769; 3 Woerner on the American Law of Administration (3d Ed.), Section 519, p. 1793; Matthews v.Turner, 64 Md. 109, 21 A. 224; Burnes v. Burnes, (C.C.A.), 137 F., 781.
As to the second claim of the defendant, we are fully satisfied from the evidence that there was an original indebtedness of $25,000, and that a promissory note was given to evidence the same.
As to the third claim of the defendant, that the *Page 92 statute of limitations has run, we are of the opinion that if the plaintiffs had a right to maintain the suit against the defendants in the common pleas court, the statute of limitations had not run, because the trust established by the agreement is a continuing and subsisting one, and there is no evidence in the record that the trustees denied or repudiated the trust. In this connection, it ought to be borne in mind that if the suit were one for money against Hart Co., based upon the note, the statute of limitations of 15 years would apply as in ordinary cases, but, as the suit is not one for money upon that note, but is one based upon a trust, although the statute of limitations may have run upon the note, the right to maintain the suit under the trust may have still remained.
As to the fourth claim of the defendant, that the note of $27,000 was made by Frank W. Hart individually, and accepted by said Joseph C. Gilchrist in discharge of the earlier note and debt of Hart Co., we are fully satisfied from the evidence that Joseph C. Gilchrist, being connected by marriage to the said Frank W. Hart, must have known of said trust agreement and its terms. We are further of the opinion that it was the intention of Frank W. Hart, at the time he destroyed said note, and gave his personal note for the new amount, which represented the amount of the old note and the accrued interest thereon, to become the direct debtor of the said Joseph C. Gilchrist in place of the original makers of said note, Hart Co., and that they were to be discharged and released from the debt evidenced thereby. We are *Page 93 further of the opinion that, when this offer on the part of Hart to substitute himself as debtor for Hart Co. was brought to the attention of Joseph C. Gilchrist, he consented and agreed to the same, as is evidenced by his long retention of the note before his death, without protest or objection, the fact that he did not endeavor to participate in the benefits of said trust, or make any complaint about the same during his lifetime, the fact that he accepted two notes of $400 each for interest on said indebtedness of $27,000, and by the further fact that he presented said notes to the estate of said Frank W. Hart, deceased, for allowance and payment therefrom. In fact, this conclusion is the same as was reached by the trial judge, as shown by No. 16 of his findings of fact, made at the request of the defendant.
But we find another serious objection to the maintenance of said suit by said plaintiffs. Their suit for an accounting is based upon the theory that the trust agreement was made for the benefit of Joseph C. Gilchrist, now deceased, and said other creditors, although he is not specifically mentioned in the agreement; the claim being that the trust agreement shows that it was made for all of the then creditors of Hart and Hart Co., whether specifically mentioned therein or not.
We have carefully and fully read the trust agreement, and we are unanimously of the opinion that the real and personal property therein referred to was transferred and assigned for the sole benefit of the creditors therein enumerated, and for no others, and upon the representation of Hart and *Page 94 Hart Co. that the creditors mentioned in said trust agreement were all the creditors of said Hart and Hart Co. This being so, and there being no evidence, so far as the trustee and the creditors mentioned in said trust agreement are concerned, that the transfer and assignment was made in contemplation of insolvency, with a design to prefer one or more of the creditors of Hart and Hart Co., to the exclusion in whole or in part of others, this transfer and assignment of said property was valid and enforcible in law. In fact, the reading of the trust agreement shows upon its face that instead of being made for the purpose of defrauding and barring creditors, it was made for the purpose of protecting and paying those who were represented to be all of the creditors of Hart and Hart Co., and the fact that the plaintiffs filed a petition for an accounting against said trustee is an affirmance by them of the validity of said trust agreement. We are therefore of the opinion that because the plaintiffs' testator was not one of the beneficiaries named in said trust agreement the plaintiffs are not entitled to participate therein, but stand in the relation to said trust as strangers thereto, and, of course, are not entitled to have an accounting made to them.
On the record as a whole we are clearly of the opinion that the plaintiffs have no valid claim against said trust estate, and that the trial court should have rendered judgment in favor of the defendant.
The judgment of the common pleas court being contrary to law, the same is hereby reversed, and *Page 95 final judgment is rendered for defendant, dismissing the petition of plaintiffs.
Judgment reversed and judgment for plaintiff in error.
WASHBURN and FUNK, JJ., concur.
Judges of the Ninth Appellate District, sitting in place of Judges SULLIVAN, VICKERY and LEVINE, of the Eighth Appellate District.