Irvine v. Dunham/Opinion of the Court

by William Burnham Woods

United States Supreme Court

111 U.S. 327

Irvine  v.  Dunham

It is not disputed that the appellee has succeeded to all the rights of Sinton and Ihrie, if they had any, set forth in the bill of complaint. The question of fact at issue between the parties is, whether or not, before the conveyance by the appellant to the Morgan Mining Company of the Morgan mine, he held the title to an undivided fourth of the mine in trust for Sinton. The declaration of trust, signed by Irvine on March 28, 1874, unless impeached, is evidence which settles this question conclusively in favor of the appellee. The appellant, however, contends, as appears from his answer and testimony, that his promise to hold one-fourth of the mine in trust for the complainant was a mere gratuity; that Sinton never paid any money or rendered any services in obtaining title to the mine; that the declaration of trust was never delivered; and that it was to take effect and bind him only in case he never returned from his proposed journey. The burden is on the appellant to make this appear. It is shown by the record that in December, 1869, or January, 1870, the appellant purchased at a tax sale the title to the Morgan mine; that he received a deed therefor dated June 29, 1870, from the sheriff, and was put in possession of the property by a writ of assistance. Prior to the purchase at the tax sale, James G. Fair and A. A. Selover had been in possession of the mine; they claimed that Irvine had purchased the mine at the tax sale for them. Irvine demanded a large sum for his services, and after some delay gave them notice that if they did not accede to his demand he would hold the title for himself. Fair and Selover never paid the sum demanded by appellant, or any part of it, and appear to have abandoned all claim to the property. About this time, Henry D. Bacon and his associates, seven in number, were claiming title to the mine. On April 14, 1873, they compromised their controversy with the appellant by an agreement that he should apply for a patent for the property in his own name, and, having obtained it, should sell the property and divide its proceeds, retaining one-half himself and turning over the other half to Bacon and his associates. The appellant accordingly applied for and obtained a patent in his own name for the property. When the Morgan Mining Company was formed, and the mine was conveyed to it, Bacon and his associates got half the stock in consideration of their interest in the mine held in trust for them by the appellant, who received the other half of the stock.

Without going into a discussion of the evidence we state our opinion to be, after a careful examination of the record, that it is established by the testimony that Sinton, who was an experienced dealer in real proper y, contributed money and aided the appellant by his advice and co-operation in obtaining the tax title to the Morgan mine, and afterwards in getting the patent therefor from the United States, and in compromising the controversy between the appellant and Bacon and his associates in regard to the ownership of the mine; and that the money and services were contributed by Sinton on the agreement and understanding that he and the appellant were to share equally in the results of the enterprise. The fact that Sinton furnished the appellant money on account of the mine is found by the master to whom the case was referred, and no exception was taken to that part of his report. It is established that the appellant, after the compromise with Bacon and others, agreed to hold the title to the undivided half of the mine in trust for himself and Sinton, share and share alike, subject to the payment of the proportion of such undivided half in the costs and expenses incurred in securing title to and managing the property. The declaration signed by the appellant on March 28, 1874, was simply an admission in writing by him of the contract between him and the appellee in relation to their interest in the Morgan mine.

The contention of the appellant that the declaration of trust was a mere gratuity is not sustained by the proof. On the contrary, independently of the declaration, the testimony in the record establishes the trust and its terms as set up in the bill of complaint, and shows that the declaration or trust was not voluntary, but was based on a valuable consideration.

The appellant contends that the declaration of trust was put in the hands of Wilson as an escrow, to be delivered to Sinton only, in case the appellant died on his proposed journey, and to be redelivered to the appellant in case he returned to California, and that as he did return, the declaration of trust became ineffectual to bind him. This contention amounts to this: that by accepting the declaration of trust upon the terms alleged by the appellant, Sinton agreed that if the appellant returned from his trip to the eastern states he would give up all claim to his share of the property. If such had been the agreement of the parties they would naturally have embodied it in the written instrument. It contains no such stipulation. It is an unqualified and unconditional admission by the appellant that he held the property in trust for Sinton and himself, and that when it was sold or disposed of he would divide its net proceeds equally between Sinton and himself. We find no evidence in the record sufficient to sustain the improbable story that Sinton agreed, in case appellant should return in safety from his trip to the Atlantic states, that he would give up his interest in this valuable property, to secure which he had contributed money and services extending over a period of several years. In other words, we do not find that the declaration of trust was subject to any such condition.

The next contention of the appellant is that the decree should be reversed, because there has been no sale or disposal of his property, and that by the terms of the trust Sinton had only a right to the net proceeds after its sale or disposal. But the record shows that the property had been disposed of by conveyance to the Morgan Mining Company. The deed of the appellant to the company effectually divested him of all title to the property. It became the property of the corporation in which he retained no interest or estate. Mr. Justice BRADLEY in Morgan v. Railroad Co. 1 Woods, 15. The conveyance was therefore a disposal of the property, and whether the consideration was cash or shares of the capital stock of the company, was immaterial. The appellant having parted with the title to the property, was bound to account for its proceeds to the beneficiary of the trust according to the terms of the trust.

The appellant next contends that he is entitled, under the terms of the trust, to hold on to the stock which he received as a consideration for the conveyance of the trust property, until there has been an accounting, and the expenses and counsel fees have been paid. But by his answer he denies the trust; he claims to hold the stock for himself alone; he wants no accounting, and does not offer to account, or to hand over any net proceeds of the property after an accounting. In other words, he seeks to hold on to the trust property until it suits him to execute a trust, the existence of which he denies. Where there is a failure of suitable trustees to perform a trust, either from accident, or from the refusal of the old trustees to act, or from their original or supervenient incapacity to act, or from any other cause, courts of equity will appoint new trustees. Ellison v. Ellison, 6 Ves. 663; Lake v. De Lambert, 4 Ves. 592; Hibbard v. Lamb, Amb. 309; 2 Madd. Pr. Ch. 133; Com. Dig. 'Chancery,' 4 W, 7. No trustee can be more unsuitable than one who not only refuses to act, but denies the trust. When, therefore, appellant denied that he held in trust the stock claimed by the appellee, the latter, having established the trust, was entitled to have, if he demanded it, a new trustee appointed; or, if the appointment of a new trustee were not necessary for the preservation of his rights, to have an account taken by the court of the expenses and assessments with which his share of the trust property was chargeable, and upon their payment to have a transfer to himself of his share of the stock. The decree of the circuit court has given him these rights. There has been an accounting, and the sum with which the appellee's interest in the stock is chargeable has been ascertained, and when the sum so found is paid by appellee, and not till then, the decree of the court requires a transfer to him of his share of the stock. The decree of the court simply executes and winds up a trust, the existence of which it finds, but which the trustee denies and refuses to execute. Both parties got their rights under the decree. It must therefore be affirmed.

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