AMERICAN LAW REPORTS ANNOTATED VOL. 47 CAVANAUGH BROTHERS HORSE COMPANY V. WILLIAM A. GASTON et al., Exrs., etc., of Henry Nawn, Deceased. Massachusetts Supreme Judicial Court — June 1, 1926. Parties, § 10 right to enforce promise under seal. 1. A third person cannot maintain an action on a sealed instrument to which he is not a party. [See annotation on this question beginning on page 5.] Accounts, § 2 when action lies. 2. An action at law on an account stated lies only where there have been transactions previous to the statement of the account which created the relation of debtor and creditor. [See 1 R. C. L. 208, 210; 1 R. C. L. Supp. 65; 4 R. C. L. Supp. 13.] Accounts, § 2-action to compel pay ment. Limitation of actions, § 116 when runs. 5. The Statute of Limitations begins to run upon a cause of action for breach of trust upon an open disavowal of the alleged trust, or at least upon actual notice to the person interested of the breach. [See 17 R. C. L. 708, 796; 3 R. C. L. Supp. 723, 734.] Evidence, § 1554 sufficiency ab sence of promise to pay debt. 6. That one to whom property was conveyed for payment of debts did not sign instruments obligating him to pay certain claims may be inferred from statements made in his lifetime denying any promise, considered in the light of the fact that he returned the property to the grantor without making the payment. EXCEPTIONS by plaintiff to rulings of the Superior Court for Suffolk County (Hall, J.) made during the trial of an action at law on an account stated which resulted in a verdict for defendants. Overruled. The facts are stated in the opinion of the court. 47 A.L.R.-1. Mr. Frederick J. Smith, for plaintiff: The transfer of John Nawn's real estate to Henry Nawn in 1900 was a voluntary assignment for the benefit of creditors, with Cavanaugh Brothers as beneficiary, establishing an express trust. Andrews v. Tuttle-Smith Co. 191 Mass. 461, 78 N. E. 99. No privity of contract is necessary to support an action at law against the trustee by the plaintiff. Mason v. Waite, 17 Mass. 560; Hall v. Marston, 17 Mass. 575; Arnold v. Lyman, 17 Mass. 400, 9 Am. Dec. 154; Carnegie v. Morrison, 2 Met. 381; Dow v. Clark, 7 Gray, 198; Rogers v. Daniell, 8 Allen, 343; Prescott v. Ward, 10 Allen, 203; Derome v. Vose, 140 Mass. 575, 5 N. E. 478; Gould v. Emerson, 99 Mass. 154, 96 Am. Dec. 720; Underwood v. Boston Five Cents Sav. Bank, 141 Mass. 305, 4 N. E. 822; Gannon v. Ruffin, 151 Mass. 204, 24 N. E. 37; Bouve v. Cottle, 143 Mass. 313, 9 N. E. 654; Henchey v. Henchey, 167 Mass. 77, 44 N. E. 1075. Plaintiff might have enforced execution of the trust. New England Bank v. Lewis, 8 Pick. 113; Ward v. Lewis, 4 Pick. 518; Dedham Bank v. Richards, 2 Met. 105; Bryant v. Russell, 23 Pick. 508; Draper v. Putnam, 7 Allen, 172; Andrews v. Tuttle-Smith Co. 191 Mass. 461, 78 N. E. 99. Henry Nawn would be estopped to deny this trust, as the terms of it are contained in a writing under seal signed by him. Ward v. Lewis, 4 Pick. 518; Drury v. Fay, 14 Pick. 326; Morrill v. Lamson, 138 Mass. 115. There was a vested right in the Cavanaughs as beneficiary, under which the assignee, Henry Nawn, is liable if he devest himself of the trust property without providing for the beneficiaries. Noyes v. West, 3 Cush. 423; Frost v. Gage, 1 Allen, 262. If he returns the property to the assignor or reconveys it to him, a creditor who did not consent to such retransfer is entitled to enforce the trust, even if the estate was solvent and only one creditor unpaid. Noyes v. West, supra; Carney v. Dewing, 10 Cush. 499; Fitch v. Workman, 9 Met. 517; Dimmock v. Bixby, 20 Pick. 368.. If there was a misapplication of the trust property innocently made by the trustee, who thereby devested himself of the trust, he would be liable. Ward v. Lewis and New England Bank v. Lewis, supra. The mortgages, or one of them, was an equitable mortgage of Cavanaugh Brothers, to which the Statute of Frauds is no defense. Campbell v. Dearborn, 109 Mass. 130, 12 Am. Rep. 671; Potter v. Kimball, 186 Mass. 120, 71 N. E. 308. As between the trustee and cestui que trust in an express trust created by sealed instrument, where the trustees still retain the proceeds of the trust, the Statute of Limitations has no application, and no length of time. is a bar. Farnam v. Brooks, 9 Pick. 212; Fuller v. Cushman, 170 Mass. 286, 49 N. E. 631; Perry, Trusts, 6th ed. § 863. The trust being established, the burden is on the defendant to prove that the trustee executed it, that the property was sold or turned into cash, and that Cavanaugh Brothers were paid. Ashley v. Winkley, 209 Mass. 509, 95 N. E. 932; Cosmopolitan Trust Co. v. Mitchell, 242 Mass. 119, 136 N. E. 403. If there was any question upon the evidence as to when the Statute of Limitations began to run, if at all, the defendant was not entitled to a directed verdict. Kellogg v. Tompson, 142 Mass. 76, 6 N. E. 860; Trudeau v. Poutre, 165 Mass. 81, 42 N. E. 508. Messrs. E. C. Thayer and Edward Bangs for defendants. Wait, J., delivered the opinion of the court: The plaintiff declared, in contract, that it and Henry P. Nawn accounted together on November 1, 1918; that a balance of $3.913.08 was found due from Nawn which he agreed to pay but never paid. The defendants, in addition to general denial and payment, pleaded the statute of frauds and the statute of limitations. The case was referred to an auditor who reported findings of fact upon which, unless the statutes of frauds and of limitations constituted a defense, the defendants, as executors of Henry P. Nawn, would be liable. At the trial before a jury, the plaintiff put in (Mass., 152 N. E. 623.) the report of the auditor and rested. All other evidence was introduced by the defendants. The judge refused to instruct the jury in accord with requests of the plaintiff, refused to order a verdict in accord with the auditor's report for the plaintiff, and submitted to the jury two issues of fact upon a charge confined to those issues. The jury found upon the first of these issues that Henry P. Nawn did not sign the originals of certain exhibits. This made a finding upon the second issue unnecessary. Thereupon the judge ordered and the jury returned a verdict for the defendants. The plaintiff saved exceptions to these refusals and order. There was evidence that in 1900 one John J. Nawn, a cousin of the deceased Henry P. Nawn, was indebted to a partnership, Cavanaugh Brothers, in the amount claimed in the declaration. He also was in debt to Henry P. Nawn, and owed the Shawmut National Bank $5,100 on a note endorsed by Henry Nawn and Cavanaugh Brothers. Under date of February 7, 1900, he deeded certain pieces of real estate to Henry P. Nawn who, as a condition of the delivery of the deeds to himself, executed a declaration of trust under seal which declared that the conveyances were made to him "to sell and turn into cash, and pay up all the debts of John J. Nawn to whomsoever owed, including especially a loan of $5,100, to the National Shawmut Bank, upon which Cavanaugh Brothers and I are liable, and debts due me and said Cavanaugh Brothers" and concluded as follows: "I hereby promise, covenant and agree to and with the said John J. Nawn that I will turn over to the said John J. Nawn, or his wife, any net proceeds from the property over and above what I may use to pay said debts, or any other debts owed by said John J. Nawn or wife, after deducting reasonable costs and expenses." This instrument was kept by one of the Cavanaugh brothers. Under date of December 22, 1903, Henry Nawn re conveyed the premises (except one parcel lost by a foreclosure of a mortgage to which it was subject when received by Henry Nawn) to John J. Nawn, and received two mortgages, one for $4,500, and one for $5,993.25, on the separate parcels, both of which bore interest at six per cent. and were for the term of one year. The deeds of conveyance to Henry Nawn were recorded February 25, 1901, while the reconveyance and mortgages were recorded January 15, 1904. Cavanaugh Brothers did not know of the reconveyance and mortgages till 1915. In 1916 Cavanaugh Brothers organized the plaintiff corporation, and assigned to it the firm's outstanding accounts on January 25, 1916. Some time before September, 1918, the declaration of trust, which had been lost for years and whose existence at any time had been denied by Henry Nawn, was found; and on September 24, 1918, it was taken to him with a statement from the books of Cavanaugh Brothers of the account against John J. Nawn and shown to him. He is said then to have acknowledged the signature and promised to pay the account. On November 1, 1918, one of the Cavanaugh brothers, then an officer of the plaintiff corporation, went to Henry Nawn at his home, taking with him a transcript of the accounts against John J. Nawn (the original of Exhibits 1, 2 and 3 at the trial) which showed at the bottom a balance due of $3,913.08, and the declaration of trust. On this occasion there was written at the foot of the account under the balance: "I will pay this account. H. P. Nawn, Witness M. A. Cavanaugh;" all but the signature being in the handwriting of Cavanaugh. December 16, 1919, Henry Nawn assigned the mortgage for $5,993.25 to William A. Gaston, then an officer of the National Shawmut Bank, who discharged it on August 12, 1921. On September 26, 1921, Henry Nawn discharged the mortgage for $4,500. Both discharges were recorded November 10, 1921. Hen ry P. Nawn died in March, 1922. This action was begun March 29, 1923. The exceptions must be overruled. Accountswhen action lies. The action is at law on an account stated. Such an action lies only where there have been transactions previous to the statement of the account which create a relation of debtor and creditor. Chase v. Chase, 191 Mass. 556, 78 N. E. 115; Tucker v. Columbian Nat. Bank, 232 Mass. 224, 229, 122 N. E. 285. It is inapplicable to enforce a promise to pay the debt of another. French v. French, 2 Mann. & G. 644, 133 Eng. Reprint, 903. The promise here is to pay the debt of John J. Nawn. -action to compel payment. Moreover, if there had been in that declaration any promise to pay the plaintiff's assignor, it would have been terminated in 1920 by operation of the statute of limitations now embodied in Gen. Laws, chap. 260, 2. Only a new promise in writing signed by the party to be charged could take away the bar of that statute. Gen. Laws, chap. 260, § 13. The jury has found that no such new promise existed. If the reconveyance made in 1903 was a breach of trust, any right at law or in equity to proceed against 92 Am. Dec. 795), so that the bar would be complete in 1910. But if, because the Cavanaugh Brothers were ignorant in regard to it (O'Brien v. O'Brien, 238 Mass. 403, 411, 131 N. E. 177), the statute did not begin to run until 1915, when they learned actually of the reconveyance, the bar was complete in 1921 (Young v. Walker, 224 Mass. 491, 113 N. E. 363). There was evidence to justify the finding by the jury. The plaintiff contends that the finding by the auditor must control in the absence of affirmative evidence to impeach it. Greenburg v. Stoehrer & P. Dodgem Corp. 250 Mass. 410, 433, 145 N. E. 824. There is such affirmative evidence in reasonable inference to be drawn from the statements of Henry Nawn in his lifetime, put in evidence by the defendants, denying any promise, taken with the conduct of the parties as disclosed in the evidence hereinbefore stated. Wyman v. Whicher, 179 Mass. 276, 60 N. E. 612. The questions, what was to be believed, and what inferences were proper, were for the jury. Evidence-suffciency-absence of promise to pay debt. The fourth request for instructions was waived. No claim of fraud on the part of Henry Nawn is made. What has been said disposes of the exceptions taken to the refusal to instruct as requested. The judge could not have directed a verdict for the plaintiff rightly. Upon the finding of fact made by the jury, after instructions which no exception was saved, he was right in directing a verdict for the defendants. Exceptions overruled. to |