(106 U. S. 99)

BACON and others v. RIVES and others.

(October 23, 1882.)

REMOVAL-NOMINAL PARTIES-TRUST CREATED BY CONTRACT-STATUTE OF

LIMITATIONS.

Where the necessary parties on the respective sides of the controversy were citizens of different states, held, that the relation to the suit of the executors of the deceased father of the principal defendant, whose interest in his father's estate had been attached in their hands, must be regarded as merely incidental; and, though made formally defendants, they occupied substantially the position of garnishees, and their citizenship was immaterial, and could not affect the right of removal of the cause into the circuit court.

A trust arises out of express agreement under which defendant received from complainants certain funds which he undertook to invest in particular kinds of property, in conformity with specific instructions given by those whom he represented.

Unless otherwise distinctly declared by the statute prescribing fixed periods for the commencement of suits, the cause of action is not ordinarily deemed to have accrued against, nor limitation to commence running in favor of, the trustee of such a trust until the trust is closed, or until the trustee, with the knowledge of the cestui que trust, disavows the trust or holds adversely to the claim of those he represents.

Appeal from the Circuit Court of the United States for the Western District of Virginia.

Joseph Bryan, for appellants.

E. R. Watson, for appellees.

HARLAN, J. This is a suit in equity. The complainants and appellants are John L. Bacon and H. E. C. Baskerville, partners as Bacon & Baskerville; John Stewart, Robert Ould, Robert H. Maury, and Isaac H. Carrington, trustees for the benefit of the creditors of William H. Macfarland, deceased, by virtue of a deed dated October 20, 1870; John W. Wright, sheriff of the city of Richmond, and as such administrator of William H. Macfarland,-all citizens of Virginia. The defendants are George C. Rives, a citizen of Texas, in his own right and as administrator with the will annexed of George Rives, deceased; J. Henry Rives, a citizen of Virginia, executor of George Rives, deceased; and Alfred L. Rives, a citizen of Alabama, and executor of William C. Rives, deceased. The suit was commenced on the twenty-second day of July, 1875, in the circuit court of Albemarle. county, Virginia, and was thence removed, upon the petition of defendant George C. Rives, (in which the defendant Alfred L. Rives, executor of William C. Rives, united,) into the circuit court of the

United States for the western district of Virginia. In the latter court a demurrer to the bill upon the part of the principal defendant, George C. Rives, was interposed upon the ground that the suit was barred by the statute of limitations, both of Texas and Virginia. The demurrer was sustained, and the bill dismissed.

The case made by the bill is, substantially, as follows:

In the summer of the year 1863, Bacon & Baskerville, John Stewart, Robert H. Maury, William H. Macfarland, and William C. Rives, uncle of the defendant George C. Rives, sent the sum of $131,000, in "confederate states treasury notes," the currency, at that time, of Virginia, Louisiana, and Texas,-to Col. James H. Stevens, then in Monroe, Louisiana, with instructions to invest or expend the same in the purchase of cotton on plantations in Louisiana and Texas, to remain thereon until the civil war was ended. Of that sum Bacon & Baskerville owned $48,000, Stewart $48,000, Maury $10,000, Macfarland $5,000, and W. C. Rives $20,000. Subsequently, however, Bacon & Baskerville became the owner of $80,000, and Stewart $16,000, of the $131,000, the interest of the other parties remaining the same as at the outset. The funds were sent to Stevens by Bacon & Baskerville, by whom all instructions were given and negotiations conducted. The proceeds of the investment, it was understood, were to be divided among the parties in proportion to their respective interests.

About the third day of September, 1863, Stevens died in Louisiana, en route to Texas, and without having invested any of the funds transmitted to him. Shortly thereafter complainants were notified by the widow of Stevens that she held the $131,000 subject to their order. The defendant George C. Rives wrote to the same effect to his cousin, Alfred L. Rives, son and executor of W. C. Rives. Moved by the advice and solicitation of W. C. Rives, as well as by the encouraging character of certain letters written by George C. Rives to Alfred L. Rives, (and which letters were exhibited to complainants,) and influenced especially by the declaration of the former in his letter that if the funds were turned over to him he would act for the parties under their instructions, and would save it by investing it in city property in Austin, Texas, or in property which he represented would pay well, and could be readily sold at any time, the complainants made and appointed George C. Rives their agent in the room and stead of Stevens. Complainants, consequently, ordered and directed the funds, in the hands of Mrs. Stevens, to be paid to George C. Rives, and towards the close of the year 1863, or early in 1864, they were received by the latter.

George C. Rives received the funds as agent and for the benefit of complainants, to be invested in conformity with specific instructions given by Bacon & Baskerville, the managers and business negotiators of the enterprise, with the concurrence of the joint owners of the funds, viz.: (1) That the funds should be invested in cotton on plantations in Texas, to remain thereon until the war ended, that being the first and chief object of the whole venture. If that could not be done, then (2) to invest them in ranch property, meaning lands in Texas with cattle and horses thereon. If that could not be done then (3) to invest them in town lots in Austin.

Nothing was heard from George C. Rives upon the subject of the proposed investment until, in response to a letter from Bacon & Baskerville, under date of January 27, 1865, he wrote a letter, under date of April 5, 1865, stating that he had invested the funds in the transportation of cotton under articles of partnership to continue during the war, and that the business was under the management of an active partner, who gave his whole time and attention to it; but he did not state who the active partner was, nor how much of the funds he had so invested, nor what property he had purchased therewith, nor what proceeds, if any, had accrued to him from the investment. These departures from the instructions given to the agent were not approved by complainants, and they hoped, notwithstanding their orders had been disregarded, that a fair and honest return would be made by their agent. After the war ended, and after the expiration of 18 months without any report or statement from their agent, Bacon & Baskerville, in November, 1866, wrote to George C. Rives, at Austin, Texas, asking an account of his agency, to which letter no reply was made. On the twenty-sixth day of January, 1867, they again wrote to him at Austin, asking such account, but no reply to that letter was received. Complainants, consequently, "almost reached the conclusion that Rives had either died or left the country." But in March, 1875, learning, accidentally, that he was not only living, but for several years then past had visited Virginia each summer, they again wrote to him asking an account of his agency. No reply came to that letter. At the same time they wrote, as they had before done, to Alfred L. Rives, asking information as to George C. Rives, but no reply was received, nor were the letters written to the latter ever returned to the writers through the dead-letter office.

As soon as possible after learning the whereabouts of George C. Rives, complainants instituted this suit. They charge that the retention by George C. Rives in his own possession of the whole proceeds of the funds intrusted to him, his silence for nearly 10 years, and his failure to render any account, arose from an intention to defraud complainants out of the funds, or the proceeds of their investment.

The bill further shows that George Rives, father of George C. Rives, died in Virginia in 1874, possessed of a large estate, real and personal, in which, by the will of his father, he had a large interest, and that J. Henry Rives and Charles Edward Rives qualified as his executors. The complainants ask that the interest of George C. Rives in that estate, in whatever form, be attached in the hands of the executors to pay whatever may be shown to be due them. Attachments were issued and served upon the executors, and were levied upon that interest. It is also averred that W. C. Rives has died, and that Alfred L. Rives is his executor; that Macfarland died in 1873, but before his death he executed, on the twenty-ninth day of October, 1870, a deed conveying all his property of every kind, in possession or in action, to Robert Ould and Isaac H. Carrington, trustees, for the benefit of his creditors, and as no administration was had upon his estate, the same was committed to the defendant Wright, sheriff of the city of Richmond. It may be stated, in this connection, that after the cause was removed from the state court, Charles Edward Rives, an original defendant, died, and George C. Rives became administrator de bonis non with the will annexed of George Rives.

The prayer of the bill is that the defendants be required to make, upon oath, fall, true, and complete answers to all the allegations of the bill; that George C. Rives be required to render a full and complete account of all his actings and doings as agent of complainants, and show what disposition or investment he made of the funds intrusted to him, and what the proceeds of such investment have been; and, if no investment was made according to the instructions given, nor any other investment of which complainants may choose to avail themselves, that he be required to pay the value of the funds intrusted to him as agent, with lawful interest thereon.

Without waiving a full answer under oath to the bill, the complainants ask that defendant George C. Rives be required to answer the several special interrogatories embodied therein, the object of which is to obtain from him information as to whether he had received the $131,000 under an engagement, as agent, to invest in the mode set out in the bill; whether he had so invested it or not-if not, why not; if so, in what kind of property he had invested, and what disposition had been made of it or of its proceeds; and whether, after the close of the war, he did not have in his possession property purchased in whole or in part with the proceeds of the investment; if so, of what did it consist, and what has been done with it.

There was also a prayer for such other and further relief as equity and justice required. Thus stood the suit when removed from the state court.

J. Henry Rives, a citizen of Virginia, having been made a defendant, in his capacity as one of the executors of George Rives, it is contended that the suit was not removable into the circuit court of the United States. This position cannot be successfully maintained. Without giving all of the reasons which may be assigned in support of the right of removal, it is sufficient to say that he and Charles Edward Rives, executors of George Rives, had no interest in the question whether complainants have or not a cause of action against George C. Rives on account of the matters set out in the pleadings. They were neither necessary nor indispensable parties to the issue between the complainants and the principal defendant. It was of no moment to them whether the one or the other side in that controversy succeeded. It is true that the attachment (sued out by complainants before the removal of the suit) against George C. Rives was served upon the executors, and was levied upon his interest in the estate of his father. But they were made defendants, not because of any connection they had with the main controversy, but to the end that George C. Rives' interest in his father's estate might be reached and held, subject to such final decree as complainants might obtain against him. Though made, formally, defendants, the executors of George Rives occupied, substantially, the position of mere garnishees. Their citizenship was, consequently, immaterial. The necessary

parties, on the respective sides of the controversy which is the foundation of the litigation, being citizens of different states, the relation of the executors to the suit was properly regarded as merely incidental, arising from the necessity of preserving the means whereby complainants might, if successful in this suit, obtain satisfaction of their demands against George C. Rives.

The remaining question to be considered relates to the defense of the statute of limitations presented by the demurrer to the bill. The contention of defendant is that the cause of action, if any, existed as far back as the close of the late civil war; that in Virginia and Texas the running of limitation was suspended by statute, in the former from some time in April, 1861, until January 1, 1869, and in the latter from some time in 1861 until March 30, 1870; that by the laws of Texas two years was the limitation to suits on oral, and four years to suits on written, contracts, while the limitation in Virginia to such suits as the present one was five years; consequently, excluding from the computation of time the periods of the suspension of the statute in the respective states, the plaintiffs' cause of action was barred. The defendant further insists that the law of Texas governs by reason of that provision in the Code of Virginia which declares that "upon a contract which was made and was to be performed in another state or country, by a person who then resided therein, no action shall be maintained after the right of action thereon is barred by the laws of such state or country." Code of Va. (Ed. 1873,) § 20, p. 1002.

In the view which the court takes of the case, it is unnecessary now to determine whether reference must be had to the law of the state where the suit is pending, or to that of the state where the alleged contract was to be performed. We are not satisfied that the cause of action, as set out in the bill, was, at the commencement of the suit, barred by limitation, as prescribed in either Texas or Virginia. The case, as now presented, discloses, not, perhaps, one of those technical trusts of which a court of equity has peculiar and exclusive jurisdiction, but yet, a trust, arising out of express agreement, under which the defendant George C. Rives received from complainants certain funds, which he undertook to invest in particular kinds of property, in conformity with specific instructions given by those whom he represented. His duty, under the law, although the agreement did not, in terms, so declare, was, from time to time, as the circumstances required, to inform those whom he represented of his acts, and, upon completion of the trust, to render an account of