Supreme Court of Canada
McDonald v. McDonald, (1892) 21 S.C.R. 201
Date: 1892-04-04
Duncan McDonald (Plaintiff) Appellant;
and
Alexander McDonald (Defendant) Respondent.
1891: May 29; 1892: April 4.
Present: Sir W.J. Ritchie C.J., and Strong, Fournier, Taschereau and Patterson JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Title to land—Sheriff’s sale—Executor—Judgment against estate for debt of—Purchase by executor—Possession—Statute of limitations.
Judgment was recovered against the executors of an estate on a note made by D.M., one of the executors, and indorsed by the testator for his accommodation. In 1849 land devised by the testator to A.M., another son, was sold under execution issued on said judgment and purchased by D.M., who, in 1853, conveyed it to another brother, W.M. In 1865 it was sold under execution issued on a judgment against W.M. and again purchased by D.M. In 1888 A.M., the devisee of the land under the will, took forcible possession thereof and D.M. brought an action against him for possession.
Held, affirming the decision of the Court of Appeal, Strong J. dissenting, that the sale in 1849 being for his own debt D.M. did not acquire title to the land for his own benefit thereby, but became a trustee for A.M., the devisee, and this trust continued when he purchased it the second time in 1865.
Held, also, that if D.M. was in a position to claim the benefit of the statute of limitations the evidence did not establish the possession necessary to give him a title thereunder.
APPEAL from a decision of the Court of Appeal for Ontario affirming the judgment of the Divisional Court in favour of the defendant which reversed the judgment of the trial judge.
The action was instituted to recover possession from the defendant of the west half of the east half of lot number 18 in the 7th concession of township of Cornwall in the county of Stormont, province of Ontario.
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The plaintiff’s claim is under certain sheriff’s deeds whereby the lands in question were with other lands conveyed to him in pursuance of sales under execution, and he also claimed that he had acquired title by possession.
The defendant claimed title to the lands as devisee under the will of his father, Lachlan McDonald, and alleged that the plaintiff merely held the lands for his benefit and was not entitled to any beneficial interest therein, and that the defendant was in possession thereof for his own use and benefit and was entitled to retain the same.
The following facts are clearly established and are now practically undisputed:—
“That Lachlan McDonald, the father of both the parties, was at the time of his death in 1846 the owner of the lands in question herein and other lands.”
“By his will he devised the lands in question to the defendant and the other lands to other members of his family and appointed the plaintiff and two other persons the executors of his will.”
“At the time of his death the Commercial Bank were the holders of a promissory note for the sum of £200, made by the plaintiff and endorsed, for his accommodation solely, by said Lachlan McDonald.”
“After Lachlan McDonald’s death the plaintiff having failed to pay the promissory note in question the bank took proceedings against the executors of Lachlan McDonald’s will and (although they had not proved the will) judgment was recovered against them for the amount of the promissory note with interest and costs.”
In 1849 the said lands were sold by the sheriff under execution issued on said judgment and were purchased by the plaintiff, who gave a mortgage thereon to the bank. He subsequently, in 1853, conveyed said lands
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to his brother William who paid off the mortgage, and in 1865 they were again sold under execution on a judgment against his said brother and again purchased by the plaintiff. The defendant took forcible possession of the land shortly before this action was brought.
At the trial judgment was given in favour of the plaintiff, the learned judge stating in giving judgment that he did not see his way clear, forty years after the transaction took place, to declare plaintiff a trustee for the devisees under the will as regarded his purchase under the judgment of the bank. He also stated that plaintiff could probably maintain his claim to the land by the length of possession since the death of his mother who had a life interest in the land. The Divisional Court reversed this judgment giving no reasons for their decision, and declared the plaintiff a trustee for the defendant of the legal estate in the land. The Court of Appeal having affirmed the decision of the Divisional Court the plaintiff appealed to this court.
McCarthy Q.C. and Leitch Q.C. for the appellant. The plaintiff can only be held to be a constructive trustee as to which the statute of limitations operates. Lewin on Trusts; Petre v. Petre; Johnson v. Krœmer; Gibbs v. Guild; Clegg v. Edmonson; Churcher v. Martin. As to what constitutes fraud see Vane v. Vane; Des Barres v. Shey.
Moss Q.C. for the respondent referred to Rolfe v. Gregory.
Sir W.J. RITCHIE C.J.—For the reasons given in the court below by the learned Chief Justice and Mr.
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Justice Maclennan, concurred in by the rest of the court, in which I entirely concur, I think this appeal should be dismissed. I should regret very much if the state of the law was such that the plaintiff could benefit by his own fraud and deprive his brother of the property in dispute which, on every principle of justice and equity, belonged to his brother. Mr. Justice Maclennan has gone so fully, and to my mind so satisfactorily, into the facts and law that I cannot with advantage add anything to his able judgment.
STRONG J.—I have extracted the following statement of the facts principally from the judgment of Mr. Justice Maclennan.
This is an appeal from a judgment of the Chancery Divisional Court, which reversed a judgment of Mr. Justice Falconbridge in favour of the plaintiff.
The action was brought for the recovery of fifty acres of land composed of the west half of the east half of lot number eighteen, in the 7th concession of the township of Cornwall.
The plaintiff and defendant are brothers the sons of one Lachlin McDonald, in his lifetime a prosperous farmer, who owned 300 acres of land, 200 of which, composed of the west half of 17 and the east half of 18 in the 6th concession, were his homestead on which he resided with his family and the other hundred of which lay in the 7th concession immediately in rear of the west half of the homestead. Lachlin McDonald’s dwelling house and his cleared land and improvements were all upon the front 200 acres, and the rear 100 acres were in his lifetime and ever since, until a recent period, uncleared, unfenced, unimproved and unoccupied, with but a very slight exception.
On the 22nd December, 1845, Lachlin McDonald endorsed a note for £200 made by his son the plaintiff,
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Duncan, for the accommodation of the latter, payable four months after date, and this note was held by the Commercial Bank unpaid at the time of Lachlin’s death which occurred in or soon after April, 1846, about the time the note became due.
The plaintiff, Duncan, had been engaged in some kind of business in which he failed, and he was unable to pay the note at maturity.
On the 6th of April, 1846, Lachlin made his will by which he gave the westerly 100 acres of his homestead to his widow and his daughter Mary for life, with remainder in fee to his son William. He also gave all his stock, utensils and furniture to his widow and Mary and whatever might be left of it at their death to William. He gave the east half of the homestead to his son John in fee, with certain qualifications not material to this case.
Then he divided the rear one hundred acres, namely, east half of 18 in the 7th between his sons William and Alexander, giving William the east half and the defendant Alexander the west half, the fifty acres in question.
He then appointed three executors of whom his son, the plaintiff, Duncan, was one, and requests “that they will be good enough to cause this, my last will and testament, to be duly executed.”
This will was never proved but it was registered in the registry office for the county by a memorial signed by one of the executors, not the plaintiff, on the 3rd of October, 1846, and the plaintiff says in his statement of claim that he and the other executors took upon themselves the administration of the testator’s estate, and his evidence is to the same effect.
About July, 1847, the Commercial Bank commenced an action on the £200 note against the three executors of the testator and the executors defended
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jointly, denying endorsement, presentment and notice of dishonour but not denying their executorship, and the action proceeded to trial and judgment was entered on the 6th of November, 1847, against the defendants, as executors, in the usual form for £236 8s. 1d., for debt and costs.
It appears that some £50 of this judgment were recovered by execution against goods, and ultimately the sheriff, under a writ of ven. ex. and fi. fa. residue against the lands of the testator, put up for sale and sold thereunder the whole 300 acres of the testator’s lands for the sum of £201 10s.
The plaintiff, Duncan, was the purchaser from the sheriff, and he obtained from him a conveyance dated the 4th of August, 1849, of the 300 acres, and this conveyance is the foundation of his paper title in the present action.
Immediately after obtaining the sheriff’s deed the plaintiff made a mortgage of the land to the Commercial Bank for £259 12s. 6d., and he says this was done in pursuance of an arrangement made with the bank before the sale that he was to buy the property at the sale and the bank would take a mortgage from him for the purchase money and would give him time for payment.
He says he bought the property for himself, adding “I bought it to protect the property.” He admits that at the time of the sale the 300 acres were worth £1,000 and might be worth $6,000 or more in 1865, and there is other evidence to the same effect.
The mother and sister of the plaintiff remained in undisturbed possession of the homestead until their death, the sister having died in 1872 and the mother in 1883; but one Alexander Fraser, who lived in the neighbourhood, was looking after the land for the
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plaintiff, and he had a written power of attorney for that purpose from March, 1875.
On the 15th of November, 1853, the plaintiff executed a conveyance of the 300 acres to his brother William for the expressed consideration of $2,000, out of which William was to pay the mortgage to the bank which was done, but William afterwards got into difficulties and the land was again sold by the sheriff under execution against William’s lands and was bought by the plaintiff for $599. The plaintiff then obtained a second conveyance of the lands from the sheriff, dated the 15th day of April, 1865, and this conveyance constitutes his present paper title.
At or about the time of the death of the testator there appears to have been a small shanty upon the half of the north hundred acres, with a small clearing of an acre or a little more of the land about it. This shanty was soon afterwards pulled down, and from that time until three or four years before action there was no actual occupation of the fifty acres in question by any person. The land was covered by forest, with the exception of the small piece already mentioned, and that small piece was an unenclosed, open common growing up with a new growth of bush.
In 1876 the front 200 acres were let to one Alex. McGuire who occupied under the plaintiff until the time of the trial, as I understand, in common with the widow until the time of her death in 1883. McGuire says he had to pay taxes on the whole 300 acres; that in about three different years persons, by arrangement with him, tapped the maple trees on the north hundred acres and made syrup, sharing the produce with him; that three years ago he rented it to one Keefe, who put some fences upon it and cropped it. He further says that he took fallen trees for his firewood from the north hundred sometimes.
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That is all the use McGuire made of the north hundred acres, and he adds that after the first two years of his tenancy, which would be about 1878, until he let it to Keefe the whole place, that is the north hundred acres, was a common.
Keefe says he has known the property (the north hundred acres) since 1843, and that before he fenced it, three or four years ago, it had been a common and unenclosed for may be more than twenty years.
This evidence agrees altogether with that of Alexander Fraser, the plaintiff’s agent, and that of the other witnesses who spoke on the subject.
I should add to the foregoing statement that the plaintiff appears to have contributed to the support of his mother and sister, for whose maintenance the profits of the farm seem to have been insufficient, from, at least, the date of the second sheriff’s sale until their death in 1872 and 1883 respectively.
About December, 1888, the defendant took possession of the land and built a small shanty thereon, and this action was brought immediately by the plaintiff to recover possession.
In his statement of claim the plaintiff sets up title under the sheriff’s sales and conveyances which have been referred to, and by length of possession, claiming that he and his brother William have been in possession ever since 1849.
The defendant sets up that the first sheriff’s sale being for the plaintiff’s own debt he became, and still is, a trustee for the devisees. He denies the possession of the plaintiff and William, and alleges that the land was vacant and unoccupied and that the legal possession was always in himself, and, by way of counter claim, asks for damages for timber lately cut and removed by the plaintiff.
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The action was tried at Cornwall and the learned judge gave judgment for the plaintiff with costs, saying that it was too late for the defendants to raise the objections he had taken to the plaintiff’s title, and that the plaintiff could also probably maintain his claim by length of possession and that after forty years he could not see his way to declare the plaintiff a trustee for the devisees as regards his purchase under the Commercial Bank judgment.
The defendant appealed to the Chancery Divisional court from this judgment and the appeal was allowed.
The plaintiff then appealed to the Court of Appeal which court dismissed the appeal. The present appeal was then brought.
There can be no doubt that the appellant by his purchase at the first sheriff’s sale acquired the legal title to the land. It is clear, however, that he so acquired it as a constructive trustee for those beneficially interested under his father’s will. Aside altogether from the relationship of principal and surety which existed in respect of the execution debt between the appellant and his father, and the obligation resulting therefrom by which the appellant was bound to indemnify his father’s devisees by paying off that debt, he was, as one of the executors of the will, disqualified from purchasing for his own benefit. If any authority for this proposition is required the case of Fosbrooke v. Balguy is conclusive against the appellant.
Then the appellant being thus a constructive trustee the sole question remaining to be decided in the present action is, whether or not the respondent is barred by lapse of time from asserting this constructive trust, either by force of the Statute of Limitations or upon an application of the principles upon which courts of equity act in dealing with stale demands.
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It appears from the case of the Marquis of Clanricarde v. Henning that there is some question if the Statute of Limitations applies to a case of this kind in which, upon the principle of constructive trust, it is sought to set aside or get the benefit of a purchase of an estate by a person standing, in respect of it, in a fiduciary relationship towards the party making the claim.
Chapter 111 R.S.O. sec. 4 (which is taken from section 2 of the English act 3 & 4 W. 4c. 27) enacts that no person shall bring an action to recover any land but within 10 years after the time at which the right to bring such action first accrued. By section 15 of the same act it is provided that at the determination of the period limited to any person for bringing an action the right or title of such person to the land shall be extinguished. This latter section is taken from, and is in substance identical with section 34 of the Imperial statute 3 & 4 W. 4 c. 27.
Then section 31 of the R.S.O. c. 111 enacts that in every case of a concealed fraud the right of any person to bring an action for the recovery of any land of which he may have been deprived by such fraud shall be deemed to have first accrued at and not before the time at which such fraud was, or with reasonable diligence might have been, first known or discovered. This section 31 is identical with the first part of section 26 of the English act.
By section 32 of R.S.O. ch. 111 it is declared that nothing in the last preceding section shall enable any owner of land to bring an action for the recovery of such land, or for setting aside any conveyance of such land on account of fraud, against a bonâ fide purchaser without notice. This is a re-enactment of the last clause of section 26 of 3 & 4 W. 4 ch. 27.
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Section 33 of the Ontario act is in these words:—
Nothing in this Act contained shall be deemed to interfere with any rule of equity in refusing relief on the ground of acquiescence or otherwise to any person whose right to bring an action is not barred by virtue of this act.
This re-produces section 37 of the English act.
Then the English act contains a section (24) as follows:—
No person claiming any land or rent in equity shall bring any suit to recover the same but within the period during which, by virtue of the provisions hereinbefore contained, he might have made an entry or distress or brought an action to recover the same respectively, if he had been entitled at law to such estate, interest or right in or to the same as he shall claim therein in equity.
This was also contained in the original Ontario Statute of Limitations but was dropped from the revision for the obvious reason that since the fusion of law and equity brought about by the Judicature Act it had become superfluous it being considered that section 4, referring to actions generally, embraced all actions, as well those claims which before the act would have been the subject of suits in equity as those which would have been the subject of ordinary actions at law.
If the Statute of Limitations applies it seems clear that it would be a bar to the equitable defence which the respondent opposed to the appellant’s claim to recover on his legal title. We may consider the case as if, under the former practice of the courts, the appellant had brought an action of ejectment seeking to recover on his legal title and the respondent had then filed his bill asserting his equitable title and seeking to have the appellant declared a trustee for him and, as such, ordered to convey the land. To such a suit if the case comes with the Statute of Limitations at all that statute would, upon the facts in evidence, have undoubtedly constituted a bar. The right and
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title of the respondent, Alexander McDonald, to impeach the purchase at sheriff’s sale made by the appellant accrued as far back as the 4th of August, 1849, nearly forty years before the respondent asserted his title, which he did not do in any way until he took possession in December, 1888. There is nothing in the point suggested that the appellant was during part of’ this time resident without the jurisdiction. The statute, as now applicable to all cases within its terms, recognizes no such disability. Further, there is no allegation, suggestion or pretence that there was any concealment practiced, or that there was concealed fraud bringing the case within section 31. Therefore, the statutory time began to run so soon as the purchase at the sheriff’s sale was completed by the conveyance. Then, if the statute applies, at the expiration of the statutory period of time (formerly twenty now ten years) not only would the respondent’s action be barred but under the express enactment of section 15 his right and title would then be extinguished.
The application of the statute depends upon the following consideration: If Alexander McDonald, the respondent, had brought a suit or action to have the appellant declared a trustee for him could that action have been properly described as an action to recover land within the meaning of section 4 of the present act? I have been careful to point out that section 24 of the original English statute, 3 & 4 W. 4, c. 27, contained a provision expressly making the statute applicable to suits in equity to recover land, just as the 2nd section of the same act had declared it a bar in the case of actions at law brought for the same purpose; and this was the state of the law in England when the Marquis of Clanricarde v. Henning was decided.
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But for that decision I should have thought it clear that a suit in equity by a person equitably entitled to land, having for its object relief against a constructive trustee having the legal estate by compelling him to convey the legal title, was undoubtedly a suit for the recovery of land. The implied recognition by sections 24, 26 and 27 of the English act of a class of cases which would, under the former system of procedure, have been the subject of equitable jurisdiction, and which would be comprised in the description of “suits to recover lands,” and in which class (as section 26 particularly indicates) a suit to set aside a conveyance for fraud would have been included, would, but for the authority I have referred to, be conclusive to show that a claim such as that set up by the respondent in his statement of defence would formerly have been within the definition of a suit to recover land. If this is correct it follows that such a claim set up by way of defence, as in the present case, is still in the nature of an action to recover land within the meaning of those words as used in the 4th section of the present statute and, as such a claim, liable to be extinguished at the end of ten years by the operation of the 15th section of R.S.O. cap. 111.
If, however, the statute does not apply, and the respondent’s equitable title is consequently unaffected by it, I should in that case be of opinion that the respondent was barred by laches from asserting the equitable title he sets up in his statement of defence. I consider it to be clear that in cases not within the statute the courts will now, as courts of equity formerly did, act in analogy to the statute and give effect to that analogy by holding the lapse of a period of time, equal to that which would have been a bar if the case had been within the statute, fatal to a claim based upon an equitable title. And this, too, in cases where
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there has been only laches in the sense of an abstinence from suing with a mere knowledge of the right without further acquiescence. Hovenden v. Lord Annesley, and Beckford v. Wade, are old and well known authorities on this head.
In the last edition of Lewis on Trusts I find the following passage which I think correctly states the law:
How far knowledge of a right to sue in respect of a breach of trust, and the abstaining to sue, will without any other act constitute laches in the eye of a court of equity and disentitle the plaintiff to relief, as in the particular instances of purchases by trustees, &c., above referred to, was until lately very uncertain, but it seems to be now settled that gross laches as for twenty years will disentitle a cestui que trust to relief.
In Lord Clanricarde v. Henning, Lord Romilly, M.R., says:—
In this case I assume that the transaction would have been set aside if a suit had been instituted within a reasonable time after the death of William Trenchard. The bar as to time is not imposed by any statute, it is only by analogy to the statute of limitations that the rule has been laid down as to the period from which time begins to run.
In this case of Lord Clanricarde v. Henning17, it was sought to set aside a purchase made by a solicitor from his client. The sale had been made in 1807, and the purchaser had received the rents and profits from that date; the conveyance had been executed in 1823; the solicitor died in 1828; the vendor died in 1829; and the bill was filed in 1859.
In Hodgson v. Bibby, twenty eight years was held a bar to a suit for relief against a clear breach of trust by an express trustee. In Bright v. Legerton it was held that though no statute of limitations ap-
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plied the lapse of twenty years without more was a bar to a suit against a trustee.
I have therefore come to the conclusion that whether the respondent’s equitable claim to this land set up in his statement of defence was in the nature of an action to recover land, and so within the statute or not, in either case the lapse of time was a bar, and that the primary judge, Mr. Justice Falconbridge rightly so held.
The appeal should consequently be allowed, and judgment in the action entered for the plaintiff, with costs.
FOURNIER and TASCHEREAU JJ.—Concurred in the opinion expressed by the Chief Justice.
PATTERSON J.—I have carefully read the report of the evidence in this case and I see no reason for doubting the correctness of the judgment of the divisional court which was affirmed by the Court of Appeal, much less for saying that the judgment is so decidedly mistaken as to make it proper for this court to reverse it. The question is one of fact, the fact of possession. It is not now disputed on the part of the plaintiff, who is the appellant, that his purchase of the farm, which included the fifty acres in question, when it was sold in 1849 under execution against his father’s executors but for the plaintiff’s own debt, constituted him a trustee for those beneficially interested in the different portions of the 300 acres under the father’s will. The trust was constructive, not express, and the defendant was cestui que trust of the fifty acres in question. Nor is it disputed that after the conveyance of the land by the plaintiff to his brother William in 1853, and
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the repurchase of it by the plaintiff in 1865 when it was sold under execution against William, the same constructive trust continued. The title of the defendant to the fifty acres is therefore established unless the plaintiff has displaced it by proof of possession for ten years before the entry by the defendant in 1888. The affirmative of that issue was upon the plaintiff. He has the unanimous judgment of two courts against him, and he cannot appeal to the decision of the trial judge, which was reversed by the divisional court, as having found that issue in his favour. The decision at the trial rested upon the conveyance from the sheriff, the learned judge thinking that the defendant was too late in taking the position that the land vested in the plaintiff only as trustee, and as to the other issue merely remarking that “the plaintiff can also probably maintain his claim to the land by length of possession since the death of his mother.” Under these circumstances it would require very clear demonstration of error or oversight in the judgment appealed from to justify this court in interfering with it. For my own part I should come to the same conclusion from a perusal of the evidence. It is by no means clear that there was any possession of these fifty acres, which were at the back part of the farm and the part most remote from the buildings, until a time within ten years of 1888, or any such ouster of the defendant as would have given occasion for an action on his part. The main reliance on the part of the plaintiff seems to be on evidence that the whole farm of 300 acres was let en bloc to tenants, but the evidence of this is very loose and has not the support of any written lease. Maguire who became tenant in 1876 makes it very clear that, with the exception of a small piece, less than an acre, which was fenced in with an adjoining lot and was therefore not in
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Maguire’s possession, there was not any continuous occupation of the fifty acres until three years or so before action when Keefe went in under Maguire.
It would be useless to attempt to analyse the evidence.
It is sufficient to say that in my opinion the conclusion of the courts below is amply supported and the appeal should be dismissed.
Appeal dismissed with costs.
Solicitors for appellant: Leitch & Pringle.
Solicitors for respondent: McLennan, Liddell & Cline.
See also Browne v. Cross, 14 18 Eq. 356; Re McKenna, 13 Ir. Beav. 105; Payne v. Evens, L.R. Ch. 239.
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