standpoint of the Rumanian Corporation and of the German interests involved.
The delay must be taken to have continued at least until 1924 in which year Von Stauss wrote Woodman two letters asking for a settlement, which letters were unanswered.If we were concerned solely with the statute of limitations, the actual bringing of the suit would of course be the only date of importance. In May, 1926, his brother, with an attorney, came to America to take the matter up with Woodman.He was unable to see Woodman at all, although he attempted to make various appointments with him. This bill in equity was filed February 28, 1927.
Discarding, for the time being, consideration of the German interests involved, Rumania entered the war on August 27, 1916. On December 6, 1916, the German forces occupied Bucharest. Thereafter until November 30, 1918, on which day the King of Rumania returned to his capital, the country was practically entirely occupied by the military forces of Germany. "Territory in the occupation of the enemy is dealt with on the footing of enemy territory being considered as part of the domain of the conqueror so long as he remained in possession of it. All persons domiciled within the occupied territory are consequently regarded as enemies." Colombos, Law of Prize, § 44. This rule was incorporated into our Trading with the Enemy Act, October 6, 1917, § 2 (a), 50 USCA Appendix, § 2 (a). Under the strictest possible interpretation of the law, therefore, the period of time while we were at war with Germany, during which Rumania was occupied by German forces would have to be deducted from the elapsed time.
Laches to bar relief imputes some degree of fault. This principle requires that the German interests in the plaintiff corporation be taken into consideration. Apparently the actual ownership of the stock passed out of German hands in 1920, but it appears that at that time there was reserved to one of the German corporations (The E.P.U.) an interest in a substantial portion of the proceeds of the trust here involved, and that such interest still exists. The war with Germany was not finally ended until October 16, 1921. During all this time German subjects and corporations had, for all legal purposes, an enemy character. German lawyers were of the opinion that the Treaty of Versailles did not restore German nationals to full privileges and protection in the countries of the allied powers. At least they had some ground for their opinion. If so it was not until the Treaty between the United States and Germany concluded in Washington, December 8, 1923, and ratified and proclaimed October 14, 1925 (44 Stat. 2132) that they were so restored. However this may be, it would be harsh and unreasonable to hold German nationals to the highest degree of promptness and expedition in prosecuting a claim of this nature against an American citizen who sold the subject of the trust to a British corporation.
All statements of the doctrine of laches are predicated upon prejudicial delay. Such prejudice may arise from expenditures upon the trust property, made by the adverse party who, by reason of the plaintiffs' delay, has good reason to believe that the alleged rights have been abandoned; or, as was pointed out in Hammond v. Hopkins, 143 U.S. 224, 12 S. Ct. 418, 36 L. Ed. 134, because of the difficulty of doing entire justice through the death of the principal participants or of witnesses, or by reason of the original transaction having become so obscured by time as to render ascertainment of the exact facts impossible. Great changes in values as in Kitts v. Hanna (C.C.A.) 29 F.2d 1013, may be a cause of difficulty and there may be various other impediments which lapse of time may place in the way of finding out the truth.
In the instant case there is absolutely nothing other than mere lapse of time to support the defense of laches. Such delay as has taken place weighs more heavily, if anything, upon the plaintiff than upon the defendant. I am unable to see a single point at which the defendant is at a disadvantage by reason of the plaintiff's delay. Apparently the only witness who had died is Janson, and if living, he could have added nothing which would make the facts relating to notice of the defendant's repudiation of the trust more favorable to the defendant that I have found them. Taking all the facts and circumstances into consideration the case is in my judgment clearly an exceptional one, which does not call for the ruthless application of the doctrine of laches.
No doubt there are occasions where the rule must be applied even in favor of a faithless or fraudulent trustee, but as was said by the Supreme Court in Ewert v. Bluejacket, 259 U.S. 129, 42 S. Ct. 442, 444, 66 L. Ed. 858, the equitable doctrine of laches was "developed and designed to protect good faith transactions against those who have slept upon their rights, with knowledge and ample opportunity to assert them. * * *"
I am satisfied that a gross fraud has been perpetrated by this defendant, that it was undertaken deliberately in the expectation that the difficulties which the plaintiff and its owners were under by reason of the war would probably prevent the assertion of their rights for a long time and possibly defeat them altogether, and that to apply the doctrine of laches now against this plaintiff would simply be working out the defendant's plan in accordance with his anticipation, and would convert this court into an instrument for carrying out his fradu and securing him in his possession of its fruits.
Fifth Conclusion of Law: The defendant became a trustee of all the stock of the Union Petroleum Steamship Company (the Delaware Corporation), other than the $2,000 worth belonging to him, and he thereafter held the stock under the terms of the agreement of trust as found in the facts.
Sixth Conclusion of Law: The defendant is liable to render a full and complete accounting of all dividends, incomes, and other profits, if any, derived or received by him from the stock of the Union Petroleum Steamship Company.
A decree in accordance with the foregoing may be submitted.
© 1992-2004 VersusLaw Inc.