Southern Pacific Company v. Bogert/Dissent Clark McReynolds
Mr. Justice McREYNOLDS dissenting.

It seems to me quite clear that the judgment below is wholly wrong. Respondents' complaint should be dismissed.

This suit was brought in 1913, some 25 years after those who complain came into possession of all material facts. During that period they were parties or privies to suit after suit-the first begun in 1889 and all unsuccessful-which sought to upset what petitioner had done because of its actual fraud.

The original bill of complaint in the present cause alleges:

'As soon as the terms of the said reorganization agreement      were announced and published [1888], S. W. Carey, Cornelius      MacArdell, Walter B. Lawrence, plaintiffs' testator, and      other stockholders of the railway company protested against      the terms of the said agreement, claiming that it practically      gave the railway company to the Southern Pacific Company in      fraud of the individual stockholders.' 'Immediately after the      entry of the said consent decree of May 4, 1888, the said      Carey, MacArdell, Lawrence, and other stockholders of the      said railway company formed a committee of stockholders to      protect themselves from the frauds committed and proposed to      be committed by the Southern Pacific Company under the said      reorganization agreement and consent decree, and said      committee of stockholders employed as counsel Frederick R.      Coudert, Edward M. Shepard, and A. J. Dittenhoefer, of New      York City, Jefferson Chandler, of St. Louis, and later on H.      Snowden Marshall, Russell H. Landale, and David Gerber, and      from the commencement of their first suit [December, 1889]      hereinafter mentioned, to the present day, the firm of      Dittenhoefer, Gerber & James has been their attorneys of      record.'

Having long emphatically condemned, attacked, and sought without success to annul petitioner's action, re spondents finally come before a court of equity saying in effect: Although represented by counsel of great eminence, we have not heretofore known the law; notwithstanding all solemnly declared to the contrary, we now maintain that petitioner was really acting for us, our trustee indeed; and we wish to share in the plan which it has carried to success against our persistent opposition. Such a claim exhales a very bad odor; and I think the parties presenting it should be dismissed, burdened with an appropriate bill of costs, for two very simple reasons:

First. They are barred by laches. Rational men are presumed to know the law; knowledge of consequent rights and appropriate means of asserting them is necessarily implied from full acquaintance with the facts. Respondents' attempt to rely upon an alleged belated discovery of a well-known remedy after years of litigation conducted in full view of all the circumstances affronts both established principles and common experience. And this is emphasized by the names of distinguished counsel who have continuously represented the minority stockholders since 1888.

'Nothing can call a court of equity into activity but      conscience, good faith, and reasonable diligence; and when a      party with full knowledge of the facts, acquiesces in a      transaction, and sleeps upon his rights, equity will not aid      him.' Hayward v. Eliot National Bank, 96 U.S. 611, 24 L. Ed.      855.

Due diligence in asserting a constructive trust is incompatible with persistent denial of such relationship after full knowledge of all the circumstances and a furious chase for 25 years in the opposite direction by the soi-disant beneficiary.

Second. Certainly the petitioner never consciously undertook to act as respondents' trustee-for years nobody seems to have thought any such relation existed. When the latter obtained full information of the real facts (1888), AT MOST, THEIR OPTION WAS PROMPTLy to treat petitioner as their constructive trustee, or to reject that view. And I had supposed in such circumstances, under an elementary rule, failure affirmatively to ratify, approve, or adopt the alleged fiduciary's action within a reasonable time amounted to disapproval. A potential cestui que trust may not indefinitely speculate on the outcome. In the present case respondents not only failed promptly to approve the action whose benefits they now seek; they deliberately engaged in a long series of actions inconsistent with their present claim; and while they did so petitioner, supposing its title absolute and unquestioned, dealt with the stock accordingly and as it probably would not have done if the present claim had been asserted. 

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