This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
If a fund is received under an express trust, the possession of the trustee is rightful, and no cause of action exists against him until he renounces the trust. The statute of limitations begins to run, therefore, at the date of such renunciation and not at the date that the fund is received.1 Thus a contract whereby a married woman releases her dower in consideration that the grantee will hold one ninth of the proceeds of the land for her is one against which limitations runs from the disavowal of the trust and not from the date of the sale.2 So it has been held that if an executor gives to his co-executor his note and mortgage for funds received by him from the estate, limitations does not run until such executor repudiates the trust.3 If a city has collected a special fund to pay certain warrants, limitations does not run until it repudiates its obligation and diverts such fund, to the knowledge of the creditor.4 So a factor having in his possession funds of his principal with authority to invest and reinvest them is a trustee within the meaning of this rule, so that limitations does not run in his favor until demand and refusal.5 An agent is not ordinarily a trustee for his principal within the meaning of this rule. Money held by the secretary of a corporation which has gone out of business is not held in trust within the meaning of this rule; and limitations runs from the dissolution of the corporation.6 If an agent having merely authority to collect and pay over to his principal collects money belonging to his principal, limitations runs in his favor from the time that the principal knows that such collection has been made.7 This rule applies to money collected by an attorney for his client, there being no fraudulent concealment of the fact of collection.8 On the other hand, limitations begins to run at the time of the breach of trust,9 even if such breach consists in lending trust funds on insufficient security and no loss is suffered until long after.10 In an implied trust, created by the operation of the law, and not by the agreement of the parties, limitations begins to run at once.11
2 In re Saunderson, 74 Cal. 199; 15 Pac. 753; McLaughlin v. Daniel, 8 Dana (Ky.) 182.
3 Berkin v. Marsh, 18 Mont. 152; 56 Am. St. Rep. 565; 44 Pac 528.
4 People v. Van Ness, 79 Cal. 84; 12 Am. St. Rep. 134; 21 Pac. 554.
1 New Orleans v. Warner, 175 U. S. 120; Williams v. Young, 71 Ark. 164; 71 S. W. 669; White v. Costi-gan. 138 Cal. 564; 72 Pac. 178; Faylor v. Faylor. 136 Cal. 92; 68 Pac. 482; Fox v. Tay. 89 Cal. 339; 23 Am. St. Rep. 474; 24 Pac. 855; 20 Pac. 897; Stanley's Estate v.
Pence, 160 Ind. 636; 66 N. E. 51; rehearing denied, 160 Ind. 645; 67 N. E. 441; Talbott v. Barber, 11 Ind. App. 1; 54 Am. St. Rep. 491; 38 N. E. 487; Irwin v. Holbrook, 26 Wash. 89; 66 Pac. 116.
2 Talbott v. Barber, 11 Ind App. 1; 54 Am. St. Rep. 491; 38 N. E. 487.
3 Fox v. Tay, 89 Cal. 339; 23 Am. St. Rep. 474; 24 Pac. 855; 26 Pac. 897.
4 New Orleans v. Warner, 170 U. S. 120; New York. etc.. Co. v. Ta-coma, 30 Wash. 661; 71 Pac. 194.