Title Guaranty & Surety Co. v. State of Missouri

Decision Date26 June 1939
Docket NumberNo. 11213.,11213.
Citation105 F.2d 496
PartiesTITLE GUARANTY & SURETY CO. et al. v. STATE OF MISSOURI ex rel. and to Use of STORMFELTZ.
CourtU.S. Court of Appeals — Eighth Circuit

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Wendell H. Cloud, of Kansas City, Mo. (Harry A. Morris, of Kansas City, Mo., on the brief), for appellant Title Guaranty & Surety Co.

R. L. Douglas, of St. Joseph, Mo., and Floyd E. Jacobs, of Kansas City, Mo. (Charles M. Howell, of Kansas City, Mo., on the brief), for appellant American Surety Co. of New York.

E. H. Gamble, S. M. Mandell, and S. L. Trusty, all of Kansas City, Mo. (N. R. Fischer, B. C. Hyde, Jr., and Edward E. Pugh, all of Kansas City, Mo., on the brief), for appellee.

Before STONE, WOODROUGH, and THOMAS, Circuit Judges.

WOODROUGH, Circuit Judge.

This action at law was brought on March 21, 1931, in the Circuit Court of Greene County, Missouri, at the relation of Andrew Jean Stormfeltz, a citizen and resident of Kansas City, Missouri, against Title Guaranty and Surety Company, incorporated in Pennsylvania, and American Surety Company, incorporated in New York. The purpose of the suit is to recover amounts claimed to be due to relator from his guardian, and the action is brought upon the two hundred and fifty thousand dollar bond which was executed on November 7, 1911, by the guardian, Luther J. Stormfeltz, who is the father of relator, as principal, and by the defendant Title Guaranty & Surety Company (whose liability was later assumed by defendant American Surety Company) as surety. The bond was conditioned as required by statute for the faithful discharge of his duties by the guardian and was approved by the judge of the probate court of Mercer County, Missouri, at Princeton, where the appointment of the guardian was made.

The case was removed to the federal court and the guardian, a citizen and resident of Kansas, was added as a party defendant. It appeared on the face of the petition as amended that the minority of the relator terminated and he became of age March 1, 1925, and on March 28th of that year the guardian filed in the probate court his purported final settlement, consisting of a report of debits and credits in his account in which he accounted to relator for the sum of $145,235.56, and that a recital was endorsed on the report over the signature of the judge of the probate court that the judge examined, approved and filed it on the same day, and that it was recorded in a settlement Record Book 7, at page 369. But it was alleged in the petition that the purported judgment of final settlement was null and void because statutory prerequisites to jurisdiction had not been complied with and by reason of certain extrinsic facts of fraud fully set forth in the petition. The petition contained sixty-eight separate counts, in each of which a breach of the bond was asserted and a cause of action was predicated thereon against defendants. It was prayed that the probate order of March 28, 1925, "in so far as it purports to be judgment of final settlement and discharge of said guardian, be adjudged void and held for naught", and in each count that the plaintiff recover a certain sum with interest.

The sufficiency of the plaintiff's pleading was challenged by demurrers which were sustained by the trial court, but on appeal this court decided that a case at law was stated in the pleading and we remanded for trial. State of Missouri ex rel. Stormfeltz v. Title Guaranty & Surety Co., 8 Cir., 72 F.2d 595, certiorari denied, 294 U.S. 708, 55 S.Ct. 404, 79 L.Ed. 1242. On the trial a jury was waived, twenty-eight counts were voluntarily dismissed and the court rendered judgment against the defendants upon forty of the counts and a count added by amendment, in the aggregate amount of $435,083.25, limiting execution against the bondsmen to $397,676.51. On the seventh count the judgment was for defendants. The guardian having declined to appeal, the sureties obtained severance and have prosecuted this appeal to reverse the judgment against them.

The Jurisdiction of the Court.

At the threshold of this appeal the appellants again take the position, as they did on the former appeal, that the state court from which the case was removed to the federal court did not have jurisdiction of the action because jurisdiction in such cases was vested exclusively in the probate court by Missouri statutes. Our decision then was that the Missouri courts had consistently held that an action on a guardian's bond could be maintained against the surety before any indebtedness had been previously established or any judgment of final settlement obtained in the probate court, and we sustained the jurisdiction of the district court to try the case presented by the petition. The point now argued is that we failed to take account of the "Discovery" provisions of the Missouri statutes which empower the probate courts to proceed against persons within their respective counties who may be suspected of having concealed or embezzled money, goods or effects of a ward. It is contended that those sections of the statute as construed by the courts of Missouri operated to divest the state circuit court and therefore the federal district court of jurisdiction in this case.1 The cases cited by appellants in support of this point are appended.2 On the other hand the appellee contends that the discovery proceedings under the probate code are intended to bring wrongfully withheld assets of an estate that is in process of administration, whether of a decedent or of a minor ward, into probate court for that purpose, and that in the present case where no claims of third persons are involved, no discovery proceedings in the probate court were necessary, but the proper action was the suit brought upon the bond in the circuit court.

We are not persuaded that the Missouri cases relied on by appellants hold either directly or by implication that the cited discovery statutes divest the circuit court of jurisdiction over such a suit on guardian's bond as is here presented. On the contrary, the case of Smith v. St. Louis Trust Company, 340 Mo. 979, 104 S.W.2d 341, decided since our former opinion, confirms our conclusion that the law of the case established in that opinion ought not to be departed from on this appeal. It is true that in the Smith case the plaintiff sued upon an administrator's bond and here the bond in suit is that of guardian. But the right to sue on one or the other is substantially similar. Mo.Rev.St. 1929, Sec. 396, Mo.St.Ann. ß 396, p. 253.

The jurisdiction is also attacked by appellants on the ground that the form which the action took upon the pleadings and evidence required the court to pass upon adverse claims of title to lands in Iowa, and also to determine that defendants were liable for maladministration of assets of the ward in Iowa. It is argued that in reaching its judgment, the trial court exceeded its jurisdiction in those respects. The questions as raised will be referred to later, but we are convinced that the suit remained throughout an action on the guardian's bond for money due on account of breaches of the bond by the guardian, and that the district court had jurisdiction to try it and to render such judgment as the facts warranted. Garton v. Botts, 73 Mo. 274; Scruggs v. Scruggs, C.C., 105 F. 28-30.

Another attack closely related to the question of jurisdiction is directed to the refusal of the court to receive the testimony of the guardian to the effect that the plaintiff had waived the notice of final settlement required by statute and had ratified the judgment of final settlement entered in the probate court at the time he attained his majority. The question of the validity of the probate court judgment of settlement was necessarily involved in the first appeal of this case to the extent that the jurisdictional defects relied on were correctly alleged in the petition. By our decision we found the allegations sufficient to show want of jurisdiction in the probate court to adjudicate final settlement of the guardian's account. The evidence on the trial sustained the allegations in the petition as to the failure to comply with the statutory requirements prerequisite to adjudication of final settlement of guardians' accounts, but defendants offered to prove by testimony of the guardian that the ward had been informed in conversations had between them that the settlement was to be made on the date that it was entered and had been given a copy of the settlement, and that the ward was present in the court at the time of the adjudication, and that the ward assented to the settlement and the judgment.

It is contended for the ward that the oral testimony was incompetent to establish jurisdiction in the probate court over the ward for the purpose of adjudicating upon the accounting with his guardian, and we think the district court's rulings in his favor were proper. The record of the probate court and its judgment roll were the best evidence, and as that record disclosed that no jurisdiction over the ward had been obtained and that no appearance had been made on his behalf, the oral testimony was incompetent. Appellants urge that the decision of the Kansas City Court of Appeals in Anderson v. Middle States Utilities Company, 231 Mo.App. 129, 98 S.W.2d 163, compels a different conclusion. We do not so understand the decision. It was there held that a minor could on coming of age ratify voidable contracts made without his authority during his minority, but it was neither involved nor ruled that where a guardian has obtained a judgment of final settlement against his ward which is void for want of jurisdiction over the ward, the guardian may establish the validity of the judgment by his oral testimony of conversations had with the ward concerning the judgment.

Counts I and III.

The trial court found the facts upon the...

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