Hennies v. Keithly
| Decision Date | 06 November 1923 |
| Parties | SYLVESTER HENNIES, a Minor, by S. J. SALFEN, Curator, Respondent, v. ORA A. KEITHLY, Appellant |
| Court | Missouri Court of Appeals |
Appeal from the Circuit Court of St. Charles County.--Hon. Edgar B Woolfolk, Judge.
AFFIRMED.
Judgment affirmed.
C. W Wilson for appellant.
(1) 1. There is no statutory requirement that a curator, or like fiduciary, should be charged with the highest legal rate of interest with annual rests. Sec. 414, R. S. 1919, does not so provide. Payne v. King, 38 Mo. 502. 2. The rule allowing them to be so charged is founded upon no statute but is rested upon the rules established in equity procedure when calling to account recalcitrant trustees in general. The rule of compensation is the established rule, in this State, that is to be applied in such cases. The beneficiaries are entitled to the rate at which the fund could have been kept safely invested. Cruce v. Cruce, 81 Mo. 676; In re Final Settlement of Tyler, 40 Mo.App. 378; Bobb v. Bobb, 89 Mo. 421; Albert v. Sanford, 201 Mo. 134. 3. It was manifestly wrong to charge this curator with interest on the $ 1,000 invested in bonds from the date the bonds were stolen, February 17, 1920, to April 11, 1922, a period of two years and two months at six per cent or any other rate, the bonds having been stolen and thus lost without fault on the part of the curator. State ex rel. v. Meagher, 44 Mo. 356; Fudge v. Durn, 51 Mo. 266; Powell v. Hurt, 108 Mo. 507, 513; Booster v. Armstrong, 93 Mo. 49. (2) 1. The curator was authorized by express statute to invest the ward's money in United States government bonds. R. S. 1919, sec. 414. 2. While it is true that on May 9, 1919, the date on which the curator subscribed for the bonds, the law had not gone into effect, the Legislature had passed the law and had finally adjourned. The Fiftieth General Assembly adjourned on May 8, 1919. Laws of Mo., 1919, page 767. The law went into effect ninety days after the adjournment or on August 6, 1919. The bonds were not delivered until about the middle of August, 1919, so that the law was in full effect when the curator received the bonds and placed them in the safe deposit box in the bank vault with the envelopes containing them, marked as the property of the ward. The curator was expressly authorized to invest the ward's funds in such bonds. R. S. 1919, sec. 419; Laws Mo., 1919, page 107. 3. Having invested the ward's means in securities as he was authorized to by express statute, he may not be charged with negligence because he made such investment of the funds. 4. The degree of care required of the curator was that degree of care which men of prudence ordinarily exercise in the conduct of their own affairs. When the curator put his ward's means in these bonds and placed the bonds for safe-keeping in a safe deposit box in a well-constructed bank vault, where he kept all his own securities, and where the business men in general in his community kept their like securities, made the investment in the kind of securities and placed them for safekeeping in the same kind of depository, that business men all over the United States were doing with their own means, he cannot be justly charged with negligence in so doing, and cannot equitably be held responsible for the amount of the stolen bonds. State ex rel. v. Meagher, 44 Mo. 356; Fudge v. Durn, 51 Mo. 264; Powell v. Hurt, 108 Mo. 507; Booker v. Armstrong, 93 Mo. 49.
Emil P. Rosenberger for respondent.
(1) The curator mixed and mingled the ward's money with his own, and loaned the money out on real estate security and realized eight per cent interest. Therefore, the curator should have been chargeable with eight per cent compound interest, and was not entitled to any credit for any services he rendered. State ex rel. Pyles v. Richardson, 29 Mo.App. 595; State to the use of Collins v. Gilmore, et al., 50 Mo. App., 353. (2) The curator having failed to comply with section 444, R. S. 1919, must therefore be charged with the highest legal rate of interest. State ex rel. Deckard v. Macom, 186 S.W. 1157; Richardson v. Allen, 185 S.W. 252. (3) A curator is bound to exercise the same measure of prudence and diligence in the care and management of his ward's estate that a prudent and diligent man would exercise in the care and management of his own business. Finley v. Schlueter, 54 Mo. App., 455; Taylor v. Kellog, 103 Mo. 258, 77 S.W. 130; Taylor v. Heidt, 61 Mo. 142. (4) Prior to August 7, 1919, a guardian or curator under the laws of this State was not authorized or empowered to invest his ward's funds in government bonds. The curator was not authorized by statute to invest the money of his wards in the bonds at the time he alleges he made the investment, and the alleged investment as made by the curator was made at his risk.
This action arises on exceptions to the final settlement of defendant, Ora A. Keithley, retiring curator of the estate of Sylvester Hennies, a minor. Defendant was appointed as curator of said estate and also of the estate of Ralph Hennies in 1913. He received as such curator $ 1879.68. All of this amount except a few small items was derived from the sale of real estate in a partition suit brought by the curator on behalf of his wards. The funds so received were deposited by defendant in the Bank of O'Fallon in his name as curator of said estates. The deposit was made on November 1, 1913. On December 8, 1913, the defendant as curator checked out of the bank his wards' balance, which constituted the entire assets of their estates, and applied it to the payment of his own individual note owing by him to the bank. Defendant at the time he checked the funds out of the bank made and signed a memorandum on a slip of paper in the nature of a due-bill, reciting that he owed his wards the amount checked out and that it should bear interest at the rate of four per cent per annum, and placed the memorandum in the bank book kept by him as curator.
Defendant made his annual settlements of the estates of his wards jointly. He made his first annual settlement February 20, 1914. This settlement showed a cash balance in his hands of $ 1872.48; his second annual settlement made February 9, 1916, showed a balance of $ 2012.40; his third annual settlement made February 16, 1917, showed a balance of $ 2079.10; his fourth annual settlement made May 14, 1919, showed a balance of $ 2215.42. In his second settlement defendant charged himself with interest on $ 1872.48 for two years at the rate of four per cent compound interest; in his third settlement he charged himself with interest on $ 2012.40 for one year at the rate of four per cent; in his fourth settlement he charged himself with interest on $ 2079.10 for two years at the rate of four per cent compound interest. The settlements do not show from what source the interest was derived, nor do they show how the wards' funds were invested or the disposition made by him of such funds, nor was any report made to the court showing such facts. Defendant at the time he checked out his wards' funds and applied them to the payment of his own indebtedness, was loaning his own money to the amount of about ten thousand dollars on real estate security in the State of Oklahoma for which he obtained eight per cent interest per annum. He testified that he was unable to loan the trust funds in the neighborhood where he resided on prime real estate security; that there was no demand for such loans; and that for this reason he used the trust funds in his own business, accounting for four per cent interest per annum thereon.
The application of the trust fund by the defendant to the payment of his own debt left his own loans in Oklahoma undisturbed, and he continued to keep his own funds at interest in Oklahoma so far as he was able to do so, making the loans and taking notes and deeds of trust therefor in his own name. All of his funds were not loaned out at all times. He usually had a small balance in the bank where his funds were deposited in his own name. In 1919 defendant's deposits accumulated in the bank until on May 9, 1919, his balance had grown to $ 4,949.58. On the last named date he subscribed for two Victory Loan Coupon Bonds of the denomination of $ 1,000 and two Victory Loan Coupon Bonds of the denomination of $ 100, and checked on his said bank account for $ 2,200 in payment for said bonds. He subscribed for these bonds in his individual name and not as curator. He testified, however, that he purchased the bonds for his wards; that he received the bonds about the middle of August; that when he received them he made a memorandum on the envelope containing the bonds, reciting that "the within bonds belong to Ralph and Sylvester Hennies," and placed the bonds enclosed in said envelope in his individual safety deposit box with his own private papers and securities in the vault of the Bank of O'Fallon. To the box defendant alone had access. There was a steel cabinet or nest of deposit boxes in the vault and defendant's deposit box was in this cabinet or nest. On December 17, 1919, defendant clipped from said bonds the interest coupons then due, amounting to $ 59.70, and deposited the same in said bank to his account as curator of Ralph and Sylvester Hennies.
On the night of February 16, 1920, the vault of the bank was burglarized. The outer door of the bank was pried open by the burglars with a crowbar, the combination lock of the vault door was blown off with dynamite, the lock of the inner door was punched out, and the deposit boxes were sledged and jimmied, and the contents thereof stolen by the burglars. And defendant testified that the bonds in question together...
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