Bishop v. Hamilton (In re Filardo)
| Decision Date | 02 June 1936 |
| Citation | 221 Wis. 589,267 N.W. 312 |
| Parties | IN RE FILARDO. BISHOP ET AL. v. HAMILTON. |
| Court | Wisconsin Supreme Court |
OPINION TEXT STARTS HERE
Appeal from an order and judgment of the County Court of Iowa County; James E. O'Neill, Judge.
In the matter of Vito Filardo, an incompetent, by his guardian ad litem, Frank D. Hamilton. From an order and judgment surcharging the account of A. F. Bishop, Jr., as guardian, with certain investments claimed to have been made unlawfully, he and his surety appeal.--[By Editorial Staff.]
Affirmed in part; reversed in part and remanded, with directions.
This appeal is from an order and judgment of the county court of Iowa county surcharging the account of A. F. Bishop, Jr., as guardian, with certain investments claimed to have been made unlawfully, under section 231.32, Stats.1933.
Vito Filardo, a World War veteran, was adjudged incompetent by the county court of Iowa county on March 30, 1920, and A. F. Bishop, Jr., one of the appellants, was appointed guardian of his person and estate. On March 27, 1928, an order was made and entered by said court approving all accounts and investments up to December 31, 1927. On May 7, 1935, the guardian filed his final account and resigned. The resignation was accepted. As a result of the hearing on the final account, the court surcharged the guardian's account with the sum of $6,034.48, plus interest The order and judgment imposing said surcharge was entered November 15, 1935, from which the guardian and his surety bring this appeal.
During the period that he made the investments resulting in the surcharges mentioned, the guardian was an active officer of the Iowa County Bank, which bank later merged with the Farmers & Citizens Bank of Mineral Point, and the new banking institution was thereafter known as the Consolidated Bank. The guardian owned 66 shares of the 1,000 shares of the capital stock of the Iowa County Bank which had a capitalization of $100,000. During the period that he sold certain assets of the Iowa County Bank to his trust, as guardian, he was the chief executive officer of the bank, was a member of its board of directors, and served either as cashier or vice president during all of said period.
The several items for which the guardian's account was surcharged are as follows:
Argall Note and Mortgage.
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¦Entire principal ¦$2,500.00¦
+-------------------------------------------------------------------+---------¦
¦Interest on $2,500 from February 28, 1930, to November 12, 1935 ¦570.55 ¦
¦(date of foreclosure judgment) at 4% ¦ ¦
+-------------------------------------------------------------------+---------¦
¦Attorneys' fees in foreclosure suit, and taxes ¦533.58 ¦
+-------------------------------------------------------------------+---------¦
¦ ¦$3,604.13¦
+-----------------------------------------------------------------------------+
In connection with this investment, it appears that in 1919 one W. R. Smith sold his residence in Mineral Point to Elmore Argall, taking back a purchase-money mortgage for $2,500, due in three years. This mortgage was later assigned to the Iowa County Bank. In September, 1928, the guardian purchased this note and mortgage from the bank for his trust. No part of the principal had been paid. The bank also held a second mortgage from Argall covering the same premises. His indebtedness to the bank at that time was in the neighborhood of $22,000. Interest was paid to February 28, 1930. The taxes were not paid for the years 1930, 1931, and 1932, and only $10 was paid on the 1933 taxes. The guardian commenced foreclosure on this mortgage in September, 1934. The county court found that at the time this investment went into the trust, the mortgage incumbrance was more than 50 per cent. of the value of the property, and that for that reason it was not a proper trust investment under section 231.32 (l) (g), Stats.1933.
Kelly Note and Mortgage.
The surcharge on this item is made up as follows:
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¦Balance of principal not paid from proceeds of government loan ¦$600.00¦
+---------------------------------------------------------------+-------¦
¦Interest on $600 from May 16, 1934, to November 12, 1935, at 4%¦35.73 ¦
+---------------------------------------------------------------+-------¦
¦Interest on $1500 from December 1, 1932, to May 13, 1934, at 4%¦87.50 ¦
+---------------------------------------------------------------+-------¦
¦Legal expense on proceedings for order authorizing compromise ¦20.00 ¦
+---------------------------------------------------------------+-------¦
¦ ¦$743.23¦
+-----------------------------------------------------------------------+
In connection with this investment it appears that on December 26, 1930, the guardian purchased from the Iowa County Bank a $1,500 interest in a $17,000 mortgage on the farm of George E. Kelly, located near Mineral Point. The particular note secured by said mortgage which the guardian purchased for his trust was dated June 1, 1922, due three years from date. When purchased, all interest and taxes were paid up to that time. In 1934, Mr. Kelly refinanced his indebtedness through a Federal Land Bank loan, on a basis, however, which necessitated his creditors taking a loss. In this connection, the guardian was offered a compromise on his investment. He applied to the county court and obtained an order permitting him to accept the compromise. He took a $600 loss, plus interest on the $1,500 from December 1, 1932. The county court found that this investment was unauthorized because the value of the premises was not double the amount of the first mortgage.
Bliss Note and Mortgage.
The items of surcharge are based upon the guardian's failure to sooner foreclose the mortgage. The note and mortgage were dated July 5, 1929, due in one year. They were purchased by the guardian on December 26, 1930. No interest was paid after July 5, 1931, and no taxes after 1932. The respondent, upon his motion for review, contends that the trial court erred in not surcharging this entire investment.
Claim Against Consolidated Bank.
In this connection, the county court surcharged the guardian's account in the sum of $633.41. This item represents the guardian's checking account on deposit in the Consolidated Bank at the time it went on a waiver basis. It appears that the Iowa County Bank and the Farmers & Citizens Bank merged July 1, 1931, under the name of the Consolidated Bank. The new bank went on a waiver basis January 18, 1932, and finally went into liquidation six months later. The actual condition of both banks prior to being merged and the condition of the Consolidated Bank after merger can be fairly judged by the fact that since the Consolidated Bank closed its doors in 1932 and has since been in the process of liquidation, no dividends had been paid to general creditors at the time of the hearing on this matter in the county court.
All Fees of Guardian Disallowed and Ordered to be Repaid.
The guardian claimed compensation for his services for the period January 1, 1928, to May 8, 1935, in the sum of $772.12. This fee was on the basis of 5 per cent. of the income handled by the guardian and thirty-six days' time on a per diem basis of $1.25.
The foregoing items represent the sum total of $6,034.48, which the county court surcharged the guardian's account.
The respondent, upon his motion for review, contends that the guardian's account should be surcharged with the following additional items:
The Graber Investment.
It appears that in 1916, one George Graber executed a note and mortgage to the Iowa County Bank, due in one year, for $450. The guardian purchased this security for his trust on March 7, 1929. There has been no payment on the principal. No interest has been paid since August 3, 1930; no taxes paid from 1929 to 1933, inclusive. The county court held that the guardian was negligent in making this investment and in protecting the same, but that the successor guardian could, in all probability, work the loan out without loss to the trust, and for that reason refused to surcharge this item.
The Wiesen Note.
On March 24, 1920, one Herman Wiesen executed a note and mortgage to the Iowa County Bank for $150. On December 28, 1930, the guardian purchased this security for his trust. It appears that no taxes were paid for the years 1930 to 1934, inclusive, and interest was defaulted shortly after the investment came into the trust. The county court held that the guardian was negligent in making the investment and in protecting it, but that the successor guardian would, in all probability, be able to work out the loan without a loss to the trust.
Commercial State Bank of Madison.
This item consists of a deposit in the sum of $121.73, made by the guardian in a checking account upon his locating in Madison at about the time the Consolidated Bank closed. This item is now in a revolving trust fund for which Mr. Bishop, as guardian, holds a deferred certificate. The trial court did not surcharge this amount on the guardian's account. Respondent contends it should be so charged.
Kopp & Brunckhorst and W. R. Kopp, all of...
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