Blanton v. First National Bank of forrest City

• Court: Arkansas Supreme Court
• Writing for the Court: MCCULLOCH, C. J.
• Citation: Blanton v. First National Bank of forrest City, 136 Ark. 441, 206 S.W. 745 (Ark. 1918)
• Decision Date: 04 November 1918
• Docket Number: 211
• Parties: BLANTON v. FIRST NATIONAL BANK OF FORREST CITY

206 S.W. 745

136 Ark. 441

BLANTON v. FIRST NATIONAL BANK OF FORREST CITY

No. 211

Supreme Court of Arkansas

November 4, 1918

Appeal from St. Francis Circuit Court; J. M. Jackson, Judge reversed.

Judgment reversed.

C. W Norton, for appellant.

1. The court erred in sustaining the demurrer. The complaint stated a good cause of action. The bank was liable as it converted a trust fund with knowledge of its identity and character. 114 S.W. 322; 38 A. 893; Am. Cas. 1914 B. 667; 82 Ark. 519; 12 R C. L. 1172 et seq.

2. Rolfe was liable as president of the bank. Kirby's Dig., § 848; 90 Ark. 51.

R. J. Williams and Mann, Bussey & Mann, for appellee.

1. There was no liability. No settlement had been made by the guardian in the probate court who alone had jurisdiction. Const. Art. 7, § 84; Kirby's Dig. Ch. 76; 12 R. C. L. 1154. The cases cited for appellant do not support the contention. 37 L.R.A. (N. S.) 409.

2. A ward cannot sue on the bond of a guardian until an ascertainment of the amount due has been found by the probate court and an order to pay over. 112 Ark. 71; 35 Id. 93. The probate court has exclusive jurisdiction to determine the liability and a complaint failing to allege such finding is bad on demurrer.

3. Rolfe is not liable unless the bank is.

MCCULLOCH, C. J. HART and SMITH, J.J., dissent.

OPINION

MCCULLOCH, C. J.

The circuit court sustained a demurrer to appellant's complaint and dismissed the action on the ground that the complaint failed to state a cause of action.

It is alleged that on March 24, 1913, appellant was a minor under guardianship in the probate court of St. Francis County, and that her mother, Mary E. Evans, was guardian of herself and also of her infant brother, John C. Blanton; that on that day W. W. Hughes, an attorney of Forrest City, having in his hands the sum of $ 1,070.67 which he had collected for appellant and her brother, drew a check on the Bank of Eastern Arkansas for said sum payable to the order of Mary E. Evans as such guardian, and delivered said check to Eugene Williams, cashier of the Bank of Forrest City, a corporation, to be placed to the credit of Mary E. Evans as guardian of appellant and her brother, but that said Williams as cashier aforesaid, after receiving the proceeds of the check, wrongfully placed the sum to the credit of the said Mary E. Evans individually, and allowed her to check it out for her personal use. It is further alleged that the said fund belonged equally to the appellant and her said infant brother, and that appellant has never received any portion thereof. It is alleged that the Bank of Forrest City was converted into a national bank and became the First National Bank of Forrest City, in succession to the assets, rights and liabilities of the Bank of Forrest City. There was an amendment to the complaint alleging that E. A. Rolfe was president of the Bank of Forrest City, but had failed and neglected to file with the county clerk a statement of the affairs of said corporation as required by section 848 of Kirby's Digest. The action is against the First National Bank and Rolfe.

It is conceded that the court sustained the demurrer on the ground that, as a prerequisite to a maintenance of this action, there must have been first an adjustment of appellant's guardianship account in the probate court of St. Francis County, and that the complaint was defective in failing to allege that there had been such adjustment. Counsel for appellees defend the ruling of the court on this ground, but we are of the opinion that the position is untenable. This is not an action on the bond of the guardian, nor is it an action involving in any sense a failure on the part of the guardian to pay over the funds to the ward pursuant to an order of the probate court. Therefore, an adjustment of the accounts in the probate court and an order to pay over is not prerequisite to maintenance of the action. Appellants are not parties to the proceedings in the probate court, and could not be made parties to any adjustment of the guardian's accounts there. It there is any liability at all on the part of appellees through their connection with the bank which received the money for deposit, it is enforceable in an original proceeding without the necessity for the prior adjustment of the accounts in the probate court as a basis for the action.

The Bank of Forrest City received the money, according to the allegations of the complaint as a trust fund for the benefit of appellant and the other ward and participated in the wrongful conversion of the fund to the individual use of the guardian. So the liability of that bank arose not as a surety for the conduct of the guardian but as a trustee for or agent of the wards who were entitled to the funds. The rule seems to be correctly stated in 12 R. C. L. 1172 as follows:

"On the same principle the ward can follow any other property wrongfully disposed of by the guardian into the hands of third parties, if they had knowledge of such facts as should have put them on inquiry; if, for instance, they had received in payment of a debt of the guardian funds standing in the name of the ward. * * * The pursuing of a claim against the estate of the guardian is not inconsistent with following the assets into the hands of one who received them from the guardian, and the ward will not be compelled to elect between the two modes of redress. It is beyond the power of a guardian or other trustee to bind the estate he represents to any use of its funds by contract with third persons who have knowledge of the...