Brovan v. Kyle

• Decision Date: 04 December 1917
• Parties: BROVAN v. KYLE ET AL.
• Court: Wisconsin Supreme Court

166 Wis. 347

165 N.W. 382

BROVAN

v.KYLE ET AL.

Supreme Court of Wisconsin.

Dec. 4, 1917.

Appeal from Circuit Court, Dunn County; Geo. Thompson, Judge.

Action by Blanche Lucille Brovan against John Kyle and others. From the judgment rendered, defendant named appeals. Reversed as to defendant bank only, and remanded, with directions.

Action against the sureties upon a guardian's bond. One Carroll Lucas was appointed guardian of the estate of plaintiff, and John Kyle and George Kyle signed his bond as sureties. Lucas died insolvent and indebted to the estate of his ward in the sum of $719.97, with interest thereon at 6 per cent. from January 1, 1912. George Kyle was also dead, and one E. J. Bates the administrator of his estate was made a party defendant. The defendant John Kyle petitioned the court, pursuant to the provisions of section 2610, Stats. 1915, to make the Bank of Menomonie a defendant on the ground that if plaintiff recovered the bank would be liable to him for the amount of such recovery or a substantial part thereof. The court granted the petition. The trial resulted in a judgment in favor of plaintiff for $719.97 and costs against the defendants John Kyle and E. J. Bates as administrator of the estate of George Kyle, and in a dismissal upon the merits with costs as against the Bank of Menomonie. From such a judgment the defendant John Kyle appealed.John R. Mathews and R. E. Bundy, both of Menomonie, and Varnum & Kirk, of Hudson, for appellant.

Freeman & Freeman, of Menomonie, for respondent Bank of Menomonie.

W. E. Plummer, of Durand, for respondent Brovan.

VINJE, J. (after stating the facts as above).

[1] For some years prior to March 20, 1911, Carroll Lucas had kept an individual deposit account with the Bank of Menomonie, which on the date mentioned amounted to $6.80. He that day presented to the cashier of the bank a check for deposit to his individual account for $1,250 payable to Carroll Lucas, guardian, and indorsed, Carroll Lucas, guardian. The cashier took note of the fact that Carroll Lucas, guardian, was the payee, and of the form of the indorsement and credited the amount of the check, afterwards collected by the bank, to Lucas' individual account. The check in fact belonged to Lucas' ward, the plaintiff herein. Lucas was indebted to the bank in the sum of $700 on a note secured by collateral of equal amount and value. He drew a check for $850 payable to the bank, and received his note and collateral and $150 in cash. The check for $850 was charged to his individual account. These transactions all took place with the cashier of the bank on the same day and immediately after the deposit of the $1,250 check. It was claimed by the appellant in his affidavit for bringing in the defendant bank that if he was liable the bank would be liable to him. Upon such a showing there was no abuse of discretion in joining the bank as a defendant in the action. Section 2610, Stats. 1915, expressly provides for just such a situation. So far as applicable to this case it reads:

“A defendant who shows by affidavit that if he be held liable in the action he will have a right of action against a third person not a party to the action for the amount of the recovery against him, may, upon due notice to such person and to the opposing party, apply to the court for an order making such third person a party defendant in order that the rights of all parties may be finally settled in one action, and the court may in his discretion make such order.”

[2] No argument is needed to show the application of the section to the facts in this case. The court properly granted the order making the bank a party defendant; for a surety on a guardian's bond, if held liable thereon, is pro tanto subrogated to the rights of his ward, and may follow the property of the ward's estate into whosesoever hands it has wrongfully come. Boyle v. Northwestern Nat. Bank of Superior, 125 Wis. 498, 103 N. W. 1123, 104 N. W. 917, 1 L. R. A. (N. S.) 1110, 110 Am. St. Rep. 844;Emigh v. Earling, 134 Wis. 565, 115 N. W. 128, 27 L. R. A. (N. S.) 243;United States Fidelity & G. Co. v. Adoue, 104 Tex. 379, 137 S. W. 648, 138 S. W. 383, 37 L. R. A. (N. S.) 409, Ann. Cas. 1914B, 667, and note; 12 R. C. L. 1172.

[3][4] The trial court found that the bank acted in good faith and lawfully received payment of Lucas' debt to it from the proceeds of the check. That the cashier believed the bank had the right to receive payment from the trust fund and was guilty of no intentional fraud may be admitted so far as this particular transaction is concerned. But that does not reach the real question at issue, namely, Ought not the bank from the evidence before it to be held as a matter of law to have had notice of the trust character of the fund, and that it could not lawfully receive payment of Lucas' debt out of it? The word guardian is a well-understood word of common speech, and implies to the average lay mind that a fund held in the capacity of a guardian does not belong to the guardian but to the ward. We speak here of the equitable ownership, not of the technical legal title. The former alone is of importance in this case. But even the legal title to the fund represented by the check was in the ward and not in the guardian, and upon the death of the ward title thereto passes to his legal representative when appointed. Glasspoole v. McGuine, 143 Wis. 294, 127 N. W. 997;Rollins v. Marsh, 128 Mass. 116; 12 R. C. L. 1123. The guardian holds the estate of his ward only in a trust capacity. Person et al. v. Merrick, 5 Wis. 231;Abrams v. United States Fidelity & G. Co., 127 Wis. 579, 106 N. W. 1091, 115 Am. St. Rep. 1055, 5 L. R. A. (N. S.) 575. The cashier, therefore, when a check was presented to him for...