Douglass v. Ferris

• Decision Date: 25 April 1893
• Citation: 138 N.Y. 192,33 N.E. 1041
• Parties: DOUGLASS v. FERRIS et al.
• Court: New York Court of Appeals Court of Appeals

138 N.Y. 192

33 N.E. 1041

DOUGLASS

v.FERRIS et al.

Court of Appeals of New York.

April 25, 1893.

Appeal from supreme court, general term, third department.

Action by William O. Douglass against Peter Ferris and another, sureties on a guardian's bond. From a judgment of the general term (18 N. Y. Supp. 685) affirming a judgment in favor of plaintiff, defendants appeal. Modified.

Andrews, C. J., dissenting.

Richard L. Hand, for appellants.

Royal Corbin, for respondent.

O'BRIEN, J.

The general question presented by this appeal is the liability of the defendants to the plaintiff upon a bond given on the 29th of March, 1872, to the plaintiff, who was then a minor, to secure the faithful performance by Edwin B. Low, his general guardian, appointed on that day, of the duties of his trust. The plaintiff arrived at the age of 21 years on the 26th of March, 1879, and it appears that on the 14th of the following May the guardian had in his hands $4,363.10 to which the plaintiff was entitled. On that day, as the findings show, the guardian and his brother, who was insolvent, approached the plaintiff with a view to a settlement and discharge of the obligation. They presented the brother's note for $3,200, payable to the order of the plaintiff, and bearing date March 31, 1879, at two years, with semiannual interest, and also a mortgage purporting to secure the payment of the sum for which the note was given, and running to the plaintiff, covering 200 acres of land in the state of Illinois. The guardian, for the purpose of inducing the plaintiff to settle his claim for the amount of the note, as secured, fraudulently represented to the plaintiff that the lands embraced in the mortgage were cultivated and valuable improved farm lands, and worth at least $10,000, and ample security for the payment of the sum for which the note was given. The plaintiff was ignorant of the facts touching the solvency of the maker of the note and the value of the land and the sufficiency of the security, but relied entirely upon the representations of the guardian. In fact, the lands were uncultivated swamp lands, not worth to exceed $700, all of which was known to the guardian at the time of making the representations. The plaintiff, believing the statements to be true, was induced to settle his claim for the note and security, and to give to the guardian a receipt in full for the $3,200, and also a paper purporting to discharge him from his trust, and authorizing an attorney named to appear before the surrogate and declare the account of the guardian settled, and to procure him to be formally discharged. The attorney and the guardian, on the 12th day of January, 1880, appeared before the surrogate, and the account was stated, and the guardian credited with the payment of the balance in his hands, namely, $4,360.32; and thereupon the surrogate entered a decree whereby it was adjudged that the guardian had fully accounted for all moneys of his ward that came to his hands, and that nothing remained in his hands that was due to the plaintiff.

The plaintiff was ignorant of the facts constituting the fraud thus practiced upon him until about the month of November, 1880, when he immediately communicated the information to the guardian, and demanded that the settlement receipt power of attorney, decree of the surrogate, and discharge be rescinded and treated as void, to which demand the guardian assented, and promised to pay the amount of the claim to the plaintiff, but failed to do so except the sum of $800, which was paid about the month of February, 1882. It has also been found that the plaintiff, at all times since the discovery of the frand, has been ready and willing to restore what he received from the guardian on the settlement, and that before the commencement of any suit he executed and tendered to the guardian an assignment of the mortgage and the note and a satisfaction thereof, and these papers have been ready for delivery since October, 1882, when he commenced an action in the supremecourt against the guardian as such. The object of that action was to procure a judgment annulling the decree of the surrogate and the settlement papers upon which it was based, and declaring the account between the plaintiff and his said guardian to be unadjusted, and the sum of $3,200 unaccounted for. The complaint contained suitable allegations of all the facts upon which to base the relief. The only pleading which the guardian served in the action was a demurrer which, upon a hearing, was overruled, and judgment was ordered in favor of the plaintiff for the relief demanded, with costs, which judgment was to be absolute unless the defendant answered over, as he was permitted to do by the judgment. It was entered on the 16th day of February, 1885, and adjudged, among other things, that there was still due to the plaintiff from the guardian the sum of $3,507.24, which included interest on the sum of $3,200 from March 31, 1879, less the payment made, before mentioned. Service of a copy of the judgment was made upon the defendant's attorneys on the day of its entry. The defendant therein then appealed to the general term, where it was affirmed, and judgment of affirmance and for costs entered June 9, 1885, which was made absolute in form upon proof that the defendant had failed to answer or pay costs, as permitted by the special term. Executions were issued upon these judgments, and returned wholly unsatisfied. Then the present action was commenced, October 31, 1885, against the sureties upon the guardian's bond, by the service of the summons and complaint, on that day, upon the sureties, Gilletta Low, Rodney Sargent, and Peter Ferris. The first named answered separately, by the same attorneys representing the guardian in the former suit, that she was a married woman when she executed the bond, and the action, as against her, was discontinued by stipulation, but she was not released. The other sureties answered by the learned counsel who argued the case at barin this court, or by his firm, and after the case was at issue and ready for trial, in 1886, they were substituted as attorneys in the old suit against the guardian, and appealed to this court from that judgment.

The new attorneys then had control of both cases, and in June, 1886, they made a motion to the court at special term in both actions. The object of these motions was first to permit the appeal to the court of appeals in the old action to be prosecuted without further security, and to stay all proceedings in this action, without security, pending that appeal. This motion was granted, upon a showing in support of the application, apparently that the plaintiff already had security in the guardian's bond, and that the appeal to this court from the judgment in the old suit conclusively determined the liability of the sureties on that bond. In October, 1887, this court affirmed the judgment (107 N. Y. 628, 13 N. E. Rep. 940) without an opinion. In the mean time, and on the 28th of January, 1887, Sargent, defendant, and one of the sureties, died, leaving a will in which the defendant Abbey A. Prouty was named as sole executrix, to whom letters testamentary were issued. This action was revived as against her by a supplemental complaint which was answered by both defendants, and these pleadings present the issues in the case. On the trial the plaintiff gave in evidence the bond, the judgment roll in the action against the guardian, and the judgments of affirmance at general term and in this court, and the executions issued and returned unsatisfied, and rested. Substantially the only proof given by the defendants was to show that the sureties had no knowledge of the settlement between the plaintiff and the guardian, or of any of the fraudulent acts or proceedings before referred to, until the month of October, 1885, and also some proof relating to the financial responsibility of the guardian during a part of that time. The court found all the facts, the substance of which is herein stated, and other facts not necessary to refer to, and found, according to the defendants' contention, that they were ignorant of the settlement or of the proceedings until the time stated; and, further, that up to April, 1882, the guardian was the owner of a valuable piece of unincumbered real estate in the county, the actual value of which was not shown, and which he conveyed at that date, and has been insolvent since January 27, 1885. He held, as matter of law, that the judgment in the first action was prima facie binding upon the defendants, and evidence against them of the facts therein adjudged, and that they were liable for the amount of that judgment and the costs, with interest thereon.

The condition of the defendants' obligation was that the guardian ‘shall well and faithfully in all things discharge the duty of guardian to the above-named minor according to law, and render a just and true account of all moneys and property received by him, and of the application thereof, and of such guardian, in all respects, to and before any court having cognizance thereof, when thereunto required.’ To insure the performance of this trust the sureties bound themselves in the penalty of the bond, ‘and each of us, our and each of our heirs, executors, and administrators, and each and every of them, jointly and severally, firmly by these presents.’ The principal questions discussed by the learned counsel for the defendants on this appeal are—First, that the sureties have been discharged by the settlement between the plaintiff and the guardian, and the extension of time involved therein; and secondly, in consequence of the plaintiff's omission to notify them at an earlier day of the situation, or to proceed against the guardian. It was competent for the plaintiff, after he became of age, to settle with his guardian, and, if the settlement had been fairly and honestly, and not fraudulently, made, it would discharge...