Elliott v. Carroll

• Decision Date: 21 February 1934
• Docket Number: 13788.
• Citation: 173 S.E. 908,172 S.C. 276
• Parties: ELLIOTT et al. v. CARROLL et al.
• Court: South Carolina Supreme Court

173 S.E. 908

172 S.C. 276

ELLIOTT et al. v. CARROLL et al.

No. 13788.

Supreme Court of South Carolina

February 21, 1934

On Rehearing April 2, 1934.

Appeal from Common Pleas Circuit Court of Dorchester County; M. M Mann, Judge.

Action by William Elliott and another, as receivers of the People's State Bank of South Carolina, against Francis F Carroll and others. From an order sustaining demurrers to answers of certain defendants, the defendants appeal.

Order affirmed.

CARTER J., dissenting.

Francis F. Carroll, of Summerville, for appellants.

Legare Walker, Jr., of Summerville, and Benet, Shand & McGowan, of Columbia, for respondents.

BONHAM Justice.

Some time during the year 1919 Francis F. Carroll executed his bond and mortgage to the Bank of Dorchester for the sum of $2,700, which bond was to become due February 1, 1920. The 1st day of December, 1931, the Bank of Dorchester assigned the bond and mortgage to People's State Bank of South Carolina. About August 5, 1922, Francis F. Carroll conveyed the mortgaged premises to J. Waties Waring in trust for Frances Eloise Carroll and Julia Reynolds Carroll (the children of Francis F. Carroll) in fee-simple absolute. People's State Bank became insolvent and closed its doors December 31, 1931. The plaintiffs are the duly appointed receivers thereof, and bring this action to foreclose the Carroll mortgage. His daughters and J. Waties Waring are made parties because they have, or claim, some interest in the mortgaged premises.

For answer Francis F. Carroll set up, first, The conveyance of the premises to J. Waties Waring, as trustee for Frances Eloise and Julia Reynolds Carroll, who now own the property second, that in January, 1919, he was appointed by the probate court the general guardian of his daughter Julia, who is a minor; that as such guardian he received certain moneys of his ward, and on December 31, 1931, had the sum of $1,169.29 of her money on deposit in the savings department of People's State Bank of South Carolina; that the bank knew that this defendant was obligated to take care of the funds of his ward, and that a default by the bank to return this money to him would render him personally liable to his ward for such loss, nevertheless, the bank permitted itself to become insolvent, and refused, and refuses, to pay the defendant the amount of said deposit with interest; that the bank personally agreed with him to return this money on demand and had violated its contract; that he is entitled to a set-off against the note and mortgage to the amount of such deposit; that his ward owns a half interest in the mortgaged premises, and any reduction in the mortgage debt will redound to her benefit.

Frances Eloise Carroll answered, denying knowledge or information of certain allegations of the complaint, that by reason of the deed of Francis F. Carroll to J. Waties Waring as trustee she owns an interest of one-half in fee simple in the mortgaged premises; that, when the People's State Bank closed its doors, she had in one of its branch banks the sum of $503 as a deposit in the savings department. She claims the right to offset said deposit, pro tanto, against the mortgage debt.

J. Waties Waring answered that his trust is a passive one, and he has no interest in, title to, or possession of, the mortgaged premises in trust or otherwise.

Plaintiffs demurred to the answer of Francis F. Carroll, for that it appeared on the face thereof that the offset claimed is a deposit of money belonging entirely to the ward of the defendant Francis F. Carroll; that such funds are not within his unlimited control, nor can they be subjected to the individual debts or obligations of this defendant; that there is no mutuality between the debt due by the defendant Francis F. Carroll, individually, and the debt due by plaintiffs to him, as guardian; that the personal responsibility of the guardian to his ward, alleged in the amended answer, is a mere conclusion without proper allegations of fact to support it.

They demurred to the answer of Frances Eloise Carroll, for that it appears on the face of it that the complaint alleges no debt due by her to plaintiffs, nor is any judgment or affirmative relief demanded of her; hence the matter of offset does not arise; that it appears by the pleadings that whatever interest this defendant has in the mortgaged premises, herein involved, is subject to the lien of plaintiff's mortgage, which fact is not controverted by the answer; therefore the offset or counterclaim, which she alleges, cannot be set up in this action for foreclosure.

The demurrers were considered by his honor, Judge Mann, who sustained them in a short order in which he assigned no grounds for his decision. The appeal is from that order.

Francis F. Carroll bases his appeal upon grounds stated in four exceptions. The first of these alleges error for sustaining the first ground of demurrer and in holding that the offset claimed by defendant was the property entirely of his ward, Julia Reynolds Carroll, and was held by him as guardian, was not within his unlimited control, nor subject to the payment of his individual debts; whereas he should have held that defendants' claim of offset was for damages for breach of contract by the bank for failing to pay him on demand the amount of said deposit.

A reference to the allegations of the second paragraph of the second defense interposed by this defendant disposes of this exception: " Second: That this defendant after his appointment as such General Guardian, received certain sums of money belonging to the estate of his ward, Julia Reynolds Carroll, and from the moneys so received by him for his said ward he had on the 31st day of December, 1931, the sum of One Thousand One Hundred and Sixty-nine Dollars and Twenty-nine cents on deposit in the savings department of Peoples State Bank of South Carolina, the said deposit being payable and demandable at its branch bank located at 544 King Street in the City of Charleston, S. C., which deposit said Peoples State Bank of South Carolina, a corporation duly organized under the laws of the State of South Carolina and doing a general banking business, agreed personally with this defendant to take good care of, and to pay and return and to hold itself at all times able and in readiness to pay and return same to this defendant, the General Guardian of said Julia Reynolds Carroll, at any time that he might demand same or any part thereof."

It is difficult to comprehend how defendant can offset an unliquidated demand for damages for the failure to pay to defendant his ward's money, without some showing in fact that the failure to do so would make him personally liable to the ward.

And this brings us to consider here the third exception, which alleges error for sustaining the third ground of the demurrer, to wit: That the personal responsibility of the guardian to his ward, alleged in the complaint, is a mere conclusion not sustained by proper allegations of fact. Under certain conditions, the guardian would unquestionably be responsible for losses of bank deposits belonging to his ward, and other conditions might arise where no responsibility would exist. For instance, if the guardian made his bank deposit without complying with the provisions of section 9050 of the Code, which requires the approval of the probate judge, he would be personally liable for the loss; whereas, with such approval, he would be held blameless.

See Oakes' Estate v. Oakes, 170 S.C. 167, 169 S.E. 890.

But, even though there should exist a personal liability of the guardian to his ward based upon his failure to obtain the approval of the probate judge as to this bank deposit, of which there is no allegation, we do not see how this fact can aid the guardian in his contention that he is entitled to an offset against his personal debt to the bank of the amount which he himself is due his ward. If he had complied with the statute, no personal liability would have existed, and hence no basis for an offset. Surely he cannot be rewarded with an offset for failing to comply with the statute.

If he deposit the funds in his own name and loss occurs, he is generally held responsible to the ward. In the case here present the funds are shown by the answer of Francis F. Carroll to have been known to the bank as the funds of the ward. No presumption of his responsibility to his ward arose by the mere failure of the bank, and no facts are alleged in his answer to show that such responsibility would attach to him individually. This likewise disposes of the fourth exception. There was no error in sustaining this ground of the demurrer.

The serious issue is made by the remaining exception of Francis F. Carroll. Appellant seems to seek to differentiate the claim he makes for the payment to him of the deposit fund as a payment to him individually for breach of contract to repay to him the deposit fund on demand, from a claim for payment in his representative capacity as guardian. The only fund he deposited was that of his ward; it was deposited to his credit as guardian; and he has shown no facts which ipso facto by the failure of the bank would entail liability on him. If he can offset this fund against the bank's debt against him, it must be because of some right accruing to him in his representative capacity.

The modern trend is toward more liberality in the application of the rule of offset. Some states have enacted statutes on the subject, and some courts have construed existing rules in a broader spirit of abstract justice and equity. A review of such of these decisions as are within reach discloses that the old established rule of offset is relaxed only where some statute applies or where some special equity...