Everett v. O'Leary

• Decision Date: 03 July 1903
• Docket Number: Nos. 13,495-(163).,s. 13,495-(163).
• Parties: M. R. EVERETT v. PATRICK O'LEARY.<SMALL><SUP>1</SUP></SMALL>
• Court: Minnesota Supreme Court

Page 154

90 Minn. 154

M. R. EVERETT v. PATRICK O'LEARY.¹

Nos. 13,495-(163).

Supreme Court of Minnesota.

July 3, 1903.

Appeal by defendant from an order of the district court for Le Sueur county, Cadwell, J., sustaining a demurrer to the answer. Reversed.

P. J. Kirwin and John Moonan, for appellant.

T. L. Everett and E. Southworth, for respondent.

COLLINS, J.

Plaintiff brought an action on a promissory note, with the usual allegations of execution, delivery, and nonpayment, all of which stood admitted by the answer, but defendant therein attempted to set forth two counterclaims. To these plaintiff demurred generally as to each, and also severally as to both —

"That the alleged counterclaims * * * did not accrue within six years immediately prior to the commencement of this action, and are barred by the statute of limitations."

1. The first counterclaim, as set forth in the answer, was to the effect that on December 28, 1889, defendant had $1,120.67 on deposit in plaintiff's bank to his credit "as guardian"; that on the same day he borrowed that exact amount from the bank, giving his note therefor, bearing interest at the rate of ten per cent. per annum; that at the same time he entered into an agreement with plaintiff by which the latter agreed to allow ten per cent. interest on the amount deposited, so long as it remained in the bank, and that the amount so accruing as interest on the deposit should pay and off-set the amount accruing as interest on defendant's note; that on January 6, 1893, this agreement was repudiated by plaintiff's cashier; that defendant then paid his note, with all interest due, and then withdrew the deposit; that afterwards, in the year 1899, plaintiff agreed to allow and to pay the interest which according to the agreement was due on the deposit; and that on May 24, 1899, the parties settled, and stipulated that the sum of $483.81 was then due defendant on account thereof, which sum plaintiff then and there promised to pay.

It is argued in support of the demurrer that the counterclaim, as alleged, simply disclosed a plan whereby the defendant, as guardian, and with the assistance of plaintiff, undertook to cheat his ward out of any income from the money, and to appropriate the use of it for his own advantage and profit, in direct violation of the well-known rule that a guardian cannot use trust funds, and reap a personal benefit from such use, and that this scheme clearly and affirmatively appears from the allegations in regard to the payment of interest by plaintiff; the same being a clear violation of the defendant's duty as a guardian, and illegal, because against public policy.

It is true that the guardian cannot profit by any agreement which he has made in his own interest and against that of his ward. Such a contract would be in violation of his duty, and is forbidden by law. If it appeared, as claimed, from the allegations of the answer, that such was the necessary result of the agreement made by these parties, we should be compelled to hold that the contract entered into was prohibited by public policy and absolutely nonenforceable, but, upon examination of the pleading, we are of the opinion that this does not clearly and affirmatively appear. Fairly construing the answer, it does not seem clear that the contract, as to interest, was intended to and would inure to the benefit of the defendant guardian, or that it was not made for the benefit of the ward. The defects in this pleading relied upon by counsel are not apparent upon its face, and, when this is the condition of a pleading, demurrer will not lie. The subsequent allegations of an accounting and...