Georgia Railroad Bank & Trust Co. v. Liberty Nat. Bank & Trust Co.
| Decision Date | 13 December 1934 |
| Docket Number | 10333. |
| Citation | 177 S.E. 803,180 Ga. 4 |
| Parties | GEORGIA RAILROAD BANK & TRUST CO. v. LIBERTY NAT. BANK & TRUST CO. et al. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
1. In view of the express requirement as to formal examination by inspection of a person alleged to be a lunatic, the statute of this state prescribing the method of determining an issue of lunacy, and providing for the appointment of a guardian of one adjudged to be a lunatic, does not violate the due process clause of the State (art. 1, § 1, par. 3) or the Federal Constitution (Amend. 14), in that it fails to provide for any notice to the person alleged to be insane.
2. The office of guardian of a minor expires by operation of law upon the arrival of the ward at his majority.
3. A guardian of a minor and the minor himself by next friend cannot sue jointly on the same cause of action, where the right to do so is challenged by a proper special demurrer nor can a national bank appear at all as next friend.
4. A guardian of a minor cannot, with or without an order of the superior court, use the funds of his ward to pay the debt of a third person; nor is he authorized without such an order to invest the funds of his ward in bonds issued by a private corporation. Where the guardian attempts to do either, and tenders to the opposite party in the transaction, as payee, a check bearing the signature of the ward by the guardian these facts without more are sufficient to put the payee on inquiry as to the validity of the transaction.
(a) A guardian is in effect a special agent of the law to manage the estate of a person non sui juris, and it is incumbent upon all persons dealing with him to examine his authority.
(b) Where a guardian invests the funds of his ward in the bonds of a private corporation without obtaining an order of court authorizing him so to do, and delivers in payment a check payable and signed as indicated above, the seller is not protected because he has no actual knowledge that the guardian is acting without authority.
(c) Notice sufficient to excite attention and put a party on inquiry is notice of everything to which it is afterwards found such inquiry might have led. Ignorance of a fact, due to negligence, is equivalent to knowledge, in fixing the rights of parties.
(d) A guardian is a trustee. Where a trustee makes an unauthorized purchase, and the seller has actual or constructive notice of the facts, he will hold the purchase money as a trustee for the beneficiaries.
(e) All persons aiding and assisting trustees of any character in misapplying assets, with knowledge of their misconduct, are directly accountable to the person injured.
(f) The beneficiary of a trust estate may follow the funds wherever they can be traced, and at his option may affirm or reject an unauthorized investment by the trustee.
(g) Where a guardian makes an unauthorized investment under such circumstances that the seller may be held liable as one aiding and assisting therein, a subsequent guardian, in the proper representation of the ward, is not limited to an action for damages, but may repudiate the transaction and sue the former guardian and the seller for the entire amount paid.
(h) This was a suit by a guardian of a person non compos mentis who has all of his life been either a minor or an insane person. The object of the suit was to recover for a misapplication of funds by one who had served as guardian of the ward during his minority, and judgment was prayed both against such former guardian and against a bank which according to the allegations, participated in such misapplication. Under the allegations the bank was the actual opposite party in the transactions with the former guardian, and accepted checks drawn by the minor through such guardian, either in part payment of a debt due by a third person or for the purchase of securities which the guardian was not authorized to buy, the bank being in its own right the final payee or recipient of the funds. The petition alleged that the bank knew, or should have known, of the invalidity of the transactions, and as against a general demurrer was sufficient to show liability on the part of the bank.
5. A party is not obliged to return that which he will be entitled to retain, as a condition precedent to a recovery in equity. The petition does not show that the plaintiff has failed to do equity.
6. The allegation as to the sale of the bonds was not objectionable as a mere conclusion of the pleader.
(a) In view of the petition as a whole, the allegation that the bank was charged with knowledge that the investment by the former guardian was unauthorized was not subject to special demurrer upon any ground taken.
(b) Nor was the petition subject to special demurrer because it did not designate the person who represented the bank in the transactions with the former guardian.
7. The allegation on information and belief that the defendant bank through its representatives, in the exercise of proper diligence, either knew, or should have known, of certain facts stated in the petition, together with "many and numerous other facts and circumstances unknown to petitioner, which either did or should have convinced said bank" that trust funds could not be invested in bonds of a named private corporation, and that it was most desirable for the bank to secure payment of debts due it by such corporation, was, as to the "many other numerous facts and circumstances" mentioned, too vague and indefinite to present any issue of fact for determination.
8. The fact that certain officers of the defendant bank were named as grantees in the deed of trust securing the bonds which were later involved in the transactions between the bank and the former guardian appears to have been irrelevant to the cause of action pleaded, and the allegations with respect to such relation should have been stricken on the special demurrer interposed thereto.
9. The allegations in the plaintiff's amendment, touching a previous suit against the former guardian and a surety, and the rendition in such action of a decree to the effect that the surety company should transfer and assign to the plaintiff trust company, as guardian, all rights of the surety company against the defendant banking company, was subject to demurrer upon the grounds that they attempted to add a new and distinct cause of action, and that they were too vague and indefinite to show the pertinency of such previous suit and decree to the cause of action sued on in the present case.
10. Each count of the petition was sufficient to state a cause of action, and the grounds of general demurrer were properly overruled. The court erred, however, in not sustaining certain grounds of special demurrer as indicated in the opinion.
Error from Superior Court, Chatham County; John Rourke, Jr., Judge.
Petition by the Liberty National Bank & Trust Company of Savannah, as guardian of the person and property of George H. Haslam, a person non compos mentis, and another, against the Georgia Railroad Bank & Trust Company and another. To review a judgment overruling its demurrers to the petition, named defendant brings error.
Reversed.
Cumming & Harper, of Augusta, and Hitch, Denmark & Lovett, of Savannah, for plaintiff in error.
Hull, Barrett & Willingham, of Augusta, and Edward C. Brennan and Connerat & Hunter, all of Savannah, for defendants in error.
The Liberty National Bank & Trust Company of Savannah, Ga., "as guardian of the person and property of George H. Haslam, a person non compos mentis, and as next friend of said George H. Haslam," brought suit against the Georgia Railroad Bank & Trust Company, of Richmond county, and J. Harold Mulherin, of Chatham county, to recover the sum of $21,000, and for such other relief as the plaintiff might be entitled to in equity. The company first named will be designated herein as the plaintiff bank or as the trust company, and the other company will be referred to as the defendant bank or the defendant banking company. The petition was based upon an alleged misapplication of funds by Mulherin while acting as guardian for Haslam during his minority, it being averred that the defendant banking company participated in such misapplication. The petition was in two counts. The first count proceeded upon the theory that Mulherin, as guardian, used the funds of his ward in making an unauthorized investment by purchasing from the defendant banking company certain bonds of a private corporation, while the second count alleged the use of such funds to pay in part a debt owed to the defendant banking company by the same private corporation, in which Mulherin was interested. The allegations of fact were the same in each count, with the exception of some variation to meet the possible proof as to the intent of the parties at the time of the transactions in question. The defendant banking company demurred to each count both generally and specially. The plaintiff offered an amendment covering several matters, which amendment the court allowed subject to demurrer. The defendant renewed all grounds of its original demurrer, and advanced additional grounds. The court overruled the demurrers as to all grounds, and the banking company excepted.
1. The petition alleged that Mulherin was appointed as guardian of the person and property of George H. Haslam, a minor, in the year 1926; that Haslam attained his majority in January 1933, but that he was at that time an insane person, and that during March, 1933, he was adjudicated insane, and the plaintiff trust company was appointed as guardian of his person and property upon such adjudication. The authority of the plaintiff to sue as guardian was challenged in certain grounds of ...
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