Hennies v. Keithley

• Decision Date: 06 November 1923
• Docket Number: No. 18234.,18234.
• Citation: 213 Mo. App. 529,255 S.W. 940
• Parties: HENNIES v. KEITHLEY
• Court: Missouri Court of Appeals

255 S.W. 940

213 Mo. App. 529

HENNIES v. KEITHLEY

No. 18234.

St. Louis Court of Appeals, Missouri.

November 6, 1923.

Rehearing Denied December 6, 1923.

Appeal from Circuit Court, St. Charles County; Edgar B. Woolfolk, Judge.

Exceptions by Sylvester Flennies, a minor, by Sebastian J. Salfen, curator, to the final settlement of Ora A. Keithley, retiring curator of exceptant's estate. From a judgment disallowing a credit for the loss of certain bonds, the retiring curator appeals. Affirmed.

C. W. Wilson, of St. Charles, for appellant. Emil P. Rosenberger, of Montgomery City, for respondent.

SUTTON, C.

This action arises on exceptions to the final settlement of defendant, Ora A. Keithley, retiring curator of the estate of Sylvester Hennies, a minor. Defendant was appointed as curator of said estate and also of the estate of Ralph Hennies in 1913. He received as such curator $1,879.68. All of this amount except a few small items was derived from the sale of real estate in a partition suit brought by the curator on behalf of his wards. The funds so received were deposited by defendant in the Bank of O'Fallon in his name as curator of said estates. The deposit was made on November 1, 1913. On December 8, 1913, the defendant as curator checked out of the bank his wards' balance, which constituted the entire assets of their estates, and applied it to the payment of his own individual note owing by him to the bank. Defendant at the time he checked the funds out of the bank made and signed a memorandum on a slip of paper in the nature of a due bill, reciting that he owed his wards the amount checked out, and that it should bear interest at the rate of 4 per cent. per annum, and placed the memorandum in the bank book kept by him as curator.

Defendant made his annual settlements of the estates of his wards jointly. He made his first annual settlement February 20, 1914. This settlement showed a cash balance in his hands of $1,872.48; his Second annual settlement made February 9, 1916, showed a balance of $2,012.40; his third annual settlement, made February 16, 1917, showed a balance of $2,079.10; his fourth annual settlement, made May 14, 1919, showed a balance of $2,215.42. In his second settlement defendant charged himself with interest on $1,872.48 for two years at the rate of 4 per cent, compound interest; in his third settlement he charged himself with interest on $2,012.40 for one year at the rate of 4 per cent.; in his fourth settlement he charged himself with interest on $2,079.10 for two years at the rate of 4 per cent. compound interest. The settlements do not show from what source the interest was derived, nor do they show how the wards' funds were invested or the disposition made by him of such funds, nor was any report made to the court showing such facts. Defendant at the time he checked out his wards' funds and applied them to the payment of his own indebtedness was loaning his own money to the amount of about $10,000 on real estate security in the state of Oklahoma, for which he obtained 8 per cent. interest per annum. He testified that he was unable to loan the trust funds in the neighborhood where he resided on prime real estate security; that there was no demand for such loans, and that for this reason he used the trust funds in his own business, accounting for 4 per cent. interest per annum thereon.

The application of the trust fund, by the defendant to the payment of his own debt left his own loans in Oklahoma undisturbed, and he continued to keep his own funds at interest in Oklahoma so far as he was able to do so, making the loans and taking notes and deeds of trust therefor in his own name. All of his funds were not loaned out at all times. He usually had a small balance in the bank where his funds were deposited in his own name. In 1919 defendant's deposits accumulated in the bank until on May 9, 1919, his balance had grown to $4,949.58. On the last-named date he subscribed for two Victory Loan coupon bonds of the denomination of $1,000 and two Victory Loan coupon bonds of the denomination of $100, and checked on his said bank account for $2,200 in payment for said bonds. He subscribed for these bonds in his individual name, and not as curator. He testified, however, that he purchased the bonds for his wards; that he received the bonds about the middle of August; that when he received them he made a memorandum on the envelope containing the bonds, reciting that "the within bonds belong to Ralph and Sylvester Hennies," and placed the bonds inclosed in said envelope in his individual safety deposit box with his own private papers and securities in the vault of the Bank of O'Fallon. To this box defendant alone had access. There was a steel cabinet or nest of deposit boxes in the vault, and defendant's deposit box was in this cabinet or nest. On December 17, 1919, defendant clipped from said bonds the interest coupons then due, amounting to $59.70, and deposited the same in said bank to his account as curator of Ralph and Sylvester Hennies.

On the night of February 16, 1920, the vault of the bank was burglarized. The outer door of the bank was pried open by the burglars with a crowbar, the combination lock of the vault door was blown off with dynamite, the lock of the inner door was punched out, and the deposit boxes were sledged and jimmied, and the contents thereof stolen by the burglars. And defendant testified that the bonds in question, together with the envelope in which they were inclosed, were thus stolen from his deposit box, and that they were entirely lost.

On February 14, 1921, the defendant resigned as curator and Sebastian J. Salfen was appointed as his successor. On March 25, 1921, defendant filed and submitted in the probate court his final settlement of the estate of plaintiff, Sylvester Hennies. In this settlement defendant charged himself with $1,107.71, being one-half the amount due the estates of both wards as shown by the annual settlement made May 14, 1919, with $5 cash received from the Hennies estate, and with $29.85 interest on Victory Loan bonds, and took credit with $9.87 expended for taxes, with $4.70 for probate clerk's fees, and with $1,100 for Victory Loan bonds alleged to have been stolen by burglars, showing a balance due the estate of $27.99. Thereupon plaintiff filed exceptions to the settlement, asking that the credit of $1,100 for the loss 'of Liberty Bonds be disallowed, and that compound interest be charged against the defendant upon the trust funds from November 21, 1912, at the rate of 8 per cent. per annum.

Upon a trial anew in the circuit court on appeal, the court charged the defendant with all the funds received by him except the interest on the coupon bonds, and charged him with simple interest on the funds in his hands from December 8, 1913, at the rate of 6 per cent. per annum, allowed him credit for his expenditures and a commission of 5 per cent. on the total assets in his hands, but disallowed the credit of $1,100 taken by defendant in "his final settlement for the loss of coupon bonds, and found and adjudged a balance due the estate by the defendant in the sum of $1,263.69. From this judgment defendant appealed.

The question for decision here is whether or not the defendant is entitled to credit for the Victory bonds alleged to have been burglariously stolen. We have not found just this case in any of the books. The general rules, however, relating to the duties and liabilities of a curator in the administration of the estate intrusted to him are well settled.

It is well settled that, if the curator keeps the estate separate from his own funds, and preserves its character and identity as a trust estate, he is only required to exercise that degree of diligence in the care and administration of the estate as reasonably prudent men are wont to exercise in the care and management of their own like business affairs. Taylor v. Hite, 61 Mo. 142, loc. cit. 144; Finley v. Schlueter, 54 Mo. App. 455, loc. cit. 458; Taylor v. Kellogg, 103 Mo. App. 258, 77 S. W. 130; State ex rel. Townshend v. Meagher, 44 Mo. 356, loc. cit. 362, 100 Am. Dec. 298; Fudge v. Durn, 51 Mo. 264; Booker v. Armstrong, 93 Mo. 49, loc. cit. 59, 4 S. W. 727; Powell v. Hurt, 108 Mo. 507, loc. cit. 513, 17 S. W. 985.

It is equally well settled that, if the curator converts the trust estate to his own use, employs it in his own private concerns, or commingles it with his own estate, so that it loses its character and identity as a trust estate, he will be held to a strict accountability in the event of loss. If he invests or loans the funds of the estate, or deposits them in a bank, in his individual name, he thereby...