Hutson v. Jenson

• Decision Date: 09 April 1901
• Citation: 110 Wis. 26,85 N.W. 689
• Parties: HUTSON ET AL. v. JENSON ET AL.
• Court: Wisconsin Supreme Court

110 Wis. 26

85 N.W. 689

HUTSON ET AL.

v.JENSON ET AL.

Supreme Court of Wisconsin.

April 9, 1901.

Appeal from circuit court, Rock county; B. F. Dunwiddie, Judge.

Action by Roy J. Hutson and others against Andrew Jenson and others. From a judgment in plaintiffs' favor, defendants appeal. Modified and affirmed.

About November 7, 1893, there died, at Edgerton, Thomas Hutson, a man of considerable property and president of the Edgerton Bank, leaving a large amount of life insurance, some payable to himself, some specifically to his wife, and, in addition, policies as follows: (1) Two policies, aggregating $4,000, in the Bankers' Life Association, payable according to the certificate to the family of the deceased. The by-laws, when certificate was issued, provided that benefits should be payable to the family, and were subsequently amended to provide that they should be paid to “the family or other designated beneficiary, upon receipt of the person designated in the original application or by a subsequent acknowledged document.” The application designated as beneficiary “my estate,” and by a subsequent document, not acknowledged, Charles L. Burnham was designated trustee to receive the money. (2) One policy for $2,000 in the Bankers' Life Association, the certificate payable to the family or other designated beneficiary, while the application designated four of Hutson's children by name, of whom the plaintiffs were three, and designated his wife, Martha Hutson, as trustee to receive payment. (3) A policy of the Modern Woodmen for $2,000, payable to four children, designated by name, of whom plaintiffs John F. Hutson and Myrtle Hutson were two. (4) A policy in the New York Life Insurance Company for $257.16, payable to four children, designated by name, among whom were plaintiffs John F. Hutson and Myrtle L. Hutson. (5) A policy in the Equitable Life Association for $485.35, payable to the plaintiff Roy J. Hutson. Charles L. Burnham, named as trustee in the first two policies, was cashier of the Edgerton Bank, and in connection with Charles T. Hutson, a son of the deceased, conducted the correspondence with reference to the collection of these various policies, which were paid as follows: “The $4,000, by a draft to Charles L. Burnham, trustee, upon a receipt signed by him as “Trustee for the Beneficiary, the Estate of Thomas Hutson.” The second was paid by draft to Martha Hutson as trustee, upon her receipt as “Trustee for the Beneficiaries, Roy James, Maude Alice, Charles Thomas, John Franklin, and Myrtle Leah Hutson.” All the other policies were paid by drafts to, and upon receipts signed by, Martha Hutson as guardian. She was appointed guardian of the five minor children of the deceased and herself November 17, 1893, and was appointed executrix of the estate of Thomas Hutson on December 6, 1893. The several insurance drafts were received in the intervals between her appointment as guardian and as executrix. As they were received, Burnham deposited them in the Edgerton Bank, and issued therefor certificates of deposit, which he placed in a box or receptacle containing papers relating to Thomas Hutson's estate, accessible to Mrs. Hutson, but which she personally never visited. These certificates of deposit varied in form. That for the $4,000 certified that Charles L. Burnham, trustee, had deposited $4,000, “payable to the family of Thomas Hutson on the return of this certificate properly indorsed.” The certificate for the $2,000 from the Bankers' Life certified that Martha Hutson, trustee for specified children, had deposited $2,000, “payable to the order of _____ on return of this certificate properly indorsed.” The others certified that Martha Hutson, guardian, had deposited several sums. On June 29, 1894, while Mrs. Hutson was both guardian and executrix, all of these certificates of deposit were deposited to the general estate account in the bank, which was carried in the name of Thomas Hutson, and that account immediately thereafter was absorbed by a charge against it of notes due from Thomas Hutson, at the time of his decease, to the bank. Thomas Hutson's will, executed in February, 1893, bequeathed $50 to each of his children, including the five children by Martha Hutson and one son by a prior marriage, and also $50 each to his two stepdaughters, and thereupon bequeathed and devised “all the rest and residue of my property, real, personal, or mixed, wheresoever situated, which I now own or may hereafter acquire, and of which I shall die seised or possessed,” to his wife, Martha Hutson, whom he also constituted executrix. She filed an assumption of all debts of the estate, all persons supposing it then to be solvent, which supposition proved to be erroneous, in part, at least, by reason of the failure of the Edgerton Bank, which occurred in or about October, 1897. On December 5, 1894, Martha Hutson, as guardian, filed a so-called report with the county court, commencing first with the inventory, describing the estate of the minors as no real estate and as personal property: “Received for account of Myrtle L. Hutson: Bankers' Life Insurance Co., $666.66; Bankers' Life Insurance Co., $400; New York Life Insurance Co., $64.29; Modern Woodmen Insurance Co., $500; from estate of Thomas Hutson, $50,--$1,680.95.” Like items were specified as received for the account of John F. Hutson, and items in like form, but differing according to the fact, as to Roy J. Hutson, aggregating $1,602.02. The so-called report then proceeds: “Loan on note and mortgage bearing date April 1, 1894: For account of John F. Hutson, $1,630.95; cash on hand for said account, $50,--$1,680.95.” Same as to Myrtle Hutson, and same as to Roy J., except his note was $1,552.02. The report concludes: “Interest on above notes is payable annually on the 1st day of April, at the rate of six (6) per cent. per annum from date. All of said minor heirs are living with said guardian, and she will make no charge at this time on account of expenses, such as board and clothing, for any of them,”--dated November 15, 1894. The report included as well the other then minors, who have since come of age. The notes and mortgage here described were notes of Mrs. Hutson to her several children, all secured by a third mortgage on a farm coming to her as devisee of her husband; the prior mortgages amounting to some $11,000. The notes to the several children were payable in the order of their respective majorities. Martha Hutson died in May, 1895, and her estate proved to be insolvent by reason of her assumption of her husband's debts. Thereafter Charles L. Burnham was appointed guardian for the three children who are plaintiffs, received the notes and mortgage which had been executed by their previous guardian, collected two years' interest thereon, amounting to $195 for each of the minors, and raised $2,000 by pledging said three notes as collateral security to his own note, all of which moneys, with the exception of about $300, were expended by him for the support of his wards. After the failure of the bank he fled, and his sureties made settlement, under authority of the county court, whereby they paid $300, being substantially the unexpended balance of said $2,000; the defendant Jenson being one of such sureties. The present action was thereupon commenced against these defendants as sureties upon the guardianship bond of Martha Hutson. It was stayed by order of court, pending the foreclosure of the several mortgages upon the farm. As a result of such foreclosure and sale thereunder the two prior mortgages were satisfied, and the notes first coming due to the two elder children were substantially satisfied, on the theory that such notes, by reason of their prior maturity, were prior liens, and a balance of $321 remained applicable to the three notes given to the plaintiffs. The trial court held that the $50 item credited by Martha Hutson as guardian to each of her children was never received by her as such, it being a legacy from her deceased husband, whose estate was more than exhausted by his debts, but held that all of the other items specified in the inventory above mentioned came to her in her capacity as guardian and she became responsible to account therefor, that the pretended loan to herself upon third mortgage was not a legitimate credit, and that the notes given might be rejected by the plaintiffs; but the sureties, declaring no preference, credited to the guardian's account the $321 realized upon the mortgage. He also credited the two years' interest which had been actually received by the succeeding guardian, Burnham, and, except for these credits, held the guardian's debtor account to consist of the amount of each of said notes, with interest at the rate of 6 per cent. from April 1, 1894; for which sum judgment was entered against the defendants, from which this appeal is brought.

Jackson & Jackson, J. M. Clancy, and Sutherland & Nolan, for appellants.

Jones & Stevens, for respondents.

DODGE, J. (after stating the facts).

This case presents one of those unfortunate situations where money claimed to be the property of helpless children has been lost by the conduct of the person intrusted therewith, in this case without any suggestion of turpitude or intentional wrong, but by mistaken confidence in the solvency of a bank and in the sufficiency of her own means to make good any losses, and where, on the other hand, the persons from whom indemnity is demanded are sureties merely, who have neither participated in the misconduct causing the loss nor received any benefit to compensatethe burdens they have assumed. Such cases unavoidably arouse sympathy for each side of the controversy, and demand the most anxious care that no undue loss be permitted to fall upon the one side, nor burdens be imposed upon the other beyond the strictest letter of liability. Both helpless minors and those who, as sureties merely, guaranty faithful performance...