In re Keisker's Estate

• Decision Date: 02 February 1943
• Docket Number: 38108
• Parties: In the Matter of the Estate of Ernest C. Keisker; Frank T. Hines, Administrator of Veterans' Affairs, v. American Surety Company of New York, a Corporation, Appellant
• Court: Missouri Supreme Court

168 S.W.2d 96

350 Mo. 727

In the Matter of the Estate of Ernest C. Keisker; Frank T. Hines, Administrator of Veterans' Affairs, v. American Surety Company of New York, a Corporation, Appellant

No. 38108

Supreme Court of Missouri

February 2, 1943

Appeal from Circuit Court of City of St. Louis; Hon. Robert J Kirkwood, Judge.

Affirmed.

Bryan Williams, Cave & McPheeters for appellant.

(1) As the deed of trust securing the payment of the bonds purchased by the guardian in 1931 expressly places all the bonds upon an equality and provides in the case of a foreclosure of the deed of trust that they shall be paid pro rata, without preference of one bond over another, said bonds were secured by prime real estate security. Ellis v. Lamme, 42 Mo. 153; Hurck v. Erskine, 45 Mo. 484; Stewart v. Omaha Loan & Trust Co., 283 Mo. 364. (2) The purchase of notes or bonds secured by a mortgage on real estate is in effect the same thing as the making of a loan. State v Bartly, 41 Neb. 277; State v. Young, 18 Wash. 21; Drake v. Crane, 127 Mo. 85; Kennedy v. Hageman, 170 N.Y.S. 828; Round Prairie Bank of Fillmore v. Downey, 64 S.W.2d 701; Matter of Smith, 279 N.Y. 479; Matter of Stupack, 274 N.Y. 198; McCune's Est. v. Daniel, 76 S.W.2d 403. (3) The respondent is estopped to now complain of the purchase of the notes or bonds by the guardian because he instructed and advised the guardian to purchase them and approved the purchase of them in eight annual settlements and in the settlement to resignation. Matter of George D. Newton, decided by the Supreme Court of Livingstone County, New York, April 18, 1938, not reported; In the Matter of McDonald, 162 Misc. 847; Hines, Administrator, v. Hoop, 89 S.W.2d 52; U.S. Veterans' Bureau v. Thomas, 156 Va. 902; State v. Bank, 121 Neb. 521; Anderson v. Bank, 186 Minn. 396; Nelson v. Colgrove & Co., 267 Ill.App. 317; Ramisch v. Fulton, 180 N.E. 135; In re Fisher's Estate, 302 Pa. 516; Payne v. Jorday, 152 Ga. 367; In re Murphy's Committee, 134 Misc. 683; Tamma County v. Kepler, 187 Iowa 34; Spicer v. Smith, 244 Ky. 68; Spicer v. Smith, 288 U.S. 430; Butler v. Cantley, 47 S.W.2d 258; Re Eigermann, 14 N.E.2d 585; Hines v. Ayotte, 189 A. 835. (4) Even if the notes bought by the guardian were an illegal investment, the American Surety Company of New York would not be liable on its bond because of the purchase of them by the guardian for the reason that they were purchased long before said company signed the guardian's bond and the said bond is not retrospective either under its terms or under the law. Wolff v. Berning, 74 Mo. 87; State to Use v. Jones, 89 Mo. 470; State to Use v. Drury, 36 Mo. 382; State ex rel. v. Elliott, 157 Mo. 609; Lincoln Trust Co. v. Wolff, 91 Mo.App. 133; State ex rel. v. Hardy, 200 Mo.App. 405. (5) The exchange of the bonds which were shown to have been in the hands of the guardian as assets of his ward's estate by the settlements made by the guardian and approved by the probate court prior to the time of the execution of the second bond of the guardian for other bonds was not a breach of the second bond given by the guardian.

P. W. Zerwekh and Joseph F. Murphy for respondent.

(1) A guardian or curator may not loan or invest funds and the probate court cannot authorize the investment of funds except as prescribed by statute. In re Taylor's Estate, 5 S.W.2d 457; In re Farmers Exchange Bank of Gallatin, 37 S.W.2d 936; Round Prairie Bank of Fillmore v. Downey, 64 S.W.2d 701; Mills v. Smith, 92 S.W.2d 939; In re Stevens Estate, 116 S.W.2d 527. (2) Statutes are to be construed so as to give effect to clear and unambiguous language and if language be of doubtful meaning the judicial construction must be such as to give effect to the legislative intent. The whole statute or parts in pari materia should be construed together. St. Louis v. Pope, 126 S.W.2d 1201; Holder v. Elms Hotel Co., 92 S.W.2d 620; In re Costello's Estate, 92 S.W.2d 723; Wallace v. Wood, 102 S.W.2d 91; St. Louis v. Senter Comm. Co., 85 S.W.2d 21. (3) A guardian and curator to save himself and his sureties from liability for loss or damage resulting from his acts in loaning or investing money of his ward must comply with the provisions of Section 418. That section imposes certain duties upon the guardian and the court, as follows: (a) The guardian shall loan the money on prime real estate security. (b) If the money be so loaned, the guardian shall at every annual settlement, state the name of the person to whom loaned, a description of the real estate security, where it is situated and its value. (c) The court shall examine the report and if the security is insufficient shall require additional security to be given and if not given the guardian shall institute suit forthwith to recover. (d) If the guardian fails to make report to the court or reports falsely, he and the sureties on his bond are liable for loss occasioned thereby. Sec. 418, R. S. 1929; Mills v. Smith, 92 S.W.2d 939; Heenies v. Keithly, 255 S.W. 940, 213 Mo.App. 529. (4) A ward who is incompetent or under legal disability cannot be estopped by the acts of others. He cannot be estopped to plead any matter by next friend so as to fully protect his rights and interests. Steadman's Estate, 265 N.W. 596; Pedigo v. Pedigo's Committee, 57 S.W.2d 55; Hines v. Hook, 89 S.W.2d 52; In re Farmers Exchange Bank of Gallatin, 37 S.W.2d 936; White v. White, 162 So. 371. (5) The failure of a guardian to comply with Section 418 in furnishing the information required by that statute annually, constitutes negligence and a breach of the bond. Mills v. Smith, 92 S.W.2d 939; Heenies v. Keithly, 255 S.W. 940, 213 Mo.App. 529. (6) A guardian has a continuing duty to replace estate funds after unlawful investment and his failure to replace or to make an effort to recover such funds, constitutes a breach of his bond. State ex rel. Short v. Hardy, 200 Mo.App. 205, 206 S.W. 904; McWilliams v. Norfleet, 63 Miss. 183; Aetna Co. v. State, 101 Miss. 703, 39 L. R. A. (N. S.) 961. (7) Although a prior bond may have been breached before the second bond was given, none the less, the second surety is liable. State ex rel. Hyslop v. Bilby, 50 Mo.App. 162; State ex rel. Enyart v. Dowd, 216 Mo.App. 480, 269 S.W. 923; Douglass v. Kessler, 63 N.W. 313; Dugger v. Wright, 51 Ark. 232, 11 S.W. 213; Foster v. Wise, 46 Ohio St. 20, 16 N.E. 687; Absher v. Rowe, 112 Ky. 545, 66 S.W. 394; Matthews v. Mauldin, 142 Ala. 434, 38 So. 849; Brooke v. American Saving Bank, 207 Iowa 668, 223 N.W. 500; Annotation 39 L. R. A. (N. S.) 961; Commercial v. Cox, 36 Pa. 442; Scofield v. Churchill, 72 N.Y. 568; 82 A. L. R. 585, and cases cited.

OPINION

Clark, J.

From a judgment rendered by the circuit court of the City of St. Louis for $ 8,047.14 in favor of the successor guardian and against the estate of the deceased former guardian of an insane person, and the surety on the guardian's bond, the surety, American Surety Company of New York, a corporation, has appealed.

The facts are undisputed and, so far as material, are as follows: On April 19, 1930, Harry M. Wagner was by the probate court appointed guardian of the person and estate of Ernest C. Keisker, an insane veteran. On that date the guardian qualified and filed a bond with the Southern Surety Company as surety. That surety company became insolvent prior to May 5, 1932, on which date the guardian filed a second bond with the appellant corporation as surety. This bond is not set out in the record, but in oral argument it was conceded to be in accordance with the statute, [R. S. Mo. 1939, sec. 456, Mo. R. S. A., p. 807] which requires the bond to be conditioned that the guardian will "take due and proper care of such insane person, and manage and administer his estate and effects to the best advantage, according to law, and will faithfully do and perform all such other acts, matters and things touching his guardianship as may be prescribed by law or enjoined on him by the order, sentence or judgment of any court of competent jurisdiction."

On May 21, 1930, Wagner sold some United States Liberty Loan Bonds belonging to his ward and purchased eleven real estate mortgage bonds of the face amount of $ 500.00 each, being a part of 135 similar bonds aggregating $ 67,500.00, some maturing before and some at the same time as those purchased by him. They were executed by a corporation and secured by a deed of trust on real estate which provided that all the notes were secured without preference, priority or distinction by reason of priority of negotiation, date of maturity or otherwise. On September 23, 1931, Wagner purchased a real estate mortgage bond secured by a similar deed of trust executed by another company, and on July 1, 1937, exchanged it for a $ 500.00 bond executed by the company first mentioned.

Prior to 1933 some of the mortgage bonds, maturing before those held by Wagner, came due and were paid in full. In 1933 and again in 1938 defaults occurred in the payment of some of the mortgage bonds coming due and each time the deed of trust was foreclosed, a new company organized to bid in the property and new notes were executed to the bondholders including Wagner as guardian.

Before selling the Liberty Loan Bonds Wagner wrote the regional attorney of the Veterans' Bureau asking his advice and received a reply advising him to make the sale and purchase the real estate mortgage bonds.

Wagner did not procure any court order purporting to authorize the sale of the government bonds or the purchase of the real estate mortgage bonds. In his first annual settlement after this transaction, he mentioned the fact that he had sold Liberty Loan bonds and purchased "1st mortgage bonds", and in his later annual settlements showed that he retained these mortgage notes or...