Kauppi's Estate v. Bridges

• Decision Date: 11 January 1971
• Docket Number: No. 2,No. 55103,55103,2
• Citation: 462 S.W.2d 694
• Parties: In the Matter of the ESTATE of Alexander KAUPPI, Incompetent, Insurance Company of North America, Appellant, v. Dola Crider BRIDGES, Respondent
• Court: Missouri Supreme Court

Page 694

462 S.W.2d 694

In the Matter of the ESTATE of Alexander KAUPPI Incompetent, Insurance Company of North America, Appellant, v. Dola Crider BRIDGES, Respondent.

No. 55103.

Supreme Court of Missouri, Division No. 2.

Jan. 11, 1971.

Motion to Transfer to Court En Banc Denied Feb. 8, 1971.

Donald F. Flint, Clayton, for appellant.

Sale, Evans & Campbell, David L. Campbell, Clayton, Morris M. Rosenthal, St. Louis, for respondent.

BARRETT, Commissioner.

This is an appeal by the Insurance Company of North America, surety on a guardian's bond, from a circuit court judgment finding and decreeing that the guardian of Alexander Kauppi's estate, F. G. Armstrong, had failed, in accordance with a probate court order, to make a complete settlement of his guardianship, that his surety's proposed settlement to death of ward had not been approved by the probate court and that he had not been discharged as guardian. Therefore the circuit court entered a judgment in favor of the administratrix-beneficiary of Kauppi's estate, Dola Crider Bridges, against the guardian and the appellant surety in accordance with the probate court's restated account in the sum of $23,560.39, with interest at 6% from June 15, 1965.

The appeal and its consequent problems arose in these circumstances and in this background; all as revealed by the pleadings, an agreed statement of facts and the testimony of a clerk-auditor from the probate court. On March 31, 1964, Alexander Kauppi, by reason of senility, was adjudged incompetent and F. G. Armstrong was appointed guardian of his person and estate with the Insurance Company of North America as his bonded surety. Mr. Kauppi's estate consisted of government bonds and cash totaling in the probate court's restated and amended account $41,383.24. The assets of the guardianship estate, it was stipulated, 'were subject to the joint control of Insurance Company of North America.' On February 4, 1965, Mr. Kauppi died and Armstrong was appointed executor of his estate 'without bond.' On April 23, 1965, Armstrong filed a settlement to death of ward showing, less certain necessary expenditures, the abovementioned property, including $12,147.48 on deposit in the First National Bank. This settlement by the guardian was never approved by the probate court even though there were certifications from the bank of the existence of the assets. On June 10, 1965, the surety, Insurance Company of North America, released its joint control and on June 15, 1965, the contents of the safety deposit box (the bonds) were delivered to Armstrong as executor and on the same day he, by check, transferred the bank accounts from himself as guardian to himself as executor. Thereafter, by three checks, he paid to Mrs. Bridges, Kauppi's sole beneficiary, $14,000.00 and in March 1966 he paid medical and funeral bills of $3822.85. In the meanwhile, however, between the dates of June 15, 1965, and December 16, 1966, until in the language of surety's counsel, the assets became 'completely dissipated,' Armstrong wrote checks for his own purposes, all to 'unknown,' totaling $23,560.39. After that, of course, on December 30, 1966, Armstrong was removed as executor and Mrs. Bridges was appointed.

In this background, in October 1967 the surety, Insurance Company of North America, filed in the probate court, in the guardianship, a 'peteition for approval of settlement to death of ward, and for discharge of guardian and surety.' In its petition the surety alleged that in April the guardian, Armstrong, had filed his settlement to death of ward. It did not allege, however, that the settlement had been approved by the probate court. It did allege that in the same month, April 1965, he had filed an inventory and appraisement charging himself with the balance due on the settlement filed. It was alleged that in May 1965 certifications confirming the existence of assets were filed, that in June 1965 vouchers in support of the settlement were filed and that on March 12, 1965, Armstrong had been appointed executor of the estate of his deceased ward. Therefore, the surety prayed an order approving the guardian's settlement filed two and one-half years previously.

In response to the surety's petition in probate court Mrs. Bridges filed an answer setting forth many of the facts concerning Armstrong's administration as guardian but after alleging the bond and its provisions she alleged that Armstrong had absconded and that prior to the date of his filing the report in the guardianship estate he had converted all the assets of the estate and so she prayed judgment against the guardian and his surety for the balance due. In addition to the probate court audit Mrs. Bridges filed an affidavit acknowledging a purported 'partial distribution' asserting at the same time Armstrong's settlement had not been approved by the court.

The probate court upon the agreed facts and its own records revalued the guardianship estate as of June 15, 1965, as $41,383.24 and as so valued 'restated' the settlement of death of ward and ordered Armstrong as guardian and the appellant as surety to effectuate delivery to Mrs. Bridges of the net balance due, $23,560.39, together with interest at 6% from June 15, 1965.

The surety appealed the probate court judgment which as stated was submitted on the agreed facts. The deputy clerk-auditor of the probate court testified that a final receipt had never been filed in the guardianship and that on March 18, 1965, Armstrong had been 'ordered to settle to death of ward on or before April 5, 1965,' but had not done so. The circuit court upon this record filed a memorandum opinion in which it found that Armstrong 'has failed to make a full and complete settlement of his accounts as Guardian' and that 'said settlement was not approved by the Probate Court, and that said Guardian was not discharged as such as required by law.' The court found that the probate court 'has only approved said account as restated.' And so the circuit court decreed as a matter of law 'until a full and accurate final settlement of a guardian is filed and approved by the Probate Court and discharge entered' the guardian and his surety remained liable to the ward and his successor, Mrs. Bridges, until discharged in accordance with the applicable statutes. Accordingly the circuit court entered judgment against Armstrong as guardian and his surety, the appellant.

Upon this appeal the surety with competence and force attacks the findings, rulings and judgments of the two courts contending that as a matter of law, on June 15, 1965, there had been a complete transfer of guardianship assets by Armstrong in his capacity as guardian to himself in his capacity as executor, that his conversion of all assets occurred after that date and after that transfer and thereby the surety in the guardianship was relieved of all liability for his conversion. This, it may be said, is the crux of the appeal. The respondent has unnecessarily complicated matters by urging in this court-tried case (Civil Rule 73.01, V.A.M.R.) that the appellant did not file a motion for new trial, that there is sufficient evidence to support the judgment and therefore it should be affirmed. And despite the enactment of the probate code in 1955 the respondent here urges, despite the two courts' allowances of 6% interest from which she has not appealed, that she is entitled to recover compound interest at the highest legal rate on the converted assets from the date of their conversion. The case upon which she principally relies, In re Hoerman's Estate, Mo. 247 S.W.2d 762, recognizes a discretion in the court as to the allowance of interest and even at that date, 1952, 'there is no statute making such a requirement.' On the merits of the appeal the respondent urges that Armstrong breached his duties as guardian with a consequent liability to the surety for the 'resultant loss' in that he did not make a final settlement because there was not a 'just and true exhibit of the account' because himself and his ward, that he 'did not make a final settlement with the court' and, finally, that a transfer of guardianship assets without a court order was a breach of his duty as guardian. In addition the respondent asserts that by releasing joint control the surety is estopped to deny liability for Armstrong's conversion of assets. The appellant surety replies that these arguments do not 'meet the issue of just what defalcations occurred in Armstrong's accounts as guardian.' The surety concedes, as it must, that Armstrong breached his duty as guardian in several respects; for example, that prior to June 15, 1965, he did not obtain probate court approval of his settlement to death as required by § 475.290. But it is asserted that these breaches had nothing to do with the actual financial losses, the surety urges that its liability as surety 'is limited to damages directly occasioned by acts of the guardian in his capacity' and character as guardian only and since the conversions all occurred after June 15, 1965, and after he became executor that his conduct as guardian 'did not result in loss' to the guardianship estate. In short, it is contended that all losses resulted from his conduct as executor--that the losses were all to the executorship estate.

Concededly, the obligation of the surety is measured and limited by the principal's obligation and 'is not to be held beyond the terms of his contract. He is bound by his agreement and nothing else.' Tittman v. Green, 108 Mo. 22, 33, 18 S.W. 885, 887, the first of the Branch cases. But these generalities do not suggest the indubitable answers to the problems involved. It may also be conceded that in some instances and circumstances a guardian or other fiduciary acting in two capacities may by his actions shift his liability and that of his bondsmen from a bond given in one capacity to that given in a second capacity. Annotation 111 A.L.R. 267, 268. But it is not...