King v. Sells

• Citation: 193 Wash. 294,75 P.2d 130
• Decision Date: 19 January 1938
• Docket Number: 26863.
• Parties: KING v. SELLS. SELLS v. SAME.
• Court: United States State Supreme Court of Washington

75 P.2d 130

193 Wash. 294

KING v. SELLS.

SELLS v. SAME.

No. 26863.

Supreme Court of Washington

January 19, 1938

Department 1.

Appeal from Superior Court, Cowlitz County; J. E. Stone, Judge.

Actions by Teresa Sells King and by Rosemary Sells, a minor, by C.J Sells, her guardian ad litem, against Mary C. Sells for money which the defendant, the mother of the plaintiffs, had controlled and invested for them. From judgments for the plaintiffs, the defendant appeals.

Judgment in each case affirmed.

Roswell J. Quinn, of Kelso, for appellant.

Cecil C. Hallin, of Longview, for respondents.

MAIN Justice.

These two cases were consolidated for trial in the superior court. The defendant in each case is the same. The purpose of each action was to recover the sum of $400. The cases were tried to the court without a jury, and resulted in separate findings, conclusions of law, and judgments. The judgment in each case was in the sum of $400 in favor of the plaintiff and from the judgments entered the defendant appeals. The cases have also been consolidated for appeal.

More than twenty years ago, Mary C. Sells and C.J. Sells were married. For a time they lived in the state of Minnesota, and there were four children, two daughters and two sons. From time to time the father gave to the daughters small sums of money or items of property which the mother converted into money, and these items, together with gifts from other persons, were handled by the mother. In the course of time the gifts had reached such an amount that the mother invested $600 of the girls' money in 7 per cent. bonds of the General Electric Company of Minneapolis. Subsequently, the parties moved to Longview, Cowlitz county.

In 1928, the appellant, the mother of the girls, exchanged the investment in the General Electric Company bonds for bonds in the Kentucky Fuel Gas Corporation, which were of the value of 98 cents on the dollar, and paid 6 1/2 per cent. A year or so later she made another investment of $100 in this company. The bonds, at the time this case was tried, were of the value of $50. When the appellant changed the investment from the General Electric Company of Minneapolis to the Kentucky Fuel Gas Corporation, she relied solely upon the salesmen who came to Longview representing a bond house in the city of Portland, and she also says that she consulted a lady who, so far as the evidence shows, had no knowledge of the value of bonds.

About 1932, the appellant and her husband were divorced. The custody of the two girls was awarded to the father, and the custody of the boys to the mother, the appellant. In 1936, the girls visited their mother, who was then living in Portland, and at that time the appellant stated that she owed each of them $400, and indicated the ways in which she expected to pay it. Some time later, the respondents made demand for these respective amounts of money, and, the appellant not responding, the present actions were instituted. The mother at no time was appointed by any court as the guardian of her two daughters.

The question is whether the mother, in selling the electric company bonds, which were worth par and paying 7 per cent. per annum, and investing the proceeds in the Kentucky Fuel Gas Corporation bonds, acted with the same degree of care as a reasonably prudent person would use in his or her own affairs. In determining this question, we shall first assume, without so deciding: (a) That the appellant was a natural guardian of her two daughters and the proper custodian of their property; (b) that she was a de facto guardian; (c) that the duties of a de facto guardian are measured by the same standard as a legally appointed guardian; (d) that the investment of a ward's funds in bonds of a corporation may, in certain instances, be proper; and (e) that a regularly appointed guardian, unless the statute provides otherwise, may make investments without an order of the court.

Giving effect to these assumptions, as already indicated, we come to the question of whether the appellant acted as a prudent investor would. In the case of a legally appointed guardian such a...