McCauley v. American Surety Co. of New York

• Decision Date: 23 December 1927
• Docket Number: 6154.
• Citation: 263 P. 90,81 Mont. 161
• Parties: McCAULEY v. AMERICAN SURETY CO. OF NEW YORK et al.
• Court: Montana Supreme Court

263 P. 90

81 Mont. 161

McCAULEY v. AMERICAN SURETY CO. OF NEW YORK et al.

No. 6154.

Supreme Court of Montana

December 23, 1927

Rehearing Denied Feb. 2, 1928.

Appeal from District Court, Fergus County; Edgar J. Baker, Judge.

Action by Nathaniel Mitchell McCauley against the American Surety Company of New York and another.Judgment for plaintiff, and named defendant appeals.Affirmed.

W. F O'Leary, of Great Falls, for appellant.

Wm. M Blackford, of Lewistown, and Walsh & Nagle, of Helena, for respondent.

FORDDistrict Judge(sitting in place of Callaway, C.J disqualified).

This is an action upon a guardian's bond.The plaintiff in his complaint alleges that the above-named surety company is a corporation authorized to do business in the state of Montana; that Julia E. McCauley was duly appointed guardian of the person and estate of Nathaniel Mitchell McCauley, and duly qualified as such; that on the 7th day of September 1911, Julia E. McCauley, as principal, and the American Surety Company of New York, as surety, made and executed a guardian's bond in the sum of $5,000, which bond was duly approved on the 23d day of September, 1911; that the surety company designing and intending to cheat and defraud the plaintiff out of any money that might be due thereon, and that intending to cheat and defraud the plaintiff, did on or about the 26th day of November, 1912, procure a pretended order of discharge by the Honorable E. K. Cheadle, which order, it is alleged, purports and pretends to release said bond and to discharge said defendant surety company, from the default and misconduct of the said guardian, Julia E. McCauley, for any failure to account for money or property coming into her hands or then in her hands, or any misconduct of said guardian subsequent to the making of said pretended order; that no petition was filed by the surety company asking for release of the bond or the cancellation thereof; that no notice of an application for said order was served upon the said Julia E. McCauley, or upon the plaintiff, or upon any other person as provided by the provisions of the Code of Montana in such cases; that the plaintiff did not appear in any manner; that no guardian ad litem was appointed for him at such hearing; that the said Julia E. McCauley did not appear therein; that she had not at that time made or filed in said court any report of her guardianship, or any account of the property received by her, and there was nothing before the court from which the court could determine whether or not any injury could or would result to the plaintiff by reason of the release of said bond; that the court did not find that injury would not result to the plaintiff by reason thereof; that the said court and its judge was without jurisdiction to make such order, or to release the defendant surety company from its liability under said bond; that the said pretended order was and is null and void, and said bond is still, and since its execution always has been in full force and effect; that the said Julia E. McCauley did not file an account as such guardian in said court until the 16th day of February, 1914; that upon the hearing of said account of said guardian so filed, it was found that there was then due and owing to the plaintiff from said guardian on said account the sum of $33,362.63, and the further sum of $184 for which she was then in default; that the hearing of the final account of the said Julia E. McCauley, filed by her as such guardian, was brought on for hearing before the above-named court after due notice to her, and after the hearing had in the above-named court, a judgment and decree was on the 11th day of December, 1923, duly made, given, and entered, settling said account, and it was ordered, adjudged and decreed therein that the said Julia E. McCauley as such guardian was indebted to the plaintiff in the sum of $110,372.93, and it was further ordered, adjudged, and decreed therein that the said Julia E. McCauley pay to the plaintiff the sum of $110,372.93, together with interest; that the plaintiff is now the owner and holder of said bond, and prior to the commencement of this action due demand was made upon the defendantJulia E. McCauley for payment of the amount so found due; that due demand was made upon the American Surety Company of New York for the payment of the amount due under the terms and conditions of said bond, and no part thereof has been paid.

The answer of the American Surety Company admits the incorporation of the surety company, and the appointment of Julia E. McCauley, as guardian, the execution and approval of the bond of $5,000 by Julia E. McCauley and surety company, and pleads affirmatively, in substance, that Hon. E. K. Cheadle required and directed the said guardian to furnish a new bond, and on the 17th day of November, 1912, a new bond in the sum of $20,000 was furnished with personal sureties; and thereupon and on November 26, 1912, a valid order was duly given and made by said court discharging said American Surety Company, as surety, from any liability based upon any subsequent act or misconduct of said guardian; that thereafter and on the 19th day of February, 1918, pursuant to order of court, the guardian furnished an additional bond in the sum of $50,000 with the Western Accident & Indemnity Company as surety; that upon petition the said Western Accident & Indemnity Company was released, and on the 10th day of July, 1919, the guardian filed a bond in the sum of $60,000 with the Royal Indemnity Company as surety; that the last-mentioned bond continued to be in full force and effect until the guardian resigned on the 17th day of March, 1921; that a judgment was recovered by the plaintiff herein against Julia E. McCauley, as guardian, for the sum of $110,372, but that no part of said sum was for, or was adjudicated to be for, any act or default of said guardian on or prior to the said 26th day of November, 1912, and up to and including said 26th day of November, 1912, the said Julia E. McCauley discharged all of her duties as such guardian, according to law, and no breach of said bond occurred on or prior to November 26, 1912; that the said evidence filed by the guardian, and no account pleading, or fact was before the court upon which to base the said judgment.The answer contains also a general denial.

The reply admits the execution of the $20,000 bond as alleged in the answer; that the Western Accident & Indemnity Company executed a bond and was afterwards discharged; the execution of the $60,000 bond by the Royal Indemnity Company; that Julia E. McCauley resigned as guardian; that a judgment was entered against the said Julia E. McCauley in the sum of $110,372.93; and denies the remaining affirmative allegations of the answer.

The evidence discloses that no application for release was made by the surety, and no notice of any kind was given prior to the...