Michael v. Locke

• Decision Date: 31 October 1883
• Citation: 80 Mo. 548
• Parties: MICHAEL, Appellant, v. LOCKE et al..
• Court: Missouri Supreme Court

80 Mo. 548

MICHAEL, Appellant,

v.LOCKE et al..

Supreme Court of Missouri.

October Term, 1883.

Appeal from St. Louis Court of Appeals.

AFFIRMED.

James Taussig for appellant.

A guardian of an insane person has power to continue the business of his ward, if such continuance is essential for the preservation and protection of the estate of the insane person. 1 Wag. Stat., § 40, p. 716; Ib., § 19, p. 714; Reed v. Wilson, 13 Mo. 28. Trustees, executors and administrators are personally liable on contracts entered into by them for the benefit of the trust estate, in the absence of an express provision in the agreement to the contrary. Noyes v. Blakeman, 6 N. Y.; News v. Nicoll, 19 N. Y. S. Ct. 431; 17 Alb. L. J. 292; Meyer v. Cole, 12 John. 549; Demott v. Field, 7 Cow. 78; Reynolds v. Reynolds, 3 Wend. 244; Ferrin v. Myrick, 41 N. Y. 315; Austin v. Munroe, 47 N. Y. 361. A trustee or guardian has a lien upon the estate for all money properly advanced and expended by him in the administration of the trust, and would, therefore, be entitled to be re-imbursed out of the estate for all money paid by him on contracts made for his benefit. Perry on Trusts, (2 Ed.) § 907. No right against the estate can exist at law. Haversham v. Huguein, R. M. Charlton 378 (Law J.) If, however, the trustee or guardian is insolvent, and a contract has been made with him, which was necessary and proper in the administration of the trust, and of which the estate, the cestui que trust, or ward, has received the benefit, the creditor may proceed against the estate itself to enforce payment of his demand. Poole v. Wilkinson, 42 Ga. 539; Owens v. Mitchell, 38 Tex. 588. See Copley v. O'Neil, 39 How. Pr. 47; Westmoreland v. Davis, 1 Ala. 293.

George A. Castleman for respondent.

Jones, the former guardian, to whom the sales of the wood were made, was personally liable therefor at law. Blakely v. Bennecke, 59 Mo. 193; Hills v. Bannister, 8 Cow. 31; Sumner v. Williams, 8 Mass. 162; Hill on Trustees, (3 Am. Ed.) 533, 534; Schouler's Dom. Rel., (2 Ed.) 457; Forster v. Fuller, 6 Mass. 58. The prosecution of the business by Jones with his ward's estate, was unlawful, and a breach of duty on the guardian's part. Western, etc., v. Jones, 8 Mo. App. 373; Merritt v. Merritt, 67 Mo. 156. Plaintiff cannot come in upon the trust fund. Hill on Trustees, (3 Am. Ed.) 533; Warrol v. Harford, 8 Ves. J. 8. In all cases cited by plaintiff's counsel, the distinct ground of equitable interference was, that the debt had been incurred for the benefit of the trust estate, and for the actual betterment thereof, and in obedience to and advancement of the objects of the trust.

MARTIN, C.

This was a suit in equity for the purpose of enforcing against the estate and assets of an insane person, a demand incurred by his guardian after he had taken charge of the estate.

The circuit court sustained a demurrer to the petition, and the plaintiff declining to plead further, final judgment went against him. The court of appeals affirmed the judgment, and the plaintiff has appealed to this court. The only question for us to determine, involves the action of the circuit court in sustaining the demurrer.

It is alleged in substance that Joseph H. Locke was adjudged insane by the St. Louis probate court, and that one Robert L. Jones was, by said court, appointed as his guardian, who assumed control and management of his estate and person; that prior to said appointment said Locke had been engaged in the business of buying and selling and manufacturing lime and cement, and had built up a large and profitable trade at great expense of time, labor and money; that for good and sufficient reasons, it was deemed best, for the interest of Locke and his estate, by the guardian, wife and family, that the business so established should be carried on as before, so as to prevent a sacrifice of property, and afford an income for the maintenance of himself, wife and family; that in pursuance of said determination, the guardian did carry on the business from the date of his appointment; that in conducting said business it became necessary to purchase, from time to time, large quantities of wood for the purpose of heating lime-kilns; that the guardian had no money on hand for that purpose, and was obliged to purchase wood to be paid for in the future; that plaintiff agreed to furnish and did furnish to said guardian wood in the value of $6,525.35, and that after deducting all credits and payments, there remained due to plaintiff on account thereof $2,932.25, as disclosed in the exhibit filed; that all of said wood was necessary for the purpose of carrying on the said business, and to prevent loss and sacrifice of property to the estate, and that the estate derived great actual benefit therefrom, in an amount greater than the price of the wood; and that it was understood and agreed between plaintiff and the guardian, that the plaintiff should have a lien on the assets of the estate for the wood so furnished. It is added that said Jones, as guardian, has been relieved of his office by order of court, and that Lancaster has been appointed as his successor, and that said Jones is insolvent, and that his successor refuses to pay the demand sued for. It concludes with a prayer that the demand be adjudged a lien upon the estate of said Locke, and that the present guardian be ordered to pay the same out of the assets of the estate held by him, and that in default of payment, so much of the estate be sold as may be necessary to satisfy the demand, and for general relief.

The counsel for plaintiff submits an able and exhaustive brief in support of the petition. But I am unable to agree with him about the propositions he advocates. I have reached the conclusion that the courts below were right in holding that the petition was wanting in equity. The guardian of an insane person is a trustee, and his conduct in the management and control of the estate committed to his charge, except as otherwise provided in the statutes, is governed by the law of trusts. As such trustee, he has no authority to subject the estate in his charge to the risks and hazards of any trade or business undertaking. Such is the general doctrine on this subject. When he employs the assets of the beneficiary in trade or speculation, or in the establishment or continuance of a manufacturing business, as was done in this case, he does it in violation of the trust by which he holds them.

I am not aware that equity has ever approved any departure from this rule, in the absence of express authority to that effect. When a will or other instrument creating or defining the trust authorizes such employment, the trustee is justified in making contracts which shall be binding upon the assets in his hands, provided he has strictly pursued the terms of his authority. We have had...