National Surety Company v. State ex rel. Heimann

• Decision Date: 19 November 1913
• Docket Number: 22,131
• Parties: National Surety Company v. State of Indiana, ex rel. Heimann
• Court: Indiana Supreme Court

103 N.E. 105

181 Ind. 54

National Surety Company v. State of Indiana, ex rel. Heimann

No. 22,131

Supreme Court of Indiana

November 19, 1913

Rehearing Denied January 13, 1914.

From Gibson Circuit Court; O. M. Welborn, Special Judge.

Action by the State of Indiana, on the relation of Norman D Heimann, against Effie D. Byers and another. From a judgment for relator, the defendant, National Surety Company, appeals.

Affirmed.

Lucius C. Embree, Morton C. Embree, Charles L. Wilson and Romney L Wilson, for appellant.

G. V. Menzies, for appellee.

OPINION

Spencer, C. J.

This is an appeal by National Surety Company from a judgment of the Gibson Circuit Court rendered in an action brought by the State of Indiana, on the relation of Norman D. Heimann, against Effie D. Byers, as principal, and appellant, as surety, on a guardian's bond. The sole question which appellant here presents is that the trial court erred in its conclusions of law on the facts specially found. The determination of this question necessarily requires a careful examination of the special findings but, although they are twenty-one in number and quite lengthy and full, it will suffice here to set out a concise statement of them as follows:

On April 28, 1904, when the relator was past fifteen years of age, his father died, leaving to the relator and his mother, Effie D. Heimann, about $ 34,000 and certain real estate. On May 9, 1905, Effie D. Heimann was appointed guardian of the relator and she, with appellant as surety, executed the bond here sued on. As such guardian she made reports to the probate court in which such guardianship was pending, from time to time, none of which reports were full or complete, but it appeared therefrom that said guardian had her ward's money in cash. In fact, however, she commingled his money with her own, bought real estate in her own name, made loans and took mortgages in her own name, and at no time secured any order from the court in regard to the investment of her ward's funds. In August, 1905, she married one Sunderland, who afterwards died, and she thereafter married P. H. Byers, who was her husband at the time this suit was instituted. Some months prior to September, 1908, when the relator was nineteen years of age, said guardian, her husband and the relator discussed the purchase of a stock of merchandise then in a store building belonging to the relator and his mother, and they concluded that this would be a desirable business for the relator when he arrived at his majority. Negotiations were begun for the purchase of the business but failed upon a disagreement as to the price. Shortly thereafter the relator went to Florida on account of his health. Early in September, 1908, negotiations were renewed by the owner of the stock of goods on the one hand and Effie D. Byers and her husband on the other, and an agreement was reached that the latter would purchase said stock of goods at the inventory or invoice price. The relator then being in Florida his mother wired him to return at once, which he did and assisted in taking the invoice of said goods, which were purchased for the sum of $ 11,694.20. Within a short time after said purchase additional merchandise to the amount of $ 5,000 was bought and all paid for out of the commingled funds of the relator and Effie D. Byers. These goods were purchased in the name and for the firm of Heimann & Byers and the business was conducted under such firm name. During the following year the relator was away from Poseyville much of the time, attending school at Bloomington and Evansville, Indiana, but when at the place of business he took part in the management thereof. He drew checks on the firm bank account signing "Heimann & Byers, by Norman D. Heimann," but he did not receive nor was he credited on the books of the firm with any stated salary. He had a running account with the firm against which he from time to time drew such money as he needed. He became of age on February 27, 1910. On the following day he agreed with his guardian to take a one-half interest in the stock of goods belonging to the copartnership of Heimann and Byers in lieu of his money which his guardian had invested therein and to become a member of said firm. At that time the firm was largely in debt, its credit was strained and it was in danger of insolvency. After he became of age the relator participated personally in a number of large financial transactions with banks and other creditors of the firm and on March 10, 1910, he wrote to a St. Louis firm as follows: "I took a half interest in the stock of goods of the firm of Heimann & Byers on the 28th day of February last. The firm is at present composed of Mrs. P. H. Byers (my mother), Mr. P. H. Byers and myself." The agreement of the relator on reaching his majority to become a member of said firm was made without any investigation of the books or affairs therof and without any knowledge thereof on his part, except such as he had acquired in participating in the management of the business. He knew the firm was largely in debt and stated to a banker that he was a member of the firm and the bank would lose nothing. No misrepresentations were made to him by his guardian or any one else to induce him to become a member of the firm but he did so voluntarily, believing that if the business was properly managed it would be a success. Between the 10th and the last of March, 1910, the relator ascertained from an examination of the books of the firm that its affairs were in bad shape financially. He took no steps to withdraw from or dissolve the partnership but he did state to his mother, his guardian, that he had concluded he wanted his money instead of having anything to do with the store. The firm continued until April 29, 1910, when, for the purpose of winding up its affairs and paying its indebtedness, the relator, P. H. Byers and Effie D. Byers, executed to one Ezra Stephens a trust deed wherein they transferred to said Stephens all the assets of the firm and certain real estate located in Evansville, Poseyville and Haubstadt, Indiana. Said trustee sold the stock of goods and part of the real estate, settled the indebtedness of the firm and conveyed the remainder of the real estate to the relator at the agreed and fair price of $ 10,730 as a payment on the amount due him from his guardian. On April 18, 1910, Effie D. Byers, as said guardian, filed in the circuit court her report in final settlement of the guardianship, which report showed a balance due her ward in the sum of $ 18,485.38. Said report did not contain a true statement of all the funds she had received for her ward, and represented that she had on hand the balance shown therein, when in fact she had commingled the funds of her ward with her own and had invested the same in her own name and without any authority, order or approval of the court. Appellant had a general agent in the State of Indiana and a local agent in Posey County during the pendency of said guardianship and, by the exercise of reasonable inquiry, could have ascertained the fact that such guardian was commingling said ward's estate with her own and converting it to her own use, but took no steps to ascertain the same or to control the management or investment of the ward's funds. The general agent of appellant knew of the trust deed and the terms thereof before the trust created was carried out and made no objection to the execution thereof by the trustee, or to the application of the assets realized thereunder. Said agent visited the relator and corresponded with the trustee during the months of May, June, July and August, 1910, concerning the liability of appellant upon the bond sued on. The court further found that Effie D. Byers received nothing nor was she allowed anything for her services as guardian, and that owing to the manner in which she administered the trust, such services were of no value to the estate; that the balance due from said guardian to the relator is $ 8,305.30.

Upon these facts the court stated its conclusions of law to be, in substance, as follows: (1) that the agreement of the relator, on his becoming of age, to become a member of the firm of Heimann & Byers, and his subsequent acts with relation to the business of said firm did not amount to a ratification of the investment of his money by said guardian; (2) that by joining in the execution of the deed of trust and by consenting to the application of the assets of the firm to the payment of partnership debts to the exclusion of his claim against said guardian, the relator did not in any manner prejudice the rights of appellant nor release any property that might have been applied to the satisfaction of the debt owed to the relator by his said guardian; and (3) that the relator is entitled to recover from Effie D. Byers, as principal, and appellant, as surety, the sum of $ 8,305.30.

In determining whether these conclusions are supported by the facts as specially found it is necessary to bear in mind the rule thus stated in Cleveland, etc., R. Co. v Closser (1890) 126 Ind. 348, 367, 26 N.E. 159, 9 L. R. A. 754, 22 Am. St. 593, " a special finding, like a special verdict, a series of instructions, or the like, must be considered as a whole, and it cannot be dissected into fragmentary parts and successfully assailed in detail. One part may be considered in connection with other connected parts, or parts referring to the same transaction, and if taken as a whole the finding legitimately supports the judgment it will be upheld." And in determining whether the judgment is thus supported, all intendments and presumptions are in favor of the finding rather than against it. Mount v. Board, etc. (1907), 168 Ind. 661, 80 N.E. 629, 14 L. R. A. (N. S.) 483;...