Pan-American Life Ins. Co. v. Crymes

• Decision Date: 02 April 1934
• Docket Number: 30972
• Citation: 153 So. 803,169 Miss. 701
• Court: Mississippi Supreme Court
• Parties: PAN-AMERICAN LIFE INS. Co. et al. v. CRYMES

153 So. 803

169 Miss. 701

PAN-AMERICAN LIFE INS. Co. et al. v. CRYMES

No. 30972

Supreme Court of Mississippi

April 2, 1934

Suggestion Of Error Overruled April 23, 1934.

1. INSANE PERSONS.

Appointment of guardian for mental incompetent in governmental hospital for insane sailors in another state held authorized by statute, though he was never legally adjudged a lunatic (Code 1930, section 1896).

2. INSANE PERSONS.

Court's orders, allowing insane person's guardian to borrow ward's funds, held not void on their face (Code 1930 section 1885).

3. INSANE PERSONS.

Insane person's guardian has no right to use trust funds for his own purposes without court order, and such use is breach of trust and, when intentional and deliberate, sufficient evidence of his unfltness for trust.

4. INSANE PERSONS.

Court's orders, allowing insane person's guardian to borrow ward's funds without his having disclosed his previous conversion thereof to his own use, held void for fraud in procuring them.

5. INSANE PERSONS.

Court's orders releasing portions of realty, owned by insane person's guardian; from trust deed securing loans to him of ward's funds, held not void on face of record.

6. INSANE PERSONS.

Company acquiring through mesne conveyances realty sold by insane person's guardian after releases thereof by court orders from recorded trust deed, substituted for trust deeds released of record by trustees, as security for loans of ward's funds to guardian, held without constructive notice of such instruments and hence not liable for balance due ward from guardian, where substituted deed erroneously described property (Code 1930, sections 2153, 2155).

7 RECORDS.

Recorded instrument gives constructive notice only of what is actually described therein or to be perceived therefrom, not of other deeds or instruments not referred to therein so as to to be made part thereof, nor of description which diligent inquiry might have disclosed.

GRIFFITH ANDERSON, and ETHRIDGE, JJ., dissenting in part.

HON. A. B. AMIS, SR., Chancellor.

APPEAL from chancery court of Lauderdale county, HON. A. B. AMIS, SR., Chancellor.

Suit by Martha Crymes, guardian of J. D. Crymes, Jr., against the Pan-American Life Insurance Company and others. From a decree overruling defendants' demurrer to the bill, they appeal. Affirmed in part, reversed in part, and remanded.

Affirmed in part, reversed in part, and remanded.

Reily & Parker and Nate S. Williamson, all of Meridian, for appellants.

The sureties are not liable where, in making the loan, the guardian has complied with the statute which prescribes the measure of their liability.

28 C. J. 1287, 1307, 1064; Neely v. Craig, 139 So. 835; Frazier v. Jeakins, 57 L. R. A. 575; Smith v. Smith, 210 F. 947.

In the case of Mansen v. Semplot, 93 N.W. 75, a father, as guardian of his son, took the ward's money and paid his own debts with it, giving his note to his son, secured by a second deed of trust, and the court held this transaction invalid because the guardian had not obtained an order from the court.

Davis v. Harris, 13 Smedes & M. 9; McWilliams v. Norfleet, 63 Miss. 183.

The doctrine is indisputably established that a purchase made by a trustee or guardian of the trust property, or by an executor of the estate of his testator from himself, during the continuance of the fiduciary character of the purchaser, will not be sanctioned or allowed to prevail, unless it be made under the authority of the court.

Cohn v. Winslow, 76 So. 264; Fawcett v. Fawcett, 89 Am. Dec. 639.

The courts have recognized the danger incident to an adverse interest on the part of a trustee, but they have also fully recognized the proper way to eliminate this danger, and to permit the handling of affairs involving this danger, and the full relief and the full power is found in the courts by revealing the situation in court, and asking for authority to deal therein.

Michoud v. Girod, 11 L.Ed. 1076; 39 Cyc. 369; Hudson v. Jenson, 85 N.W. 689; State v. Shackelford, 56 Miss. 648.

The wrongful act itself creates no liability against any surety, except the sureties on the bond in force at the time of such wrongful act; but, we do not contend that this of itself would necessarily relieve the sureties on the second bond from liability, for the sureties on the second bond would be liable for neglecting to do the things in the interest of the ward that were proper to be done while the second bond was in force, but, in the absence of such negligence, there would be no liability; and we claim that the bill filed in this case was neither original liability nor liability based on negligence.

Aetna Indemnity Co. v. Gallaspy, 57 So. 980.

The fact that the guardian makes an unauthorized loan on real estate will not authorize a recovery of damages by the ward where he has suffered no loss.

21 Cyc. 90; Aetna Indemnity Co. v. Gallaspy, 57 So. 980; U. S. F. & G. Co. v. Jackson, 72 So. 150; State v. Slevin, 12 Mo.App. 321.

Since the liability of the surety must be based on a loss, it is shown in this case that there was no liability. There is no question that this ward's estate had sustained no loss up to June 4, 1925, the day that the second bond was discharged, and on that day the chancery court found, as a fact, that all of the monies of the ward were properly and sufficiently secured.

There was no loss sustained by the estate in this case until after this second bond was fully discharged.

Hudson. v. Jenson, 85 N.W. 689; Walton v. Walton Estate, 109 So. 707; New York Indemnity Co. v. Myers, 138 So. 334.

J. H. Currie, J. C. Floyd, and Thos. L. Bailey, all of Meridian, for appellant, Pan-American Life Ins. Co.

The record on its face shows that the entire proceeding in the alleged guardianship of J. D. Crymes, Jr., was void.

Railroad Co. v. Blythe, 69 Miss. 939; Section 1894, Miss. Code of 1930.

The having of the inquisition is not only a jurisdictional prerequisite to the declaration by a court of the necessity for the appointment of a guardian, but the legislature was so careful, that while it allowed to the court the power of appointing a guardian and the commitment to an insane asylum of a person adjudged to be insane, it would not grant to the court the power to determine whether or not the person was so insane, but left that power only in the hands of six freeholders, who were to be summoned as required by the provisions of the sections of the code, and a majority of whom must, after an investigation of all the facts and of the person charged to be insane, adjudicate that such person was insane, after which the court would then have the power to appoint for such person a guardian.

Baum v. Greenwald, 95 Miss. 765.

If the proceedings be void and of no effect, then it must follow that the complainant herein had no equitable right, relief or remedy against this defendant as a result of the loan made by this defendant to A. H. George, who theretofore had acquired property from J. D. Crymes, Sr., which property the complainant alleges, while incorrectly described in the deed of trust given by J. D. Crymes, Sr., as guardian to himself as an individual, was intended to cover the property owned by J. D. Crymes, Sr., a part of which was sold to A. H. George and on which a loan was made by this defendant.

Duke v. State, 57 Miss. 229.

As conclusive proof of the fact that the legislature did not construe either sections 1894 or 1896 of the Code of Mississippi of 1930, being the same law in force as in the year 1922, as conferring upon the chancery court the power to appoint a guardian for a lunatic under the facts set out in the petition of J. D. Crymes, Sr., the Legislature did, in 1930, enact chapter 175 of the Code of 1930 known as the "Uniform Veterans Guardianship Act."

Secs. 7335 and 7354, Code of 1930.

If under any theory, J. D. Crymes, Sr., was ever legally appointed as the guardian of J. D. Crymes, Jr., the orders of the court authorizing the lending of money by himself as guardian to himself as an individual were legal and proper, as were also the orders touching the cancellation of any deed of trust given by J. D. Crymes, Sr., to himself as guardian and the release of any of such property from the terms of any deed of trust executed by himself as an individual to himself as guardian to secure funds of the ward at that time in his hands.

Sec. 352, Code of 1930.

There having been no deed of trust of record describing the property embraced in the deed from J. D. Crymes, Sr., to A. H. George at the time of the deed from Crymes to George, nor any such record at the time of the loan from the Pan-American Life Insurance Company to A. H. George and wife, the demurrer of the Pan-American Life Insurance Company to the bill filed against it should have been sustained by reason of lack of any such record.

Sec. 2153, Code of 1930; Sack v. Gilmer Dry Goods Company, 115 So. 339.

Gilbert & Cameron, of Meridian, for appellant, Bob Wall.

One unusual fact stands out in this record and that is that every step taken in this estate was ordered by the court and there was no act done "at the discretion" of the guardian. Every loan made, was directed by the court; every investment was directed specifically by the court. The person to whom the loan was made was named, the security was described and designated. The court assumed administration and left nothing to the guardian's "discretion." The guardian disobeyed no order of the court.

Cohn v. Winslow, 115 Miss. 275, 76 So. 246; Sec. 2416, Code of 1906, as amended by chapter 201, Laws of 1914.

It must be beyond debate that the court had the constitutional and statutory power to enter the decrees. If they were void it was not because the court lacked ...