People's Building & Loan Ass'n v. Severns
| Decision Date | 07 July 1934 |
| Docket Number | 31756. |
| Citation | 140 Kan. 148,33 P.2d 944 |
| Parties | PEOPLE'S BUILDING & LOAN ASS'N v. SEVERNS et al. [*] |
| Court | Kansas Supreme Court |
Rehearing Denied Sept. 24, 1934.
Syllabus by the Court.
Guardian cannot properly invest ward's money in guardian's realty.
In action growing out of guardian's investment of ward's money in guardian's realty, court will not determine whether investment was made in good faith or was good investment.
Probate court has no power to approve guardian's investment of ward's money in guardian's realty.
Where loan association advised and assisted guardian in investing ward's money in guardian's realty, and where money thus invested was used to pay part of association's mortgage, ward's lien on realty for amount invested held superior to association's mortgage lien.
1. A guardian may not invest the money of her ward in real estate owned by the guardian, and in actions growing out of such an investment the court will not inquire whether the investment was a good one or made in good faith.
2. In a case such as that described in the first paragraph of the syllabus the probate court has no power to approve the action of the guardian.
3. Where a building and loan association advised and assisted a guardian in investing money of her ward in real estate owned by the guardian and the money thus invested was used to pay part of a mortgage held by the building and loan association the ward has a lien upon the real estate for the amount invested superior to the mortgage lien of the association.
Appeal from District Court, Marshall County; Edgar C. Bennett Judge.
Action by the People's Building & Loan Association against Rosa M. Severns and Mary Eleanor Severns. Judgment for plaintiff and the last-named defendant appeals.
Judgment reversed with directions.
P. G Wadham, of Marysville, for appellant.
R. L. Helvering and Walter T. Griffin, both of Marysville, for appellee.
This was an action to foreclose a mortgage. Judgment was for plaintiff. One of the defendants appeals.
The petition pleaded the mortgage and default in payment and asked that it be foreclosed. The petition contained a further allegation that subsequent to the execution of the mortgage the defendant had conveyed to Mary Eleanor Severns, a minor, an undivided one-third of the real estate in question and that Mary Eleanor Severns claimed an interest in the real estate and that any interest she had was subsequent to the lien of plaintiff. The petition prayed for judgment and that the mortgage be adjudged a first lien on the entire tract.
As far as we are concerned here, the only question to be decided is as to the rights of Mary Eleanor Severns. Her guardian ad litem filed a cross petition and alleged certain facts. On the trial a stipulation was entered into as to these facts substantially as follows: Rosa M. Severns is the mother and guardian of Mary Eleanor, who at the time of the trial was ten years old. On April 28, 1926, Rosa was a widow and the owner of the real estate in question. On that date she borrowed $4,300 from plaintiff and executed a note and mortgage on the real estate in question for that amount.
Rosa had the custody of $2,000 cash belonging to Mary Eleanor, her ward and daughter. She had loaned this amount to one who had signed her guardian's bond. Along in September, 1929, the person who owed this money stated that she wished to pay it and to be released from the bond. Mrs. Severns informed the probate judge that it would be necessary to find a new investment for her ward's funds. The probate court directed Mrs. Severns to invest the funds in government bonds or a good farm loan. About September 25, 1929, Mrs. Severns called on L. N. Cole, the president and managing officer of plaintiff. She informed him of the instructions of the probate court. Mr. Cole suggested that the $2,000 be invested in the real property in question by reducing the loan heretofore referred to. He gave Mrs. Severns a card showing how much the loan would be reduced and what the payments would be. This card was submitted to the probate judge. Some time later and before October 23, 1929, the probate judge orally instructed Mrs. Severns to convey to the minor an undivided one-third interest in the real estate and to thereupon pay to plaintiff the $2,000 to be applied on the mortgage. On October 24, 1929, Rosa M. Severns and one Kate Ellenbecker, who was the surety on the guardian's bond, went to plaintiff's office and Kate Ellenbecker gave the guardian a check for $2,000 payable to the guardian, which was immediately indorsed by Rosa M. Severns and delivered to L. N. Cole personally. It was immediately indorsed by plaintiff and deposited to its account in the Exchange Bank of Marysville. The mortgage and note in question were then executed and delivered to plaintiff and the release of the $4,300 mortgage was filed October 24, 1929. The new mortgage of $1,900 was filed for record at the same time. Mrs. Severns was directed to return to Mr. Cole's office October 25, 1929, and execute a deed to the minor. She did this by executing a warranty deed to an undivided one-third interest in the real estate to Mary Eleanor Severns.
No proceedings were ever had in the probate court by the guardian for authority to mortgage the interest of Mary Eleanor Severns in the real property.
On May 16, 1932, plaintiff notified Mrs. Severns of its intention to foreclose. Her husband called on Judge Potter and was advised that the probate judge had personally consulted L. N. Cole and both had determined that the investment of the $2,000 in the purchase of an undivided one-third interest in the real property was a good investment. The foster father of Mary Eleanor about the same time called on L. N. Cole and was by him orally informed that the investment was made by the guardian upon the advice of Judge Potter and L. N. Cole.
The mortgages and deed were all acknowledged before Mr. Cole as notary public.
On October 23, 1929, an order was made by the probate court on application of the surety on the guardian's bond "that all the assets that have come to the hands of said guardian have been accounted for to the satisfaction of the court and that the surety aforesaid is under no liability by reason of said bond" and that the surety be discharged, and on November 1, 1929, a further order was made by the court finding that Rosa M. Severns "has recently invested the funds of said minor in real estate, which action in so doing was then and is now approved by the court" and "it is not necessary to continue the bond" and the sureties be discharged.
The action was tried before the court and a judgment was entered foreclosing the mortgage and ordering the entire property sold to satisfy it.
This appeal is by Mary Eleanor Severns from that part of the judgment decreeing Rosa M. Severns to be the sole owner in fee of the mortgaged premises and that the undivided one-third interest of Mary Eleanor was subject to the lien of the mortgage.
The position taken by the trial court was that the question was one of the power of the guardian to invest the funds of her ward in incumbered real estate and that when this question was answered in the affirmative the probate court by its order of November 1, 1929, approved such investment.
It will simplify matters to state briefly just what the stipulated facts amount to. What actually happened was that a guardian paid a mortgage owed by her with funds belonging to her ward and the plaintiff association received the money to reduce the debt owed by the guardian knowing at the time that the money...
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