Reily v. Crymes

• Citation: 176 Miss. 133,168 So. 267
• Decision Date: 25 May 1936
• Docket Number: 31978
• Court: United States State Supreme Court of Mississippi
• Parties: REILY et al. v. CRYMES

168 So. 267

176 Miss. 133

REILY et al. v. CRYMES

No. 31978

Supreme Court of Mississippi

May 25, 1936

(In Banc.)

1. APPEAL AND ERROR.

Supreme Court's response to allegations on former appeal became law of case and was binding on parties, on trial court, and on Supreme Court.

2. INSANE PERSONS.

Evidence held to justify decree holding sureties on bond of incompetent's guardian liable for guardian's conversion of incompetent's funds, notwithstanding court's orders allowing guardian to borrow incompetent's funds, on ground that guardian appropriated funds to his own personal use as fast as he received money for incompetent, and hence orders were void for fraud in procuring them because of failure to disclose previous conversion of funds (Code 1930, secs. 1869, 1885).

3. INSANE PERSONS.

Sureties on bond of incompetent's deceased guardian could not claim that successor guardian failed to prove that guardian had converted incompetent's funds prior to petitioning court for permission to borrow such funds because of failure of administrator of deceased guardian to testify as to what money and effects deceased guardian had on his death, where admitted decree of insolvency of guardian's estate at time of his death made such proof unnecessary (Code 1930 secs. 1869, 1885).

4. INSANE PERSONS.

As respects surety's liability, interlocutory adjudications of court in allowing guardian's three petitions to borrow ward's funds, and decree approving guardian's first annual account, which decrees were obtained ex parte, were only prima facie valid, but proof necessary to establish fraud in procurement of decrees was more than mere preponderance, but had to be clear and convincing as in other fraud cases in civil law.

5 EVIDENCE.

In civil cases, court acts on reasonable probabilities, and conjectures and possibilities are insufficient on which to base judgment or decree, but neither are they sufficient to avoid a judgment or decree when proof points to probabilities.

6 FRAUD.

When preponderance of reasonable probabilities has become of such weight as to make evidence in behalf of prevailing party clear and convincing, evidence is enough to establish fraud and to prevail against ex parte interlocutory orders obtained by fraud thus established, so far as concerns parties and privies to those orders.

7. INSANE PERSONS.

Sureties held not relieved from liability on bond of incompetent's guardian for guardian's conversion of incompetent's funds prior to time when court issued orders allowing guardian to borrow such funds on ground that court without sureties' knowledge or consent made improvident orders releasing security given by guardian until security became inadequate to cover amount converted (Code 1930, secs. 1869, 1885).

8. GUARDIAN AND WARD.

Except as authorized by statute, guardian has no right to convert money of his ward to his own use and to spend it for his own personal purposes, and when he does so, it is as much an "embezzlement" as when treasurer of corporation or other fiduciary of funds does the like (Code 1930, secs. 1869, 1885).

9. GUARDIAN AND WARD.

When guardian converts ward's money to his personal use without previously having arranged by proper proceedings to borrow funds on security approved by court, guardian is guilty of breach of his bond, and guardian and his bondsmen are liable as in debt for money converted and such debt cannot be released except on payment thereof in money (Code 1930, secs. 1869, 1885).

10. GUARDIAN AND WARD.

Court may aid bondsmen of guardian who has converted ward's money without authority by accepting security for accrued debt from guardian, and enforcing it in behalf of bondsmen, but court has no power to release obligation of bondsmen on such security however ample, and liability continues until satisfied by payment and security of payment by mortgage or deed of trust on property, however adequate at time, is not such "payment" (Code 1930, secs. 1869, 1885).

ETHRIDGE and COOK, JJ., and SMITH, C. J., dissenting.

HON. A. B. AMIS, Chancellor.

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

Suit by Martha Crymes, guardian of J. D. Crymes, Jr., against M. W. Reily and others. From a decree, named defendant and another appeal. Affirmed.

Affirmed.

Welch & Cooper, of Laurel, for appellants.

D. G. Fountain and R. R. Dinsmore, both of Jackson, and Graham & Graham, of Meridian, for appellee.

Ethridge J., dissenting. Cook, J., and Smith, C. J., also dissent.

OPINION

Per Curiam:--

This is the second appearance of this case in this court, the first appeal being reported in PanAmerican Life Ins. Co. et al. v. Crymes, 169 Miss. 701, 153 So. 803. By the majority opinion in that case it is shown that one J. D. Crymes, Sr., was in June, 1922, appointed guardian of his incompetent son, who had become the victim of some mental disease as a result of service in the United States Navy during the World War, and who was confined to a government hospital, but was entitled to certain sums to be paid from time to time by the Veterans' Administration as disability compensation. The opinion further discloses that on December 4, 1922, the guardian had collected for his ward in cash one thousand two hundred dollars and forty-one cents, and that on that day the guardian was allowed by the court to borrow the said money on the security of real estate owned by the guardian, as an individual; that on November 19, 1923, the guardian had collected a further sum of one thousand thirty-two dollars and forty-one cents, and was allowed by the court to borrow that additional sum on the same security; and that on June 4, 1925, the guardian filed his first annual account showing collections of about two thousand dollars, in addition to the two other sums above mentioned; and that on the same day he presented his petition to borrow this last-mentioned additional sum on the same. security, and this petition was also allowed.

The opinion recites further that in a few days after the third loan transaction, the guardian petitioned the court for a release of a portion of the property included in the deed of trust given to secure said loans, and that on October 19, 1929, a second petition for a release of another portion of the property was presented and allowed, it being represented to the court by the guardian in both these petitions that the remaining property was adequate in value to secure the loans aforesaid. That the said guardian had sold the property released, and that in fact the remaining mortgaged property not released and not sold was insufficient by far as security for the balance due the ward. That some time after the year 1930 the guardian died, leaving a wholly insolvent estate.

The bill reviewed in that opinion was filed by the successor guardian to recover of the bondsmen on the several bonds given by the original guardian during the course of his guardianship. The first bond for one thousand dollars was given when the letters of guardianship were first issued. The second bond was given as an additional bond on December 20, 1923, for four thousand dollars, with M. W. Reily, Nate S. Williamson, and T. P. Crymes as sureties. On June 4, 1924, a new bond was given in the sum of five thousand dollars with the Union Indemnity Company as surety, and an order was made by the court purporting to release the second bond from any further liability. The Union Indemnity Company later became insolvent, and was put in the hands of receivers.

The sureties on the first and second bonds above mentioned defended the bill by demurrers, and on the main ground that because the court had allowed the guardian to borrow the money coming into his hands during the periods of their suretyship and on security then adjudged to be adequate, the said sureties could not be held liable for the improvident action of the court in subsequently releasing from the security given by the guardian those portions of the property which embraced the greater part of the value, so that the remaining property was insufficient by far to cover the debt due by the said guardian.

In anticipation of this defense, the successor guardian had averred in her supplemental bill, among other averments "That the deceased guardian never opened any guardian account at any bank until long after all the guardian bonds herein sued on were executed, but deposited all trust funds received during said time in his private personal bank account, or cashed the trust checks and appropriated all the moneys to his, the deceased guardian's own benefit, and at the time the deceased guardian petitioned the Honorable Court for permission to loan to himself said trust funds on representations to the Court that certain definite sums of money in trust funds were then on hand, such funds were in fact not then in the hands of the deceased guardian, but in fact had already been converted by the guardian to his own use and the guardian's petitions for and the decrees of the court permitting the deceased guardian to use said trust funds and the giving of the three deeds of trust securing said trust funds by the deceased guardian were all done and executed at a time when in fact there were no trust funds in the hands of the guardian to be loaned or borrowed, and the only effect thereof was to secure trust funds already converted by the deceased guardian, all of Which facts existed while all three of the guardian's bonds herein sued on were in full force and effect, and all of which facts were by the deceased guardian withheld from the court besought by the deceased guardian to grant the various releases set up herein as defenses, which the court never would have considered granting, had the deceased guardian...