Southern Surety Co. v. Tessum
| Decision Date | 29 November 1929 |
| Docket Number | 27,350,27,352,27,364,27,384 |
| Parties | SOUTHERN SURETY COMPANY v. OLUF TESSUM AND OTHERS |
| Court | Minnesota Supreme Court |
Defendants appealed, in four groups, from an order of the district court of Fillmore county, Peterson, J. denying their separate motions for a new trial. Reversed.
Resignation of guardian invalid unless final account is allowed.
1. Under G.S. 1923 (2 Mason, 1927) § 8789, permitting a representative to resign his trust but providing that "such resignation shall not be effectual for any purpose until the court shall have examined and allowed his final account," an order accepting the resignation of a guardian held void because of his failure to present and have allowed his final account.
Sureties on separate bonds did not become cosureties.
2. Where the two guardians of an incompetent gave separate bonds, the sureties for one did not become cosureties with those for the other, so as to give rise to the right of contribution where one surety made good a default which as between the guardians was chargeable to its own principal alone.
When surety on one bond not entitled to subrogation under another bond.
3. There was conversion or loss of funds by one guardian. The coguardian did not participate in the wrong or profit therefrom, but was liable to the ward by reason of his negligent inattention to his own duty. Had he himself made the loss good, he would have been entitled to indemnity from the actual wrongdoer. In that situation a surety for the latter who has made good his default is not entitled to be subrogated to the rights of the ward so as to have indemnity from the innocent guardian or contribution from his sureties.
When surety seeking contribution entitled to prove initial default.
4. The initial default was the failure of the guardians to account for the proceeds of a land sale. That default continued to the final accounting. Because it was continuing, each successive general bond filed by the guardians became liable for it. The order allowing the final account of one of the guardians charged him with the accrued delinquency as so much cash on hand. But it contains recitals which prevent its being construed as an adjudication that the money was then in hand. Hence it was competent for the plaintiff, a surety seeking contribution from cosureties, to prove the time and nature of the original default and its continuing character.
Liability of surety after discharge.
5. A surety of one guardian was discharged but only from liability for subsequent acts or omissions of the principal. Liability had already accrued under the bond for the default above referred to. For that the surety remained liable and became cosurety with a subsequent bondsman so as to be liable to make contribution when the latter made good the default of the common principal of the two sureties.
December 27, 1929.
Each sale bond was the separate bond of the guardian signing it.
6. Each of the sale bonds furnished by the guardians was conditioned for the faithful performance by both of their duties under the license to sell the real estate. But neither bond was signed by both guardians. Each signed a separate bond which recited that it was his bond "as principal" and that of the sureties who signed with him. The two bonds were dated, filed and approved at the same time. Neither can be considered the joint obligation of the two guardians. Each is held the separate bond of the guardian who signed it.
Insane Persons, 32 C.J. § 285 p. 665 n. 45; § 309 p. 671 n. 40; § 310 p. 671 n. 53.
Subrogation 37 Cyc. p. 433 n. 48.
See 12 R.C.L. 1168; R.C.L. Perm. Supp. p. 3273.
See note in 12 L.R.A.(N.S.) 1105; 21 R.C.L. 964; 4 R.C.L. Supp. 1440.
Perl W. Mabey and H. O. Chommie, for appellants Oluf Tessum, I. T. Aastad, Rasmus Oen, Henry S. Dahlen, W. W. Prichard, Sr. and Halvor Loken (No. 27,364).
Barrows & Stewart, for appellant Maryland Casualty Company (No. 27,384).
Cobb, Hoke, Benson, Krause & Faegre and Tracy J. Peycke, for appellant United States Fidelity & Guaranty Company (No. 27,352).
Duxbury & Duxbury and Hopp & Larson, filed a notice of appeal (No. 27,350) in behalf of defendants H. A. Daniels, I. B. Kinneberg and C. B. Christenson but filed no brief in this court.
F. H. Durham and Arthur H. Lindeman, for Southern Surety Company, respondent.
Plaintiff, having paid certain judgments against it as surety for Miller Tessum, guardian of Margrethe Tessum, incompetent, brought this action to enforce contribution from defendant Oluf Tessum, coguardian with Miller, and the other defendants, also sureties for one or the other of the two guardians. The trial was without a jury, and plaintiff prevailed. In four groups, defendants appeal from an order denying their several alternative motions for amendment of the decision so as to require judgment in their favor or for a new trial. The appeal taken by defendants Daniels, Kinneberg and Christenson as sureties for Miller Tessum has not been argued and will not be discussed. The judgments paid by plaintiff and which are the subject matter of the case are those affirmed in Lyngen v. Tessum, 169 Minn. 304, 211 N.W. 314.
The estate involved was originally that of Elling Tessum. It consisted in the main of a farm of 119 acres, of which 80 were the homestead. Elling Tessum died in 1899. Surviving him as heirs were his widow, Margrethe Tessum, four sons, Oluf, William, Miller and Oscar, and a daughter, Mathilda Lyngen. Before any of the transactions presently involved, the widow, Margrethe, acquired by purchase the interest in the estate of the son William. She was adjudged incompetent in 1918, and Oluf and Miller became her guardians. They filed an inventory listing the farm as her property, although she had but a life interest in the homestead and only an undivided one-third of the remaining 40. In 1919 the farm was sold under license from the probate court for $27,013. The four children interested joined in the deed. They also signed a "stipulation" in which Miller and Oluf also joined as guardians of their mother. In substance it was that the net proceeds of the land sale should be invested by the guardians; that the mother should have the income for life; and that at her death the principal should be distributed to the three sons and daughter.
In 1920 and again in 1921, Miller Tessum filed an account charging the guardians with the entire sum received on the sale of the farm. Oluf was not a party to these accounts. He lived a long distance from Fillmore county, where the farm was situated, the rest of the family lived and all of the business was done. He seems to have had little or nothing actually to do with the management of the trust. Finally, August 8, 1925, Miller's final account was settled. It charged him with the entire proceeds of the farm and interest thereon. See In re Guardianship of Tessum, 169 Minn. 310, 211 N.W. 316. Oluf's account has never been settled by the probate court. There is no order or judgment of that court charging him with any sum as guardian.
There is a finding that the two guardians, while in possession of the property of their ward, "wrongfully caused and permitted same to be dissipated so that said estate suffered a loss in excess of" $15,625.54; and "that said loss occurred before any of the defendant sureties were discharged from liability and while all of their bonds were actually or by legal construction in full force and effect." Miller Tessum used the trust fund as though it were his own and lost the sum stated. Oluf was held liable, not because of any active participation in the embezzlement, but solely because of his negligent failure to discharge his own duties as guardian.
Successively, Oluf filed four bonds for the faithful performance by him of his duties as guardian. In like manner Miller filed five separate and successive bonds conditioned for the faithful performance by him of his duties. When the farm was sold each filed a separate sale bond conditioned for the discharge by the guardians of their duties under the license to sell the real estate. By G.S. 1923 (2 Mason, 1927) § 8911, the discharge of the sureties upon a sale bond of a guardian upon the settlement of his annual account is provided for, but there was no such discharge in this case. The default charged against both guardians by the decision below is really their failure to account for the proceeds of the land sale, and the sureties on the sale bonds are therefore liable. Because that liability is cumulative to that of the general bonds of the guardians (Frederickson v. American Surety Co. 135 Minn. 346, 160 N.W. 859) there is no need of distinguishing between the sale bonds and the general bonds. It is sufficient to consider the sureties in two groups, in the one those for Oluf and in the other those for Miller, plaintiff being one of the latter and as such having discharged the entire liability.
1. There is a finding that March 9, 1923, Oluf resigned and Miller "continued as sole guardian" until the death of the ward. The evidence is that March 9, 1923, the probate court made an order reciting the filing of a resignation by Oluf and purporting to discharge him "from any and all further duties and liabilities in said matter." Neither then nor thereafter was the final or any other account of Oluf examined and allowed. G.S. 1923 (2 Mason, 1927) § 8789, permits a representative to resign at any time but provides that "such resignation shall not be effectual for any purpose until the [probate] court shall have examined and allowed his final account." So his attempted resignation and discharge can be allowed no effect upon the liability of Oluf and his sureties for any default of...
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