State, to Use of Lancaster, v. Jones

• Decision Date: 21 June 1886
• Citation: 1 S.W. 355,89 Mo. 470
• Parties: The State to use of Lancaster, Guardian, v. Jones Administratrix, Appellant
• Court: Missouri Supreme Court

1 S.W. 355

89 Mo. 470

The State to use of Lancaster, Guardian, v. Jones Administratrix, Appellant

Supreme Court of Missouri

June 21, 1886

Appeal from St. Louis Court of Appeals.

Affirmed.

Charles Gibson and C. E. Gibson for appellants.

(1) A surety is not liable for a breach which has occurred prior to the execution of the bond. The authorities cited by respondent on this branch of the case do not support him. (2) The sureties on a bond cannot be held liable for a conversion, if the funds converted were never in the hands of the principal after they signed the bond. (3) It is error as against the surety to apply a credit, earned by the principal after the execution of the bond, in extinguishment of a debt originating prior to the execution of the bond and for which the surety is not liable. (4) A surety of one holding a position of trust is not liable on his bond for property received by the principal independent of the trust. Leigh v. Taylor, 7 B. & C. 491; Dedham Bk. v Chickering, 4 Pick. 338; Carey v. State, 34 Ind. 105; Reeves v. Steele, 2 Head, 647; State v. Long, 8 Ired. 415; Schloss v. White, 16 Cal 65; Sample v. Davis, 4 Greene [Ia.] 117; Sommers v. Corn, 3 Bush, [Ky.] 555; Schouler on Dom. Rel., sec 367; Cabanne v. Skinker, 56 Mo. 357; Blair v. Ins. Co., 10 Mo. 560; Nolley v. Callaway Co., 11 Mo. 447; City v. Sickles, 52 Mo. 122; Bank v. Traube, 6 Mo.App. 221. (5) A principal speculating with trust property cannot render the surety liable beyond the amount of property received by the principal by virtue of his trust. The surety is not liable for the speculations of the principal beyond the amount of the trust property. (6) One taking the profits of a business conducted without authority of law, but in the utmost good faith by the trustee and under the orders of the court having control of the trustee, must take such profits subject to the reasonable compensation of the trustee for conducting such business. Byrd v. Governor, 2 Mo. 102; Van Bibber v. Julian, 81 Mo. 618; Brown v. Litton, 1 Peere Wms. 140; 10 Modern Reps. 20. (7) The statute confers on the probate court power to authorize a guardian to continue the business of his insane ward. R. S., secs. 5787, 5791, 5795, 5805. The statute requires the guardian to manage and administer the estate. The court did not decide the precise question here presented in Michael v. Locke, 80 Mo. 548, and that case is not controlling authority here. Long v. Long, 79 Mo. 659. (8) When a guardian offers to deliver up notes of the estate to his successor, the successor has no right to require an inventory. When a suit is instituted on the bond of a guardian (which suit is in the nature of a settlement), the sureties have a right to deliver up the property and take credit for the same. If a conversion takes place of insolvent notes, the damages are only nominal. (9) A recovery cannot be had on a ground not stated in the petition.

G. A. Castleman and J. A. Harrison for respondent.

(1) Jones had no authority, under the sanction or on the order of the probate court, to prosecute the business upon the ward's estate. Western Cement Co. v. Jones, 8 Mo.App. 373; Michael v. Locke, 80 Mo. 548. (2) The investment in trade of a ward's estate by a guardian, is a breach of duty by the guardian and he must account to ward's estate for all profits. Perry on Trusts, sec. 427. "When a guardian speculates with his ward's funds, or employs them in trade, he must account for the profits. As this is a clear breach of trust, compound interest would be properly chargeable. It would seem to be the true rule, in equity, where large profits, which ought to have gone to the credit of cestui que trust, are appropriated by his trustee, to require them to be turned in on account." Schouler Domestic Relations, 477, 478; Spear v. Spear, 9 Rich. Eq. 184. "The ordinary commission is sometimes refused for disbursements of the guardian's final balance to the ward and receipt of the original fund; nor is it allowed on the principal in mere re-investment." Schouler Dom. Rel., note 5, p. 201, and cases cited. "In the present state of the law on this point, no trustee could be advised, under any circumstances, to undertake the responsibility of carrying on any business in trust for others. For, by so doing, he adopts the same risks and liabilities as persons who trade on their own account, while he can participate in none of the profits." Hill on Trustees, 534. See, also, 3 Redf. Ex'rs and Adm'rs [2 Ed.] 402, pl. 10, and cases cited. "An executor or administrator is regarded as a trustee, and when he wrongfully uses the trust funds in his hands for his own purposes, or embarks them in enterprises distinct from the management of the estate, expecting to realize a personal profit, nothing can be more just than the rule above announced. The cestui que trust always has the right to follow the trust funds, and avail himself of any gain that has been made out of them." Merritt v. Merritt, 62 Mo. 156. (3) The failure and refusal of Jones, upon his removal, to account for and deliver over to his successor the notes and due bills belonging to his ward's estate, was a conversion thereof, and an appropriation to his own use. For "a wrongful taking or assumption of a right to control or dispose of property constitutes a conversion. Indeed any wrongful act, which negatives or is inconsistent with the plaintiff's right is per se a conversion." Schroeppel v. Corning, 5 Dim, 236; Williams v. Wall, 60 Mo. 321; Koch v. Branch, 44 Mo. 542; State ex rel. Wolff v. Berning, 74 Mo. 49. A mere refusal to deliver up, upon demand, to their owner, property gotten from a third party by the holder, who was ignorant of the ownership and was holding in good faith, is held to be a conversion. Rembaugh v. Phipps, 75 Mo. 422. (4) The face of the notes converted was, prima facie, the measure of damages to which plaintiff was entitled. Menkens v. Menkens, 23 Mo. 252; Bredow v. Mer. Sav. Inst., 28 Mo. 182; Wolff v. Berning, 74 Mo. 87. The annual settlements of the guardian are mere ex parte statements of accounts and are not admissible as evidence in favor of defendant in this cause. State v. Hoster, 61 Mo. 546; State v. Roeper, 9 Mo.App. 21; S. C., 82 Mo. 57. But in the present cause the settlements are all really in evidence -- since those settlements are merely copied from the books kept by Jones, and even if the law did make ex parte statements competent, yet defendants are not injured, as the contents of the settlements were before the referee. (5) Under section 5796, Revised Statutes, the probate court ordered a new bond; it was given, and the parties to that bond are liable for all breaches of duty by the guardian -- whether before or after the date thereof -- as the new security is cumulative. State ex rel. v. Drury, 36 Mo. 284; State ex rel. v. Fields, 53 Mo 474; Haskell v. Farrar, 56 Mo. 497; Wolff v. Schaeffer, 4 Mo.App. 372-375. But the findings of the referee show that all the money and property converted by Jones, excepting $ 182.06, taken January 4, 1874, was appropriated subsequent to date of the bond sued on, and this was, of course, still in his hands and was converted when he refused to pay it to his successor. (6) Under the doctrine of "express aider," the failure of plaintiff to allege neglect of Jones in his failure to collect the notes and due-bills was cured by defendant's plea that Jones had used due diligence in his efforts and failure to collect, and the finding of the referee as to those notes, etc., is sound upon that ground, although it is based upon Jones' "conversion" of these assets. Bliss on Code Plead., sec. 437; United States v. Morris, 10 Wheat. 246; Lemon v. Chanslor, 68 Mo. 340. (7) The finding of the referee, when correct as to facts found, is to be supported, although the court may not agree with all of the reasons assigned. O'Neil v. Capelle, 62 Mo. 208; The Moniteau National Bank v. Miller, 73 Mo. 187. In pleading, "less particularity is required, when the facts lie more in the knowledge of the opposite party." Bliss on Code Pleading, Sec. 310; Stephens' Pleading, * 368. Plaintiff could not know with particularity the disposition of assets, belonging to the ward, in keeping of the guardian -- and defendants followed the well-established rule, in alleging impossibility of collection -- but failed to offer any proof of diligence in, or impossibility of, collecting. (8) Jones was guilty of waste of his ward's estate in the large expenditures made for support of ward and family. The guardian "in supplying the wants of his ward is to consider, not the style of life to which they have been accustomed, so much as the income of their estate at his disposal." Schouler on Dom. Rel. 455.

Black J. Sherwood, J., Dissenting.

OPINION

Black, J.

In 1871, Joseph H. Locke was found to be of unsound mind, and incapable of managing his affairs, and, thereupon, the probate court of St. Louis county appointed Jones guardian of his person and estate. The guardian gave bond as required by law. By order of that court, Jones gave a new bond in April 1874, with Howard and others as sureties. In 1878 the court ordered the guardian to procure and file another bond, and for failure to comply with that order the court revoked the former appointment, and appointed R. D. Lancaster guardian of the insane person. The deposed guardian failed to make settlement of his accounts, and Lancaster brought this suit on the second bond, assigning various breaches. Locke, it appears, at and prior to the inquisition, had been engaged in selling cement and lime, and in manufacturing lime; the business had a reputation of considerable value. Jones, as guardian, in addition to collecting debts due to and paying those due from the ward, carried on the business...