Trook v. Lafayette Bank and Trust Co.

Decision Date21 November 1991
Docket NumberNo. 79A02-9010-CV-569,79A02-9010-CV-569
Citation581 N.E.2d 941
PartiesDorothy M. TROOK, Appellant, v. LAFAYETTE BANK AND TRUST COMPANY, Appellee.
CourtIndiana Appellate Court

Robert A. Mucker, Gambs, Mucker, Bauman & Seeger, Lafayette, for appellant.

William C. Burns, Lafayette, for appellee.


Dorothy Trook (Trook) brings this interlocutory appeal challenging the trial court's ruling that Lafayette Bank and Trust Company (Bank) had authority to act as Trook's guardian from February, 1989 to June, 1989.

We affirm.

Trook presents the following issue for our review:

Whether a court-appointed guardian, whose appointment is later adjudged to have been defectively made because of the trial court's failure to comply with statutory prerequisites to appointment, has authority to act as guardian of the ward's property after the defective appointment is made but before the appointment is challenged?

The pertinent facts are not in dispute. In February, 1989, Trook was hospitalized after suffering a cerebral stroke. 1 On February 22, 1989, Trook's husband filed a Petition For Appointment of an Adult Guardian, alleging that Trook needed a guardian because of the stroke and its effects. On that same day, February 22, having found that all necessary parties had consented to the guardianship proceeding, or had been served adequate notice by summons or registered or certified mail, the court appointed Bank as guardian of Trook's estate. Bank then executed its duties as Trook's guardian and took possession of her real and personal property and began managing her financial affairs.

On June 15, 1989, Trook filed her petition seeking to vacate the guardianship appointment, to expunge the record, and to abate the proceedings. 2 Trook alleged, and the record reflects, that notice of the proceedings had not been served upon Trook. 3 The record also reflects that the court did not conduct the statutorily required hearing to determine incompetency, 4 nor did it grant sufficient time between the filing of the petition to appoint a guardian and the appointment of the guardian. 5 On June 11, 1989, the court granted Trook's petition to vacate, finding that the guardianship appointment was improvidently and prematurely made. Thereafter, on June 29, Bank filed its final guardianship account. The account showed that, at the time of the commencement of the guardianship, Trook's assets were valued at $114,702.25. As guardian, Bank authorized expenditure of $28,855.31 of Trook's funds. On October 3, Trook filed objections to the accounting and to release of guardian. She requested the return of all of the assets that had been collected by Bank. Included in the assets that Trook requested be returned to her was the $28,855.31 amount which Bank had already expended on behalf of Trook. Trook's request that the expended amount be returned to her is based upon the contention that Bank had no authority to use any of the assets in her estate for any reason because the guardianship appointment had been invalid. On September 6, the trial court issued its finding that "the Bank had [the authority to act as guardian] pursuant to court order even though Bank's appointment was subsequently ruled substantively defective." Record at 44. The instant appeal followed.

By virtue of its ruling that Bank's acts during the defective guardianship were authorized, the court has made possible a later ruling that expenditures of money during that time, if deemed appropriate according to normal guardianship accounting standards, were proper and thus not chargeable to Bank. However, if Bank's expenditures were unauthorized, as Trook asserts, then Bank must refund the entire $114,702.25, regardless whether any expenditures were reasonable according to normal guardianship standards. In order to decide whether Bank's actions were authorized, we must address the following questions:

I. What was the nature of the court's ruling appointing Bank as guardian--was it void or voidable; and II. What species of guardianship did the court create, if any, by its defective appointment of Bank as guardian?

I. Void v. Voidable

This issue presented for our review involves the interpretation of Indiana law and does not involve questions of fact. In reviewing legal determinations made by the trial court we determine whether the trial court erred in its application of the law. See, e.g., Indiana & Michigan Electric Company v. Terre Haute Industries, Inc. (1984) 1st Dist. Ind.App., 467 N.E.2d 37.

Trook contends that the court's appointment of Bank as guardian was void, and not merely voidable. Implicit in Trook's argument is her understanding that the terms "void" and "voidable" have different meanings which may dictate significantly different results. So it is in the instant case. If the court's appointment was void, it would necessarily mean that anything done subsequent to the appointment but before the appointment was vacated was without legal justification. If, on the other hand, the appointment was voidable, any action undertaken in the interim period was arguably legally justifiable. However, this distinction between the two terms appears to have been occasionally lost in judicial writing.

Case law, both in Indiana and elsewhere, seems frequently to use the terms "void" and "voidable" interchangeably, without due regard for the technical--but nonetheless important--difference between their meanings.

"[V]oid in the strict sense means that an instrument or transaction is nugatory and ineffectual so that nothing can cure it; voidable exists when an imperfection or defect can be cured by the act or confirmation of him who could take advantage of it." (Emphasis in original) Black's Law Dictionary 812 (abridged 5th ed. 1983).

"Void" therefore may properly be used only when the action or subject matter it describes is of no effect whatsoever, and is incapable of confirmation or ratification. "Voidable," on the other hand, describes an action or subject matter which nonetheless operates to accomplish the thing sought to be accomplished, until the fatal flaw is judicially ascertained and declared. However, a court sometimes uses the term "void" when the effect of its holding indicates that the action or subject matter it describes is really voidable--that is, capable of ratification or confirmation. See, e.g., Jessup v. Jessup (1897) 17 Ind.App. 177, 46 N.E. 550.

Into this analysis we inject the term "void ab initio," which means literally "void from the beginning" and denotes an act or action that never had any legal existence at all because of some infirmity in the action or process. It is readily apparent that "void ab initio " has essentially the same meaning as "void." In fact, "void ab initio " is perhaps preferable because it more vividly underscores that concept which represents the significance of the difference between the term "voidable" and the terms "void" and "void ab initio ": the former describes an act or subject matter that, although flawed in some respect, is not beyond retrieval; the latter describe an act whose flaw renders the act irretrievable and without effect.

Nowhere is the distinction between "void" and "voidable" more clearly brought into focus than in the area of jurisdiction. There are three jurisdictional elements in every action: jurisdiction of the subject matter; jurisdiction of the person; and jurisdiction of a particular case. State ex rel. Public Service Commission v. Johnson Circuit Court (1953) 232 Ind. 501, 112 N.E.2d 429. A judgment rendered by a court without jurisdiction to hear that particular case is voidable because the jurisdictional defect is waivable if not attacked by a timely appeal. D.L.M. v. V.E.M. (1982) 1st Dist. Ind.App., 438 N.E.2d 1023. On the other hand, lack of subject matter jurisdiction renders void any action undertaken by the court because the defect is not susceptible to waiver or cure. Behme v. Behme (1988) 1st Dist. Ind.App., 519 N.E.2d 578. Regrettably, the label which courts attach to actions involving defects in personal jurisdiction has occasionally been misapplied.

Two recent Indiana decisions may give rise to the mistaken impression that judgments rendered in an action in which personal jurisdiction may be lacking are void, or void ab initio, and not merely voidable. In Simmons v. Carter (1991) 1st Dist. Ind.App., 576 N.E.2d 1278, a small claims action was filed by a non-attorney agent on behalf of his principal. The agent signed his own name on the Notice of Small Claim form and appeared upon the principal's behalf at the hearing, after which the court awarded the principal a default judgment. Three months after the default was entered, the defendant filed a motion challenging the validity of the judgment. Indiana law requires that in a Small Claims proceeding a natural person, if not appearing on his or her own behalf, must be represented by counsel. 6 In challenging the default judgment, the defendant asserted lack of notice of the hearing, and also that the agent was not an attorney. This court declared the default judgment void because of the defective representation. Simmons, supra, 576 N.E.2d at 1280. However, the court indicated that the plaintiff could have undertaken an action subsequent to the commission of the error which would have, in effect, cured the error. 7 Consistent with the true meanings of the terms, the judgment might better have been characterized as voidable, not void, because the defect was susceptible to cure or waiver.

In Shotwell v. Cliff Hagan Ribeye Franchise, Inc. (1991) Ind., 572 N.E.2d 487, 489, the Indiana Supreme Court set aside a default judgment because of defective service of process. 8 The court stated:

"Where there is no service of process, there can be no personal jurisdiction, and the default judgment issued by the court was void. In the proceeding to enforce the default judgment, the Hagan defendants filed appropriate objections...

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