Clark v. Crout

The opinion of the court was delivered by

Mr. Justice McIver.

This was an action brought by the plaintiff, as administrator of Charles Banks, a deceased lunatic, against the defendants, as administratrixes of Uriah Grout, the duly appointed committee of said lunatic, for an account of the administration of the estate of the lunatic, as well as for his services. The facts of the case are so fully and clearly stated in the report of the referee, which, together with the decree of the Circuit Judge, should be incorporated in the report of the case, as to render it unnecessary to make any further statement. We will therefore proceed at once to the consideration of the several questions presented by this appeal, stating only such facts as are necessary to a proper understanding of such questions.

It is conceded that Uriah Crout, after having qualified as committee on or about the 1st of January, 1857, received from the estate of the former committee the sum of $2,926.64 for the lunatic, and this appeal concerns only the administration of that fund. The defendants by their answer set up several defences: 1st. That a large portion of the fund was properly invested in Confederate bonds in 1864, which, of course, became worthless at the close of the war between the States, and that the balance of it was exhausted in the proper maintenance and support of the lunatic. 2nd. That all the matters here brought into controversy had been compromised and settled by an agreement entered into in 1870 between Charles Banks, by his next friend, George L. Banks, and Uriah Crout, in an action then pending in the Court of Equity between them. 3rd. That the defendants had fully administered the estate of Uriah Crout, before notice of the claim set up herein, except one bond held by them due to said estate for about the sum of one thousand dollars. The defendants also set up, as a counter-claim, a demand for the maintenance and support of the lunatic after his funds were exhausted up to the time of his death, and for burial expenses.

The'referee disallowed the investment in Confederate bonds, overruled the defence resting on the compromise of the former suit, and, after stating the account as set forth in exhibit Y to his report, recommended that the plaintiff have judgment against the defendants, as administrators of Uriah Crout, for the balance therein shown and for the costs of this case; but it does not appear that any notice was taken of defendants’ plea of plene administravit praetor. To this-report defendants filed numerous exceptions, and the case was heard by his honor, Judge Wither-spoon, who rendered judgment overruling all of the exceptions and confirming the report except as to costs, which he adjudged should be paid, one half by the plaintiff and the other half by the defendants.

From this judgment defendants appeal upon the several grounds set out in the record, which, as stated in appellants’ argument, present the following matters.for the consideration of this court: “1st. The effect of the former suit, and the agreement therein, upon this action and upon the heirs of Charles Banks, especially George L. Banks, the next friend, and his heirs. 2nd. The laches of Charles Banks and of other parties now interested in this action. 3rd. The validity of the investment in Confederate bonds; and herein the competency, as evidence in this action, of the answer of the committee in .the former suit touching this subject. 4th. The statement of the account; and herein of exhibit Y to referee’s report, the scaling of the expenditure during the war, and the value of the maintenance, of the non compos since the war. 5th. The counter claim. 6th. The plea of plene administravit praeter.”

.1 -First, then, as to whether the former suit and the compromise thereof can operate as a bar to this action. It seems that on the 1st of July, 1869, Charles Banks, by his next friend, George L. Banks, who was his brother, filed a bill in the Court of Equity against Uriah Crout as committee, calling on him to account for his administration of the funds belonging to the estate of the lunatic. After the pleadings in that case (copies of which are embraced in the “Case” as prepared for argument here] were made up, and after some. testimony had been taken therein, an agreement was made for the compromise of that suit, whereby the same was to be discontinued, and Uriah Crout on his part agreed to supply the lunatic, for and during his natural life, with good and comfortable clothing and wholesome food, and such necessary care and attention as his situation required, whereupon the said Uriah was to be discharged from any further liability on account of the funds received by him on account of the lunatic. The terms of this agreement were reduced to writing and signed by Geo. L. Banks and Uriah Crout in July and August, 1870, and an order was prepared, to be submitted to the court, confirming such agreement, to which was appended the written consent of the complainant’s solicitor ; but the order was never signed, never having been presented to the court, probably because the judge of the Circuit had been of counsel in the cause.-

The lunatic himself being incapable of contracting, neither he nor his distributees can be affected by such agreement, unless it could be shown that his next friend had authority to contract for him. We are not aware of any authority which recognizes the power of one who has assumed the office of next friend of a lunatic to enter into any contract or agreement binding upon the lunatic. He may institute suit for the benefit of the lunatic, but the court before which suit is pending is charged with the protection of the interests of the lunatic, and it alone could authorize any compromise of his legal rights; and this the court would never-sanction unless, after full inquiry, it was satisfied that such a course was best for the interests of the lunatic. This view was manifestly recognized by the parties to the former suit, as well as their counsel, for ihey prepared and agreed upon an order sanctioning the compromise; but, unfortunately for the defendants in this action, such order never was signed. Whether it would or would not have been signed by the court, we cannot now know with any degree of certainty, as all the testimony in that case is not before us. But from what is before us, we think the action of the court would have depended largely, if not entirely, upon the view which it might take of the Confederate transactions of the committee; especially of the propriety of the investment of a large portion of the lunatic’s estate in Confederate bonds.

2 Our remark made above that neither the lunatic nor Ms distributees can be affected by such agreement, is not to be understood as prejudging the question whether George L. Banks, or rather his representatives (behaving died since the commencement-of this action), is estopped by Ms being a party to said agreement from sharing in any recovery that may be had against the defendants, or even as indicating any opinion whatever as to that question. Until his representatives are made parties, that question cannot properly be considered. And as we think that question should be determined in' this action, provision should be made to bring them in as parties. For if it should eventually be determined that George L. Banks, by signing that agreement, is estopped from making any claim against the estate of the committee, then clearly whatever would otherwise bo his share of the recovery, should first be deducted from any amount that may be established in this action, before any judgment is rendered against the defendants herein. It is stated in the “Case” that this point was made in the court below ; but, so far as we can discover, it was not distinctly passed upon, and the failure to do so is made one of the grounds of exception to the Circuit decree. It seems to us, therefore, that the decree should be modified in this respect, and that the pleadings should be so amended as to bring before the court the parties necessary to a proper determination of this question.

3 It is contended, however, that Uriah Crout having performed his part of the agreement by providing for the comfortable support of the lunatic during his life, his estate has a right to claim, in equity and good conscience, that the entire agreement shall now be carried out by a discharge of the estate of the committee from any further liability. But it will be observed that until it is made to appear that such support was provided for out of the committee’s own funds, which involves the question whether the lunatic’s estate had been exhausted, Uriah Crout was doing no more than what his duty as committee required of him. And, as we shall presently see, the lunatic’s estate not having been exhausted, this ground cannot, for this reason, be sustained.

4 As to the defence of laches, we agree with the referee and the Circuit Judge. To say nothing of the fact that this defence is not set up in the answer, we see nothing in the case to sustain it. Charles Banks died in January, 1888, and this action was commenced within a few months thereafter, and certainly there w'as no unreasonable delay in instituting this action. It is true that the parties who might ultimately be entitled to an interest in the lunatic’s estate might possibly have instituted an action against Uriah Crout to save the estate of the lunatic from waste or destruction, or to enforce its application to the support of the lunatic, as required by the terms of the trust which Crout had assumed ; but this could only have been done under proper allegations and proofs. So far as we can see, there were no grounds upon which such allegations could have been made. The testimony shows that .Crout continued to discharge his duties faithfully up to the time of his own death, and made provision in his will for the support of the lunatic as long as he might live, which seems to have been faithfully carried out. There is no testimony that the security given by him had become impaired by the sureties on his bond becoming insolvent, and his own estate seems to have been sufficient to enable him to meet any balance that might remain of the trust fund, after the trust terminated by the death of the lunatic. There was nothing to call for the bringing of such an action as is suggested, except the fact that Crout claimed by his returns to have invested $1,500 of the trust fund in Confederate bonds in 1864, and this we do not regard as sufficient to require that an action should have been brought within a reasonable time thereafter by parties who might, or might not, be ultimately interested in whatever balance of the lunatic’s estate might remain after his death, at the peril of being charged with laches when they brought their action after their rights had' become vested. But in addition to this, the referee finds as matter of fact that Crout continued to make regular returns down to and including the year 1868, copies of which are set out in the “Case,” from which it appears that he claimed a balance duo him in the return for 1865. Nor can the fact that an agreement of compromise, hereinbefore referred to, had been entered into between George L. Banks and Uriah Crout in 1870 avail; for this, if known to the parties ultimately interested, would be accompanied with the knowledge that such agreement had never been sanctioned by the court, and was therefore not binding.

5 Next, as to the validity of the investment in Confederate bonds; and as preliminary or incidental thereto, the question as to the competency of the answer of Crout in the former case, as evidence in this case. While we agree with the view taken of this question by the referee and the Circuit Judge, yet we regard it as scarcely a practical question in this case; for it seems to us that all the evidence furnished by the ahswer, so far as this investment is concerned, is contained in the returns of Crout, which were received without objection.

6 Recurring, then, to the main question, we do not think this investment can be approved. Crout received the money of his ward on or about the 1st of January, 1857, and, in the absence of any testimony whatever tending to show that he ever invested it in any way' prior to 1864, we are bound to conclude that he retained it in his own hands. This, though a technical breach of trust, as it is termed by Wardlaw, Ch., in his Circuit decree in Spear v. Spear (9 Rich. Eq., at page 188), did not necessarily involve any moral delinquency whatever. Indeed, under the then latest utterance of the highest judicial tribunal in this State, in the case of Sweet v. Sweet (Speer Eq., 809), such a course was not only approved, but rather recommended. It is true that the reasoning of that case was disapproved in the subsequent case of Spear v. Spear, supra, which, however, was not heard until January, 1857 ; but when decided does r.ot appear, as it was not customary at that time to give the dates of the filing of opinions. It does appear, however, that the volume containing the last mentioned case was not published until 1858. It is very obvious, therefore, that Crout could not possibly have been influenced by what was said in the last case, in the disposition of the money when he received it. At all events, the undisputed facts remain that he received the money in January, 1857, and he never claimed to have invested it in any way until 1864. Even in his answer to the former case, he makes no such claim. In the face of the fact that there is no evidence whatever that Crout had ever made any other investment, and in view of the further fact that although he made regular returns, he never even claimed that he had made any investment of his ward’s funds until 1864, and that lie entered the investment now in question upon his next return, we do not see how it is possible to doubt that the trust fund had been retained in his own hands up to that tíme. This being so, when Crout received the trust fund in January, 1857, he became a debtor to the estate of the lunatic, and continued to be so until such debt was properly discharged.

The practical question, therefore, is whether a trustee becoming indebted to the trust estate, in gold or its equivalent in 1857, could properly discharge such indebtedness by paying the amount thereof to himself in 1861, in a depreciated currency. To the question thus stated, there can be but oue answer. Confederate treasury notes, though used as money, never really acquired a legal character as such. Such a debt, therefore, could not legally be discharged with Confederate treasury notes, except by the creditor consenting to receive them as money, when, upon the principle that anything received by the creditor as payment shall operate as such, the debt might be thus discharged. But this principle cannot be applied to the present case, for the committee occupied the position of both debtor and creditor, and as the principle really rests upon the agreement to receive such depreciated currency as payment, it could not apply in a case where no such agreement was possible, for the reason that the two parties necessary to make an agreement were wanting ; the committee could not, as debtor, make such agreement with himself as creditor,

While, therefore, we can very readily understand how a trustee might he justified, under proper circumstances, in receiving from another Confederate treasury notes in payment of'a debt clue to the trust estate, even when contracted on a gold basis, we do not see how he could be justified in receiving from himself payment of such a debt in that kind of currency, further than what was necessary for the immediate exigencies of the trust estate. While, therefore, the committee may be justified in receiving even from himself so much as was necessary for the comfortable support of the lunatic in Confederate cuirency, from the necessity of the case, inasmuch as the evidence shows, and the referee so finds, that such cutrency was the only one in use in this State from 1st January, 1862, to 1st of May, 1865 ; yet there was no such necesj-ity to justify the receipt of anything more. We agree, therefore, with the referee and Circuit Judge that the alleged investment in Confederate bonds cannot be sustained.

7 8 9 The fourth matter presented by the counsel in behalf of appellants for the consideration of this court, involves three inquiries: 1st. As to the correctness of the figures in the account as stated by the referee, and the alleged omission to allow commissions on the expenditures for 1868, and on the interest which accrued to date of report. 2nd. As to scaling the expenditures during the war. 3rd. As to the value of the maintenance of the lunatic since the war. As to the first, we find it difficult to ascertain with certainty whether there is any error in the figures or in the omission of credit for commissions, owing to the condensed form in which the account is stated; and as the case will be recommitted to the referee for another purpose, the parties will be allowed to show, if they can, any errors in the figures or any omissions of credit for commissions. As to the 2nd inquiry, it seems that the referee only scaled the excess of the disbursements in 1863, 1864, and the first four months of the year 1865, over and above the interest for those periods; and in this we do not see that there was any error. These disbursements were made in Confederate currency, and the prices paid for articles furnished the lunatic, as shown by the returns of the committee, are quite sufficient to justify the course which the referee pursued. The 3rd inquiry presents only a question of fact upon which there was conflicting testimony, and, under the well settled rule, the conclusion adopted by the referee, and concurred in by the Circuit Judge, cannot be disturbed.

As to the counter claim. It follows necessarily from what has been said, that there was no error in disallowing it, except so far as the burial expenses are concerned, and they are more properly allowed by the referee as a credit on the account as stated by him.

10 The only remaining inquiry is as to the plea of plene administravit praeter. So far as we can discover, this matter has not been distinctly passed upon either by the referee or the Circuit Judge. In this we think there was error; for if the defendants can sustain this plea, any judgment which may be rendered against them should be subject to such plea. It seems to us, therefore, that the case should be recommitted to the referee, for the purpose of having the issues raised by that plea passed upon.

The judgment of this court is, that the judgment of the Circuit Court, except as modified herein, be affirmed, and that the case be remanded to that court for the purpose of such further proceedings as may be necessary to carry out the views herein announced.

Case Details

Case Name: Clark v. Crout

Court Name: Supreme Court of South Carolina

Date Published: Sep 14, 1891

Citation: 34 S.C. 417

Court Abbreviation: S.C.