Cureton v. Watson

3 S.C. 451 | S.C. | 1872

The opinion of the Court was delivered by

Moses, C. J.

The decree of the Circuit Court sustains the investment made by the defendant, as guardian of the plaintiff, Alice M., and dismisses the bill.

There is a question, however, which lies behind that, and which the Judge below has entirely failed to consider. It is a material point made in the case, and one on which the plaintiffs’ strongly relied for the relief asked by their proceeding. It refers to the duty of the guardian in calling in the outstanding securities, and thus, himself, providing a fund in hand for investment. It was one of the points submitted for the judgment of the Court by the report of the special Referee.

The principal item is the sum of $1,767.73, averred to have been received of B. IT. Massey on 11th April, 1863. The transaction in regard to this debt was as follows: The plaintiff, Alice M., was entitled to a bond of the said B. H. Massey, with good and sufficient sureties, and also secured by a mortgage of real estate, given on the sale of the property of her deceased father, sold by the Commissioner in Equity, under an order of the Court, and by him held. On the 14th of October, 1861, without any money having been paid to the Commissioner or Watson, the latter receipted for the full amount to the former, and the bond was marked satisfied. On the same day Watson took the note of Massey for the said sum, with J. H. Stewart as surety. What was the motive which induced the change, it is difficult to imagine, so far as Watson could have had in view the interest he was bound to protect. It was said in Sanders vs. Rodgers, 1 S. C. 459, on the authority of Lord Eldón, “ that generally it is not the duty of trustees to call in money, invested in good real estate, where there is no probable risk.” Here it seems to have been called in without any necessity for its immediate use, and without the purpose of obtaining a higher rate of interest, and for no conceivable object, having in view any advantage to the ward. Where a concession of this extraordinary kind is made, he who makes it, assumes all the hazard of loss, and must bear the consequences.

Let us now pursue the note. On 11th April, 1863, payment of it was accepted in Confederate money, and about the 17th of the same month, the proceeds were funded in 8 per cent. Confederate bonds. At this time there had been a great depreciation in the currency of the country, and the result of this operation between Massey and Watson was, that the former actually paid for the land an amount in a depreciated currency, nominally equal to the sum due on the bond, but which was demandable and payable in specie. The difference is not perceived between this case and that of Sanders vs. Rogers, so far as relates to the acceptance of Confederate notes by Pawley, in satisfaction of the bonds payable in gold, and secured by a mortgage of real estate, or that of Meyer vs. Mordecai, (1 S. C., 383,) so far as relates to the general principle applicable to the collection of the bonds by the defendant there. Watson, in effect, exchanged a bond secured by personal sureties and a mortgage of landed property, for a simple note of hand, with one surety. Are we to require testimony to satisfy us of the relative marketable value of each of the paid securities, considered even without reference to their respective dates ? When, however, it is remembered that the bond was given in 1858, promising the payment, in gold and silver, and the note in 1861, leaving doubtful the character of the currency to be required for its payment, a difference in their value at once appears to the prejudice of the latter, though the full extent is not shown in the testimony.

In Nance vs. Nance, (1 S. C., 209,) it was held that the duty of the guardian, or other trustee, required him to take as security mortgage of unencumbered real estate of value sufficient to make the fund safe; and it is only where such real security can not with reasonable diligence be procured, that he may take personal security in lieu thereof. The defendant here, so far from presenting a case coming Avithin the rule there laid down, actually exchanged the security of the higher grade for that of the lower. The course of the guardian in this particular is in evident conflict with the duty imposed by his trust, and cannot be upheld.

Then, as to the other items of investment, in his return of 1860 he includes $650, received on 10th April, $184.87, on 17th July, and, in his testimony, states that these sums, with $250 transferred on 24th March, 1861, from himself, as administrator of M. M. SteAvart, to himself as guardian of Alice Stewart, and various other sums received down to 1863, were all included in the said bonds for $3,000, for which he claims credit. It is a little singular that, so far as ajApears by his returns filed, none of the credits disclosed by him are included in them after the entry of July 17, 1861, except the amount received from Massey. It is not less strange that, of those received in 1860,and 1861, to say nothing of 1862, he never thought it necessary to put them in the shape of an investment until about 17th April, 1863. There is something more, in the evidence of the defendant, which cannot escape attention or remark.

Pie refers to various receipts as comprised in “ the bonds above alluded to,” or “ embraced in said bonds,” or in bonds above recited. The bonds call for §3,000, and the various sums said to be so funded are in excess of that amount. It is not contended that such bonds were at a premium, and the diminution thus accounted for.

The report states that “ the defendant, also, on different occasions, specified in the testimony, collected notes and other claims due his ward’s estate, receiving Confederate money in payment of the same, and invested the same in Confederate bonds.” We are to assume that these notes and claims were based on a specie currency. The testimony is conclusive to show that, without any offer of payment by the debtors, he notified them “-that he would (on a certain day) invest in Confederate bonds, and that those who owed, and wished to pay, must do it by that time.”

In conformity with this intimation, he received the Confederate money, which was at a large discount, compared with gold, which he had a right to demand — waived such right, and accepted what he knew was a depreciated medium. The loss which resulted should not be endured by the ward, who was without power to avert it.

It would have placed the defendant in a better position, if at the time of the alleged investment, he had so endorsed the bonds that the ownership in them might have plainly appeared, or to have entered in his return of 1863, a credit in his favor by the amount invested, thus shewing the disposition of the balance with which he stood charged. If, in the course of events, the result of which could not be foretold, the bonds had attained a par value in gold, while the Confederate Treasury notes may have been below it, there was nothing on which she could have relied to claim property in them. Pie himself says in his examination, “the moneys he collected for his ward, he did not keep separate, but mingled it with his own.”

The defendant, however, is entitled to a credit for the negro hire received in 1862, 1863 and 1864, if charged with it in the account, and if included in the bonds or certificates to which he refers in his testimony. This hire accrued yearly, had reference to the prevailing circulation, and was receivable in it. He should also be credited with any payment of taxes he made, and of which in the account he has not had the benefit.

It is ordered and adjudged that the order of the Circuit Judge, dismissing the bill, be set aside. That the case be remanded to the Circuit Court for York County, that the necessary orders may be had, to give full effect to the principles and directions herein expressed.

Willard, A. J., and Wright, A. J., concurred.