1 Mills Surr. 536 | N.Y. Sur. Ct. | 1900
On the 20th of April, 1885, letters of guardianship of the estate of John and Henry Hurlburt were issued by the surrogate of Cattaraugus county to the petitioner, who entered upon the discharge of his duties as such guardian, and so continued until the wards became of age, and he now files his account and petition for a judicial settlement of the same; such account shown that the only asset in his hands as guardian is the mortgage hereinafter referred to.
The mother of the wards died sometime prior to the issuing of such letters of guardianship, leaving her surviving her husband and her two sons, John and Henry. After her death the husband married again, and he died intestate in 1886, leaving a widow, and an infant daughter by his second wife. The mother of the wards was insured at the time of her death, the beneficiaries under such policies of insurance being the husband and the two sons. The adjustment of such insurance was delayed for some time after her death, in consequence of litigation, but was finally settled upon the basis of paying the sum of $1,000 .to the wards and a certain sum to the husband, the particular amount of which does not appear. The thousand dollars belonging to the wards came into the hands of the petitioner as their guardian shortly after the issuing of the letters of guardianship. At the time of receiving this money the petitioner was the owner of a tract of land in the town, of Ischua, containing sixty acres, little of which was improved or cleared, lying mainly on the hillside, and entirely without buildings or substantial improvements. On the 30th day of June, 1885, the petitioner conveyed this land to Edward Hurlburt, the father of
However harsh the enforcement of this demand against the guardian may seem, there are certain well-defined legal rules regulating the conduct of guardians in the performance of their trust that cannot be ignored. The relations between a general
Eo actual fraud need he shown on the part of a trustee to make him personally liable, when he deals for his own benefit with the trust funds. Jewett v. Miller, 10 N. Y. 402; Fulton v. Whitney, 66 id. 548-555; Colburn v. Morton, 3 Keyes, 296; Gardner v. Ogden, 22 N. Y. 327-344; Van Epps v. Van Epps, 9 Paige, 237.
The office of guardian is peculiarly one of trust and obligation, and while, as a general proposition, they are not insurers of the safety of the trust estate, and are required to employ only .such prudence and diligence in the discharge of their duties as men of average prudence and discretion under like circumstances employ in their own affairs (Purdy v. Lynch, 145 N. Y. 462) ; yet the guardian is bound at all times to act for the interest of his ward rather than his own. Whenever he seeks to gain a personal advantage at the expense of his ward, such act will be annulled by the court. 9 Am. & Eng. Ency. of Law, 155; White v. Parker, 8 Barb. 48-52; Schieffelin v. Stewart, 1 Johns. Ch. 620; Brown v. Rickets, 4 id. 303.
Unauthorized acts, even if done in good faith, are undertaken .at the risk of the guardian, and if they prove beneficial to the ward the court will adopt them; if detrimental, he is personally liable for the loss. Jackson v. Sears, 10 Johns. 435; Milner v. Harewood, 18 Ves. 259; 9 Am. & Eng. Ency. of Law, 107.
Persons standing in relations of trust are not permitted to .speculate in the trust property. Lewin Trusts, par. 279 ; Welch v. Woodruff, 20 N. Y. St. Repr. 840.
If a guardian sells his own property to his ward, the latter can ignore the sale and recover the price and interest, regardless of whether such sale was made in good faith or not. Hendee v. Cleaveland, 54 Vt. 142.
Under the authorities cited it is apparent that a direct sale of this land by the petitioner to the wards would have been en
.The sale of this land to Hurlburt by the guardian taking back the $1,000 to himself as guardian, and thereupon appropriating the moneys of the wards, was in effect an exchange by indirect methods of the petitioner’s lands for the moneys of his wards — a transaction which cannot be sanctioned without utterly disregarding the salutary rules recognized by the cases cited. It must be held that the petitioner is liable to account for the principal sum of $1,000, but he having in fact derived no interest or income therefrom, and it being a matter of common observation that it is difficult to so invest a trust fund as to continuously produce the full legal rate of interest, I am not disposed to charge him with interest at the rate of six per cent. He should, however, account, for and be charged with interest on this fund from the date of its receipt to the date of this decree at the rate of three per cent.
Under this disposition of this claim, the mortgage in question belongs to the petitioner personally and should be transferred to him so that he may enforce it in his own name.
A decree will be entered in accordance with the foregoing conclusions.
Decreed accordingly.