98 Ark. 553 | Ark. | 1911
(after stating the facts). 1. It is first insisted that the appointment of Marie A. Justice as guardian of Earle M. Wilson by the Greene Probate Court in 1906 was void because the guardianship of H. A. Parker was pending. It is not necessary to consider this point, for Mrs. Justice also brings the suit as next friend of the minor. St. Louis, I. M. & S. Ry. Co. v. Haist, 71 Ark. 258.
2. It will be' noted that the demurrer to the complaint was not acted upon by the court. In the case of Kiernan v. Blackwell, 27 Ark. 235, it was held (quoting from syllabus) : “Where a cause has proceeded to final adjudication, without judgment of the court upon demurrer filed in same, the demurrer will be considered to have been waived.” Recent decisions of this court have recognized and applied the rule. Therefore the case is presented to us just as if the defendant had assented to the jurisdiction of the chancery court to try the case, and had made no objections to the suit proceeding to determination against them.
3. It is next contended by counsel for defendants that the property of Mary A. Wilson, deceased, never came into the possession of H. A. Barker as guardian of her minar children, and that he was not accountable to the probate- court as such guardian. This brings us to a construction of her will. It is set out in the statement of facts and need not be restated here. The power of one, legally competent to make a will, to dispose of his property as he sees fit, subject to the restrictions provided by the statutes, is a legal incident to ownership. In construing the provisions of a will, the intention of the maker is first to be ascertained, and, when not at variance with recognized rules of law, must govern. The intention of the testator must be gathered from all parts of the will, and such construction be given as best comports with the purposes and objects of the testator, and as will least conflict.
These canons of construction are so firmly established as to need no. citation of authority to support them.
It will be noted that Mary A. Wilson bequeathed to Earle M. Wilson, her son, all her earthly possessions. Continuing, the will provides: “I furthermore appoint my husband, Sidney J. Wilson, sole guardian of my son and his property. He is to take entire charge of both, managing the one and educating the other as he sees fit. As a mark of my esteem and affection, I require no bond and hold him free of the law. Therefore, he is to take and hold all my son’s, Earle Malcolm Wilson’s, property in trust to manage and direct, to bargain, sell and convey, in my son’s name until the latter is twenty-one (21) years of age.”
A subsequent clause of the will provides that future issue of her marriage shall take equally and in like manner with Earle M. Wilson. Ollie Houck -was subsequently born unto her. The testatrix had the right and the power to leave her property in trust for her children during their minority and to name such trustees as she saw fit.
In her will she expressed the object and purpose of the trust and defined explicitly the powers of the trustee. In the application of the rules of construction above announced, we are of the opinion that, under the terms of the will, the testatrix intended something more than to malee her husband guardian of her minor children; or to give him power to manage her property, but that she intended to place her property in trust for her children during their minority. She does not stop with directing him to manage the property, but goes further and uses the word “hold,” which has a technical meaning as expressing tenure. He is given power to bargain, sell and convey. Hence, instead of -merely intending to appoint her husband guardian of her children and to give him power to manage the property for them, we a>re of the opinion that, by direct and express terms, she made him trustee of her property during their minority with power to sell same, and that the legal title thereto -during the trust term was in him as trustee. Fay v. Taft, 12 Cush. (Mass.) 448.
It follows, then, that Sidney J. Wilson, under the will, became entitled to take and hold possession of the property of Mary A. Wilson at her death unless he was for some reason incapacitated from executing the trust. It also appears from the testimony of Parker himself that Sidney J. Wilson was somewhat improvident, and also that he was arrested and tried for the murder of bis wife. He was, however, acquitted of the charge in 1892, and the presumption is that he was innocent. Parker says that he did not know of the existence of the will at the time letters of administration on the estate of said Mary A. Wilson were granted him. If he had known of its existence, of course there would have been no necessity for the administration; for it does not appear that any debts were probated against her estate. It is true Parker turned over the money belonging to her estate to Sidney J. Wilson at various times; but he is no more liable on that account than if. he had turned it all over at one time. He was entitled to the property under the terms of the will, and, there being no necessity for an administration of Mary A. Wilson’s estate, there was likewise no need for Parker to procure .an order of the probate court directing him to turn the property over to the trustee. The trustee being entitled to it under the will, no one else could complain except creditors of Mrs. Wilson’s estate, and there are none. Without going into detail, it is sufficient to state that Parker has' fully accounted for the whole of Mary A. Wilson’s estate. He has given in detail the amounts paid over to the trustee and the purposes for which they were paid. It seems from his testimony, which is not contradicted, that all these amounts, except $100, were paid to the trustee to be used for the benefit of the minor child, Earle M. Wilson. Therefore, we hold that Parker is not liable for the $1,280.20, the amount received by him as belonging to the estate of Mary A. Wilson, deceased. In reaching this conclusion, we have not allowed him the $100 paid by him to one of the attorneys of Sidney J. Wilson. We think that the other amounts paid the trustee exceed the amount received.
4. Of course, the amount of the insurance did not become part of the estate of Mary A. Wilson at her death; for her children were named as beneficiaries in the policy. The amount of this policy, viz., $2,000, vested in the children upon the death of their mother.
It will be noted that Earle M. Wilson became of legal age during the pendency of the suit, and before the decree was rendered. Upon arriving of age, he was substituted as plaintiff. Parker had made a settlement of his accounts as such guardian in the probate court at its July term, 1893, and his settlement was confirmed at the next term of the court. One of the objects of this suit is to surcharge and falsify that account. We have not set out the account in full for the reason that the chancellor found in favor of Parker as to all the items except the Hughes notes,, and no appeal has been taken by Earle M. Wilson from his decision. Hence it will only be necessary for us to consider the item of the Hughes note.
The chancellor charged Parker with the loss resulting from the non-collection of the loan made to Hughes. Counsel for Parker strongly insist that the chancellor erred in so holding. Our statutes contain provisions authorizing the money of the ward, to be loaned and directing the guardian to report the disposition of the money. Section 3604 of Kirby’s Digest provides that if at any time the guardian shall have on hand money of the ward beyond what is necessary for his education and maintenance he shall loan same under the direction of the court. Sec. 3806 contains a provision in regard to the rate of interest and the kind of security required. Sec. 3807 makes it the duty of the guardian at every annual settlement make report of the disposition made of the money of the ward, and, in case it is loaned out, to report the name of the person to whom loaned, the description of the real estate security and where situate, and its value. Sec. 3809 provides that “no guardian shall be personally responsible for any money belonging to his ward and loaned out by him under the direction of the court, and on security which may have been approved by the court, in case of the inability of the person to whom such money may have been loaned or his security to pay the same.”
The first question that presents itself is whether or not these statutory provisions are mandatory. The precise question has-never been passed upon by this court.
In this connection it may be stated that we have a statute which provides that, unless the direction of the probate court is obtained therefor, “the guardian shall not be allowed in any case for the maintenance and education of the ward more than the clear income of the estate.” Kirby’s Digest, § 3792. This section has been construed to be mandatory, and the court held that it takes from the probate court the discretion to approve expenditures of a guardian for the support and education of the minor, which are in excess of his income, unless the expenditures have been made under an order of the court previously obtained. And that a bill in chancery will lie to surcharge and falsify the guardian’s account, where he has been allowed credit in his annual settlements for amounts so expended in excess of the income from the ward’s estate. Campbell v. Clark, 63 Ark. 450.
While the language of the provisions under consideration is not as strong and positive as that in the section last referred to, we think that it should be construed to be mandatory. The money belongs to the ward, but he is not consulted, and has no voice in regard to' the loaning out of his own money. The statute contemplates that it shall be done under the direction and orders of the probate court. It is true the guardian may assume the responsibility and loan it out without an order of the court, but in such case he acts at his own peril. If he imprudently loans the ward’s money upon inadequate security, without having first procured an order of the court to loan it, he must suffer the loss occasioned thereby, even though he may have acted honestly in the matter.
In discussing a similar statute the Supreme Court of New Jersey said:
“In cases coming under this act trustees may take the responsibility of loss upon themselves, or they may throw it 'on the court. If the latter course is pursued, the directions of the statute are plain. They must obtain leave and direction for the purpose of putting out the money, not put out the money first, and at some future day, when difficulties are foreseen or loss apprehended, go to the court and obtain a decree of confirmation. No such power is given to that court; nor have the administrators or trustees any authority under the statute to make such application. This may appear to be a rigid and harsh construction of the act, and I confess it appears so at first sight; but I think a moment’s reflection will satisfy us of the propriety, if not necessity, of construing the power of the orphan’s court in this respect strictly. It was doubtless the intention of the Legislature that the trustee, in putting out minors’ money, should be implicitly governed by the direction of the court. In all such cases the court derives its information mostly from the representations of the trustees themselves, who can or ought to have no possible temptation to impose upon the court. One common motive should govern all — that the minor’s money should be safely invested. But so construe this statute as that trustees may invest money at their own risk, and at any time afterwards come before the court to seek a confirmation which shall shelter them from all danger, and ‘be conclusive upon the rights of those who are not able to be heard, and who are reposing in the security afforded by the wholesome provisions of the law, and we place them before the court in a very suspicious attitude. Their object for coming there will be their own safety alone, and not that of the fund. You place them under strong temptations, such as many men are not able to resist; and any one who is conversant with the ordinary mode of doing business -in that court must be satisfied that the greatest imposition would often be practiced, and the grosses frauds committed. I feel satisfied, therefore, to say that this .order is not made in pursuance of any authority vested in the court, and, not within its jurisdiction, and therefore is no protection to the administrators.” Gray v. Fox, 1 (Saxton, Ch. Rep.) N. J. Eq. 259. See, also, Guardianship of Caldwell, 55 Cal. 137.
In the application, of these principles, we hold that where a guardián loans the ward’s money without first obtaining an order of court authorizing him to make the loan, he assumes the responsibility, and no subsequent order of the probate court confirming his action will relieve him from liability if loss follows.
As we have already seen, our statutes protect the guardian from personal responsibility where he loans the ward’s money under an order of the probate court. This brings us to the question : did Parker obtain an order of the probate court authorizing him to make the loan to Hughes ?
Parker himself states that the order was made by the judge, and it does not appear on the records of the court. Then, too, in his accounts, Parker recognizes that he made a mistake in making the loan, and does not refer directly or indirectly to the fact that it was made under the order of the probate court. On the contrary, his statement about the matter as contained in his account filed in a year after the loan was máde places the whole responsibility upon himself. No reference is made to previous order of the court ordering or directing him to make the loan. Parker states that he went to Judge Mayo, and consulted with ■him about making the loan; that Judge Mayo directed him to draw up a petition, and that he would approve it. Parker further said: “I did draw up a petition and presented it to Judge Mayo. In my presence, he turned it over and indorsed it on the back, 'Examined and allowed,’ and I put it in the files of (the Wilson papers, and it was in those files until the fire occurred, when they were burned.”
It will be noted that Parker does not state that the petition was given to the clerk so that the order might be placed upon the records of the court; but states that the petition was placed among the Wilson papers and remained there until they were burned. This negatives the idea that it was an order of the court, and that it was made in term time. It is conceded that the records of the probate court were not 'burned, and that the order does not appear thereon. It seems that Parker went no further than to seek the approval of the county and probate judge. From this testimony the chancellor found that Parker did not obtain an order of the probate court authorizing him to make the loan to Hughes, and a majority of the judges are of the opinion that the finding of the chancellor is not against the weight of the evidence, and consequently should not be disturbed.
I agree with my brother judges that conversations between the guardian and the probate judge, and the verbal or written advice of such judge that the loan should be made, can not operate as an order of the court as contemplated under the statute ; but I am also of the opinion that Parker was speaking colloquially in his testimony, and that when he referred to the probate judge indorsing his petition on the back “Examined and allowed.” he meant the probate court. He was a lawyer of experience and familiar with the statutes governing such matters. He would •hardly have gone to the trouble of preparing a written petition to present to the judge in vacation. I am strengthened in this belief by the fact that in his annual settlement he complied with the statute in such matters by reporting to the court the details connected with the loan. I think it fairly deducible from his whole testimony that he obtained an order from the probate court to make the loan, and that by inadvertence such order was not spread upon the records of the court. If my view is correct, it follows that the order of court protects him from the loss that followed; for the testimony shows that he was not negligent in collecting the loan; hut that the loss was occasioned by financial misfortunes and reverses w'hich overtook Hughes after the loan was made. See Jacks v. Kelley Trust Co., 90 Ark. 548.
5. But the court is of the opinion that it by no means follows that because Parker is liable for the whole amount of the Hughes loan the sureties on his bond as guardian of Earle M. Wilson are also liable for the full amount of the loan. Counsel for plaintiff invoke the rule that if a person occupying the dual relation of guardian and administrator holds funds in the latter capacity, which are due and payable to his -ward, the sureties on his guardian’s bond are chargeable with his failure to account therefor as guardian. The theory on which the rule proceeds is that, after the time for the administration to close under the statutes has passed, the presumption is that the person transferred the funds from himself as administrator to. himself as guardian, and that by operation of law he becomes liable as guardian for such funds, and in like manner the sureties on his guardian’s bond also become liable. We do not decide whether the rule obtains in this State; for we hold that under the facts of this case there is no place for the application of such rule.
It is true that Parker was guardian of both Earle M. and Ollie Houck Wilson, and that he administered on the estate of Ollie Houck Wilson when he died, and that Earle M. Wilson was the sole heir-at-law of Ollie Houck Wilson. Parker, however, gave separate bonds in each case, and his co-defendants only signed his bond as guardian of Earle M. Wilson.
It will be remembered that the loan to Hughes was made on May 13, 1892; that Ollie Houck Wilson did not die until November, 1892, and Parker did not become administrator of his estate until September, 1893. It is apparent then that he never had any part of the Hughes loan in his hands as administrator of the estate of Ollie Houck Wilson, for Hughes had obtained the loan several months prior to the death of Ollie Houck Wilson. Hence we hold that sureties on the bond of Parker as guardian of Earle M. Wilson are only liable for half of the amount loaned to Hughes, that being the amount that belonged to Earle M. Wilson when the loan was made, and was all that should have been in his hands at that time.
6. We next come to the question of interest. Parker having lent the money without an order of court and upon insufficient security, we have held him personally liable. Pie then stands before the court as if he had kept the money himself and neglected to obtain an order -of the court to lend it.
In the case of Merritt v. Wallace, 76 Ark. 217, the court held (quoting syllabus) : “Where a guardian, after being ordered by the probate court to lend out his ward’s money, waited for ten years without lending the money, and without making any report to the court of his failure to do so, it was not error, after allowing him reasonable time to do so, to charge him with interest thereafter at the legal rate.” The court said:
“The general rule is that the guardian must exercise reasonable skill arid diligence to loan the money; and if he fails to do so, he is liable therefor at legal rate of interest; and if the ward can show it could have been loaned at a higher rate, he is chargeable with what he could have obtained.”
It is true, the loan to Hughes was at ten per cent., but it is shown to have been a very injudicious loan. Hence we do not think it sufficient evidence to show that Parker could have obtained a rate higher than the legal one if he had made a loan on good security. No other testimony on the point appears in the record. Hence we hold that the court erred in charging Parker with interest at a greater rate than 6 per cent., the legal rate.
The decree will, therefore, be reversed and the -cause remanded with directions to the chancellor to render a judgment against the defendant, H. A. Parker, for $655 with 6 per cent, interest from May 13, 1893, and against the other defendants for half that sum with interest at the same rate and from the same date.