200 Mo. App. 405 | Mo. Ct. App. | 1918
— Defendant Hardy was Public Administrator and ex-officio Public Guardian and . Curator of Moniteau county for three sucessive terms, the last of which ended January 1, 1909. During his last term, and on July 30, 1906, he was ordered by the probate court to take charge of the persons and property of Grace, Goldie and Henry Miller, minors. He did so, and continued as Guardian and Curator of said minors through the remainder of his term and thereafter until November 9, 1914, when he voluntarily appeared 'in the probate court and asked to be permitted to execute a new bond as guardian and curator and that his bond as public administrator be discharged. The court made an order permitting him to execute said new bond, which he did; and same was filed and approved by an order which further directed that “the said bond as public administrator as aforesaid be, and the same is hereby, finally discharged from further liability in this behalf.”
Hardy continued as guardian and curator, under said new bond, until November 26, 1917, when, upon proof of the publication of four weeks’ notice in a news
Whereupon his successor brought this suit on the aforesaid bond against him and his sureties, one of whom is dead but whose estate is represented herein by his executors. Said bond recites that whereas Hardy had been appointed guardian of the persons and curator of the estates of said minors, “Now, if the said H. B. Hardy shall faithfully discharge his duties' as said guardian and curator, according to law, then this bond to be void,” etc.
The petition, after alleging the appointment of the successor guardian and the execution of the bond sued upon, set up the resignation of Hardy, the filing of said settlement showing the balance hereinbefore mentioned, the order to pay over said balance, and the demand therefor in open court by said successor; and, for the breach of said bond, charged the failure and- refusal of said Hardy to pay said amount as ordered.
Hardy filed no answer but the sureties defended upon the ground that Hardy converted the funds before the execution of the bond sued on; and that on the 9th day of November, 1914, the day said bond was executed, and for at least six months prior thereto, he did not have, and had not had, in his possession or under his control any money notes or personal property belonging to said heirs except certain yearly rents from real estate which the sureties alleged had been duly accounted for in his settlements. All this was denied by the reply.
The case was tried before the court without a jury. The judgment recites that the court found that, after
After defendants’ demurrer to the evidence had been overruled they asked the court to give two declarations of law, the first to the effect that if the court found Hardy did not have the estate of said minors in his hands or possession at the time of the execution and approval of' the bond sued on, but had used it in private business or in settlement of other estates in his hands prior to November 9, 1914, then the fact that he charged himself up in settlements of the estates was not binding upon the defendant sureties and the finding should be in their favor. The second declaration was to the effect that if the court found that at the time of the approval of the bond sued on, Hardy, as curator, had used the assets of said estate in his private business, or in settling up other estates of which he may have been in charge, and did not have said assets in his hand, or in his possession or under his control, although he was solvent, then the finding should be in favor of the defendant sureties, notwithstanding the fact that Hardy kept up his settlements as curator and charged himself with the balances thereof as though he had the moneys of the estate in hand. Both of these declarations were refused.
It is defendants’ contention, first, that the court should have sustained their demurrer to the evidence; second, that the court erred in refusing each of said declarations.
With reference to whether defendants’ demurrer should have been sustained, we think that regardless of the questions hereinafter discussed, the court did right in overruling the demurrer. For, without regard to the time when the conversion occurred, the settlements made under the new bond show that about $450 of rents came every year into the curator’s hands and, in accounting for these, Hardy credited himself with various sums for his services. Now, the rule is that a curator who has converted assets of the estate is riot entitled to pay for his services since pay is an incident to a faithful discharge of the trust. [State to use v. Berning, 74 Mo. 87, 100.] So that, the curator has not fully accounted for the rents that came into his possession after the execution of the bond sued on but owns the said suras which he paid to himself. It would seem that this would’ justify the court in refusing to sustain the demurrer, and would authorize a judgment for the amount of these credits against the sureties on the bond in suit even if said sureties should not be held responsible for any other amount.
For the purpose of- showing that liability was on the sureties of his bond as public administrator and not on the present or second set of sureties, the defendant introduced Hardy as a witness to prove that he converted the heirs money before the present bond was executed and that he did not have any money of these heirs in his official hands at the time the bond in suit was executed, and that none had come into his hands as guardian since, except the rents heretofore mentioned which rents he said he had correctly accounted for' and paid out for expenses. His testimony, however, is very indefinite and unsatisfactory. He was asked if he.had any of the money or personal property of the Miller heirs at the time the bond in suit was executed or at any time for a period of six months before that, and he answered in the negative. But he could not be induced on cross-examination to say when he converted the Miller money, and his testimony as a whole tends to show that it is only his conclusion that he had converted the money of these heirs at that time. He kept all funds in his hands as public adminstrator, including the Miller money, in one general fund in a Public Administrator Account at the bank. This account was not introduced in evidence, nor was he able to testify with reference to it and admitted he had not examined it. No showing whatever was made as to when this Public Administrator account was exhausted if it ever was. So far as the evidence shows there may have been money in this account at the time the second bond was executed and thereafter, but that he had considered the Miller money had been checked out
The testimony in this case is unique and peculiar for another reason. It shows that Hardy all along had, and now has, enough cash in his personal account together with the aforesaid notes payable to himself personally, to cover the amount of this estate; that at-the time of the trial he had notes aggregating between $3100 and $3500; that he could cash his other property for at least $2500 and perhaps more. In other words, while the testimony states as a conclusion that Hardy converted the funds from his official to his private hands, he shows he is not insolvent and that even if he did violate his duty during the time óf the old bond, still such violation did not render him incapable of doing his duty during the time of the new bond by restoring the fund and thereafter paying it over to his successor when ordered to do so. His sureties under the new bond agreed to stand good for his breaches of duty occurring after the execution of their bond. One of these duties was to collect moneys due the estate and when done
There is no question, however, but that the general rule is that “where an officer proves a defaulter, and has held the office under different appointments with several sets of sureties, it must now be conceded by established precedent that the sureties will be responsible who were on the bond at the time the defalcation occurred.” [State ex rel. v. United States F. and G. Co., 188 Mo. App. 700, 704 and cases cited.] The rule is-further that such sureties are liable only for those breaches occurring after the execution of the bond on which they are obligated and,, they are not liable for prior defaults unless made so by the terms of the bond. [State to use v. Jones, 89 Mo. 470, 480; State ex rel. v. Chatham Nat’l. Bank, 98 Mo. 532, 573.] This rule applies in the case of guardians the same as in that of other officers; and “in order to determine which set of sureties are liable, it is only necessary to ascertain when the defalcation occurred, for each set of sureties is liable for the malfeasance which their principal commits during the period they were standing for him.”
The foregoing statements of the general rulés are well enough and cause no difficulty when the sureties sued are those on the bond at the time the funds tvere converted; and the general statement of the iules above mentioned cause no difficulty even when the suit is against a set of sureties who became such after the conversion, if the principal was not, during the continuance of the second bond, able to return the fund theretofore converted. But is it strictly and logically accurate to apply the above general rules so as to absolutely exonerate the sureties on the second bond, even though the technical eoversion took place prior to the giving of said second bond, if, notwithstanding the prior conversion, The principal was solvent and able to replace said fund during the entire existence of said second bond. For example, a curator under one bond converts property of his ward by changing it from his official to his personal possession, but remains solvent and able to replace it. While matters areythus, he gives a new bond. The sureties under this last bond do not obligate themselves to stand good for such prior conversion, nor any prior breaches of duty. Nor should they be required to pay for any loss occasioned solely by such prior conversion or breaches. But if by reason of the prior conversion and the subsequent solvency and ability of the principal to replace the fund, the loss results from both the prior and subsequent breach why should not the estate be entitled to look to both sets of sureties, requiring them to ultimately adjust their liabilities between themselves? The preservation of the estate is what the two bonds were given for. And if it is difficult to fix ultimate liability because it is difficult to ascertain when solvency or insolvency exists, that is a difficulty which the bondsmen should shoulder. It is true the second set of bondsmen do not agree to stand good for prior breaches, but in the present instance are there not two breaches, one arising under the first bond and the other under the second, both of which have contributed
That both sets of bondsmen may be liable for the same loss though not the same breach, the first for converting the funds and the second for the guardian not replacing it when he could, see the remark of Sherwood, J., in State to use v. Berning, 74 Mo. 87, l. c. 97-8 where it is said; “The doctrine distinctly asserted in the case just cited, (State v. Drury, 36 Mo. 281), is that if a conversion takes place during the time of the first bond, whereby a loss occurs, the obligors therein must be held liable, notwithstanding a breach and a liability occurred, also under the second bond. It quite often may happen that a breach of a bond is a continuing breach, commencing during the period of the first bond and extending down to and through the period covered by the second bond;-where the maladministration would be a breach of both bonds; and this seems to have been the case here. In such case the' relator might well have judgment on both bonds but of course could have but one satisfaction.” The property in that case was a note pledged by the principal, during his first bond, to secure his individual debt. He could have reclaimed the note at any time, since the pledgee knew it was the estate’s.property. If he could replace the property at any time it is not seen why there should be any difference in the ease of a note and any other indebtedness or asset. In the case at bar, Hardy was not shown to have been insolvent at the time the new bond was executed but on the-contrary appears'to be still solvent; and hence his failure under the new
In Tittman v. Green, 108 Mo. 22, tbe suit was against the second set of Branch’s sureties, and tbe evidence was that he was solvent at and after the time the second bond was given, and though he had converted- the fund prior to the giving of the second bond, yet the judgment against the second set of bondsmen was upheld. At page 33, the general rule, hereinbefore mentioned, is referred to and there Judge GaNtt says, “But it is conceived that these principles of law, however well settled, do not of themselves solve the difficulties of this case. ’ ’
Later on, at page 35, he speaks of the necessity of a ‘! careful discrimination here ’ ’ and, after fully agreeing that a fiduciary cannot by his mere nahed election, (i. e. that and nothing more,) transfer his mere indebtedness to himself in one capacity to himself in another capacity so as to exhonerate his sureties in the one and throw the burden upon his sureties in the other, says “To make tbe transfer valid, it must consist of something more than a mere naked liability. ' It must be substantial assets if made by an insolvent fiduciary.”
In a subsequent suit against Branch’s sureties under his first bond, the decision on the first appeal thereof (State ex rel. v. Branch, 112 Mo. 661), shows there was no evidence that Branch was insolvent (see p. 668), and the court again announced the rule adopted in the Tittman case saying, in italics, that there must be a transfer of substantial assets if made by an insolvent debtor, (p. 668). Again, the court, speaking of the time when the second bond was executed and the trustee succeeded the curator, says p. 673, “If at that time he actually had her estate in his hands, or was solvent and able to turn over her estate, his election by this distinct act or declaration affected the transfer, and such election
The principle that the sureties on Hardy’s second bond ought to be held for his failure to replace the money theretofore- converted, if he was solvent and able to replace it during the existence of the second bond, appears to be deducible from what MacfarlaNd, J., says in the decison of the third appeal in the Branch case, 134 Mo. 592, l. c. 602-3, where he says:
“When Branch was appointed trustee, he assumed the duty of withdrawing the trust funds from his private business, and of holding and administering it as trustee, and for the performance of this duty his securities bound themselves as well and as fully as for its proper management after it came into his hands.”
He then goes on to say that it “does not follow” that such neglect of duty will relieve the first bondsmen for a liability that existed when their bonds was in force and then says, (p. 603):
“If a third person had been appointed trustee, it would have been his duty to have collected the amount due from the curator or his securities. While a neglect to do so would create a liability on the part of the securities on his bond as trustee for the losses thereby incurred, it would not alone relieve his securities as guardian from their liability for the original default.”
This would seem to mean, if it means anything at all, that if Branch had been solvent during the time of
At the time the foregoing appeals of the Branch ease were decided and at the time the last one was determined (151 Mo. 622), the judgment against the second set of sureties had been obtained in a case where the evidence showed that Branch %vas solvent. On p. 632 of said last mentioned appeal it is shown that these second bondsmen had stipulated with the estate that the latter should sue the first bondsmen and that then the second bondsmen would pay if the suit against the first was unsuccessful. This was only another way of the second bondsmen obtaining contribution from the first set of bondsmen. The decision in 151 Mo. 622 held that there was no estoppel. And on page 637 the court analyzed the former appeals, saying they “expressly decided” that the conversion of the funds by Branch while curator and under the first bond could only be excused and such bondsmen “relieved of their liability” (italics ours) by showing either that he had the cash actually in hand or had replaced it after he became trustee; and that even though Branch may have been solvent, such fact “would not relieve the sureties on his bond as curator of their liability.” (Italics ours). The court further goes on to say that a fiduciary cannot, by merely signing a receipt, and without having any funds at hand, transfer his and his first bondsmen’s liability to the second set of sureties, (i. e. excuse the first and saddle it on the second alone); that by filing the receipt he asserted it was his intention to hold the estate as trustee and not as guardian” but if he did not have the estate in his hands and by reason of his insolvency was unable to turn over the estate he could not, and did not come Into possession of the funds as trustee” (italics ours) and
Be this as it may, however, we are relieved of the duty of interpreting the foregoing decisions as, in effect, relieving the second set of bondsmen in this case even though Hardy was and still is solvent. The Supreme Court in State ex rel. v. Elliott, 157 Mo. 609 (a suit against the second set of bondsmen), so held. It is true, in that case the evidence all tended to show the principal was insolvent at the time he converted the funds during the first bond and there was no evidence to show that he ever was otherwise. We think, however, that the ruling is as above indicated. Hence even if, as defendants contend, the money of the Miller heirs was converted during the first bond, we cannot hold the second set
It is urged by plaintiff that , even though defendant sureties cannot be held on the theory of continuing or successive breaches, nevertheless they should be held because the final settlement of Hardy was a- final judgment conclusive on the sureties, and, therefore, they were not entitled to show a breach prior to their bond; The plaintiff objected and excepted to the admission of such evidence. But even if the so-called final settlement can he regarded as such (of which we are exceedingly doubtful, since the court did not order the notice required in section 456, Revised Statutes 1909, to be given, and no notice of .settlement but only of an intention to resign was given), nevertheless such settlement cannot preclude ' the sureties from showing that they are not responsible ’ for the payment of the balance therein shown. [Cases of State ex rel. v. Branch, supra.] If that settlement is anything, it is only prima-facie evidence of the amount due. Under a proper answer raising the defense here interposed, the sureties can show that the default was committed before their bond was executed. It was only for failure to plead such a defense that it was not allowed in State ex rel. v. Kennedy, 163 Mo. 510.
Again, the question of whether the one set of bondsmen or the other were responsible was not before the probate court for adjudication. Hence the judgment,, if there was one, could not be res adjudicata as to that. [2 Woerner’s Am. Admn. (2 Ed.), sec. 506; Black on Judgments, sec. 644; Nelson v. Barnett, 123 Mo. 564, 570; Bramell v. Adams, 146 Mo. 70, 87.] Furthermore, there was no formal order approving the settlement and
It follows, therefore, that the court erred in refusing the declarations asked as aforesaid, and the judgment must be reversed and the cause remanded for a new trial. It is so ordered.