Continental Casualty Co. v. Deegan

230 Iowa 891
CourtSupreme Court of Iowa
DecidedAugust 4, 1941
DocketNo. 45595
StatusPublished

This text of 230 Iowa 891 (Continental Casualty Co. v. Deegan) is published on Counsel Stack Legal Research, covering Supreme Court of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Continental Casualty Co. v. Deegan, 230 Iowa 891 (iowa 1941).

Opinions

Mitchell, J.

— On January 18, 1939, Mrs. Mary E. Johnston, who was then seventy-five years of age and confined in bed at Mercy Hospital, Dubuque, Iowa, filed her petition in the district court of Dubuque county, asking the appointment of George W. Hird as guardian of her property. George W. Hird had been duly admitted to the practice of law in Iowa, and at that time was about twenty-seven years of age. He was associated and officed with Mrs. Johnston’s attorney, and it was her attorney who prepared the application for the appointment of Mr. Hird as guardian. On January 18, 1939, George W. Hird was appointed as guardian, and his bond fixed at $3,000, which he filed, and on the same day letter of guardianship issued to him.

At that time Mr. Hird was administrator of the Patrick Walsh estate and there was a shortage of about $1,500 in that estate. He was also administrator of the Jennie O. Nichols estate and there was a shortage in that estate of about $300. Of course Mr. Hird did not inform the court of these shortages at the time he was appointed as, guardian and qualified.

On January 25, 1939, Mr. Hird filed an application for the [893]*893increase of his bond as guardian, setting out that he had discovered more personal property belonging to his ward, and the bond was increased to $32,000, and on the same day he filed a new bond with the Continental Casualty Company as surety, in the amount of $32,000.

On January 19, 1939, Mrs. Johnston had her will prepared for her by her attorney, Mr. Bowen. It was dictated to Mr. Hird, who was also a stenographer, and duly executed. The will appointed George W. Hird as executor without bond.

On February 5, 1939, Mrs. Johnston died. February 10, 1939, her will was duly probated, George W. Hird confirmed as executor. He qualified and letters testamentary issued to him.

On February 8, 1939, after the death of Mrs. Johnston, Hird found under a mattress in her room at the Mercy Hospital the sum of $744.59 in cash.

On February 13, 1939, he filed his inventory as guardian of Mary E. Johnston, and also his inventory as executor of Mary E. Johnston Estate, listing the identical property in each inventory and including therein the $744.59 of cash. As guardian he disbursed or paid out no money. Everything he received as guardian remained intact, until he became executor. Between March 29, 1939, and April 24, 1940, Hird admitted that he took and used funds belonging to the Estate of Mary E. Johnston, in the sum of $8,844.49. He acted as executor until June 3, 1940, when an order removing him as executor of the Mary E. Johnston Estate was entered and George F. Jansen was appointed as administrator c.t.a. of the will of Mary E. Johnston.

Mr. Hird filed his final report as guardian on September 7, 1940, to which the legatees and administrator c.t.a. filed objections. The objections alleged among other grounds that Mr. Hird as guardian had been guilty of fraud and bad faith in his conduct in relation to his ward’s estate. That he as guardian had entered into a tortious scheme and plan for the conversion of the money and property of his ward to his own use. Later in this opinion the objection will be set out more in detail. The guardian’s surety filed a motion to strike from the objections all of the allegations of fraud and bad faith. The court sustained the motion to strike and the objectors elected to stand [894]*894on said ruling and declined to proceed further. The surety on the guardian’s bond filed an application for discharge and petition of intervention, also asking to be discharged.

Although the objectors announced in open, court, that they would offer no testimony the court on its own motion proceeded to hear evidence in regard to the manner in which the guardian was appointed and as to his doings during his term of office. The complete field was covered over the objections of the guardian’s surety. George W. Hird told the entire story of the manner in which he was appointed and how he handled the guardianship and the estate of Mary E. Johnston. So we find that although the court sustained the motion striking the objections to the report, on the court’s own motion all of the evidence covering the bad faith of George Hird was admitted. The court entered an order finding the Guardian George W. Hird and his -surety were liable for $8,934.59 and directed that suit be brought to recover said sum.

The basis for the order is as follows, we quote:

“That the said George W. Hird, Guardian aforesaid, in failing to report the condition of his ward’s estate, before undertaking to administer upon the Estate of Mary E. Johnston, Deceased, as Executor, under his appointment without bond, being a trust officer of the District Court of Dubuque County, Iowa, was charged with the duty of exercising the affairs of his office with the utmost good faith, and of preserving the trust property coming into his possession' as Guardian intact, and of administering his said ward’s estate under the orders and directions of the District Court of Dubuque County, Iowa, and that in failing to report the condition of his said ward’s estate before attempting to administer upon the Estate of Mary E. Johnston, Deceased, as Executor without bond, and in failing to report the death of his said ward in an appropriate report as Guardian,- and in failing to inform the Court that he was under a $32,000.00 surety bond as Guardian before undertaking to administer upon the Estate of Mary E. Johnston, Deceased, as Executor without bond, and in failing to obtain directions and orders from said District Court as to how to proceed in the premises, the said George W. Hird, as said Guardian, failed to faithfully discharge his duties, and violated his obligation [895]*895taken for the faithful performance of the duties imposed by law upon his office as said Guardian, and is, therefore, responsible to the Estate of Mary E. Johnston, Deceased, for the loss caused by his said wrongdoing as such Guardian.
“That it was the duty of the said George W. Hird, as said Guardian, to give his personal care to the management of his said ward’s estate, and he was bound under the law to exercise such diligence and prudence as a reasonably prudent person ordinarily employs in the conduct of his affairs; and the said George W. Hird, as a trust officer of this Court, in taking charge of the funds of the Estate of Mary E. Johnston, Deceased, as Executor, without first reporting to the Court the condition of the Estate of Mary E. Johnston, Incompetent, failed in his duty, and committed a fraud upon the Court, and thereby violated his obligation as said Guardian, and he and his surety are liable for his said wrongdoing and the loss incurred thereby.”

The Continental Casualty Company has appealed and will be referred to as the appellant. The objectors have filed a cross-appeal from the ruling of the court sustaining the motion to strike. They will be referred to as the appellees and cross-appellants.

The appellees in their brief and argument make the following statement. We quote:

“This proceeding is somewhat out of the ordinary because the fraud that is charged is that through which Mr. Hird secured his appointment without bond and his breach of trust in subsequently permitting the transfer of the property to himself as executor, when he knew the property would be unsafe in his hands without bond. ’ ’

The facts in this case are not in conflict. As guardian George W.

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230 Iowa 891, Counsel Stack Legal Research, https://law.counselstack.com/opinion/continental-casualty-co-v-deegan-iowa-1941.