Stude v. Gross

179 Iowa 785

• Court: Supreme Court of Iowa
• Decided: April 3, 1917
• Status: Published

Opinion

Ladd, J.

1. Dower and distribution: dower or distributive share: property sub- . guardianship : property. The decedent had been guar- ■■ . dian of tlie estates of four children, and a . • ' • . , considerable sum of monev belonging to , ° eacb had come into his hands. The administrator of the decedent’s estate was ordered to pay over these several sums, with interest at the rate of 4 per cent per annum added from the date of the last report of decedent as guardian, and it was further ordered that the distributive share of the widow of decedent be one third of the estate after paying the moneys owed these wards by decedent as guardian. She contends “that, at the time of the death of Henry Stude, deceased, and prior thereto, that the funds in his hands as guardian of said children, were borrowed and used by him under the orders of the court, and was not a trust fund as contended by appellee, and that the dower' interest of the said appellant in her husband’s estate was not liable for the payment of - said funds, but that said funds should be taken from the two-thirds interest coining to the children of Henry Stude, deceased.”

2. guardian and ward : care ana euftoriy trlsi Irmas*0 8. Guardian and ward : care and custody of ward’s estate : principles. The record disclosed that payment of interest on the several-funds was exacted from the guardian by order of court, an(t subsequently from the administrator of his estate; but the grounds for'so doing are not disclosed, and surely it is not to be inferred from the mere order that this was owing to any loan made by decedent as guardian to himself individually, with or without an order of the court. Title to the several funds was in the several wards and so remained, unless these sums were converted by the guardian to his own use, and there was no evidence so showing. The relation between the guardian and Avards is that of trustee and cestui que trust, but the trust is not one Avhich gives to the guardian the legal title to the Avards’ estate, as in case of administrators, executors, and trustees appointed by deed, by will, or by the court. The guardian’s duties entitle him to the possession of the ward’s property, but his possession is the possession of the Avard, in Avhom the legal title remains. Rollins v. Marsh, 128 Mass. 116, 118; Hutchins v. Dresser, 26 Me. 76; Newton v. Nutt, 58 N. H. 599. Actions, save for injury to possession, are to be brought in the name of the ward, rather than that of the guardian. Wilson v. Galey, 103 Ind. 257; Morgan v. Potter, 157 U. S. 195; Dennison v. Willcut, (Idaho) 35 Pac. 698; Newton v. Nutt, supra. The possession of personal property by the guardian, then, is the possession of the ward, and the guardian is required to exercise the utmost good faith in taking care of the wards’ interests. It is his duty to preserve the wards’ property intact, ahd keep it separate from his oavii. Brisbane v. Bank, 4 Watts (Pa.) 92; White v. Parker, 8 Barb. (N. Y.) 48; Woerner on Guardianship, Section 63.

To invest in trade or speculation would be a breach of duty on the part of the guardian. Tucker v. State, 72 Ind. 242; King v. Talbot, 40 N. Y. 76; Martin v. Raborn, 42 Ala. 648. But it is well established that a guardian may not keep idle the money or property of his wards, but is bound to all reasonable diligence in keeping the money loaned out on good security under the orders of the court, and in procuring ordinary returns from other property; and, if he refuses or neglects to invest the money in loans such as may be approved by the court, the genera] rule is that he will be charged a reasonable rate of interest for the use of the money he has neglected to loan. Of course, he is not required, at his peril, to keep the funds of his wards so invested at all • times, hut he must exercise reasonable diligence to keep it so. invested; and, if he fails so to do, he will, as said, be charged with a reasonable rate of interest for the use of the money during the period it might have been loaned out. The rule is well stated in Cruce v. Cruce, 81 Mo. 676:

“First. A trustee is accountable for all interest or profits actually received by him from the trust fund, whether used in his private business or otherwise employed by him. Under no circumstances will he be permitted to retain any benefit or advantage from the trust fund, except his compensation or commissions. Second. He is, at all events, accountable for such interest or profits as he might have obtained by the exercise of reasonable skill and exertion in the management of the fund, whenever the character of his trust or the relation which he holds to the fund, requires him to make it productive. In all such cases he is, at least, accountable for such gains and profits, although the actual gains and profits may be less.”

See Woerner on Guardianship, Section 64, where thea authorities are gathered and reviewed. That the guardian may have made use of the funds of his wards in his private business, did not constitute the transaction a loan. Such a course would have been a delinquency on his part, often .denounced as gross and wilful violation of his duty. It would have been a conversion of the property to his own use, and is never approved by the courts. The title to the property continued in the wards, in the sense that, had he appropriated it, it might have been traced.by them in a proper action, and the property, as well as the profits derived therefrom, recovered. The funds never became the property of the decedent, as between him and his wards, but continued that of his wards, and the,court rightly ordered the payment of the several sums owing these wards from the estate of decedent. As decedent never had title thereto, the widow had no distributive share therein. In other words, the widow was not entitled to a distributive one third of the property of his wards, and the court rightly so held. — Affirmed.

Gaynor, C. J., Evans and Salinger, JJ., concur.