United States Fidelity & Guaranty Co. v. Nash

121 P. 541, 20 Wyo. 65, 1912 Wyo. LEXIS 21

Opinions

Scott, Justice.

This action was commenced in the district court of Sheridan County by the defendant in error against the plaintiff in error as surety upon a guardian’s bond to recover the value of the ward’s property alleged to have been wasted and converted by the guardian to his own use. The bond sued on is the same one involved in the case of U. S. Fidelity and Guaranty Co. v. Clara E Parker, this day decided, and was given by George A. Marks as guardian and approved in the district court of Custer County in the State of Montana on June 28, 1902, to secure Clara E. Marks, J. Mabel Marks and James R. Marks, minors therein named. Judgment was recovered by the guardian and the company brings the case here on error.

Upon the trial the defendant objected to the admission of any evidence on the grounds, first: That the petition does not state facts sufficient to constitute a cause of action, and second: That the district court of Sheridan county had no jurisdiction over the subject matter of the action. This objection was overruled to which an exception was taken. Thereupon the defendant by its attorneys stated to the court “that in view of the ruling of the court, that it is not prepared to go into the irial of the case, and declines to go into any accounting under the pleadings, and that it is not prepared to do so, and' refused to participate further.” This exception and the motion for a new trial, and the exception to the order overruling the same constitute the bill of exceptions in this case. None of the evidence is contained in the bill. We are therefore limited in our discussion to the two questions raised by the objection.

It is alleged in the petition that Ira W. Nash was and is the duly appointed, qualified and acting guardian of the estate of Jennie Mabel Simpson, a minor, by virtue of letters of guardianship issued to him by the district court of' Sheridan County on January 25, 1909. That prior thereto and in July, 1900, letters of guardianship issued out of the district court of the County of Custer in the state of Montana where the minors named in the bond then resided and had property to one George A. Marks who on or about July 7, 1900, qualified and acted as such guardian up to the time of his death, to-wit, on or about August 1, 1906. That after such appointment the district court of Custer County, Montana, by its order required the said guardian to give a new bond and on April 17, 1902, in compliance with such order the guardianship bond in controversy with George A. Marks as principal and the United States Fidelity and Guaranty Co. (plaintiff in error) as surety was made, executed and delivered to said minors. That this bond was approved and filed on June 28, 1902, and the sureties on the previous bond were by order of court discharged from further liability. That Jennie Mabel Simpson, on whose behalf this suit is brought, is the same and identical Jennie M. Marks, minor, who is mentioned in said bond and in the petition. The different sections of the Statute of Montana having to do with guardian’s bonds and the power of the court to require them and also additional security or a new bond when such requirement is deemed advisable, and discharge the existing sureties from further duties and liability as in the U. S. Fidelity and Guaranty Co. v. Parker, this day decided, are pleaded. That on or about Aug. 7, 1900, the said guardian entered into the possession of the estate of his wards; that he filed but one report during his guardianship and that in June 1902, showing the condition of the estate on May 1, 1902, at which time-according to his report he had in his possession as such guardian of the three wards named as obligees in the bond the following property, viz:

“172 head cattle and calves of the then value of $4000

Stallion of the value of... 40

45 head range horses of the then value. 450

Farm implements of the value of. 10

Total..$4500”

It is further alleged that the livestock mentioned in this report propagated arid increased in number and value so that before the death of the said guardian on or about Aug. 1, 1906, the interest of the said Jennie Mabel Simpson in and thereto amounted to $3000, and that between June 28, 1902, and the date of his death the said guardian sold all of the property of her estate, received the proceeds thereof, to-wit: $3000, and wrongfully converted the same to his own use and benefit and has failed to account for the same or any part thereof. That the said Marks died on or about August 1, 1906, and that his estate is now and was at the time of his death insolvent and did not nor has it assets or fund with which to pay said $3000 or any portion thereof. That it was and is impossible and impracticable to have an accounting in said guardianship matter prior to the commencement of this action for the reason that there was and is no one unless this defendant who could render an accounting therein and that there were and are no receipts, vouchers and data from which an accounting could be had in said matter. That neither the estate of George A. Marks, deceased, nor the said defendant nor any one has paid said sum, nor any part thereof though demand of payment thereof was made on the surety company on December 1, 1908. Judgment is prayed for the sum of $3000, and interest at eight per cent, per annum from the date of the demand. Issue was joined and the case was tried to the court without a jury and upon the evidence the court found in favor of the defendant in error and against the plaintiff in error and rendered its judgment accordingly in the sum of $2969.80 including” interest together with costs.

The .questions with reference to the sufficiency of the petition and the jurisdiction of the court involved in this case are identical with those involved in the case of the U. S. Fidelity and Guaranty Co. v. Clara F. Parker, this day decided, except that here upon the face of the petition there has been no accounting whatever prior to this suit. With that exception all questions here raised including the validity of the bond and the right to maintain a several action thereon were there involved and decided adversely to the contention of the plaintiff in error here and need not be further considered.

The case here upon both the sufficiency of- the petition and the jurisdiction of the,district court of Sheridan county to entertain the action turns upon the question of the jurisdiction of the domestic court to entertain an action against the surety upon the bond in the absence of an accounting by the deceased guardian or his representative to the district court of Custer County, Montana. The district court of Sheridan County is by Section 10 of Article V of the Constitution vested with original jurisdiction in all causes at law and in equity and in all cases in which original jurisdiction shall not have been by law vested exclusively in some other court. Jurisdiction to appoint guardians of the persons and estates of minors is vested in that court by Section 5735, Compiled Statutes, and the powers and duties of such guardian are prescribed by Chapter 381, p. 1343, Comp. Stat. If a guardian were appointed and qualified in this state and converted his ward’s property under like circumstances as alleged in the petition the rights of the ward arising therefrom conferred by statute in this state would be identical with the same rights conferred by the statutes of Montana in the case here presented. There is nothing here pleaded that shows that the enforcement of the action on the bond in that state would in any wise be different from the action on the bond in this state. If upon the allegations of the petition an action at law could be maintained against the surety on the bond in the courts of Montana then such cause of action is transitory and could be maintained in any court of competent jurisdiction in this state.

The question here is not when and under what circumstances a court of equity will entertain an action for an accounting by a ward against his guardian independent of the court of primary jurisdiction but whether upon the facts alleged an action at law can be maintained against the surety on the guardian’s bond without a previous judicial accounting? In discussing the question thus 'presented we do not refer to equitable defenses authorized under our Code but only to the sufficiency of the facts alleged if proven or admitted to authorize a recovery.

It is the general rule that before an action at law can be maintained against the sureties upon -a guardian’s bond that the devastavit- must be established by separate action against the guardian or by the settlement of his account in the court of his appointment. 21 Cyc. 241, 243. There are, however, exceptions to this rule as shown by the following cases and the question here is whether the facts alleged in this petition bring this case within the exceptions. Otto v. Van Riper, 164 N. Y. 536, 58 N. E. 643, 79 Am. St. Rep. 673; Kurz v. Hess, 86 N. Y. App. Div. 529, 83 N. Y. Supp. 773; Girvin v. Hickman, 21 Hun, (N. Y.) 316, 319; State v. Humphrey, 7 Ohio, 224; State v. Roeper, 82 Mo. 57, 63; State v. Slaven, 93 Mo. 253; Miller v. Kelsey et al. 100 Me. 103; Robb v. Perry, 35 Fed. Rep. 102; Mitchell v. Kelly, 107 Pac. 782, (S. C. Kans., March 12, 1910.).

Otto v. Van Riper et al., supra, was an action against the' sureties upon a guardian’s bond. It was pleaded as a defense that the guardian was dead and that no personal representative had been appointed, and that neither the guardian nor his personal representative had ever been called, upon to account, and that no account had ever been filed. It appeared upon the trial that subsequent to the loss of the ward’s property the guardian removed to another state where he died intestate, leaving no estate whatever in either state, and that no personal representative had ever been appointed. The court say: “Of course it was impossible, under these circumstances, for the plaintiff to procure a judicial settlement of the account between herself and her guardian. The form of - this action is in equity, and the demand for judgment is that it be found and decreed to be due the plaintiff from her guardian the sum of money received by him with interest thereon, and, further that the defendants be charged as sureties, with the amount so found due. It is doubtless, the general rule that an action cannot be maintained against the sureties upon the bond of a general guardian until proceedings for an accounting have been had against the guardian and his default established therein. (Perkins v. Stimmel, 114 N. Y. 359, 58 N. E. 643.) When it appears that an accounting is impossible or impracticable, an action in equity to establish the extent of liability and charge the sureties is proper. (Long v. Long, 142 N. Y. 545; Haight v. Brislin, 100 N. Y. 219, 3 N. E. 74.)” In Girvin v. Hickman, 21 Hun, (N. Y.) 316, 319, the ward having attained his majority instituted suit against the sureties upon his guardian’s bond: The court say: “The condition of the bond in suit required the guardian, among other things to 'render a just and true account of all property received by him, and of the application thereof &c. * * * And again to faithfully apply said legacy, * * * and account for the same when thereunto required.’ Ordinarily an accounting would be necessary to show how much of the money or property of the ward received by him remained in his hands, over and above what he had ‘Faithfully applied.’ But the complaint here alleges (and upon demurrer, the defendant must be held to concede its truth) that the guardian did not faithfully apply the said legacy, but has wrongfully converted the whole of it (except the sum of $17) to his own use. The fact being conceded, the extent of the guardian’s liability is fixed, as definitely as it could be by an accounting.” ' State v. Roeper, supra, was an action upon a guardian’s bond instituted after the ward reached his majority. At page 63 of the report the court say: “It is next urged by the defendants that the ward, although having attained his majority, could not sue on the bond of his guardian until a final settlement had been effected in the probate court. The law has been held otherwise in several well considered cases by the court of appeals. State v. Rosswaag, 3 Mo. App. 11; Flach v. Fason, 3 Mo. App. 561. As the guardian in this case was insolvent and had delayed his final settlement beyond the proper time for it, I see no good reason in denying to the ward his right to resort to the bond for the purpose of obtaining his estate.” Mitchell v. Kelly, supra, was an action by a guardian against the administrator of a guardian who converted his ward’s property, became insolvent and died, and against the surety on the guardian’s bond. It was held upon separate demurrer of the surety that the petition stated a cause of action against him and that the action could be maintained against him notwithstanding the objection that there had been no. settlement of the guardian’s account in the probate court. The court say: “The guardian is the managing agent for the ward, and his duty is primarily to account to him rather than to the court. * * * * When the guardian dies the trust does not pass to his executor or administrator. His personal representative stands toward the ward as any third person having money or property of the ward in his possession * * * and no substantial reason is apparent why the new guardian may not bring his action in the district court.” To the same effect in principle is Davenport v. Olmstead, 43 Conn. 67. In the case here as against the demurrer an accounting is unnecessary upon the allegations of the petition. A sufficient reason for not bringing the action for a balance found due on an accounting is alleged. If the allegations of the petition be true and they must be taken as such in testing the sufficiency of the facts pleaded to constitute a cause of action then all of the trust estate including the ward’s share which amounts to the sum of $3000 was converted by' her guardian George A. Marks to his own use notwithstanding he had obligated himself by the terms of the bond “to faithfully execute the duties of said-trust according to law” and upon the expiration of his trust to “account and pay over and deliver to the person entitled to the same all money or other property that may come into the hands of such guardian” and that such guardian was insolvent at the time of his death and his estate has continued to be insolvent and unable to pay any part of the claim. The conversion of the entire estate fixes the liability of the guardian at the time of his death as definitely as it could be fixed by an accounting. Girvin v Hickman, supra. The insolvency of the estate to the extent that none of the liability could be realized therefrom and the inability of the defendant in error to produce the guardian’s vouchers and receipts if any were taken, were also sufficient reasons for allowing the maintenance of the action against the surety upon the guardian’s bond in the absence of a previous accounting, which upon the facts alleged was impossible and impracticable. State v. Roxen, supra; Otto v. Van Riper et al., supra; Long v. Long, supra; Haight v. Brislin, supra; Davenport v. Olmstead, supra. The ward was in no wise to blame for the existing condition and the impossibility or impracticability of rendering an account. It was the duty of the guardian to take and preserve the vouchers and receipts so that they might be produced upon an accounting and to render such account and the plaintiff in error obligated itself to her that the guardian would do so and it cannot now be heard to insist that an impracticable or impossible thing be done in order to fix its liability. We are of the opinion that the petition states a cause of action and also that it could be maintained in any court of competent jurisdiction in the State of' Montana wherein the action accrued and for that reason it could be maintained in a court of like jurisdiction in this state.

It is urged that the amount of the recovery for which judgment was given is excessive. The evidence is not contained in the bill of exceptions. While the petition states a cause of action does it state a cause of action against the company for the amount claimed and for which judgment was rendered ? The same wrong which is made the basis of this action would constitute a cause of action on the bond in favor of each obligee, and the aggregate liability of the surety thereon excluding interest could not exceed the amount of the bond, viz: $4800. The ward’s interests in the trust property were equal and the liability of the surety to each ward would in the absence of a showing to the contrary be equal. Freedman v. Vallie, 75 S. W. 322 (Civ. App. Tex. June 6, 1903); Knox v. Kearns, 73 Ia. 286. In this separate suit on the bond by one of the obligees no facts are alleged as a reason for allowing this ward to re cover more. The amount of recovery therefore should be limited to her one third 'of the penalty of the bond, and to that extent only does the petition state facts sufficient to constitute a cause of action. We are of the opinion that as the judgment exceeds that amount that that is an error appearing upon the record within the provisions of Section 5109, Comp. Stat. 1910, and authorizes this court to modify the judgment in that respect. The district court of Sheridan County is directed to modify the judgment by reducing the amount to the sum of $1600 and interest thereon at the rate of eight per cent, per annum from Dec. 1, 1898, the date of the demand upon the plaintiff in error, and costs, and as so modified the judgment will be affirmed.

Affirmed.

Beard, C. J., and PoTTER, J., concur.