Opinion
15498
February 2, 1943.
Before G. DEWEY OXNER, J., Greenville County, March, 1942. Affirmed.
Action by Lillie Chamberlain against the First National Bank of Greenville, brought on a bond executed by the First National Bank of Greenville as guardian for the plaintiff, Reuben Gosnell and another subsequently being made parties defendant in the action. The matter was heard by the Master of Greenville County, who recommended judgment against the defendant bank. Upon exceptions to the master's report the case was heard by Judge Oxner, who overruled the exceptions, affirmed the report, and filed a judgment order against the defendant bank. From this judgment the bank appeals.
The order of Circuit Judge Oxner, adopted unanimously as the opinion of the Court, follows:
The plaintiff seeks in this action to recover the sum of $754.25 on a bond executed by the First National Bank of Greenville, as guardian of plaintiff, Lillie Chamberlain. The case was referred to the Master who recommended judgment in favor of the plaintiff against the First National Bank for the amount sought, and it now comes before me on exceptions by said bank to the report of the Master.
The documentary and oral testimony taken before the Master disclose the following facts:
The plaintiff is an uneducated colored person who cannot read or write. In 1924, when she was about ten years old, the plaintiff lost both her feet as a result of a railroad accident and she received from the railroad in settlement of a claim made arising out of said accident the sum of $1,500.00.
On March 17, 1924, on petition of Mattie Devlin, a sister of the plaintiff, the First National Bank of Greenville, S.C. was appointed guardian of said estate by the Probate Court of Greenville County. Said bank duly qualified, executed the usual bond in the penal sum of $3,000.00 and received in behalf of its ward the sum of $1,500.00. This bank was experienced in the handling of minor's estates and so held itself out to the public.
In October, 1925, the bank decided that this estate was too troublesome to it and indicated to the Probate Judge its desire to discontinue its duties as guardian. On October 22, 1925, the bank delivered the unexpended funds in its hands, amounting to $1,055.26, to Mrs. Fannie C. Scott, the then Probate Judge of Greenville County. On November 23, 1925, it filed its first and only return showing the various receipts and disbursements made by it and in these disbursements there was included a charge on the part of the bank for commissions in the sum of $51.31.
Upon this return being made, the Probate Judge issued what purported to be Letters Dismissory to the Bank, which are dated November 23, 1925. In this order, which purports to discharge the bank from any further duties as guardian, it is recited that the bank has made a final accounting and had turned over to the Probate Judge, as public guardian, "the sum of $1,055.26 to be held by the said Probate Judge until said minor is 21 years of age or until a suitable guardian is appointed in Greenwood County (the child now being a resident there)." The order further affirmatively shows that it was granted without advertisement in the newspaper and without notice to the interested parties and without the performance of other conditions set out in Section 213 of the Code. The order states "no advertisement necessary in this case."
There is no further record of the handling of these funds until February 21, 1927. On that date the record contains a petition made by Reuben Gosnell for his appointment as general guardian of said minor. On this petition, the Probate Judge undertook to so appoint Gosnell upon his giving bond in the sum of $2,166.52. There was no petition for such appointment by the minor or anyone in her behalf. The testimony abundantly shows that the minor and her sister did not know Mr. Gosnell who was a stranger in the matter.
Although the order purporting to appoint Mr. Gosnell as guardian required a bond with approved surety in the above mentioned amount, the only bond executed by Mr. Gosnell was a bond without any surety whatsoever. There is a notation at the bottom of the bond to the effect "R.E. mortgage put up as surety," but no such real estate mortgage was ever executed by Mr. Gosnell. Notwithstanding this, letters of guardianship were issued by the Probate Judge to him on February 21, 1927. Mr. Gosnell's explanation of his connection with this matter is that he was a very close friend of the Probate Judge and that he was requested by her to execute some papers in order to clear the records in her office; that at that time he had implicit confidence in her and executed these papers without any knowledge of their purport, relying on the Probate Judge's statement that they were merely being given in order to clear the records in her office.
On April 11, 1927, Mr. Gosnell filed a return showing a receipt of the sum of $1,083.26 and interest of $11.56, making a total of $1,094.82, and further showing disbursements of said amount on April 11, 1927, by payment of said amount of $1,094.82 to Fannie C. Scott, Judge of Probate. Mr. Gosnell states that he never received nor expended in connection with this estate one penny.
The record further discloses certain correspondence between Mrs. Scott, the Probate Judge, and J.E. Hanger, Inc., manufacturers of artificial legs and arms, wherein certain expenditures in behalf of said ward for artificial limbs were billed to Mrs. Scott personally and paid by her personally in March, 1927. At this time the Probate Judge had purported to appoint Mr. Gosnell as guardian and notwithstanding this, the disbursements were made by the Probate Judge personally.
There were no further steps taken in connection with the alleged guardianship of Mr. Gosnell. The records fail to show any advertisement or other proceedings taken, as required by law, to have Mr. Gosnell discharged as alleged guardian. No letters dismissory are contained in the record.
The next record of these funds is in May, 1930. At that time there appears in the record a petition dated May 16, 1930, purporting to be signed by Lillie Chamberlain, asking for the appointment of E.W. Biggs and Fannie C. Scott, Probate Judge, as general guardians. The testimony abundantly shows that Lillie Chamberlain did not sign this petition and, as above pointed out, this minor could neither read nor write. There is attached to said petition a letter reading as follows: "Miss Scot plese appont a good white man guardeen for lilly mae — not our color — Mr. Ballenger or you. Mattie devlin, lilly Chamberlain, lilly was borned feb. 23, 1914."
It is apparent that the letter and petition, if signed by anyone, were signed by Mattie Devlin who was the sister of the minor. The minor at that time was seventeen years of age. Upon said petition, there was an attempted appointment, on May 16, 1930, of E.W. Biggs alone, but he never gave bond or received letters of guardianship. There is a check in the record, made payable to E.W. Biggs as guardian, for $1,058.30, signed by Fannie C. Scott, Probate Judge. The check is not signed by Mrs. Scott as public guardian. The purported appointment of E.W. Biggs and his oath of office are not on the petition for appointment of guardian, but are on a separate form which has been glued to and attached to the purported petition of Lillie Chamberlain. The foregoing check bears the endorsement of E.W. Biggs and has been paid by the bank.
The next proceeding with reference to these funds is in December, 1930. At that time the Probate Judge undertook to appoint J.P. Ballenger as guardian who, also on that date, signed the oath of office. The record fails to disclose any petition by anyone asking for the appointment of J.P. Ballenger as guardian, nor does the record show any proceedings which undertook to discharge E.W. Biggs as guardian. The record contains a bond signed by J.P. Ballenger and E.W. Biggs. This bond recites the appointment of J.P. Ballenger as guardian on May 16, 1930, although the order purporting to appoint him and his oath of office are both dated December 30, 1930. This bond is considerably mutilated and it is apparent that in several places the name of E.W. Biggs has been erased and the name of J.P. Ballenger inserted. It would seem that although though the bond was signed by E.W. Biggs, he was not executing same as surety because under these two signatures there appears the following: "Surety: Real Estate Mortgage" and the blank wherein the surety is supposed to execute the necessary oath as to his worth is not filled in, but the following appears across the blank: "Secured by Real Estate Mortgage." The implication from this is that it was intended for a real estate mortgage to be used as surety. No such real estate mortgage, however, was ever executed. From a careful examination of this paper, I think someone undertook to change a bond which had been executed by Biggs as principal to one on which Ballenger would be principal and Biggs as surety.
Alleged letters of guardianship were issued to Ballenger on December 30, 1930, which was just seven days before Mrs. Scott vacated the office of Probate Judge. J.P. Ballenger was the clerk in this office. Lillie Chamberlain was not a party to the appointment and discharge of Biggs or the appointment of Ballenger.
The record shows that in 1931 and 1932, certain expenditures were made in behalf of this minor and the bills for same were made in addressed to Mrs. Scott personally and were apparently paid by her personally.
On February 18, 1932, J.P. Ballenger purports to make a return showing various disbursements and a balance due this minor of $754.25.
The action as originally commenced was against the bank alone. The bank demurred to the complaint upon various grounds. Thereafter an order was passed construing the complaint as an action on a bond for an accounting, overruling the demurrer and allowing the bank an opportunity of bringing in such additional parties as it may be advised. Thereafter an order was passed making Reuben Gosnell and J.P. Ballenger defendants to the action. No steps were taken on the part of the bank to have Ballenger served. Gosnell was served and filed answer setting up various defenses. An answer was also filed by the bank in due course.
The Master has filed an extended report in which he held that the bank was liable for the remaining funds due to this minor and further held that the defendant, Gosnell, was not liable for the reason that he never qualified nor functioned as guardian and never received, handled, or performed any of the duties as guardian. Exceptions were duly filed by the bank to the report of the Master. These exceptions number fifteen but briefly raise the following contentions:
1. That the bank had been regularly discharged of its duties and had properly accounted for all funds.
2. That the proceedings constituted a collateral attack upon the order of the Probate Court.
3. That the action was barred by the statute of limitations.
4. That Gosnell duly qualified as guardian and if there were any liability, it was primarily that of Gosnell.
5. And that no act on the part of the bank was the proximate cause of any loss to this minor.
Section 213, Code of 1932, makes it unlawful to discharge any guardian until proper notice has been given in the newspaper for a certain stipulated time and further provides that no such discharge shall affect the ward who has not been made a party to the application for discharge, either by personal service or by publication in the manner provided for by law. The record affirmatively shows that in undertaking to receive its purported discharge, no effort was made by the bank to comply with this section. Its application for and purported discharge were wholly ex parte and these defects affirmatively appear from the record. The minor received no notice, actual or constructive, of such application for discharge. The bank simply followed a practice which seems to have been established by the then Probate Judge of permitting guardians and other fiduciaries to pay funds of wards into her hands and giving an ex parte discharge.
Mrs. Fannie C. Scott was Probate Judge of Greenville County for a long number of years and the practice thus followed in this case by her has heretofore been before the Supreme Court in the case of Snyder v. Scott, 174 S.C. 403, 177 S.E., 665. The Supreme Court held in that case that the Probate Court was wholly without authority to receive funds in this manner and under this decision the payment by the bank of these funds to Mrs. Scott as Probate Judge was no more effective than the payment of such funds to a stranger to the proceeding. It would seem further to be clear that as no proper proceedings were ever taken by the bank to secure its discharge as guardian, it still remains as guardian of this minor. The bank contends that successor guardians were appointed and that assuming that its payment of said funds to the Probate Judge was unlawful, such act was not the proximate cause of any loss to this minor, as the funds subsequently were paid into the hands of a duly appointed guardian for this minor.
Assuming, without deciding, the soundness of this principle, it has no factual basis in this record. I think it is apparent from the foregoing review of the various steps taken in this case that there has not been since the appointment of the bank a properly appointed guardian of this minor. The procedure contemplates a petition by the minor, if over the age of fourteen years, or by a relative or friend, if under fourteen years of age, for the appointment of a general guardian. No such procedure was followed in any instance after the appointment of the bank. The statute above referred to makes it mandatory that no discharge shall be lawfully given until the required advertisement has been published. There has never been any advertisement, in accordance with law, in connection with the discharge of any guardian in this case. The statute further provides that there shall be notice, actual or constructive, to the minor of such application for discharge. Nowhere was such done in this case. Inasmuch as there has never been a proper discharge of any guardian, if the contention on the part of the bank were accepted, it would necessarily follow that there is now outstanding four distinct guardians for this minor. Furthermore, in not a single instance has the purported successor guardian given the bond which the statute requires.
I think it is clear that the funds in this case after the payment by the bank to the then Probate Judge continued to remain throughout the entire time in her hands or under her control and that the various purported appointments constituted a camouflaged attempt to keep in the office some semblance of apparent regularity. It follows from this that the act of the bank in improperly — although I am sure the bank acted in good faith — paying over these funds to the Probate Judge was the proximate cause of the loss which was resulted. The act of the bank in improperly paying these funds over to the Probate Judge made possible the manipulation of the funds which followed. The bank is in no better position than if the funds in controversy had been paid by it to a stranger. The liability of the bank for improperly turning these funds over to the Probate Judge is fully established in the case of Snyder v. Scott, supra.
The question as to whether the surety on the Probate Judge's bond is also liable for dereliction on the part of the Probate Judge in receiving these funds is not before this Court, as said surety is not a party to this proceeding. The principles laid down in the case of Snyder v. Scott, supra, were approved in the subsequent case of Hunter v. Boykin, 195 S.C. 23, 10 S.E.2d 152. And, as above pointed out, I am not called upon to pass upon the contention that the act of the bank would not be a proximate cause of loss if the funds thereafter found their way into the hands of a duly appointed and qualified guardian. This is true for the reason that there never was in this case a subsequently duly qualified guardian.
But it is contended by the bank that the effect of this proceeding is to make a collateral attack upon the judgment of the Probate Court. This defense was set up in the demurrer and overruled by order of the Court from which there was no appeal by the bank. But passing over this point, the Court is of the opinion that plaintiff may attack the various orders of the Probate Court in this proceeding. The Court is not unaware of the line of cases establishing the sound doctrine that where proceedings are regular on their face, a party to such proceedings cannot collaterally attack such judgment. However, this principle has no application in this case because the jurisdictional defect or irregularity affirmatively appears on the face of the judgment purporting to discharge and relieve the bank of further liability and on the face of the other records in this case. It is uniformly held that such a judgment may be attacked collaterally if the jurisdictional defect is affirmatively shown.
The doctrine contended for by the bank could not apply in this case for the further reason that the minor was never a party, actually or constructively to any of the proceedings had in the Probate Court after the appointment and qualification of the bank. No effort was made to make the minor a party to the proceeding wherein the bank sought to procure its discharge.
The case of Vaught v. United States Fidelity Guaranty Co., 179 S.C. 259, 184 S.E., 798, 799, shows clearly that the proceedings in controversy are so irregular on their face as to permit a collateral attack. The following language of the Court in that case is applicable here: "The law is very jealous of the rights of minors, and the irregularity of the whole proceedings in the probate court in this case removes any jurisdiction that the orders of that Court might have exercised over Willie Vereen."
It follows from the foregoing that the bank is liable to the plaintiff for the amount of the unexpended funds now owing to the minor as found in the report of the Master.
It is contended by the bank that in the event it is held liable, it should have judgment against its co-defendant Reuben Gosnell, for the amount of any liability determined. In this connection, it is urged that Gosnell petitioned for and accepted the appointment of general guardian; that his return shows that he received the funds and that he is estopped to deny that fact; and that Gosnell would be responsible for irregularly turning the funds over to the Probate Judge. There would be more force in this contention if the plaintiff were undertaking to hold Gosnell. But this issue arises solely in the contest of the bank against Gosnell.
The situation as to Gosnell is the same as if the Probate Court had paid this money over to a stranger who, in turn, several months later returned such funds back to the Probate Judge from whom they were originally received. The funds could not have been properly turned over to Gosnell as he never was a qualified guardian, but no injury resulted to anyone in this transaction for the reason that according to his return the funds were returned to the Probate Judge. I am unable to see, therefore, how the bank has been in any way prejudiced by the Gosnell transaction.
But the bank contends that Gosnell committed the same act which the plaintiff contends that it unlawfully did. The distinction is that Gosnell was never a qualified guardian of this estate, whereas the bank did properly qualify and continues until this day as the duly qualified and the only qualified guardian of this estate, and this is not an action by the plaintiff against Gosnell.
But apart from the foregoing, the conduct of the Probate Judge in the handling of these funds was such that Gosnell could collaterally impeach this record and show in fact, as the Master found that he did, that he never undertook to discharge the duties of his office and never, in fact, either received or disbursed any of these funds.
I am not called upon to pass upon any liability on the part of Biggs or Ballenger to the bank, as Ballenger was never served after being made a party and no effort was made by the bank to bring Biggs in as a party to this proceedings.
It is lastly contended by the bank that this action is barred by the statute of limitations [Code 1932, § 387] and the delay in postponing action was for such a length of time as would estop the minor from now asserting that the bank was not discharged. In so far as the element of estoppel is concerned, the record fails to disclose any act on the part of the minor which misled or in any way prejudiced the rights of the bank. I think it is clear that the claim of the minor in this case is not barred by the statute of limitations. Strain v. Babb, 30 S.C. 342, 9 S.E., 271; Beatty v. National Surety Co., 132 S.C. 45, 128 S.E., 40; Lyerly v. Yeadon, 199 S.C. 363. The last mentioned case further shows that the minor in this case is not barred by laches.
It abundantly appears that the minor was an ignorant colored girl, that her sister had very little more education, and that at no time were they familiar with the manipulation of the funds in this case, and as late as 1932 were appealing to Mrs. Scott, who at that time had ceased to act as Probate Judge, for financial assistance. There is no basis in this record for either the element of estoppel or laches.
While I have not undertaken to discuss the exceptions to the Master's report seriatim, I have given careful consideration to all of them.
All exceptions are overruled and the report of the Master is confirmed. I find it unnecessary to pass upon various other contentions made by the plaintiff and Gosnell.
Further ordered: That the plaintiff have judgment against the defendant, First National Bank of Greenville, S.C. for the principal sum of $754.25, with interest from February 18, 1932, at the rate of six per cent., and for the costs of this action.
Mr. W.B. McGowan, of Greenville, Counsel for Appellant, cites: As to Guardians: 150 S.C. 125, 147 S.E., 646; 96 S.C. 34, 79 S.E., 791; 6 Rich. Eq., 378; 158 S.C. 446, 155 S.E., 740; 60 S.C. 401, 38 S.E., 634; 178 S.C. 400, 183 S.E., 634; 146 S.C. 385, 406, 144 S.E., 84; (N.C.), 52 S.E., 953; 72 Ga. 725; 21 C.J., 1063; 28 C.J., 1098; 23 C.J., 1099; 28 C.J., 1282; 16 S.C. Eq., 384; 179 S.C. 259, 184 S.E., 798; 153 S.C. 78, 86, 150 S.E., 473; 176 S.C. 463, 180 S.E., 454; 176 S.C. 156, 179 S.E., 777; 180 S.C. 317, 185 S.E., 619; 191 S.C. 384, 1 S.E.2d 797; 40 S.C. 69, 18 S.E., 220; 146 S.C. 385, 144 S.E., 82; 156 S.C. 43, 152 S.E., 721. As to Liability of Bank as Surety: 174 S.C. 403, 177 S.E., 665; 70 S.C. 1, 48 S.E., 619.
Messrs. Hingson Todd, Messrs. Wyche, Burgess Wofford, and Messrs. Price Poag, all of Greenville, Counsel for Respondent, cite: As to Estoppel: 182 S.C. 135, 188 S.E., 789; 189 S.C. 320, 1 S.E.2d 181; 192 S.C. 216, 6 S.E.2d 265; 84 S.C. 431. As to "Collateral Impeachment": 4 Dessaus., 176; 40 S.C. 69, 18 S.E., 220; 1 R. L. Dict., "Collateral Impeachment", page 226; 23 S.C. 435; 24 S.C. 298; 25 S.C. 276; 65 S.C. 308, 43 S.E., 667; 83 S.C. 157, 65 S.E., 217; 116 S.C. 218, 107 S.E., 909; 146 S.C. 385, 144 S.E., 82; 1 S.E.2d 804; 186 S.C. 93, 195 S.E., 122; 114 S.C. 306, 103 S.E., 511. As to Guardianship Funds: 174 S.C. 403, 177 S.E., 665; 195 S.C. 23, 10 S.E.2d 152; 115 S.C. 469, 106 S.E., 470; Code of 1932, Sec. 213. As to Guardian's Bond: Code, Sec. 8612; 169 S.C. 244, 168 S.E., 697.
February 2, 1943.
The questions presented by appellant are, in the opinion of this Court, properly disposed of by the order of the Honorable G. Dewey Oxner, Circuit Judge, which is adopted and will be reported as our judgment. For the reasons therein clearly stated, the exceptions are overruled and the judgment of the Circuit Court affirmed.
MR. CHIEF JUSTICE BONHAM, MESSRS. ASSOCIATE JUSTICES FISHBURNE and STUKES, and CIRCUIT JUDGES L.D. LIDE and E.H. HENDERSON, ACTING ASSOCIATE JUSTICES, concur.