Opinion
(August Term, 1849.)
A guardian is not bound to have the money ready to pay his ward when he comes of age, but the ward is bound to take a bond in discharge of the guardian, which the latter properly took and has not made his own by fraud or laches. Such a bond in truth belongs to the ward, just as much as a specific chattel.
CAUSE removed from the Court of Equity of LINCOLN, at Spring Term, 1849.
Landers and Boyden for plaintiff.
Guion, Thompson and Craige for defendant.
The bill in this case was filed in September, 1847, for the purpose of setting aside a release obtained by the defendant from the plaintiff, and for an account against the defendant as the plaintiff's late guardian, and payment of the sum which may be found due. The facts are that the plaintiff was entitled to the sum of $544.15 as his distributive share of the estate of his intestate father, due in July, 1840; and that the defendant, as the plaintiff's guardian, received from the father's administrator, on 1 January, 1841, a bond for that sum, made by Robert H. Burton and Henry Fullenwider, and payable to the defendant, as (239) guardian, one day after date. The interest from July, 1840, to January, 1841, was paid to the defendant in cash, and the bond was taken by the administrators from the obligors, who were debtors to the estate, by a previous arrangement between the administrators and the defendant, who applied to them to pay him the plaintiff's distributive share in good bond, payable to him as guardian, rather than in money. At that time both Fullenwider and Burton were in possession of large estates and were considered by every one perfectly safe. In January, 1842, Burton offered to pay the debt to the defendant in the presence of the plaintiff, who was then within a month or two of full age; but the plaintiff requested the other parties to let the money remain at interest as it was, and they did so. Burton at the same time stated that if further security was desired, he would renew the bond and get one Hoke to become his surety, but he died the later end of February following, without anything further having been done. On 18 March, 1842, four days after the plaintiff came of age, the defendant went to the plaintiff's house to settle with him. The plaintiff declined at first, in consequence of his being unwell at the time, but the defendant urged him to settle, and the plaintiff finally consented to do so. The defendant then paid him in money all that was due him, except the amount of the above mentioned bond, and proposed to transfer that to the plaintiff for the balance. The plaintiff objected to taking it, saying that he did not like to receive a dead man's bond. But the defendant, as alleged in the bill and established by the proofs, said that if he would take the bond Hoke, who had become the executor of Burton, would become bound for it as surety; and thereupon, the plaintiff received the money and bond without indorsement, and executed to the defendant an acquittance therefor and a general release of all demands. It turned out that Burton (240) and Fullenwider were insolvent at the time, and that Hoke, when requested by the plaintiff and defendant, refused to become bound for the debt. The plaintiff then brought an action at law upon the bond, but has never been able to get anything, and Fullenwider has no property and Burton's assets have been tied up by a suit by some of the creditors in a court of equity for their administration. The bill charges that, in fact, both Burton and Fullenwider were insolvent in 1841, and that it was the duty of the defendant to have collected the money and especially to have received it when offered by Burton in 1842, and that the bond was also void by reason of an usurious agreement of the defendant with Fullenwider for indulgence, and it insists that the defendant was liable to make good the bond to the plaintiff, and that the acquittance and release were unduly obtained.
The answer states that the defendant considered himself obliged by law to have the plaintiff's estate ready for him in money when he should come of age, and, in conformity to what he thought his duty, that he would have collected the money from Burton, as he might in January, 1842, if the plaintiff had not interposed had requested him not to do so. The defendant states that the administrators of the plaintiff's father selected Burton and Fullenwider as the best out of debtors to the estate to the amounts of upwards of $5,000, and that no men were considered as less likely to become insolvent or involved than those; and, indeed, that no suspicion of their solvency was entertained until the sale of Burton's property by his executor in the latter part of April, 1842; but that, on the contrary, their estates were so ample, and their industry and prudence were deemed so exemplary as to establish a credit on which they could have borrowed almost any sum of money that any business in that part of the country could have required, and that the defendant believed the debt perfectly good up to that sale. The defendant, therefore, avers that he acted to the best of his (241) judgment of the interests of his ward in receiving the said bond for his distributive share, and in letting it remain uncollected in accordance with both the interest and the wishes of the plaintiff; and denies that he intended to take, or did take, any advantage whatever of the plaintiff in transferring the bond to him as part of his estate and obtaining the release. He denies positively any agreement at any time for the payment of usurious interest on the bond, or any premium for indulgence thereon; and avers that his sole motive for becoming guardian was to serve the plaintiff, and that he did so without a view to his own advantage, and did not even charge any commissions.
The answer is fully sustained by proofs as to the property and reputed solvency and wealth of the obligors, and of Mr. Burton in particular, until the death of that person and the sale of his effects in April, 1842; and there is no evidence in support of the charge of an usurious agreement.
From the circumstances under which the settlement was made with the plaintiff just after he came of age, and when he was sick, and without advice, and was reluctant, on those accounts, to enter into it, the release could not stand in the plaintiff's way if any undue advantage had been gained therein by the guardian. But it seems to the Court that putting aside the settlement and release, the plaintiff is not entitle to any relief upon the other facts, as the money was, we think, honestly and properly invested by the defendant, and, therefore, the plaintiff had a right to claim the bond as property, and so, (242) likewise, the defendant had a right to insist that the plaintiff should take it as his property. Possibly, if there were no statute upon the subject, it might be deemed laches in a guardian to let money lie on the personal responsibility of the debtors. We should, indeed, rather conclude otherwise, in the state of our country, where there are so few opportunities of investment in public securities and for small sums on mortgages on real estate. But the act of 1762 puts the matter at rest by making it the duty of a guardian to lend the surplus money of the ward upon bond with good security, with interest payable annually or compounded. As the guardian is a trustee merely, he is entitled to all the protection of trustees which arises from obedience to the law in good faith. Therefore, the ward is bound to take a bond in discharge of the guardian, which the latter properly took and has not made his own by fraud or laches. The Court has said that such bonds, in truth, belong to the ward, and that, although they are negotiable, one who takes them from the guardian with notice must account for them to the ward. Powell v. Jones, 36 N.C. 337; Exum v. Bowden, 39 N.C. 281. It follows that, in equity, the guardian is entitled to transfer the bonds to the ward in satisfaction, and is not bound to pay the ward, in money, as the defendant seems, by mistake, to have supposed. Indeed, the statute expressly provides that the guardian may assign any uncollected bonds to the ward, and that such assignment shall be a discharge pro tanto. And it is clear that the assignment is one that will enable the ward to collect the money by suit in his own name, and not to charge the guardian as indorser; for the same section provides that the guardian shall be liable for the money only when the borrowers and the sureties are likely to become insolvent, and the guardian shall not use all lawful means to enforce payment. The Court therefore holds that in this case no imposition was practiced on the plaintiff, inducing him to discharge his (243) guardian upon receiving the bond in question, for the guardian acted bona fide and rightly in taking the bond and in not collecting the money, since the debtors were deemed perfectly good up to the time when he parted from the bond, and were so deemed, not only by him, but by the plaintiff and the whole community, without a single exception, as appears. It is purely a question of loss between two innocent persons; and surely the guardian, who would not be allowed to make a profit for himself, and acted on behalf and for the benefit of the plaintiff, ought not to bear the loss; but it must rest with the plaintiff as the equitable owner of the bond.
PER CURIAM. The bill dismissed with costs.
Cited: Williamson v. Williams, 59 N.C. 65.