Case ID: ohio-st_64/html/0343-01.html
Source: Caselaw Access Project
Author: {"author": "Bueicet, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Swisher v. McWhinney et al.
    
      Guardian gave general and special bonds — Sections 6259 and 6285, Rev. Stat. — He also gave realty mortgage to indemnify sureties on both bonds — Dies insolvent and defaulter — Sureties on general bond insolvent — On special bond solvent-proceeds of mortgage security to be credited on both bonds in proportion of liability of several sureties to amount realised from sale — Rule of calculation^ of interest upon amount realised by guardian in sale of realty — Distributive share, to wards from realty sale — Pleadings—Two or more actions pending — Parties agree that law as held in one case shall control in ail — Except as to matters of fact — Does not preclude either party, after one case tried, to raise other issues of fact.
    
    1. Where there are two or more actions pending, and pleadings are made up as to certain issues, and the parties stipulate that the law as finally held in the one case tried, shall control in the other cases, and be conclusive as to all matters in the cases not yet tried, “except as to matters of fact upon which issue may be joined therein,” such stipulation does not preclude either party, after the one case has been finally disposed of, from raising other issues of fact by proper pleadings, on leave of the court. 1 >
    2. A guardian upon his appointment gave a general bond with three sureties under section 6259, Revised Statutes, and afterward gave a special bond with two sureties for the sale of real estate under section 6285, and later died insolvent and a defaulter to his wards in a large sum received on the sale of real estate and from other sources, having commingled the funds and used them as his own; before his death he gave a mortgage on his real estate to his sureties on both bonds for their indemnity; after his death his administrator sold the real estate upon petition in the probate court to pay debts, and by order of that court paid the net proceeds to the wards, and they applied the whole of it upon the liability of the general bond, the sureties on that bond being insolvent, and the sureties on the special bond being good. In an action by each ward upon the special bond for his share thereof, the bond being largely in excess of the amount received on the sale of the real estate, the courts below held that the sureties on both bonds were co-sureties for the amount of the guardian’s default, and that each surety was entitled to have one-fifth of the amount real ized under the mortgage, applied as a credit on his liability on the bond signed by him, and that sum being greater than the liability of the two sureties on the special bond, rendered judgment in favor of the two sureties and dismissed the petition — held: that this was error; that the sureties on both bonds were co-sureties only to the extent of the proceeds of the sale of the real estate; that the two sureties on the special bond were entitled to have the sum realized from the indemnity mortgage, credited upon their liability in proportion of the liability under the special bond fer funds received on sale of real estate to the liability under the general bond for funds not so received.
    3. Interest should be calculated upon the amount realized by the guardian on the sale of the real estate with annual rests to the date of his death, and thereafter at simple interest without such rests to the rendition of the judgment.
    4. Where the wards own the real estate in equal shares, the money realized from the special bond given on the sale of such real estate, should be equally divided among them, even though the amount due to the several wards by reason of other funds received by the guardian, may be unequal.
    (Decided March 26, 1901.)
    Error to the Circuit Court of Darke county.
    On February 14, 1884, one J. N. Lowry was appointed guardian, by the probate court of Darke county, of Viola Swisher, Olive Swisher and Warren C. Swisher, minor children of Robert Swisher, deceased, and gave a guardian’s bond under section 6259, Revised Statutes, in the sum of twelve thousand dollars, with D. T. Shepherd, N. M. Wilson and Jacob Warner, as his sureties.
    Afterward the guardian filed a petition' in the probate court to sell the lands of his wards, and in that proceeding he was required to give a bond under section 6285, Revised Statutes, to secure the proceeds of such sale, and he gave such bond on the 16th day of February, 1885, with said Frank McWhinney and Daniel Ryan, defendants in error, as his sureties, which bond was in the sum of twenty-three hundred dollars, was in due form, and was conditioned as follows:
    “That if the said J. N. Lowry as guardian of said wards as aforesaid shall well ajad faithfully discharge his duties as such guardian and well and faithfully pay over to the proper person or persons, and account for all the money arising from the sale of said real estate, .according to law, then these presents to be void, otherwise to be and remain in full force and virtue in law.”
    The lands were duly sold in said proceeding, and the net proceeds amounted to the sum of $876.75, one-third part of which belonged to each ward.
    The guardian received large sums of money for his wards from other sources, but kept no separate account between the money received from the sale of the land, and the money received from other sources, but commingled all the funds together indiscriminately, and used them as his own, and died insolvent on the 9th day of November, 1891. The last settlement filed by him was in May, 1890, and he then owed his wards $7,179.56.
    After his death, his administrator filed accounts of said guardianship, and the probate court found from said accounting, that there was due to said wards from their said guardian at the time of his death, the following sums: Viola Swisher, $2,252.35; Olive Swisher, $2,061.71, and Warren C. Swisher, $2,607.73; total $6,921.79.
    Said wards having become of the age of majority, demanded of said defendants in error the payment of the full amount of the bond so signed by them for $2,300.00, and upon refusal each one began a separate action against said defendants in error on said bond for the apportionate share of each in the same, with interest thereon from the ninth day of November, 1891, being the date of the death of their said guardian.
    An answer was filed by said Frank McWhinney and Daniel Eyan to the petition of Olive Swisher, in which they claimed that they could be held in any event for only the amount for which the land sold, $876.75, and that as the guardian’s accounts showed that he had paid out more than that sum for the wards, they were entitled to have sufficient of his payments credited on their liability on the bond to discharge the same in full. The courts held that they were not entitled to such crédit, but that their liability did not extend beyond the amount for which the land sold with interest.
    Olive recovered her one-third of the proceeds of the sale of the land, $292.25, with interest from the date of the death of her guardian. That case came to this court and is reported in (McWhinney v. Swisher) 58 Ohio St., 378.
    Instead of filing answers to the petitions of Viola and Warren C., counsel caused to be entered upon the journal in each case the following:
    “By agreement of the parties to the above entitled action, the final disposition of the several motions and demurrers filed in said case, or hereafter filed to any of the pleadings in said case, are to be controlled by the final holding and disposition of the courts upon similar motions and demurrers in the case of Olive Swisher v. Frank McWhinney et al., now pending as Case No. 15,047 in the court of common pleas of Darke county, Ohio.
    
      “In other wofids, the law as finally held in that case in the court in which said case is finally submitted, is to control in the above entitled case, and to be conclusive as to all matters in said above entitled case, except as to matters of fact upon which issue may be joined therein.”
    After the judgment in favor of Olive had been affirmed by this court, and the mandate sent to the clerk of the court of common pleas, counsellor Viola, and Warren C., moved for a like judgment in their cases. This was resisted by counsel ior the sureties, and they asked leave to file answers, which was granted by the court. Thereupon they answered in substance that after the guardian found that he could not pay the money owing to his wards, and for the purpose of indemnifying his sureties on said two bonds, one for $12,000.00, and the other for $2,300.00. he made and delivered to his said sureties, on the 18th day of July. .1891, a mortgage on his real estate, which was duly accepted and recorded, and was conditioned as follows:
    “Provided, nevertheless, that whereas said Frank McWhinney and Daniel Ryan on the 16th day of February, 1885, became sureties for said J. N. Lowry, on a certain guardian’s bond, as guardian of Olive, Viola and Warren O. Swisher, minors, in the sum of $2,300.00, which bond was on said 16th day of Feb: ruary, 1885, approved and accepted by said probate court and recorded in volume 1, guardian’s bond record, page 62 of probate record.
    “And, whereas, said D. T. Shepherd, Jacob Warner and N. M. Wilson, on the 31st day of January, 1884, became sureties for said J. N. Lowry, on a certain guardian’s bond as guardian of Olive, Viola and Warren C. Swisher, minors, in the sum of $12,000, which bond was on said 13th day of February, 1884, approved and accepted by said probate court, and recorded in Volume ‘F,’ page 434, guardian’s bond record, in probate record.
    “Now, if said J. N. Lowry, his heirs and assigns,' shall well and truly pay his said wards, as they become of age, or to his successors, the amounts found due said wards, and shall well and truly account for all moneys, credits, etc., received by him or hereafter to be received, and fully perform the conditions of said bonds and save these mortgagees harmless, then these presents shall be void. Otherwise, to be and remain in full force and virtue.”
    That the administrator of the deceased guardian filed a petition in the probate court to sell said land to pay debts, and made the sureties on said two bonds defendants; that said administrator sold said laud for the net sum of $3,820.00, and the probate court ordered him to pay that sum upon the amounts found due said wards, and that he did so pay the same as follows: to Viola $1,232.25; to Olive $1,098.25, and to Warren C. $1,489.50. That said payments wrere applied to the liability of the sureties on the bond for $12,000.00, they being totally insolvent, and no part was applied to the liability of the sureties on the bond for $2,300.00; that the defendants in error had no knowledge of such application, and did not consent thereto, and averred that they were entitled to have an equitable share of the $3,820.00 applied to the discharge of their liability on the bond signed by them, and that when so applied it would discharge their entire liability on the bond.
    There wTas a reply filed setting up the agreement as to abiding the result of Olive’s case, and also other matters, but as it conceded the controlling facts in the answer, a demurrer was sustained thereto, and exceptions taken. Thereupon, judgment was rendered in favor of the bondsmen upon the petition and answer, and exceptions again noted. The circuit court affirmed the judgment. Thereupon the plaintiffs below, Viola and Warren C., filed their petitions in error in this court, and the two cases were heard together.
    
      Meeker & GasJeill and All-read & Teegarden, for plaintiff in error.
    
      R. 8. Frizel'l and Anderson é Bowman, for defendant in error.
   Bueicet, J.

In McWhinney and Ryan v. Swisher, 58 Ohio St., 378, this court held that, “The liability of the sureties of a guardian upon his additional bond given pursuant to section 6285, Revised Statutes, to account for the proceeds of the sale of real estate of his ward, can not be extended beyond the terms of their undertaking, although the guardian commingles such proceeds with money of his Avard derived from other sources for which he fails to account.”

This court also held in that case that “Although the proceeds of the real estate are exceeded by general payments made by the guardian from such commingled fund, his sureties are liable in an action by the ward after majority, for all such proceeds, they being within the amount of the general balance found in the hands of the guardian.”

The matters so determined in Olive Swisher’s case were not attempted to be again litigated in the answers to the petitions of Viola Swisher and Warren 0. Swisher, but were conceded to be settled by that case. The matter as to the proper division and credit of the fund of $3,820.00 realized on the mortgage taken by the sureties on the two bonds, was not brought into the case of Olive Swisher and was not covered by the agreement, but was within the exception, “as to matters of fact upon which issue may be joined therein.” There was therefore no error in sustaining the demurrer to that part of the reply. And there was no error in sustaining the demurrer to the whole reply, because it did -not controvert the controlling facts of the answer.

The most difficult question is, as to the rights of the wards and the sureties on the bonds, as to the $3,820.00 realized on the sale of the land covered by the indemnifying mortgage to both sets of sureties. As the three sureties on the general bond taken when the guardian was appointed are insolvent, the wards claim that they have the right to apply the $3,820.00 on the liability of those three sureties, and it was so applied, leaving the sureties on the bond given on the sale of the land by the guardian, without any benefit from the $3,820.00.

It is well settled that when a creditor receives money from his debtor without any direction as to which debt the money shall be applied upon, the creditor may make the application to his best advantage. Gaston v. Barney, 11 Ohio St., 506. Tuttle v. Northrop, 44 Ohio St., 183.

But the rule applies only when all the debts are owed by the debtor paying the money, and can not apply where the money comes from‘two persons, and both owe one debt, and one owes another debt. In such case the creditor can not apply the whole fund to the payment of the debt owed by the one, because that would be applying the money of two persons to pay the debt of one of them. In short, it would be applying the money of one person to pay the debt of another. In such cases the money must be applied upon the debt.owed by both. But if the money is not owned by the persojns paying the same in their own right, but was obtained for the purpose of indemnifying themselves as sureties, on different debts or liabilities, as in the case at bar, the creditor need not apply the fund to the payment in full of the debt owed by both, but may apportion the fund between the two debts in proportion to the amount of each, especially may this be done when one of the debtors is insolvent. But the creditor can not in such case apply the whole fund to the debt owed by the insolvent debtor, and thereby deprive the solvent one from receiving any benefit from the fund which he was instrumental in securing for the purpose of saving himself from loss on the debt owed by both.

In the case at bar the three wards had no right to apply the whole fund of $3,820.00, realized from the mortgage taken by the two sets of sureties for their indemnity, upon the liability of the three sureties on the general bond, and thereby deprive the two sureties on the special bond from realizing any benefit from the said fund which they were instrumental in securing to indemnify themselves. The most that the wards could do was to divide and apportion the fund between the sureties of the two bonds in proportion to the liability of the sureties to the wards on each bond, and give each set of sureties credit accordingly.

The total liability of the guardian at his death on November 9, 1891, was $6,921.79. The liability for the proceeds of the land sold for $876.75 net, was on the same date, counting interest with annual rests, $1,297.37. Therefore the two sureties on the special bond were then liable to the wards for this sum of $1,297.37, and the three sureties on the general bond were also liable to the wards for that sum, and as to that sum the sureties on both bonds were co-sureties, because they were sureties to secure the payment of the same debt, liability, or obligation. But as to the balance of the liability of the guardian to the wards $5,624.42, the three sureties on the general bond alone were liable, and the two sureties on the special bond were not liable therefor; and as to that sum they were not co-sureties with the three sureties on the general bond.

The sureties on both bonds, by their efforts, obtained the mortgage from the guardian from which the fund of $3,820.00 was realized, for their indemnity, and but for their efforts that fund would also have been lost to the wards. That fund can therefore not be treated as a mere payment made by the guardian, thus reducing his liability to $3,101.79, and leaving the sureties on the two bonds liable ás if that had been the whole of the amount for which the guardian defaulted. True the $3,820.00 was realized out of the property of the guardian, but it was not paid by him to the wards, but was wrung from him by the sureties for their own indemnity, and they are entitled to be rewarded for their diligence by having it so credited as to benefit both sets of sureties, in proportion to the liability of the sureties on each bond, considering the full sum of $6,921.79 as the amount of the defalcation. When the fund of $3,820.00.is so divided and credited, there should be credited upon the liability of the special bond, the sum of $716.00, which taken from the whole liability of that bond $1,297.37, will leave the sum of $581.37, due to the three wards from the two sureties on the special bond, at the death of the guardian. As the death of the guardian terminated the guardianship, that sum became a debt at that date due from the two sureties, and would bear simple interest without annual rests until paid, and to this date would amount to the sum of $908.70.

As the amount is less than the amount due on the proceeds of the sale of the real estate, and as each ward owned one-third of the real estate, it follows that this sum must be equally divided among the three wards, $302.90 to each. Olive has already been paid in her case, but a judgment will be entered upon the conceded and controlling facts, in favor of Viola Swisher for $302.90, and costs, and a like judgment .in favor of Warren C. Swisher in his case. ■ The court of common pleas erred in rendering judgment upon the petition and answer in favor of the defendants in error, and the circuit court erred in affirming the judgment. Both judgments will therefore be reversed, and judgment rendered as above indicated.

Judgment reversed, and judgment for plaintiff in error.

Minshall, C. J., Williams, Spear, Davis and Shauck, JJ., concurred.