Case ID: sc-eq_7/html/0361-01.html
Source: Caselaw Access Project
Author: {"author": "Johnson, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Charlotte M'Dowell and Others v. Harriet Caldwell, Administratrix, and John Caldwell.
    The surely to a guardianship bond is liable as well for moneys received before the execution of the bond for the estate, as for moneys afterwards raised and not accounted for. Whatever may be found due on the breach of a bond for money, or performance of covenants (as in the case of a guardianship bond,) ranks as a bond debt. Where minors were invited by their guardian to reside with him gratuitously, they shall not afterwards be made to pay board. But the guardian will be allowed for clothing and other necessaries furnished them. A guardian is not authorized to break in upon the capital of his ward for his maintenance, except under peculiar circumstances. And if the guardian advances beyond the income, as a general rule he will not be allowed interest on a balance due for maintenance. A guardian is entitled to be reimbursed his expenses in prosecuting a claim of his ward’s, or in selling a tract of land for him. This court reluctantly interferes with decrees on facts. If a person standing in a fiduciary situation suiler his transactions to be involved in obscurity, which with proper care he could have prevented, the lowest estimate will be put upon his remuneration, should lie be entitled to any.
    This bill was filed by Charlotte M’Dowell, Agatha M’Dowell, and Patrick M’Dowell, against Harriet Caldwell administratrix of William Caldwell deceased, and John Caldwell. The bill charged, that William Caldwell, at the June term of the court of equity for Newberry district in 1818, was appointed guardian of the complainants, and their brother James M’Dowell since deceased; that in April, 1817, he, together with John Caldwell as his surety, gave bond to the commissioner for the faithful discharge of his duty. That William Caldwell during his guardianship had received the sum 86,401 31½ on account of his guardianship, of which an ^account was claimed from the -'defendants; and that the amount which William Caldwell might be found in arrear, might be decreed to rank as a bond debt, and paid accordingly by his administratrix; and in the event ofhis estate being unable to pay the whole, that then the surety, John Caldwell, might be decreed to pay the balance.
    The defendant, Harriet Caldwell, answered and admitted that William Caldwell was guardian, as stated ; and that he had received the amount charged by the bill.
    The defendant John Caldwell, answered and admitted the appointment of William Caldwell, and the execution of the bond: he did not know nor admit the receipt by William Caldwell of the sum charged in the bill. He concurred with the complainants that the amount which might be found to be in arrear on the guardianship of the said William should rank and be paid as a bond debt.
    At June term, 1825, the case came on for hearing before his honor, Chancellor Thompson', and his honor decreed that the matlers of account in the case should be referred to the commissioner, and that he should make his report to the next court, regarding the amount received by William Caldwell, as guardian, as a bond debt.
    The commissioner in obedience to that order was attended by the parties: he examined the accounts and submitted a report to the court in June, 1826, rejecting a greater part of the complainants’ claim, and reporting a balance against them, and in favor of William Caldwell, deceased of 83,022 84. To this report the complainants filed exceptions, and the case was heard upon the report and exceptions.
    That the complainants’ first exception was, “that the commissioner rejected the charge founded upon the receipt of William Caldwell, deceased, for a note on Harris & Bowen for §887 83 with interest, which note, ^whatever might have been the form of the receipt, to the complainants, was intended for their use, and therefore must have been collected by him for them, as guardian.”
    His honor overruled so much of that exception as sought to make the surety, John Caldwell, liable for that sum, but sustained so much of the exception as sought to make the estate of William Caldwell answerable for the same, as a bond debt. The following were the facts in relation to that part of the case. In June, 1818, William Caldwell was appointed guardian, and on the 17th of April, 1819, gave his bond. It appeared that on the 4th of April, 1818, William Caldwell received of James Blocker a note on Harris & Bowen, originally for $887 83 cents; but, at the time, he received it, amounting to $1,006 08 cents. This note was payable to Patrick M’Dowell, deceased, the father of complainants, and when collected, the amount of it was for their use, and on account of their share of their father’s estate. In the first and only return ever made by William Caldwelll, as guardian, in 1819, he charged himself with $100 received on Harris & Bowen’s note, for the use of complainants. In a conversation had with Major Black, which was proved before the commissioner, William Caldwell, speaking of Harris & Bowen’s note, said, that since he had obtained funds, he should take the boys, Patrick and James M’Dowell, from trades, to which they had been previously bound, and send them to school. It was also ¡moved that he had actually paid the board of Patrick and James M’Dowell while at George Bowen’s, by crediting Harris & Bowen’s note with the amount of their board. William Caldwell collected the amount of the note at different times, long subsequent to his receipt of the note, and to the execution of the guardianship bond.
    The complainants’ second exception was “because *the commissioner rejected the charge founded on the receipt by William Caldwell of §200, on John Collins’ note, which note he received from the estate of Alexander M’Dowell.”
    On this exception his honor remarked, “I presume, however, there can be no doubt, that it is a charge on the estate, but not as a bond debt; and I decide accordingly on the exception. This power cannot affect the surety, Mr. John Caldwell, only so far as the money was received by William Caldwell, after he joined in the surety bond. The payment of $100 on the 27th of February, 1822, and of $100 on the 23d of December, come clearly within the surety bond.”
    The following were the facts in relation to this part of the case:
    The complainants were entitled to a moiety of the estate of Alexander M’Dowell, deceased, under his will. William Caldwell received from that estate John Collins’ note, and collected upon it, on the 27th of February, 1822, $100, and on the 23d of December, 1823, $100. The note was received by Caldwell, for and on account of complainants’ part of the estate of Alexander M’Dowell; and the money collected was received for their use.
    The complainants’ third exception was, “ that he rejected the charge founded on the receipt, by Caldwell, of $400, from James Blocker.”
    His honor overruled the exception. The facts in relation to this exception were, that on the 10th of June, 1824, William Caldwell received of James Blocker $400 in part payment of Davidson & Blocker’s bond to the late Alexander M’Dowell. He gave Blocker a receipt, promising that that sum should be credited on the bond, and should bear interest from that time. It was not pretended that the complainants were not entitled to this money; but it was urged that Caldwell *did not receive it as guardian, and ought not therefore to account for it in that character. To that it was replied, that it was immaterial how, or in what character, he received it, provided it was the recovery of his wards. And that the payment to him of so much, on Davidson & Blocker’s bond, would be, pro tanto, an extinguishment of their share of Alexander M’Dowell’s estate, and of necessity would, in equity, be a payment of that much on Davidson & Blocker’s bond.
    The complainants’ fourth exception was, “that the commissioner rejected the charge of §281 for money received by William Caldwell from E. Drummond, for land of the estate of Alexander M’Dowell.”
    His honor overruled the exception. As to this exception the facts were as follows :
    The will of Alexander M’Dowell directed his executors to sell his real estate out of Charleston whenever they should think proper. Mr. Cheves, one of the executors, living in Philadelphia, and Mr. M’Dowell, the other executor, living in Charleston, it was inconvenient for them to execute that portion of the will. Mr. M’Doweli, therefore, in the name of himself and his co-executor, after William Caldwell had been appointed the guardian of the complainants, made an application to the court of equity, and obtained an order authorizing William Caldwell, as the agent of the executors, to sell and convey, at private sale, several tracts of land in Spartanburg. He accordingly sold one one tract to Ephraim Drummond for §281, and received the money. It was not pretended that the proceeds of this sale did not belong to the complainants; but it was contended that Caldwell received it as the agent of the executors. It was in proof before the commissioner that, had not Caldwell been the guardian of the complainants, he never would have been appointed the agent of the execu-t01’s i and they considered all moneys received by *him, as their agent, as payments to him, as guardian. All the expenses attending the application to the court of equity, for the sale of the lands, were paid by Caldwell, and were allowed in the commissioner’s report, as charges against the complainants.
    The complainants’ fifth exception was sustained, and it is unnecessary to notice it.
    The complainants’ sixth exception was merely one on facts, involving no legal question.
    The complainants’ seventh exception was, “that the commissioner had erroneously charged Charlotte M’Dowell and Agatha M’Dowell with their board, notwithstanding they were invited by Mr. and Mrs. Caldwell to live with them, on the assurance that they should be free from all charge for boarding; and the evidence showed that Mr. Caldwell never intended to charge. His honor overruled this exception. The evidence upon this part of the case was in substance, that shortly after their marriage Mr. and Mrs. Caldwell invited Charlotte and Agatha M’Dowell to live with them, saying that it should be without charge. Major Black proved, that about the time of Mr. and Mrs. Caldwell’s marriage he offered to Charlotte that she might live with his family without any charge; and that Mr. Watts made the same proposition to Agatha; and he was perfectly satisfied, he said, that if Charlotte or Agatha had supposed that they had to pay board at Mr. Caldwell’s, that they never would have gone to live with him. He thought that their services in Mr. Caldwell’s family were well worth their board. Mrs. Caldwell, the defendant, was examined, and stated that her sisters, Charlotte and Agatha, came to live with her and her husband upon their invitation; that her husband never intended to charge them board ; and that their services were worth their board. Other witnesses concurred in saying that they were very industrious and far from being extravagant in any respect.
    *The complainants’ eighth exception was, “that if they, the complainants, were liable to account for their board, the commissioner had made an extravagant estimate of their board and expenses by a lumping estimate, whereas he ought to have confined himself to the vouchers produced.”
    His honor thinking that the amount allowed by the commissioners for board and expenses was rather high, reduced the allowance twenty-five per cent., and beyond that overruled it.
    All the vouchers and evidences of payments ever made by Caldwell for board or expenses of the complainants, were produced on the reference. Major Black proved that he, in a few days after Mr. Caldwell’s death, examined the papers, and that the vouchers produced were all that were in his possession.
    Mr. Caldwell’s book of charges was also produced. The complainants contended that the commissioner should confine himself to the vouchers and charges produced, in making allowance for board and expenses. But in order that Mr. Caldwell’s estate should not suffer in any point of view, they offered to make it part of the report and decree, that the defendants should be allowed twelve months to collect evidence of other charges against them; and if any could be established, that they should be deducted from the amount decreed in their favor. The commissioner however rejected the vouchers, and resorted to the opinion of witnesses as to the probable amount of board and expenses : and the result of that examination was, as the appellants’ brief stated, “that he allowed for board and expenses, and interest thereon, the extravagant amount of $6,903 06; and the effect of his honor’s decree was still to allow $5,177 30, when the complainants allege, and so the fact will turn out on examining the vouchers and hearing proof of every payment, that William Caldwell during his guardianship* never paid $1,500 on account of the complainants’ board and expenses.”
    The complainants’ ninth exception was, “that the allowance for maintenance ought not to bear interest.”
    His honor overruled the exception.
    The complainants appealed, and moved the court of appeals to reverse the circuit decree in part, and for a decree for the complainants on the following points:
    First. “That the complainants’ first, second, third, and fourth exceptions ought to have been sustained, and the commissioner dirgcted to charge the amount of Harris & Bowen’s note, the amount received on John Collins’s note, the amount received from James Blocker on Davidson and Blocker’s bond, and the amount received fromE. Drum-mond for sale of lands, against the estate of William Caldwell, as a bond debt.”
    Second. “That the complainants’ seventh exception ought to have been sustained, and the commissioner directed to make no allowance for the board of Charlotte and Agatha M’Dowell, inasmuch as they were invited to live with Mr. Caldwell, and he never intended to make any charge.”
    Third. “That the complainants’ eighth exception ought to have been sustained, and the commissioner directed to make no allowance for board or expenses, except where payments were vouched or proved.”
    Fourth. “That the complainants’ ninth exception ought to have been sustained, and the commissioner directed not to allow interest on the allowance for maintenance and expenses, inasmuch as the income of the wards’ estate ought to be applied in the first instance to their maintenance.”
    Fifth. “That if any portion of the moneys received by William Caldwell for complainants should not be entitled to rank as a bond debt, that then the commissioner *ought to be directed to apply it, in the first instance, to the payment of board and expenses, and such sums as are to as a bond debt untouched, until the former is extinguished.”
    Sixth. “ That the complainants ought not to be charged with the expenses of the case of Black and wife and others v. M. J unkin, and the expenses attending the sale of the land sold to Drummond, all which were allowed in the commissioner’s report, unless the amount received by Caldwell from Drummond, and from James Blocker, and from Harris & Bowen, were to be charged as a bond debt against his estate.”
    Seventh. “That if the estates of William Caldwell, and John Caldwell bis surety, were to be charged only with such sums as were received by William Caldwell subsequently to tile execution of the guardianship bond; then, in the settlement of the accounts in this case, they should not be credited or ailowed for board, expenses, or payments, anterior to that period.”
    Feb. 1, 1827.
    O’Neall. for the appellants.
    It is strange doctrine that the principal should be liable as for a bond debt, and yet the surety not also be liable as for a bond debt. No matter bow a guardian receives property of his wards, whether as guardian or not, he is always liable for it as guardian. He can receive his wards’ property in no other character. It is in vain for him to say he received it as agent for another party. He cannot divest himself of the equitable character of guardian. Caldwell was entitled to retain, because he was guardian to the distributees of Patrick M’Dowell. Even though he received it as agent for the administrator of Patrick M’Dowell, yet the court will hold him liable, if he suffered it to pass out of his hands; upon the established maxim, in equity, tiiat what ought to have been done is considered as done; and he will be considered as having received it for his *wards. But the fact is, that the witness Black proved that Caldwell told him he liad received funds of his wards, which he intended to apply to their education. And so he did apply it, in part, in paying Bowen for the board and education of two of the children. The whole of Caldwell’s acts then shewed that he received it in his character of guardian, and those acts would have rendered him liable as such ; and the same facts must render his sureties liable. The principal and the surety are both liable as for a bond debt. Can it be said, that if the guardian received money before he gave bond, that he was not liable for such sum ? And if he be liable as guardian, his surety must be.
    If an executor owe money to the estate, it is assets in his hands for the payment of debts, 13 Ves. ‘2(54. The principle of the doctrine applies to guardians : and as he owed what he received, and it became assets during the time of his bond ; his surety became liable for such assets. He ought to have charged himself immediately for the same, 4 Burns’ Ecc. Law, 109. 8 Ves. 4(56. Walker v. Bynum, 4 Desaus. Rep. 557.
    As to the board allowed by the commissioner, the allowance was improper and illegal: for the Misses M’Dowell were invited to Caldwell’s, from their own house, where they paid nothing. This was proved by Major Black. They lived at his house and had lived at some other houses on the same terms. They were young ladies, living as friends invited to his house. The invitation was proved by a letter from Mrs. Caldwell, directed in the hand-writing of Caldwell. Besides, it was proved, that the services of the young ladies to his family were, more titan sufficient to counterbalance their board.
    The interest was the proper fund for maintenance, Boycot v. Cotton, 1 Atk. 556, 3 Atk. 438. Cud worth v. Thompson, 3 Desaus. Rep. 62. The interest, or the rents and profits, are applicable to maintenance, where *ibe parent is unable to pay, the children having a separate estate. Maintenance is to be regulated by the income, Chaplain v. Chaplin, 3 P. Wms. 368. And the capital is not to be broken into by a trustee for maintenance, 1 Mad. Cha. 276. Walker v. Weatherall, 6. Ves. 474. 1 Ves. Jun. 217. 4 Ves. Jim. 268, 269.
    Interest is never allowed on the arrears of maintenance. 1 Madd. 272 Mellsh v. Meiish, 14 Ves. 516, 517. If any receipts are not to rank as bond debts, they should be applied to the expenditures.
    Dunlap, in reply.
    The sureties are not liable for funds received by the principal before the sureties gave bond. 9 Cranch, 212.
    As to the board, it is but justice. The invitation was only for a temporary visit. Besides, Caldwell himself was then boarding at a tavern, and the invitation, at all events, was only intended for Charlotte.
    It is admitted that interest is the proper fund for maintenance, if sufficient; but if the interest be not sufficient, will not the court break in upon the capital rather than sufler the ward to starve? The cases cited by Mr. O'Nball were sill cases between parents and children having separate estates. In such cases, if the parent be able to maintain the child, he is bound to do it without touching the principal or interest of the child’s separate estate.
    J. Caldwell, same side.
    The receipt from Blocker, &c., was previous to Caldwell’s giving his guardianship bond, and at that time he wms not acting as guardian, but as agent to the executors of Patrick M’Dowell; and if the payment was made in that character, can it at any time afterwards be changed in its nature to a receipt of funds in a fiduciary situation, and thus involve the surety on his bond given long after? Who credited *him? Who trusted him ? The executor of Patrick M’Dowell. And after all this, the court are asked to make an innocent person liable for acts done before signing the surety bond, which must be considered prospective in its obligation. He cited 9 Cranch, 212.
    O’Neall, in reply.
    The case in Cranch is not applicable, because the default was before the bond was given, which the court held was entirely prospective in its terms. There was no conversion in this case before he gave his bond, which was not the fact in the case in Cranch. The money was received in this case before the bond, though the conversion was afterwards. But the bond in the case from Cranch was entirely prospective, “for all moneys which may come into his hands.” Baker v. Preston, Gilmer’s Rep. 235. Pie at least is prima facie liable; for Caldwell, in this case, in his first return, charged himself with this money. This affords conclusive evidence that ho received the money for the estate.
    Jan. 1827.
   Curia per

Johnson, J.

The matters of law arising out of this case will be considered with reference to the following points, without regard to the order in which they are set down in the brief. They are

First. Whether a surety to a guardianship bond is liable for funds in the hands of the guardian at the time the bond was executed?

Second. Assuming that the estate of William Caldwell, the deceased guardian, is insufficient to pay all his debts, whether, in marshalling the assets, any balance that may be found due on the settlement of his accounts as guardian is to rank as a bond or simple contract debt?

Third. Whether, under the circumstances, the defendants are entitled to a credit on account of the subsistence of Charlotte and Elizabeth M’Dowell?

* Fourth. Whether the defendants are entitled to be credited on account of board and expenditures for clothing and tuition of James and Alexander M’Dowell, ascertained by a conjectural estimate, without proof of actual expenditure, and to an amount exceeding their annual income?

As to the first point, it was satisfactorily proved that William Caldwell, the guardian, in the interval between the order for his appointment and his entering into bond, received a sum of money from Harris & Bowen in part payment of a bond, and the decree allows it as a charge upon his estate, but not against the surety, because it came into his hands before the surety was bound; and these circumstances give rise to the first of the foregoing propositions.

The guardianship was general. It committed to William Caldwell the management of the whole estate of his wards, and his bond was intended as a security for the discharge of his duty with respect to the whole. Of this the funds in his hands constituted a part. His appointment was consummated by his entering into bond, for until then he had no powers. In virtue of it he had a right to detain the funds in his hands, and on every principle of justice and reason the bond must stand as a security for the manner in which he disposed of it. The sums received on this account must be charged to the surety, whether they were received before or after the execution of the bond.

Connected with this matter a contest has arisen, whether in point of fact the complainants were entitled to certain sums received by their guardian from John Collins and James Blocker, and on account of land sold to Drummond. The first of these only is allowed, and that only as a charge upon the estate of William Caldwell and not against the surety. Whether William Caldwell received these sums as agent for the executors of *Patrick and Alexander M’Dowell, or on account of his wards, is left in some degree doubtful by the evidence; nor have I been able to between the character of the evidence in relation to these items, nor to comprehend fully the reasons which led to the allowance of one and the exclusion of the others; and under these circumstances it has been thought most advisable to send them to the commissioner for further evidence, with directions to charge them to the account of the guardianship bond, if they should be found to have been received on account of the plaintiffs; and it is ordered accordingly.

As to the second ground, by the common law, if the condition of a bond was broken, whether it was for the payment of money or for the performance of covenants, the penalty was forfeited and became a debt by specialty; and although equity has always relieved against it, and although by statutes courts of law are authorized to do so, yet I apprehend that the legal character of the debt has not been changed. The penalty still remains a debt by specialty, and stands as a security for whatever may be found due on the condition, and is entitled to rank as such in marshalling the estate of William Caldwell.

As to the third ground, the proof is very conclusive that there was no intention on the part of William Caldwell to charge his wards, Charlotte and Elizabeth M’Dowell, with board, and that it was so understood at the time they took up their residence with him. The relation of brother-in-law in which he stood to them, the well known liberality of his feelings, the kind attentions which he bestowed on them, added to the positive evidence of Mrs. Caldwell, establish it beyond controversy. Indeed the reasoning both of the chancellor and the commissioner indirectly admits it, a forced construction has evidently been resorted to for the purpose of *cbarging them with it as a relief to the surety, John Caldwell. But when we reason that it is unjust that a principal should be liberal at the expense of his surety, we see but one side of the picture of this case. These young ladies had been invited by Major Black and Mrs. Watts, their relations, whose respectability and ample means promised all that could be expected, to take up their residence with them, free of any expense on account of subsistence. They were seduced from this oiler by the entreaties of a sister, and the assurances of her husband that he would accord them the same terms. To charge them with board under these circumstances, would not only be a violation of the rule, that what was intended as a gratuity shall not be converted into a demand, but it would amount to a positive fraud. It has been further urged, that the invitation could not have contemplated a residence so protracted as this proved to be, and that for that reason it should be limited to one year. The undertaking was voluntary, and imposed no obligation on William Caldwell further than that it was executed; and if he found it onerous he might at any time have put an end to it, but until he did so the original conditions remained. This view of the subject is not, however, intended to exclude any demands for money expended for clothing, or other necessaries suited to their condition and circumstances in life; for these they are clearly accountable.

With respect to the fourth proposition, the facts appear to be these : the complainant, Alexander M’Dowell, and his deceased brother, James M’Dowell, had been put out apprentices to trades; but on funds coming into the hands of their guardian, he removed them from their occupations, and put them to school. They resided with the guardian a part of the time, and at other times were boarded abroad, but no account has been furnished of the actual expenditures, or of the length of time they *were boarded abroad; and the bases of the them is probable conjecture as to what would be the expenses of board, tuition, clothing, &c., for the whole length of time. It is a well settled rule, that the guardian is not entitled to break in upon the capital of his ward for his subsistence, except under peculiar circumstances, which do not enter into this case; and generally it is limited within the income. Of course, there could not be a balance against the ward at the end of the year on which interest could be calculated ; and for this reason, as a general rule, interest is not allowable on a balance due for subsistence. The liberality of the complainants, in consenting that a reasonable allowance should be made for the board of those young men, without regard to their income, has relieved the court from the necessity of applying these principles to the case further than is applicable to interest on the annual expenditures. This, for the reasons before mentioned, cannot be admitted; and the account for their board and subsistence will be retained, expunging the interest which has been calculated on it.

With respect to the matters contained in the seventh ground of the complainants’ motion, it may be remarked that thay present a proposition too clear to admit of any doubt. If the expenses of the suit of Black and others and wife v. M. Junkin were incurred in prosecuting the rights of the complainants, and have been paid by their guardian, he is entitled to be credited with them; and so with regard to the expenses on account of the lands sold to Drummond. If the proceeds of this sale belonged to complainants, of course they are chargeable with the expenses, but if otherwise they clearly are not. Whether they are, or arc not entitled to this fond, is one of the facts referred back to the commissioner; -and their liability must depend on the determination of that question.

This disposes of all the points made on the part of *the complainants; and it will only be necessary to notice very briefly those made the defendant. The first stated in his brief is disposed of in considering the second general proposition arising out of the complainants’ motion, and without abandoning the question of law arising out of his second ground. Mr. John Caldwell, who is the party and the counsel, has consented to waive it, and that the amount charged to have been received from Mr. Cheves shall be retained. His third ground involves a question of fact onl_y, and for that reason this court would reluctantly interfere with it: but connected with it is the circumstance that no accounts have been kept or exhibited as to the actual expenditures; and if a person who stands in a fiduciary relation will suffer his transactions to be involved in obscurity, when, by a proper attention to his dut}: and the interest of his cestui que trust, he might have removed it, if he is entitled to any remuneration, it furnishes a good reason for putting it on the lowest estimate. The court are perfectly satisfied with the deduction made by the chancellor on account of the board of the young men.

It is therefore ordered that this case be referred back to the commissioner, to examine into the matters left open by this decree, and to state an account between the parties conformably to the principles laid down.

Decree modified.