Title: The Prudential Insurance Co. of America v. Frazier

State: arkansas

Issuer: Arkansas Supreme Court

Document:

The PRUDENTIAL INSURANCE COMPANY of America
v. Melissa Conrad FRAZIER and Mellonie Conrad

94-1320                                            ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered February 5, 1996


1.   Jurisdiction -- chancellor had subject matter jurisdiction --
     action for accounting against an insurance company and former
     guardian. -- The chancellor had subject matter jurisdiction
     over an action against an insurance company and former
     guardian for accounting and judgment.   

2.   Guardian & ward -- appellant paid proceeds to putative
     guardian without court authority -- chancellor's ruling
     correct. -- Where the appellant paid the proceeds to the
     guardian without court authority, no bond was ever set and no
     letters of guardianship were ever issued, and the Probate code
     of 1949 did not authorize appellant to pay the guardian the
     proceeds on the strength of a court order conditionally
     appointing him guardian, with bond yet to be determined, there
     was no error in the chancellor's so ruling.

3.   Appeal & error -- appellant's argument raised for the first
     time on appeal -- court will not address such arguments. --  
     Where appellant's second argument for reversal was that after
     paying the proceeds to the guardian, it had no further
     obligation to appellees under the law of trusts, and the
     abstract did not reveal that appellant relied on the law of
     trusts in the proceedings below, the court refused to address
     the argument; the record on appeal is confined to that which
     is abstracted.  


     Appeal from Garland Chancery Court; Tom Smitherman,
Chancellor; affirmed.
     The Rose Law Firm, A Professional Association, by:  Phillip
Carroll, for appellant.
     Crawford Law Firm, by:  Michael Crawford, for appellees.

     Andree Layton Roaf, Justice.February 5, 1996.   *ADVREP9*









THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA,
                    APPELLANT,

V.

MELISSA CONRAD FRAZIER AND
MELLONIE CONRAD,
                    APPELLEES,






94-1320



APPEAL FROM THE GARLAND COUNTY
CHANCERY COURT,
NO. 94-209-CC,
HON. TOM SMITHERMAN,
CHANCELLOR,




AFFIRMED.


                   Andree Layton Roaf, Justice

     Appellant, the Prudential Insurance Company of America,
appeals from a judgment in an action for accounting, in which the
chancellor awarded $30,519.60 in insurance proceeds to appellees,
Melissa Conrad Frazier and Mellonie Conrad.  The court of appeals
certified this case to us as one requiring interpretation of the
Probate Code of 1949.  Jurisdiction is therefore properly in this
court pursuant to Ark. Sup. Ct. R. 1-2(d)(1) and (a)(3).  For
reversal, appellant argues that it properly paid the insurance
proceeds to appellees' guardian and that, under the law of trusts,
it had no further obligation to appellees as beneficiaries.  We
find no merit to these arguments and affirm.
     Appellees were aged eight and nine when their mother died on
August 27, 1983.  On October 25, 1983, an order was entered by the
Garland County Probate Court appointing their uncle, Jerry Reid, as
guardian of their persons and estates.  The order stated that "bond
shall be determined."  Bond was not determined and letters of
guardianship were apparently never issued to Mr. Reid.  On November
10, 1983, appellant paid the appellees' $30,519.60 share of their
mother's life insurance proceeds to Reid as guardian of their
estates.  Reid and his wife adopted appellees in July 1984.  After
reaching the age of majority, appellees initiated this suit in 1994
by filing a petition for an accounting and for judgment, alleging
that both Reid and appellant had failed and refused to account for
the life insurance proceeds.  After a bench trial, the chancellor
found that Reid spent the proceeds for improper purposes and
without court approval, that appellant and Reid were jointly and
severally liable to appellees, and that Reid was liable to
appellant for any payment of the judgment appellant made.
     Unlike the dissenters, we have no difficulty in concluding
that the chancellor had subject matter jurisdiction over an action
against an insurance company and former guardian for accounting and
judgment.  See Nelson v. Wood, 199 Ark. 1019, 137 S.W.2d 929 (1940)
(chancellor imposed trust on property titled in guardian's name but
purchased with minor's funds); Hancock v. Hancock, 197 Ark. 853,
125 S.W.2d 104 (1939) (chancery court had jurisdiction to hear
custody dispute between natural mother and guardian previously
appointed in probate court); Grogan v. Weatherby, 196 Ark. 705, 119 S.W.2d 557 (1938) (chancellor determined that guardian's failure to
give bond rendered proceeding void and set aside partition sale of
minor's land); A&P's Hole-In-One, Inc. v. Moskop, 38 Ark. App. 234,
832 S.W.2d 860 (1992) (accounting is an equitable remedy; provides
a means to compel one entrusted with property of another to render
account of his actions, and for recovery of any balance due).    
     Appellant first argues that it properly paid the insurance
proceeds to Reid as appellees' guardian and was under no duty to
ensure that the guardian would carry out his obligations.  This
argument challenges the chancellor's finding that appellant "paid
insurance proceeds to Reid without court authority and without
[e]nsuring the beneficiaries would be properly protected." 
Appellant presented no evidence at the bench trial.  Appellant did,
however, move for a directed verdict at the close of all the
evidence arguing that it had properly paid Reid the proceeds on
November 10, 1983, because Reid had been appointed guardian by
court order entered October 25, 1983.
     Appellees admitted into evidence, without objection, a
certified copy of the entire file of the guardianship proceedings. 
The October 25, 1983 order appointing Reid guardian stated that
"bond shall be determined."  There is nothing in the guardianship
proceedings indicating that bond was ever determined or issued, or
that letters of guardianship were ever issued.  Appellees
introduced a notice from the Probate file dated October 10, 1984,
directing Reid to file an inventory of appellees' assets, and
Reid's response dated November 9, 1984, which listed each
appellee's sole asset as $437.00 monthly social Security benefits. 
The chancellor found that Reid did not disclose the insurance
proceeds he received as guardian from appellant almost one year
earlier.  The chancellor also found that, because the proceeds were
not disclosed, no bond or additional accounting was required by the
court in the guardianship proceedings.
     On appeal, appellant argues it properly paid the proceeds to
Reid as guardian pursuant to the October 25, 1983 order because, at
that time, there was no requirement that a bond be issued in a
guardianship proceeding and Reid had accepted the appointment as
guardian.  Appellees respond to this argument with case law to the
effect that a guardian is not appointed until bond has been issued. 
See e.g., Sturdy v. Jacoway, 19 Ark. 499 (1858).  
     The parties' reliance on the requirement of a bond or on
Reid's acceptance of appointment as the determinative issue is
misplaced.  The issue before us is whether appellant paid the
proceeds to Reid without court authority.  This issue is controlled
by Ark. Stat. Ann.  57-618 (Repl. 1971), in effect at the time the
proceeds were paid, which provided that letters of guardianship,
"until revoked or cancelled by the court, shall protect persons
who, in good faith, act in reliance thereon."  As determined by the
chancellor, no bond was ever set and no letters of guardianship
were ever issued.  The Probate code of 1949 did not authorize
appellant to pay Reid the proceeds on the strength of a court order
conditionally appointing him guardian, with bond yet to be
determined.  We find no error in the chancellor's ruling in this
regard.
     Appellant's second argument for reversal is that, after paying
the proceeds to the guardian, it had no further obligation to
appellees under the law of trusts.  We answer this argument
summarily.  First, the argument is premised upon the assumption
that the trial court found a post-payment obligation of appellant
to appellees as beneficiaries deriving from the law of trusts.  The
trial court made no such finding or any ruling that appellant had
a continuing obligation to appellees after it paid the proceeds. 
Rather, the ruling was that appellant did not ensure that it
properly paid the proceeds to the guardian and in fact paid the
proceeds without court authority.  Second, the abstract does not
reveal that appellant relied on the law of trusts in the
proceedings below.  The record on appeal is confined to that which
is abstracted.  Mahan v. Hall, 320 Ark. 473,