### IN THE COURT OF APPEALS OF TENNESSEE AT JACKSON November

27, 2001 Se ssion IN RE: GUARD IANSHIP OF ASHL EY J. TATUM, A MINOR A Direct Appeal from the Probate Court f or Shelby County No. B-26297 The Honorable Robert L. Benham, Judge

No. W2001-00859-COA-R3-CV - Filed February 4, 2002

This case involves liability

for misap

propria tion of funds in

a guardianship estate. After a guardian was appointed by the

probate court, F idelity and Deposit Company of Mar yland executed a guardianshi p bond as sur ety. The orde r appointing the guardian provided for the guardian’s attorney to have joi nt control of the guardians hip estate w ith the guardi an. Be llSo uth Telecom municatio ns, Inc . owed ce rtain sumsto the ward and was notified by the guardian’s attorney of the joint contr

ol provisio n. The g

uardian ’s attorn

ey also request

ed that the funds be

sent to him to be depos ited in the

guard ianshipac counts. BellSouth ignored the request and sent the check pay able to the gua

rdian. Sub sequentl

y, t he gua rdian misa

ppropria ted the f unds, and the su

bstitute guardian was awa rd ed judg ment ag ainst F & D. F & D

filed a th

ird party complain

t again st BellSouth for the s u ms so paid, an d after a nonjury trial, the probate court entered judgment for F & D ag ainst Be

llSouth. B ellSouth ha s appeal ed. We af firm.
Tenn.R.App.P. 3; Appeal as of Right; Judgment of the Probate Court Affirmed
W. F RANK C RAWFORD , P.J., W.S., delivered the opinion of the court, in which D AVID R. F ARMER , J. and H OLLY K IRBY L ILLARD , J., joined. Earle J. Schwarz , Memphis, For Appellant, Bell South Michael G. McLaren; Vickie Hardy Jones, Me mphis, For Appellee, Fidelity & Deposit Company of Maryland OPINION
On October 19, 1995, Rosalyn W. Felder, m other and natura

l guardia n of Ashle

y J. Tatum, filed a petition in probate court to be appointed Tatum’s general guardian. The pe tition recited that Tatum’s father had died, leaving Tatum as the beneficia ry o f various b enefits a

vailable from his employment

with BellSou

th Telecommunications, Inc. By order filed October 19, 1995, Felder was appointed general guardian, and the order provide d in pertinent part: “(2) That the b ond in this c ause1 We note at thi s poi nt thatboth parties cite in th eir brie fs var ious e xhib it num bers in clud ing a n ex hibit fo r this provis ion of t he ord er. Th e exh ibits w ere n ot filed as pa rt of the reco rd in th is app eal, but where both parti es conc ede the su bstan ce in th e exh ibit wh ich is m aterial to our decisio n, w e w ill cons ider it a stip ulation of fac t. -2- is $210,000.00. Joint control iswith Philip Cooper, Atty.” 1 On this sam e date, Fi delity an d Deposit Company of Maryl and (F &D) executed the guardia n bond in the

amount of

$210,000. 00 as sure

ty for the guardian. By order filed February 18, 1998, the pro ba te court removed Felder as guardian and appointed a substitute guardian. On August 2, 1999, the successor guardian filed a “Petition for JudgmentAgainst Rosalyn W. Felder, Former Guardian of Ashley J. Tatu m and Judgment Over Against F & D Bonding Company.” The petition recited that Felder ha d convert ed funds for her own use that w ere pai d to her as guardian by BellSouth . F & D filed an answe r, cross -claim a

gainst Felder, and third party co mplaint ag ainst BellS outh. The third par ty complain

t alleged that, bec ause of the death of

Tatum’s f

ather, c ertain mo nies bec ame payable to Tatum from BellSouth. The third party complaint further alleges that Cooper, Felder’s attorn ey, notif ied BellSouth that the order provided for joint control and that BellSouth should send the funds directly to h im to put in the guardia nship account. The compl aint state s that BellSouth had a duty to deliver into the proper hands any funds that it held for the guardianship, and that it negligently and in breach of its duty sent the guardianship funds to Felder. The complaint asserts that BellSouth wa s put on noti c e of the probate court’s order and, therefore, F & D was entitled to judgment over against BellSouth for such sums as it is requiredto pay. On November 2, 2000, an order was filed in the probate court granting the success or guard

ian judgme

nt agains tFelder and a judgment against F & D Bonding Company, plus inter est. BellSouth’s answer

to the thir

d party c omplaint a

dmits t h e allega tion of the

third par ty compl aint that, because of Tatum’s father death, c ertain monies became payable to Tatum from BellSouth. The answer

denies that BellSouth was put on notice concerning the order’s provision for joint control and denies that BellSouth had aduty to deliver the funds into the proper hands. If it had such a du ty, BellSout

h claims it fulfilled that duty by delivery of the funds to Felder, the guardian of the estate. The answer

further admits that the funds were sent to Felder, and that they wer e never deposited into the guardianship funds, but denies that BellSouth negligently or in breach of contract sent the funds to Felder.
A nonjury tr

ial w as held Februa ry 27, 2001, and on March 14, 2001, the probate court entered an “Ord er Gran ting Fidelit

y and Deposit Company of Maryla nd Judgmen

t Against Be

llSouth Telecom municatio ns, Inc., ” which p rovides:
1. That the father of Ashley J. Tatum, Ernest Tatum, Jr. (social security no. [Redacted] was an employee of BellSouth.
2. Because of the death of Ernest Tatum, Jr., on Januar y 28, 1 99 5, certain monies became payable to Ashley J

. Tatum fr om BellSouth or its age nts/affi liates.-3- 3. That Ashley J. Tatum is a minor.
4. That on October 19, 1995, Rosalyn W. Felder (“ Felder”) was appointed by this Court as legal Guardian of the person and estate of Ashley J. Tatum. 5. That pursuant to order of this Court dated October 19, 1995, bond was set at Two Hundred

Ten Thousand Dollars ($210,000) and F&D became surety for Felder.
6. That the order

of this Court d ated Oc tober 19, 1995, add itionally provided that Guar

dianship f unds we re subje ct to joint c ontrol wit h attorney Philip J. Cooper.
7. That b y letter dated October 19, 1995, attorney Philip J. Cooper putBellSouth on

notice th at (i) a Guardianship had been established for Ashley J. Tatum and

(ii) that in accordance with the joint control required by the Probate Court of Shelby County, Tennessee, funds held for Ashley J. Tatum should be sent to attorney Philip J. Cooper at 251 AdamsAvenue, Memphis, Tennessee 38103. Philip Cooper enclosedwith this letter the Or der Appointing Rosalyn Felder Guardian and directing Attorney Philip Cooper to share joint

control of Guardianship funds and the Certificate of Guar dianship. 8. That Attorney Philip Cooper testified that there were subsequent convers ations be

tween re present atives of BellSouth

and him during which Philip Coope

r repea ted his request to Be

llSout h to direct all funds payable to the Guardianship to hi m and that BellSouth indicatedthat it would not comply with the aforementioned Orders of this Court.
9. That the testimony of Philip Cooper was credible and further that it was unrefuted by BellSouth, BellSouth choosing to have no one testify at trial on its behalf. 10. That the Guardianship established for A s hley J. Tatum was the entityto receive the monies owed by BellSouth, and BellSouth was obligated to d eliver into the pr oper hands any funds it held f or said Guardianship.
11. That BellSo

uth sent gu ardians h ip funds in the form of a check made payable

to “Ashley J. Tatum, Rosalyn W. Felder Guardian of” in the amount of $18,622.38 to Felder instead of Cooper, which funds were ne ver depo sited into t

he Guar dianship a

ccount.-4- 12. That this p ayment by BellSouth

was in bre ach of it s obligations to the minor beneficiary, A shle y J. Tatum, whose interests were being protected by the Guardianship.
13. That as a result of this breach, on April 6, 2000, an Orde r wa s entered by this Court against F & D requiring F & D to pay the Guardia nship the unaccounted for fund s, including the funds sent directly to Felder by BellSouth.
14. That F & D tendered payment of the judgment plus ten percent (10%) prejudgment simple interest to the Guardianship.
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED as follows:
1. That F & D is granted a judgment against BellSouth on its Third Party Complaint in

the amount of $18,622.38 plus ten percent 10%) pre-judgment

simple interest of $6,517.83 for a t otal judgment of $25,140.21; 2. That BellSouth pay Court costs in this matter. BellSouth ha s appeal ed and pr esents the sole issu e for re view as: Whether the Probate Court

erred in finding that BellSouth had failed to pay the mo ney it

owed to the ward on account of her fat her’s de ath when the undisputed facts demonstrated th at BellSouth mailed a check in the appropriate amount to the court-appointed guardian and the guardian received the chec k? We have rephrased this issue to:

Whether the proba te c ourt erred in finding that the payment by BellSouth was in breach of its obligation to the minor beneficiary whose interests were being protected by the guar dianship. Since this case was tried by the court sitting without a jury, we review the case de novo upon the record with a presum

ption of corr ectness of the findings of fact by the trial court. Unless the evidence preponderates against th e finding s, we must affirm, absent error of law. T.R.A.P. 13(d). BellSouth states in its brief that it “has beenunable to find any c ases tha

t addres s the narrow issue presented in this appeal,” but that “the most clo sely analogous Tennessee case of which BellSouth is aware is Atkins v. Se curity Conn. Life Ins. Co. , No. 02A01-9710-CV-00257, 1998 WL 900057 (T enn. Ct. Ap

p. 1998). BellSouth su

mmarize s Atkins in its brief as follo ws:-5- In t hat case, an insurance company paid dea th benefits based

upo n information submitted in a proper claim form that appeared to have been signed by the Plaintiff. As it turned out, Plaintiff, who was the actual beneficiary, was incarcer ated at the time the claim was subm itted and the insurance company paid the claim. Plaint iff’ s signature on the claim form had been f orged. After discovering by accident that he was the designated beneficiary on his father’s life insurance policy, Pla

in tiff fi led suit ag ainst the insurer s eeking to recover the death benefits that

the insurer had

previously paid to the fraudulent beneficiary.
On a m otion fo r summary judgment, the trial court denied recovery and the Court of App eals af firmed. T his court held that the insurance company had satisfied its contractual obligations by paying in response to a claim form that appeared on its face to be proper. Although Atkins may have some similar features to the case at bar , there are some significant facts in Atkins that distin guish it fr om the ca se at bar. In Atkins , the record revealed that the c laim forms submitted were in order, and the insurance company a sserted that there was nothing in the claim document s to indica

te to the company that the documents were forged or other wise improper. Plaintif f, Atkins, pr esented no evidence of anything in the documents that might have put the insurance company on notice of an irregularity. The Atkins court, affirming the judgment for the insurance company, relied upon the principle adopted in other jurisdi cti ons that “ an insure r is discharged

from all subsequent liability when it makes good faith paym ents to a purported beneficiary without notice of any competing claims.” Id. at 86; (citing Crosby v. Crosby , 986 F.2d 79, 83 (4th Cir. 1993) and other cases). The difference between Atkins and the case at bar is easily s een. In t

he case at bar, it is undisputed that the order of the probate court required joi nt co ntrol, and the evidence does not prepond erate against the trial court’s finding that BellSouth was duly notified of the provision and rejected the requ est of

the ward’s attorney that the funds be sent to him for deposit in the guardia nship estate. BellSouth’s action resulted in a loss to the ward’s estate, and BellSouth makes no issue that upon r

eimburse ment of the

estate b y the sure

ty, the sur

ety stand s in the sh oes of th e ward. Bel l South

was fully

informed

that joint c ontrol wa s provide d for by th e court, and if BellSouth had complied with the attorney’s request, the funds would not have been misappropriated by the guardian. If there had been some confusion on the part of BellSouth, further inquiry would have resolved this confusion and thus again prevent a loss from occurring. “Where one of two persons must suffer loss by the acts or fraud of a third p arty, he who enab les that th

ird party to occasion the loss or to permit the fraud ought to be the sufferer.” William H. Inman, Gibson’s Sui ts in Chancery § 2 (7th ed. 1988). Se e also Commerc ial Bank and Tr ust Co. v. Sout

hern Indus. Banking Corp. , 66 S.W.2d 209 (Tenn. Ct. App. 1932).-6-

In t he case be fore us, BellSouth’s deliberate choice to ignor e the court order and the attorne y’ s reques t allowed

the gua rdian to mi sappropr

iate the f unds.
Ac co rd in gl y, the order of

the proba te court is affir med. The case is r emanded to the pro bate court for such furth er proc eedin gs as ma y be necessa ry . Costs of th

e appea l are as sessed a

gainst ap pe ll an t, Be ll So ut h T el ec om mu ni ca ti on s, Inc ., an d i ts su re ty.

__________________________________________ W. FRANK CRAWFO

RD, PRESIDING JU DGE, W.S

.