Source: https://supreme.justia.com/cases/federal/us/112/452/case.html
Timestamp: 2016-08-27 06:33:23
Document Index: 542466732

Matched Legal Cases: ['§ 179', '§ 453', '§ 259', '§ 97', '§ 506', '§ 1754', '§ 6', 'art, 17']

U.S. Supreme CourtLamar v. Micou, 112 U.S. 452 (1884)Lamar v. Micou, 112 U.S. 452 (1884)Argued October 31, November 3, 1884Decided December 1, 1884112 U.S. 452APPEAL FROM THE CIRCUIT COURT OF THE UNITED
The authority of the Surrogate's Court of the County of Richmond Page 112 U. S. 464 and State of New York to appoint Lamar guardian of the persons and property of infants at the time within that county, and the authority of the supreme court of the State of New York in which this suit was originally brought, being a court of general equity jurisdiction, to take cognizance thereof, are not disputed, and upon the facts agreed it is quite clear that none of the defenses set up in the answer afford any ground for dismissing the bill.
The further grounds of defense, set up in the cross-bill, that Micou participated in Lamar's investments and that Mrs. Micou approved them are equally unavailing. The acts of Micou before his own appointment as guardian could not bind Page 112 U. S. 465 the ward. And admissions in private letters from Mrs. Micou to Lamar could not affect the rights of the ward or Mrs. Micou's authority, upon being afterwards appointed administratrix of the ward, to maintain this bill as such against Lamar's representative, even if the amount recovered will inure to her own benefit as the ward's next of kin. 1 Greenl.Ev. § 179.
The Court of Chancery, before the Declaration of Independence, appears to have allowed some latitude to trustees in making investments. The best evidence of this is to be found in the judgments of Lord Hardwicke. He held, indeed, in accordance with the clear weight of authority before and since, that money lent on a mere personal obligation, like a promissory note, without security, was at the risk of the trustee. Ryder v. Bickerton, 3 Swanston 80, note; S.C. 1 Eden 149, note; Barney v. Saunders, 16 How. 535, 57 U. S. 545; Perry on Trusts § 453. But in so holding, he said: "For it should have been on some such security as binds land, or something to be answerable for it." 3 Swanston 81, note. Although in one case he held that a trustee, directed by the terms of his trust to invest the trust money is government funds or other good securities, was responsible for a loss caused by his investing it in South Sea stock, and observed that neither South Sea stock nor bank stock was considered a good security, because it depended upon the management of the governor and directors, and the capital might be wholly lost, Trafford v. Boehm, 3 Atk. 440, 444, yet in another case he declined to charge a trustee for a loss on South Sea stock, which had fallen in value since the trustee received it, and said that "to compel trustees Page 112 U. S. 466 to make up a deficiency, not owing to their willful default is the harshest demand that can be made in a court of equity." Jackson v. Jackson, 1 Atk. 513, 514; S.C. West Ch. 31, 34. In a later case, he said:
In later times, as the amount and variety of English government securities increased, the Court of Chancery limited trust investments to the public funds, disapproved investments either in bank stock or in mortgages of real estate, and prescribed so strict a rule that Parliament interposed, and by the statutes of 22 & 23 Vict. c. 35, and 23 & 24 Vict. c 38, and by general Page 112 U. S. 467 orders in chancery, pursuant to those statutes, trustees have been authorized to invest in stock of the bank of England or of Ireland, or upon mortgage of freehold or copyhold estates, as well as in the public funds. Lewin on Trusts (7th ed.) 282, 283, 287.
In New York, under Chancellor Kent, the rule seems to have been quite undefined. See Smith v. Smith, 4 Johns.Ch. 281, 285; Thompson v. Brown, 4 Johns.Ch. 619, 628, 629, where the chancellor quoted the passage above cited from Lord Hardwicke's opinion in Knight v. Plymouth. And in Brown v. Campbell, Hopk.Ch. 233, where an executor in good faith made an investment, considered at the time to be advantageous, of the amount of two promissory notes, due to his testator from one manufacturing corporation, in the stock of another manufacturing corporation, which afterwards became insolvent, Chancellor Sanford held that there was no reason to charge him with the loss. But by the later decisions in that state, investments in bank or railroad stock have been held to be at the risk of the trustee, and it has been intimated that the Page 112 U. S. 468 only investments that a trustee can safely make without an express order of court are in government or real estate securities. King v. Talbot, 40 N.Y. 76, aff'g S.C., 50 Barb. 453; Ackerman v. Emott, 4 Barb. 626; Mills v. Hoffman, 26 Hun. 594; 2 Kent, Comm. 416, note b. So the decisions in New Jersey and Pennsylvania tend to disallow investments in the stock of banks or other business corporations, or otherwise than in the public funds or in mortgages of real estate. Gray v. Fox, Saxton 259, 268; Halsted v. Meeker, 3 C.E.Green 136; Lathrop v. Smalley, 8 C.E.Green, 192; Worrell's Appeal, 9 Penn.St. 508, and 23 Penn.St. 44; Hemphill's Appeal, 18 Penn.St. 303; Ihmsen's Appeal, 43 Penn.St. 431. And the New York and Pennsylvania courts have shown a strong disinclination to permit investments in real estate or securities out of their jurisdiction. Ormiston v. Olcott, 84 N.Y. 339; Rush's Estate, 12 Penn.St. 375, 378.
In Massachusetts, by a usage of more than half a century, approved by a uniform course of judicial decision, it has come to be regarded as too firmly settled to be changed, except by the legislature, that all that can be required of a trustee to invest is that he shall conduct himself faithfully and exercise a sound discretion, such as men of prudence and intelligence exercise in the permanent disposition of their own funds, having regard, not only to the probable income, but also to the probable safety, of the capital, and that a guardian or trustee is not precluded from investing in the stock of banking, insurance, manufacturing, or railroad corporations within or without the state. Harvard College v. Amory, 9 Pick. 446, 461; Lovell v. Minot, 20 Pick. 116, 119; Kinmonth v. Brigham, 5 Allen 270, 277; Clark v. Garfield, 8 Allen 427; Brown v. French, 125 Mass. 410; Bowker v. Pierce, 130 Mass. 262. In New Hampshire and in Vermont, investments, honestly and prudently made, in securities of any kind that produce income appear to be allowed. Knowlton v. Bradley, 17 N.H. 458; Kimball v. Reding, 11 Fost. 352, 374; French v. Currier, 47 N.H. 88, 99; Barney v. Parsons, 54 Vt. 623. Page 112 U. S. 469
As a general rule (with some exceptions not material to the consideration of this case), the law of the domicile governs the Page 112 U. S. 470 status of a person and the disposition and management of his movable property. The domicile of an infant is universally held to be the fittest place for the appointment of a guardian of his person and estate, although, for the protection of either, a guardian may be appointed in any state where the person or any property of an infant may be found. On the continent of Europe, the guardian appointed in the State of the domicile of the ward is generally recognized as entitled to the control and dominion of the ward and his movable property everywhere, and guardians specially appointed in other states are responsible to the principal guardian. By the law of England and of this country, a guardian appointed by the courts of one state has no authority over the ward's person or property in another state except so far as allowed by the comity of that state, as expressed through its legislature or its courts; but the tendency of modern statutes and decisions is to defer to the law of the domicile and to support the authority of the guardian appointed there. Hoyt v. Sprague, 103 U. S. 613, 103 U. S. 631, and authorities cited; Morrell v. Dickey, 1 Johns.Ch. 153; Woodworth v. Spring, 4 Allen 321; Milliken v. Pratt, 125 Mass. 374, 377, 378; Leonard v. Putnam, 51 N.H. 247; Commonwealth v. Rhoads, 37 Penn.St. 60; Sims v. Renwick, 25 Ga. 58; Dicey on Domicile 172-176; Westlake Private International Law (2d ed.) 48-50; Wharton on Conflict of Laws (2d ed.) §§ 259-268.
An infant cannot change his own domicile. As infants have the domicile of their father, he may change their domicile by changing his own, and after his death, the mother, while she remains a widow, may likewise, by changing her domicile, change the domicile of the infants, the domicile of the children in either case following the independent domicile of their parent. Kennedy v. Ryall, 67 N.Y. 379; Potinger v. Wightman, 3 Meriv. 67; Dedham v. Natick, 16 Mass. 135; Dicey on Domicile 97-99. But when the widow, by marrying again, acquires the domicile of a second husband, she does not, by taking her children by the first husband to live with her there, make the domicile which she derives from the second husband their domicile, and they retain the domicile which they had, before her second marriage, acquired from her or from their father. Page 112 U. S. 471 Cumner v. Milton, 3 Salk. 259; S.C. Holt 578; Freetown v. Taunton, 16 Mass. 52; School Directors v. James, 2 Watts & Sergeant 568; Johnson v. Copeland, 35 Ala. 521; Brown v. Lynch, 2 Bradford 214; Mears v. Sinclair, 1 W.V. 185; Pothier, Introduction Generale aux Coutumes, No. 19; 1 Burge Colonial and Foreign Law, 39; 4 Phillimore International Law (2d ed.) § 97.
It may be suggested that this would enable the guardian, by changing the domicile of his ward, to choose for himself the law by which he should account. Not so. The father, and after his death the widowed mother, being the natural guardian and the person from whom the ward derives his domicile, may change that domicile. But the ward does not derive a domicile from any other than a natural guardian. A testamentary guardian nominated by the father may have the same control of the ward's domicile that the father had. Wood v. Wood, 5 Page 112 U. S. 472 Paige 596, 605. And any guardian appointed in the state of the domicile of the ward has been generally held to have the power of changing the ward's domicile from one county to another within the same state and under the same law. Cutts v. Haskins, 9 Mass. 543; Holyoke v. Haskins, 5 Pick. 20; Kirkland v. Whately, 4 Allen 462; Anderson v. Anderson, 42 Vt. 350; Ex Parte Bartlett 4 Bradford 221; The Queen v. Whitby, L.R. 5 Q.B. 325, 331. But it is very doubtful, to say the least, whether even a guardian appointed in the state of the domicile of the ward (not being the natural guardian or a testamentary guardian) can remove the ward's domicile beyond the limits of the state in which the guardian is appointed and to which his legal authority is confined. Douglas v. Douglas, L.R. 12 Eq. 617, 625; Daniel v. Hill, 52 Ala. 430; Story Conflict of Law § 506, note; Dicey on Domicile 100, 132. And it is quite clear that a guardian appointed in a state in which the ward is temporarily residing, cannot change the ward's permanent domicile from one state to another.
As the law of the domicile of the ward has no extraterritorial effect except by the comity of the state where the property is situated or where the guardian is appointed, it cannot, of course, prevail against a statute of the state in which the question is presented for adjudication, expressly applicable to the estate of a ward domiciled elsewhere. Hoyt v. Sprague, 103 U. S. 613. cases may also arise with facts so peculiar or so Page 112 U. S. 473 complicated as to modify the degree of influence that the court in which the guardian is called to account may allow to the law of the domicile of the ward, consistently with doing justice to the parties before it. And a guardian, who had in good faith conformed to the law of the state in which he was appointed might perhaps, be excused for not having complied with stricter rules prevailing at the domicile of the ward. But in a case in which the domicile of the ward has always been in a state whose law leaves much to the discretion of the guardian in the matter of investments, and he has faithfully and prudently exercised that discretion with a view to the pecuniary interests of the ward, it would be inconsistent with the principles of equity to charge him with the amount of the moneys invested, merely because he has not complied with the more rigid rules adopted by the courts of the state in which he was appointed.
Upon these facts, the domicile of the children was always in Georgia from their birth until January, 1860, and thenceforth Page 112 U. S. 474 was either in Georgia or in Alabama. As the rules of investment prevailing before 1863 in Georgia and in Alabama did not substantially differ, the question in which of those two states their domicile was is immaterial to the decision of this case, and it is therefore unnecessary to consider whether their grandmother was their natural guardian, and as such had the power to change their domicile from one state to another. See Hargrave's note 66 to Co.Litt. 88b; Reeve, Domestic Relations 315; 2 Kent Com. 219; Code of Georgia 1861 §§ 1754, 2452; Darden v. Wyatt, 15 Ga. 414. Whether the domicile of Lamar in December, 1855, when he was appointed in New York guardian of the infants, was in New York or in Georgia does not distinctly appear, and is not material because, for the reasons already stated, wherever his domicile was, his duties as guardian in the management and investment of the property of his wards were to be regulated by the law of their domicile.
1. The sum which Lamar received in New York in money from Mrs. Abercrombie he invested in 1856 and 1857 in stock of the Bank of the Republic at New York and of the Bank of Commerce at Savannah, both of which were then, and continued till the breaking out of the war, in sound condition, paying good dividends. There is nothing to raise a suspicion that Lamar, in making these investments, did not use the highest degree of prudence, and they were such as by the law of Georgia or of Alabama he might properly make. Nor is there any evidence that he was guilty of neglect in not withdrawing the investment in the stock of the Bank of Commerce at Savannah before it became worthless. He should not, therefore, be charged with the loss of that stock. The investment in the stock of the Bank of the Republic of New York being a proper investment by the law of the domicile of the wards, and there being no evidence that the sale of that stock by Lamar's order in New York in 1862 was not judicious, or was for less than its fair market price, he was not Page 112 U. S. 475 responsible for the decrease in its value between the times of its purchase and of its safe. He had the authority, as guardian, without any order of court, to sell personal property of his ward in his own possession and to reinvest the proceeds. Field v. Schieffelin, 7 Johns.Ch. 150; Ellis v. Essex Merrimack Bridge, 2 Pick. 243. That his motive in selling it was to avoid its being confiscated by the United States does not appear to us to have any bearing on the rights of these parties. And no statute under which it could have been confiscated has been brought to our notice. The Act of July 17, 1862, c. 195 § 6, cited by the appellant, is limited to property of persons engaged in or abetting armed rebellion, which could hardly be predicated of two girls under thirteen years of age. 12 Stat. 591. Whatever liability, criminal or civil, Lamar may have incurred or avoided as toward the United States, there was nothing in his selling this stock and turning it into money of which his wards had any right to complain.
As to the sum received from the sale of the stock in the Bank of the Republic, we find nothing in the facts agreed by the parties upon which the case was heard to support the argument that Lamar, under color of protecting his wards' interests, allowed the funds to be lent to cities and other corporations which were aiding in the rebellion. On the contrary, it is agreed that that sum was applied to the purchase in New York of guaranteed bonds of the Cities of New Orleans, Memphis, and Mobile, and of the East Tennessee and Georgia Railroad Company, and the description of those bonds, in the receipt afterwards given by Micou to Lamar, shows that the bonds of that railroad company, and of the Cities of New Orleans and Memphis at least, were issued some years before the breaking out of the rebellion, and that the bonds of the City of Memphis and of the railroad company were at the time of their issue, endorsed by the State of Tennessee. The company had its charter from that state, and its road was partly in Tennessee and partly in Georgia. Tenn.Stat. 1848, c. 169. Under the discretion allowed to a guardian or trustee by the law of Georgia and of Alabama, he was not precluded from investing the funds in his hands in bonds of a railroad Page 112 U. S. 476 corporation endorsed by the state by which it was chartered or in bonds of a city. As Lamar, in making these investments, appears to have used due care and prudence, having regard to the best pecuniary interests of his wards, the sum so invested should be credited to him in this case unless, as suggested at the argument, the requisite allowance has already been made in the final decree of the circuit court in the suit brought by the representative of the other ward, an appeal from which was dismissed by this Court for want of jurisdiction in 104 U. S. 104 U.S. 465.
The investment in bonds of the Confederate States was clearly unlawful, and no legislative act or judicial decree or decision of any state could justify it. The so-called Confederate government was in no sense a lawful government, but was a mere government of force, having its origin and foundation in rebellion against the United States. The notes and bonds issued in its name and for its support had no legal value as money or property, except by agreement or acceptance of parties capable of contracting with each other, and can never be regarded by a court sitting under the authority of the United States as securities in which trust funds might be lawfully invested. Thorington v. Smith, 8 Wall. 1; Head v. Starke, Chase 312; Horn v. Lockhart, 17 Wall. 570; Confederate Note Case, 19 Wall. 548; Sprott v. United States, 20 Wall. 459; Fretz v. Stover, 22 Wall. 198; Alexander v. Bryan, 110 U. S. 414. An infant has no capacity, by contract with his guardian, or by assent to his unlawful acts, to affect his own rights. The case is governed in this particular by the decision in Horn v. Lockhart, in which it was held that an executor was not discharged from his liability to legatees by having invested funds, pursuant to a statute of the state, and with the approval of the probate court by which he had been appointed, in bonds of the Confederate States, which became worthless in his hands. Page 112 U. S. 477