Case Name: Pan-American Life Ins. Co. et al. v. Crymes
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 1934-04-02
Citations: 169 Miss. 701
Docket Number: No. 30972
Parties: Pan-American Life Ins. Co. et al. v. Crymes.
Judges: 
Reporter: Mississippi Reports
Volume: 169
Pages: 701–732

Head Matter:
Pan-American Life Ins. Co. et al. v. Crymes.
(In Banc.
April 2, 1934.
Suggestion of Error Overruled April 23, 1934.)
[153 So. 803.
No. 30972.]
Reily & Parker and Nate S. Williamson, all of Meridian, for appellants.
J. H. Currie, J. C. Floyd, and Thos. L. Bailey, all of Meridian, for appellant, Pan-American Life Ins. Co.
Gilbert & Cameron, of Meridian, for appellant, Bob Wall.
S. M. Graham, of Meridian, D. G. Fountain and R. R. Dinsmore, both of Jackson, for appellee.
Argued orally by J. H. Currie, J. C. Floyd and V. W. Gilbert, for appellant, and by S. M. Graham, for appellee.

Opinion:
Per Curiam:
On June 9, 1922, J. D. Crymes, Sr., presented a petition in the chancery court of Lauderdale county averring* that his son, J. D. Crymes, Jr., was at that time an adult of the age of twenty-three years, and was a resident citizen of said county, but that because of injuries suffered by said J. D. Crymes, Jr., during the World War and while in the service of the United States Navy, he had become a victim of some mental disease, was incapable of attending to his own affairs, and that he was then in the government hospital in Augusta, Georgia. The petition further averred that certain sums of money estimated at about one thousand dollars were due to J. D. Crymes, Jr., by the United States government, but which would be paid over only to a guardian, and petitioner prayed for letters of guardianship. The petition was granted, the letters were issued, and the guardian made an approved bond in the sum of one thousand dollars.
On December 4, 1922, the guardian filed his inventory showing that he had collected for his ward, one thousand two hundred dollars and forty-one cents. On the same day the guardian filed his petition stating that he had in his hands the sum mentioned and praying that the guardian, as an individual, be allowed to borrow the said money from himself as guardian on the security of certain real estate owned by the guardian as an individual, the petition describing the property and showing that it was ample in value to safely protect the loan. A decree was entered by the court sustaining the petition, and thereafter on January 4, 1923, a deed of trust was executed by Crymes, Sr., as an individual to himself as guardian to secure the loan aforesaid, the trust deed being duly recorded.
On November 19, 1923, the guardian filed another petition averring that he then had in his hands the further sum of one thousand thirty-two dollars and forty-one cents, and prayed that he be allowed to borrow also that sum from himself and to give as security therefor a second deed of trust on the same property. This petition was granted by the court, the second deed of trust was executed on November 22, 1923, but was not filed for record until July 25, 1924. Otu November 23, 1923, an order was niade requiring a guardian's bond in the sum of four thousand dollars, and this bond was filed and approved on December 20, 1923.
On June 4, 1925, the guardian filed his first annual account showing collections of about two thousand dollars in addition to the two amounts hereinabove mentioned, and on the same day the guardian presented his third petition for the borrowing of the funds by himself as an individual from himself as guardian, and on the security of the same real estate, and the petition prayed further that the two previous loans he combined with the third loan, which would make the total amount four thousand one hundred thirty-three dollars and seventy-four cents; that one deed of trust he accepted for the entire amount; and that thereupon the two previous deeds of trust be canceled. The prayer of this petition was also granted by the court, the third deed of trust was duly executed and recorded, and thereafter on June 30, 1925, the two previous deeds of trust were canceled on the records by the respective trustees therein, attested in statutory form by the clerk. On the day that the first annual account was filed, and on which the third loan was allowed, a new bond in the sum of five thousand dollars was ordered and was approved and filed.
On June 10,1925, a few days after the third loan transaction next above mentioned, the guardian petitioned the court for an order of release of a portion of the property from the deed of trust, it being represented that the portion sought to be released was worth about six hundred dollars and that the remainder would be ample security for the total loan, and, on O'ctober 19, 1929, the guardian petitioned for the release of an additional portion of the property averring that the remainder would be adequate security. Both these petitions were allowed by the court, the releases were ordered, the guardian sold the property so released, and one of the defendants, the Pan-American Life Insurance Company, has become the purchaser by mesne conveyance of the larger and more valuable portion of said real estate so ordered released.
The guardian continued to collect and receive money for his ward, the total amount collected by him from the government and other sources being five thousand four hundred seventy dollars and seventy-three cents without interest, against which the guardian paid out for and to his ward only about nine hundred dollars. These collections so continued down to the end of the year 1930. Thereafter the guardian died, leaving a wholly insolvent estate. A successor guardian was appointed who exhibited the hill now before us which, with the amendments and supplements and numerous exhibits, set forth the facts above stated and many others in detail, out of which we are making reference only to those which will present the legal questions which we have been called upon by this appeal to decide. The bills and exhibits disclose that the land not released and not sold is insufficient by far as security for the balance due the ward; that the third bond has become insolvent; and that it is necessary to resort to the first and second bonds. The sureties on all the bonds and all others necessary have been made parties.
1. The first question to be decided is whether the guardianship proceedings throughout are void. The petition for the appointment did not aver that J.* D. Crymes, Jr., had been adjudged a lunatic under a writ de lunático inquirendo, nor did it aver that the government hospital in Augusta, Georgia, was an asylum for the insane. The facts now shown by this record and admitted by all parties are that, although mentally incompetent, he has never at any time or anywhere been legally adjudged a lunatic; but it is admitted also that the hospital mentioned is an institution where insane soldiers and sailors are confined and treated. Section 1896, Code 1930, reads as follows: * ' The chancery court of any county in which may be situated the property or any part thereof, or debt due to, or right of action of any person who may be adjudicated to be a lunatic by proper proceedings in another state; or of a citizen of this state of unsound mind who may be confined out of this state in an asylum for the insane, shall have jurisdiction to appoint a guardian of the estate of such lunatic, or person of unsound mind. ' '
The majority of the court, without expressing any opinion, deeming it unnecessary, as to what would be the result had Crymes been all the while in this state, has concluded that the appointment in this case is supported by and under the last clause of the quoted statute and that the guardianship proceedings are not and were not void.
2. The second question is whether the orders of the court allowing the guardian as an individual to borrow the funds from himself as guardian are void, the facts appearing on the face of the record was challenged; the basis of the challenge being the general principle of law that no guardian or other fiduciary shall ever be allowed to have such relation to the trust estate as will bring his personal interests into definite conflict with his duty as trustee. Section 1885, Code 1930', provides that "whenever the guardian shall have the money of his ward not needed for current expenditures, . he shall apply to the court . . . for direction as to the disposition he shall make of it; and the court or chancellor shall determine whether he shall lend it at interest, and upon what security, or how he shall dispose of it; and if the court or chancellor designate the person to whom the loan shall be made, or the security on which it shall be made, and the loan to he so made, responsibility shall not attach thereafter to the guardian." While expressing no opinion upon the wisdom or propriety of an order for the loan of the ward's funds to the guardian himself, the majority of the court is of the opinion that the language of the statute is broad enough to include the guardian, and that since the Legislature did not by express words exclude him, it is not proper for this court to exclude him by construction. The vote of the majority is that these orders are not void on their face.
3. The third question is whether the orders aforesaid are void for fraud in their procurement, or because of the circumstances under which made. The bills allege and the demurrers admit that when the guardian applied to the court praying these several orders allowing him to borrow the money in his hands, the guardian did not in fact at said times have the funds in his hands, but that he had already converted them to his own use; in other words, that the petitions presented were not in fact to borrow money then on hand but were to cover up embezzlements already committed. The majority of the court is of the opinion that a guardian has no right to use the trust funds for his own purposes, that is to say, to convert them to his own use, and that any such use before obtaining an order of the court is a breach of his trust; and when intentionally and deliberately done is sufficient evidence of his unfitness for further trust. In Smith v. Smith (D. C.), 210 Fed. 947, affirmed, 221 Fed. 1, 139 C. C. A. 465, it was held that when a guardian misappropriates the funds of the ward to his own use and then obtains an order from .the court authorizing a loan to himself of the same funds, keeping secret the fact, of his previous conversion, his conduct constitutes a gross fraud upon the court and renders its order for the loan void, the court remarking that if the disclosure had been made, it would be inconceivable that the court would have made the order for the loan. Of the fatal effect of a failure to make a full, or at least a fair, disclosure to the court in seeking orders in guardianship matters, there is an apt illustration in Union Chevrolet Co. v. Anderson, 162 Miss. 816, 138 So. 593. The majority of the court therefore holds that the orders allowing the loans were void on the ground stated in this paragraph, if the facts as alleged shall be sufficiently sustained on the proof.
4. The fourth question is whether the major portion of the property released as aforesaid and afterwards acquired through mesne conveyances by the defendant life insurance company remains liable, it being the contention of the bill that the releases were void. We are of the opinion that the orders of the court for the releases were not void on the face of the record; and the two trustees having released the first two deeds of trust in the manner provided by sections 2153 and 2155, Code 1930, those two deeds of trust, so far as constructive notice is concerned, disappeared as completely as if never of record; and as to the third deed of trust there is a misdescription in that instrument by which the property there described is located six miles distant from the property intended to be conveyed. No knowledge is charged by the bill against the purchaser except the constructive notice furnished by the records; and it is well settled in this state that the constructive notice given by a recorded instrument is only of what is actually described in. that instrument or which is to be perceived from that instrument and that instrument alone was intended to be described therein. It does not give notice of other deeds or instruments not referred to therein so as to be made a part thereof, nor does it give notice of a description which a diligent inquiry might have disclosed. Simmons v. Hutchinson, 81 Miss. 351, 33 So. 21; Sack v. Gilmer Dry Goods Co., 149 Miss. 296, 115 So. 339. In the latter ease there were two deeds which, if taken together, would have disclosed the property intended, but the court 'held that so far as constructive notice is concerned each deed stood alone; and that is the case here before us. The court is of the opinion therefore that the demurrer of the life insurance company should have been sustained.
5. There arises the question of the relative liability of the several sureties in the three separate guardian's bonds. If the entire guardianship proceeding had been held void, each bond would have been liable only for the money actually received by the guardian while that particular bond was in effect; but the majority of the court holds that the guardianship was not void, and thus the liabilities of the several bonds take a wider range, and according to principles which have already been settled by decisions of this court, but which we think cannot be precisely applied until the facts have been developed in detail upon a full hearing. We therefore do not enter upon a determinative discussion of that question.
The result is that the. court holds that the demurrers of all the defendants were properly overruled, except that of the life insurance company, which should have been sustained.
Affirmed in part,' reversed in part, and remanded.