Case Name: James W. Gray, Com'r in Equity, vs. Robert Brown
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1845-01
Citations: 1 Rich. 351
Docket Number: 
Parties: James W. Gray, Com’r in Equity, vs. Robert Brown.
Judges: O’Neall, Butler, and Frost, JJ. concurred.
Reporter: South Carolina Law Reports
Volume: 30
Pages: 351–364

Head Matter:
James W. Gray, Com’r in Equity, vs. Robert Brown.
The liability of the surety to a guardianship bond, is not limited to property owned by the ward at the time the bond is executed, but extends to property subsequently acquired which comes into the guardian’s hands.
Such surety is liable for the rents and profits of lands received or lost, and waste permitted, but not for the lands in substance; where, however, the proceeds of a sale of lands, duly authorized, comes in money to the guardian’s hands, as guardian, then, whether such money is regarded in equity as money or as land, the surety is lia. ble for it.
Where the right of receiving a fund as guardian, and the duty of paying it as trustee, unite in the same person, the law presumes a performance of the duty, and -without further proof a surety of the person as guardian is liable.
If in such case the trustee’s liability had been extinguished by discharge under a bankrupt or insolvent debtors Act, or other legal means, before it became his duty to transfer the fund to himself as guardian, the legal presumption would, it seems, not arise; but mere proof of insolvency, or even, it seems, of utter destitution of means, would .not be sufficient to arrest the legal presumption of payment, and exhonerate the surety.
C. united in himself the characters of guardian as to the personalty of his wards, and trustee as to their contingent interest in lands. By permission of the Court of Equity, he sold the lands, and gave bond and security as trustee, and was ordered by the court to re-invest the proceeds in other lands, but failed to do so. After the contingency happened by which the wards became entitled to have the. lands apportioned amongst them, the 'court ordered the master to take care that C. in his account as guardian, should set forth the amount to which his v. ards were respectively entitled from the proceeds of the lands. In conformity with this direction C. made some returns as guardian. Held, (1,) that if the order of the court gave C. the right to elect in which character he would hold the proceeds, his returns as guardian showed an election to hold in that character; (2,) that if the order was imperative, then the law, without further proof, pre. sumed a transfer to C. as guardian; and that, in either point of view, C’s surety as guardian was liable for the proceeds of the lands.
Before Waudlaw, J. at Charleston, Spring Term, 1844.
This was an action of debt on bond against the defend ant, as surety on the guardianship bond of B. R. Carroll, guardian of the four minor children of Edward D. Perry.
The plaintiff duly proved the bond, and produced the decree of the Court of Equity, settling, as against the guardian, Mr. Carroll, the amount due to his wards, and claimed a verdict for the same amount. The bond was executed in February, 1835.
The defendant admitted his liability for part of the amount decreed against Carroll; but, as to another part, he set up the following defence.
In November, 1818, Bartholomew Carroll conveyed a house and lot, in Yanderhorst-street, to Win. G. Steele, trustee, in fee simple, to the use of Rachel Carroll, his daughter, for life, with limitations over, which are thus set forth in the deed.
It conveys, “In trust to and for the sole and separate use, benefit and maintenance of the said Rachel Govan Carroll, during • and until the end and term of her natural life, free from the contract, interference or management of any future husband of the said Rachel Govan Carroll, and not liable, subject or responsible for any debt or contract, of what kind or nature -soever, of any husband whom she, the said Rachel Govan Carroll, may at any 'time hereafter marry.
“And upon the death of the said Rachel Govan Carroll, then in trust for and to the only proper use and behoof of any child or children of the said Rachel Govan Carroll, lawfully begotten and surviving, to be equally divided among them, if more than one, share and share alike ; and if only one, then to that one, absolutely and forever, free from any and every further and other condition, limitation, proviso, use or trust, the same to be apportioned when the eldest shall have attained the age of twenty-one years, or day of marriage. But if the said Rachel Govan Carroll should die, leaving no issue lawfully begotten ; or-leaving issue, should they all die, before either of them attains the age of twenty-one years, or day of marriage; then and in that case, in trust, to and for the right heirs of the said Bartholomew Carroll, absolutely and forever.”
Rachel Govan Carroll became the wife of Edward D. Perry, and mother of five children ; and upon the death of Edward D. Perry, B. R. Carroll became guardian of all the children.
Afterwards, Mr. Carroll was substituted trustee, in the place of Wm. G. Steele; and on the 9th June, 1838, he filed in the Court of Equity a petition praying that the property be sold, and the proceeds be invested on the same trusts declared by the deed. Upon this petition the court made the following decree.
June 9, 1838 — “Ordered, that the trustee be authorized to sell the house and lot, at public auction, and re-invest the proceeds of sale, upon the same trusts and limilations as those contained in the deed; and that the trustee be first required, before making the sale, to enter into bond and security to the commissioner, in double the value of the property, that he will execute the trusts and limitations of the deed.”
In pursuance of this decree, on the 11th July, 1838, B. R. Carroll, with Robert M. Allen, as his surety, entered into bond to the Commissioner in Equity, in the penal sum of $16,400, the condition whereof is expressed as follows.
‘Now, the condition of the above obligation is such, That if the above bound B. R. Carroll, his heirs, executors or administrators, shall and do well and truly pay or cause to be paid unto the above-named James W. Gray, Commissioner in Equity, his successors in office, or assigns, the sum of eight thousand and two hundred dollars, with interest, thereon from date, for the use of the minor children of Mrs. Rachel Perry, according to the requisitions of the decretal order made in June Term, 1838, in the Court of Equity in Charleston, on the petition of the said B. R. Carroll, trustee for said children, without fraud ot further delay, then the above obligation to be void and of none effect, or else to remain in full force and virtue.”
On the same day, B. R. Carroll received the sum of $2000, part of the proceeds of the sale of the premises ; and on the 20th April, 1839, a balance of $6,200, making in all $8,200, which the defendant contended was not chargeable to him as surety on the guardianship bond'; but constituted a special liability on the bond oí July, 1838.
It was further proved, that all the children were minors at the date of the order and sale, but at the time of the filing the bill against Mr. Carroll, and obtaining the decree against him above mentioned, Mrs. Perry was dead, and the eldest of the children had married Mr. Thomas Waring, and had been settled with her portion.
In reply the plaintiff produced the following decree of Chancellor Dunkin, in a case entitled ex parte J. W. Gray, Master in Equity, in re B. R. Carroll, trustee and guardian of the children of E. D. Perry,” made on 14th January, 1842.
“The master has made a special report, in which he states that “B. R. Carroll, a special trustee under an order, made in June Term, 1838, in cause “B. R. Carroll, trustee, et al.” was notified to substitute another surety on the bond, dated 11th July, 1838, conditioned for the payment of ($8,200) eight thousand two hundred dollars, with interest, in the place of Robert M. Allen, deceased, and the said substitution has not been made.” On reference to the deed under which Carroll was appointed trustee, and which was filed with the petition, it would seem that the estate vested absolutely in the children of Edward D. and Rachel G. Perry, on the death of the parents, which event has happened.
“B. R. Carroll has been duly appointed guardian of the children, and as such guardian, would be entitled to receive any funds or estate belonging to his wards. If a third person had been trustee under the deed, he would have been compelled to account to Mr. Carroll as guardian.
“Mr. Carroll, uniting in himself both these characters, the court cannot undertake to say that the trustee has not accounted to the guardian for any sums actually received by him, and would, therefore, be diffident in proceeding against him as for a contempt, in consequence of his neglect or omission to substitute a new surety, on the bond given by him as trustee.
“The master will, however, take care that in the account of Mr. Carroll as guardian, he shall set forth the amount to which his wards are respectively entitled, from the proceeds of sale under the order of June Term, 1838.” '
Some returns of Mr. Carroll, as guardian, made in conformity with this order, were also produced.
The plaintiff contended that the trusts in the deed of Bartholomew Carroll were all executed upon the death of the survivor of Mr. and Mrs. Perry, or at all events, upon the marriage of Mrs. Waring, — that the children were then entitled to their shares of the fund, and that Mr. Carroll must be deemed to have received, as their guardian, what he was bound to pay as trustee, and therefore his surety as trustee was discharged, and his surety on the guardianship bond became liable.
The defendant contended that the bond of a guardian extends only to personal estate, and that the Court of Equity took the same view of the matter when they required Mr. Carroll to give a separate bond with new sureties. That, therefore, Carroll, as guardian, was never authorized to receive this fund from the trustee; and that by any other construction, the whole proceeding of the Court of Equity would merely result in being a snare to entrap the surety on the guardianship bond.
Under the charge of the presiding Judge the jury found for the plaintiff the whole amount of the decree.
The defendant appealed, and now moved for a new trial, on the following grounds.
1. Because the defendant, as security for the guardian, was liable for- the personalty, not the realty. And the fact that the Court of Equity allowed the real estate to be sold, could not increase his liability without his assent.
2. Because the bond of a guardian and his security, is like any other contract; and such a contract cannot be altered, so as to add a new liability by matter arising after the execution of the bond.
3. Because the liability of the guardian was for the preservation of the personalty ; and the proceeds of the sale of realty were still affected by all the trusts in the deed from B. Carro’l to William Govan Steele, trustee; and that while the fund was in the hands of the trustee, the security for the guardian cannot be held responsible,
4. Because the relation of guardian and trustee continued to exist independently of each other, for some time after the real estate had been sold, and it was incumbent on the plaintiff to have shown that the funds had not been wasted, at the time when it is alleged the rights of the guardian attached.
Memminger & Magrath, for the motion.
No matter how broad or general the terms of the bond may be, it must be construed in reference to the subject matter. If, therefore, Carroll did not receive the money as guardian, or did receive it, when as guardian he was not entitled to receive it, the surety is uot liable. He had a right to say non in hcec feedera veni\ 2 M. and S. 363; 6 East, 508; 2 Hill, 590; 9 Wheat. 680. It is a well established rule oflaw that a guardian has no control over the corpus of his ward’s real estate. He has a right to receive the rents and profits, but nothing more. 2 Kent, 228; P. L. 217; 1 Johns. Ch. 564; 7 lb. 154. When the bond was entered into, the wards had a trust estate iu lands. Could the surety have supposed that the bond embraced that interest? As well might the surety of an administrator suppose that he was becoming surety for the land. The question then comes up, what was the effect of the sale? Did it convert the land into personalty I The rule in Westminister Hall, — and the same rule prevails in this State — is that the court cannot change the nature of an infant’s property; that land converted into personalty is considered as land, and vice versa; 19 Ves. 122;' 11 Yes. 257; 6 Yes. 6. When lands are sold, the proceeds are considered as lands until the infant arrives at' age, and elects to take them as personalty. This right of election is one which the guardian cannot make, and which the court cannot deprive the infant of; 2 Sim. & Stu. 123. Under the operation of these rules, is it not clear that the proceeds of the sale in Carroll’s hands, are to be considered as real estate, until an election to consider them as personalty is shewn ? In this point of view it is unimportant to consider at what time the estate became absolute in the wards, for whether absolute or not, it still remained as realty in the hands of the trustee.
But admitting that Carroll had a right to receive the fund as guardian after the trusts became executed by the marriage of Mrs. Waring^ does it follow he did receive it'? It is said the presumption of law is that he did so receive it; but may not that presumption be rebutted'? Suppose Carroll had wasted the fund before the trust was executed, would the presumption then have arisen ? 1 Hill Ch. 428. The true rule is that the sureties are liable during whose term the default arose. Now, the evidence abundantly shows that the default arose while Carroll was trustee. It was his duty to reinvest. He failed to Mo so. Is not that the cause of complaint? and does it not show that the fund had passed out of his hands before he was ordered by Chancellor Dun kin to account-for it as guardian? No rule is good which does not work both ways. Suppose Carroll’s bond as guardian had been only for $500, would the presumption then have arisen ? Would the surety as trustee have been discharged? It is only in cases where it is a matter of course that the money should be transfered that the law presumes a payment. Now it was not a matter of course that Carroll as trustee should transfer the fund to himself as guardian.. Indeed the presumption that he did transfer it, is based on a presumed violation of duty, for it was his duty to reinvest as trustee, not to pay to himself as guardian.'
But again. Was it not discretionary with Carroll whether he would hold as guardian or as trustee? If so, his surety as guardian is not liable, because no election to hold as guardian is shown. 5 Mason, 108.
Mazyck, contra.
When Mrs. Waring married, the trust was determined. It then became Carroll’s duty to apportion the fund, and of course to receive the shares of the unmarried wards himself as guardian. When a man is both to pay and receive, the money is regarded in law as ipso facto paid. 2 Bail. 60, 199; 2 McC. Ch. 304; McM. Eq. 495.
It is said, and it is true, that the sureties of a guardian are only liable for the personalty, and the rents and profits of lands. But when the lands were sold, was not the money arising from the sale, personalty ? No matter what may be the rule of equity, this court is bound to consider it as personalty.
But it is said again, that Carroll must be proved to have had the money when the trusts ceased. That is not the rule. The presumption is that he did his duty and that he had the money. The burden of proof lies on those who allege the contrary.

Opinion:
Curia, per
Wardlaw, J.
The defendant has been allowed to look into the decree of equity against his principal, and the proceedings upon which it is founded, and to object to any portion of the amount established by the decree, which he supposes not to be covered by the condition of the guardianship bond, to which he is surety. The contract which he has made cannot be altered without his consent, by the addition of any new ground of liability; but the amount of the liability which he incurred may be more or less, according to circumstances supervening the condition of his bond. In this respect, his contract does not differ from other contingent engagements.
Properly, the condition of a guardian's bond should be drawn in such general terms as would secure the faithful performance of all his duties, whatever they may be. The bond by which this defendant is bound, however, undertakes to enumerate the duties of the guardian; and upon its terms, the defendant has a right to stand. In the enumeration, the guardian is required to deliver to the minors, severally, when they shall come of age to receive the same; "such portion or portions as shall fall due unto the said minors, or any of them, of the goods and chattels of any persons whatsoever, according to the inventory thereof, or by any other ways whatsoever." These terms, restricted (as of right they must be) to such portions as the guardian received, or ought to have received, are large enough to include every thing belonging to one of the minors, which came to the hands of the guardian from any source whatsoever.
There is no force in the objection of the defendant, that the bond related only to the property then owned by the minors, and did not contemplate future acquisitions. Such a construction would be contrary to the express terms of the instrument, and destructive of the purposes for which it was executed. The law does not limit the power of the guardian to the property owned by his ward when the trust is assumed. His control over property subsequently accruing, is no less than over that previously vested ; and as his rights and powers extend to both, so should his liability and his security.
In this State, the guardian has, to specific chattels of the ward, no such title, any more than to his realty, as authorizes him to sell and convey, without the order of a competent court. As it is his duty to preserve and increase the personalty, accounting for the use, or hire, or interest, according to its form; so he is bound to receive the rents and profits of lands, and manage them so as to make reasonable profits. If only portions of land, in kind, had come, to the wards, the surety could not have been answerable beyond profits received or lost, and waste permitted; for the lands, in substance, would have remained to answer for themselves. But if the proceeds of a sale of lands, duly authorized, came in money to the hands of the guardian, as grrardian, then, whether such money was equitably regarded as money or as land, the guardian was bound to account for it, and his surety is liable for his failure. If it was the duty of the guardian to manage the proceeds as money, then he is bound to refund it with interest, according to the rules established in the courts which settle accounts. If it was his duty to regard the fund as land, and to reinvest it in land, then from his neglect of this duty damages have ensued to the ward, at least equal to the amount to be accounted for in the other case. In either case, his failure to deliver the minor's portion falls within the condition of his bond, and being measured in money, and charged as money by the decree in equity, comes within the liability assumed by his surety.
The true question, as to which the nature of the fund may be material, is, whether B. R. Carroll ever received the proceeds of sale as guardian. And it is only as serving to solve that question, that the bond given by B. R. Carroll, as trustee, is at all important. For if the guardian right fully received, the trustee's liability is extinguished. If that bond were to be regarded as a new security taken from, a guardian, in reference' to an accession of fortune acquired by his ward, then it would be merely accumulative. However the rights of the different sureties might be settled in a court of Equity, (where, probably, the last in order of time would be primarily liable) a court of law must, in an action against the first surety, hold him answerable for every thing covered by his contract, and leave him to pursue his remedy against the principal, or against the subsequent surety. But did the guardian ever rightfully receive the fund from the trustee?
For the plaintiff, it is contended that the right to receive and the duty to pay, united in B. R. Carroll, who was both trustee and guardian, and from the impossibility of his suing himself, the law presumed a retainer; and so the liability, by operation of law, devolved upon him as guardian, aud upon his surety in that character.
For the defendant, it is argued that the court of Equity, by taking a new bond from the trustee, aud making an order for the trustee to re-in vest the proceeds of sale, manifested its intention to do what it ordinarily conceives to be proper upon sale of minors's property — preserve the fund unchanged in kind; that the default from which the damages have ensued, was the trustee's neglect to obey the order directing reinvestment, and, therefore, the consequences should fall upon the surety of the trustee; that according to the purpose and order of the court of Equity, there never was a right, on the part of the guardian, to receive the fund, as there was no duty on the part of the trustee to treat the fund as money, or pay it over, without the order of the court, before the minors, severally, had attained full age.
Upon the death of Mrs. Rachael Govan Perry, leaving children, all unmarried, and all under the age of twenty-one years, the property conveyed by the deed of Bartholomew Carroll, must, according to the- trusts of that deed, have remained in the hands of the trustee to abide contingencies, either until all the children should die, (upon which event it would have passed to the right heirs of Bartholomew Carroll) or until one of the children should attain tile age of twenty-one years or be married, (upon which event it was to be apportioned amongst them.) The application for sale having been made before the happening of either of these contingencies, there was good reason tor requiring bond and surety from the trustee, independent of all reference to his liability as guardian.
The court of Chancery, in England, is very careful not to change a minor's property from real to personal, or fro'm personal to real, before the minor has attained discretion to choose for himself; because of the different forms of disposition, which have there existed, as to the two kinds of property, and the different courses of succession which prevail as to them in cases of intestacy. In these particulars, the distinctions between the two kinds of property are here almost obliterated ; but still, in case of a female minor, there is a nice distinction between the two, as to the marital rights ; and this distinction is jealously regarded by our courts of Equity. There is, however, no doubt of the power of the court of Equity, in any case, upon reasons appearing to it sufficient, to change the nature of a minor's property ; and where that court has recognized a change, as the result of its own proceedings, a court of law would be very reluctant to scrutinize the grounds of the recognition.
Admitting, however, that the court of Equity only established the amount of B. R. Carroll's liability, without distinguishing between his characters as guardian and as trustee, does it not appear that the liability devolved upon him as guardian ?
If no sale had taken place, and the property had been capable of actual partition, upon the marriage of Mrs. Waring, the trust estate would, in regular course, have been apportioned amongst the children, the portions of the minors being yielded to their guardian. In that case, the surety of the guardian could not have been liable for the corpus of the minors's portions remaining in land. If a sale had been found necessary for partition, (as obviously it would have been) application would have been made to the court of Equity ; and in the usual course of that court, the shares of the minors would have been received by their guardian in money; although it would have been in the power of the court to direct otherwise.
If Steele had remained trustee, and the sale had been made at his application, before the happening of the contingency upon which apportionment was directed, and the order had been made by the court of Equity, such as was made upon B. R. Carroll's petition for sale, in that case, if the order had been obeyed, the commissioner of the court would have taken bond with security, conditioned that the trustee should "execute the trusts and limitations of the deed," instead of the unauthorized bond, requiring payment of the money to the commissioner, which was taken from B. R. Carroll as trustee ; and Steele would have re-invested in land, (if no other directions were obtained.) Upon the happening of the contingency, partition of the land, by sale or otherwise, would have been made, and the shares of the minors would have remained in the hands of the guardian as land, or have been changed into money only by the sanction, express or implied, of the court of Equity.
If, in disobedience of the order, Steele had retained the proceeds of sale in money, he would have been answerable as trustee, and it would, probably, have been held in Equity, that he could not have discharged himself by payments to the guardian, without the order of the court which directed re-investment.
To B. R. Carroll, as trustee, the same rules apply which would have been applicable to Steele. The order of the court of Equity for his payment to himself, as guardian, was probably necessary to effect that union in himself, of the immediate right to receive, and immediate duty to pay, which, by presumption.of law, would operate a transfer of his liability from one character to the other. That order of the court is found in Chancellor Dunkin's permission, given in January, 1842, for B. R. Carroll to set down in his account, as guardian, the sums to which his wards were respectively entitled, of the proceeds of the sale, followed, as it was, by the returns of the guardian made conformable thereto.
These returns, (although not so formal as, in correct practice, they should have been,) amount to such an act as would establish the presumption of retainer in his character as guardian, even if the Chancellor's order of January, 1842, is to be considered as giving to B. R. Carroll only the right to elect in which character he would hold the fund. Where such right of election exists, there must be some distinct act to shift the liability. 5 Mason C. C. R. 108. But when the right to receive and the duty to pay, absolutely concur, there can be no election. Whenever, by this concurrence, or by election, the retainer is established, it is no answer to his liability for the surety to the character that has received by retainer, to say that the default occurred in the other character. It is the consequences of that default which has been received. In the case of Vaughan vs. Evans, 1 Hill's Ch. R. 428, which has suggested this answer, the officer, during his first term, was required to pay or invest; for his default, he became answerable to third persons ; and at the commencement of his second term, there was in him neither the right to receive, nor the duty to pay to himself, the sums so previously ordered out of his hands.
If, in the case before us, it should be supposed that, under the bond taken by the commissioner from B. R. Carroll, as trustee, there was a right of action in the commissioner for the trustee's default to re-invest, or that such right of action was in the minors, suing by their next friend, it will be perceived that whatever sum may have, in either form, been recovered, would have belonged to the minors, and might have been made payable to the guardian, whenever the order of the court of Equity should have been made for such payment. The case would have been just as it now is, if judgment or decree for the amount of his default, as trustee, had been obtained against B. R. Carroll, and then the Chancellor had directed his retainer as guardian. The effect is the same as if he had, as trustee, paid to the commissioner, and then, as guardian received back. So long as his powers as guardian remained unrevoked, and his surety remained undischarged, the surety was liable for his acts within the terms of the bond.
If, by discharge under the bankrupt law, or the insol vent debtor's Act, or other legal means, the liability of the trustee had been extinguished, of course no duty to pay would have survived, and the liability could not have devolved upon the surety to the guardianship bond. But without a discharge, proof of the trustee's inability to pay his debts, could not prevent the presumption of retainer ; for this debt may have been met, although others could not have been. Even entire destitution of means would seem not to arrest the presumption of payment, which, by law, results from the union of debtor and creditor in the same person. The cases which have been cited from our own reports — Simkins vs. Cobb, 2 Bail. 60; M'Dowell vs. Caldwell, 2 M'C. Ch. 55 ; Hall vs. Hall, 2 M'C. Ch. 304 ; Joyner vs. Cooper, 2 Bail. 199 ; Schnell vs. Schroder, Bail. Eq. 334, and O'Neall vs. Herbert, M'Mul. Eq. 496, all seem to regard the extinguishment of the debt as a necessary legal result of this union.
The motion is, therefore, dismissed.
O'Neall, Butler, and Frost, JJ. concurred.
Evans, J. dissented.