Case Name: STATE OF NORTH CAROLINA Ex Rel. MYRTLE LEONARD v. J. A. YORK, Administrator, et al.
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1932-05-11
Citations: 202 N.C. 704
Docket Number: 
Parties: STATE OF NORTH CAROLINA Ex Rel. MYRTLE LEONARD v. J. A. YORK, Administrator, et al.
Judges: 
Reporter: North Carolina Reports
Volume: 202
Pages: 704–706

Head Matter:
STATE OF NORTH CAROLINA Ex Rel. MYRTLE LEONARD v. J. A. YORK, Administrator, et al.
(Filed 11 May, 1932.)
Guardian and Ward H a — Agreement for joint control of guardianship funds by guardian and surety will not be held void on demurrer.
Where the surety on a guardian’s bond alleges an agreement for the joint control by the guardian and surety of the guardianship funds deposited in a bank, the agreement will not be held void upon a demurrer, it being assumed that the agreement comes within the purview of O. S., 6382(e).
Appeal by Bank of Ramseur and tbe Page Trust Company from McElroy, J., at December Term, 1931, of RaNdolph.
Civil action to recover from tbe estate of a guardian, and tbe surety on guardian’s bond, moneys alleged to bave been received for ward and not properly disbursed.
Tbe National Surety Company, surety on tbe guardian’s bond, set ' up in its answer an agreement- between it and tbe' guardian whereby all funds belonging to tbe ward were to be deposited in tbe Bank of Ramseur subject to tbe joint control and joint check of tbe guardian and tbe surety’s local representative; further that tbe said Bank of Ramseur knew of and assented to this arrangement; and that in violation of tbe trust, thus accepted by it, tbe bank permitted tbe guardian to withdraw bis ward’s moneys and use them as bis own without tbe knowledge or consent or counter signature of tbe surety or its local representative.. Wherefore tbe National Surety Company asked that tbe Bank of Ram-seur and its successor, tbe Page Trust Company, be brought into this action as parties defendant, to tbe end that tbe said company might bave judgment over, for an amount equal to any recovery bad by tbe ward against tbe surety. Summons was issued accordingly, following tbe service of which, a -cross-action was set up based upon an alleged breach of tbe joint-control agreement above mentioned. To this, tbe Bank of Ramseur and tbe Page Trust Company demurred on tbe grounds of a misjoinder of causes and for that no valid cause of action bad been stated against either or both of said defendants. Demurrer overruled, and tbe said demurrants appeal.
A. G. Davis for plaintiff.
Kenneth M. Brim and Boss Ashby for defendant, National Surety Company. • «.
H. M. Robins for defendants, Bank of Ramseur and Page Trust Company.

Opinion:
Stacy, C. J.,
after stating tbe case: It is tbe bolding of a number of courts that a joint-control agreement between a guardian and tbe surety on bis bond, like tbe one here alleged, is contrary to public policy and void, in tbe absence of legislative sanction or approval. Re Estate and Guardianship of Wood, 159 Cal., 466, 114 Pac., 992, 36 L. R. A. (N. S.), 252; Fidelity & Deposit Co. v. Butler, 130 Ga., 225, 60 S. E., 851, 16 L. R. A. (N. S.), where tbe English and American authorities are cited and reviewed. Without statutory authority, therefore, such arrangement, under these decisions, would render tbe guardian and bis surety liable to tbe ward as guarantors of tbe property or funds so held. Cowan v. Roberts, 134 N. C., 415, 46 S. E., 979.
The doctrine of the cases is, that as the relation between a guardian and his ward is that of trustee and cestui que trust, the guardian may not relinquish control, in whole or in -part, to a surety, or turn over to the surety, for its own protection, the very estate for which it is intended to furnish indemnity against loss, without becoming liable therefor as guarantor. White v. Baugh, 3 Clark & Fin., 44, 6 Eng. Reprint, 1354; 28 C. J., 1128. See, also, valuable article in 66 United States Law Review, 233.
We are not disposed to question the soundness of these decisions, where no legislative declaration of policy has been made, but it is observed that, in this jurisdiction, C. S., 6382(e), corporate sureties of fiduciaries are permitted, in certain instances at least, to require, for their protection, a deposit of a portion of the trust property, or that "no future sale, mortgage, pledge or other disposition can be made thereof without the consent of such corporation, except by decree or order of court of competent jurisdiction." Thus, it would seem that in cases coming within the purview of this statute, and perforce to the extent thereof, joint-control agreements between fiduciaries and their sureties are sanctioned in this State by act of Assembly. Pierce v. Pierce, 197 N. C., 348, 148 S. E., 438. That the present agreement comes within the spirit of the act will be assumed on demurrer, at least the contrary will not be presumed. S. v. Bank, 193 N. C., 524, 137 S. E., 593.
We cannot say, therefore, that the demurrer was improvidently overruled.
Affirmed.