Opinion ID: 1940707
Heading Depth: 1
Heading Rank: 3

Heading: punitive and double damages

Text: Mitchell contends that double damages should have been assessed against Bates under SDCL 30-17-3 [2] which applies to guardianships through SDCL 30-26-3. [3] She further claims that punitive damages were warranted under SDCL 30-17-8. [4] Mitchell bases these claims upon Bates' alleged conversion of Viereck's cash and annuities without his consent. In its memorandum decision dated December 13, 1985, the trial court discussed the executor's claim for double damages as follows: These damages are contingent upon a finding that guardianship assets were stolen or alienated by Mr. Bates. There is no indication that Mr. Bates intended to deprive his ward of guardianship funds. Rather, he jumped the gun in distributing such funds to those he believed to be heirs of the ward. While his actions were improper, they do not rise to the level of intentional stealing. No double damage award shall be granted. Likewise, no punitive damage award is justified by the evidence. Bates argued before the trial court that SDCL 30-17-3 did not apply to guardianship matters. On appeal, Bates conceded Mitchell's argument that SDCL 30-17-3 applies to both probate and guardianship proceedings. This concession does not entirely resolve the matter, however, because SDCL 30-17-3 on its face, limits liability and double recovery to an action by the executor or administrator of the estate ... for the benefit of the estate. This language excludes Mitchell and as indicated above, the executor has abandoned its claim by not appealing. Mitchell's claim for punitive damages under SDCL 30-17-8 stands on different footing. The statutes, [5] when taken together, do not restrict a claim for punitive damages to the executor or administrator of the estate for the benefit of the estate as do those relating to double recovery. Therefore, we consider her claim. Mitchell relies upon Matter of Estate of Hansen, 366 N.W.2d 852 (S.D.1985) to support her claim for punitive damages. In Hansen, this court affirmed the trial court's conclusion that the executor of decedent's estate mishandled the estate's assets and wrote: In the referee's memorandum opinion, adopted by the trial court, he states that the discrepancies were so great he was compelled to the conclusion that they could not possibly have been the result of any honest mistake and that the discrepancies among the various accountings were the product of an intentional intent to secrete assets of the estate. Id. at 854. As in Hansen, Mitchell argues that Bates' improper distribution of Viereck's cash and annuities to the four daughters, one of which was Bates' wife, and the discrepancies in the accountings show that the assets were alienated. Although Mitchell argues that Bates intended to convert the guardianship funds, the evidence shows otherwise and the trial court so found: Bates knew the contents of Viereck's will which provided for the distribution of the (Anchor National Life) annuities to his four daughters. In an effort to reduce Viereck's estate tax, Bates distributed the annuities to the three surviving daughters without Viereck's consent and before his death. See infra note 6. Although Bates claimed he consulted his attorney about making the cash distributions, he remained concerned. Therefore, he (or his wife) spoke with each of the Viereck daughters before the distributions were made and obtained their agreement (or understanding) that if the court should later deem the distributions improper, they would return the money. After the court ordered Bates to restore the cash and annuities to the estate he did so except for the $6,250 distributed to Ethel Ferguson, which Mitchell received but refused to refund. By the time of the final accounting, the distribution to Ethel Ferguson was returned to the estate from Bates' personal funds. As indicated, when the court ordered Bates to return the money, he promptly caused compliance through the daughters, except for Ethel Ferguson who predeceased Viereck. Ethel Ferguson received $6,250 on December 30, 1982, approximately sixteen days before her death. This became a part of her estate and Mitchell was her sole heir. Despite Bates' prior agreement with Ferguson, neither Mitchell nor Ferguson's husband would return the money. They claimed they were unaware of any agreement between Bates and Ethel Ferguson. Therefore, Bates restored the $6,250 plus interest to the Viereck estate out of his own pocket. The evidence suggests that Bates made the distributions in good faith in accordance with what he believed to be Viereck's testamentary intentions. He stated that he thought as guardian he could make cash distributions to Viereck's heirs up to $10,000. Although the transfer was improper, the Viereck daughters agreed to it and there was no finding to the contrary. Bates realized no personal gain from the transaction. Even though Bates jumped the gun by distributing the cash and annuities to Viereck's heirs before his death and without his consent, it does not show that Bates intended to steal or alienate his ward's assets. As distinguished from Hansen, supra, the evidence does not support Mitchell's claim that Bates intentionally converted the assets. Rather, it shows that he made mistakes which he later corrected, without substantial harm to anyone but himself. The evidence does not support Mitchell's claim for punitive damages and the court's denial was within its discretion under SDCL 30-17-8.