Opinion ID: 1809453
Heading Depth: 2
Heading Rank: 3

Heading: Whether it produced inequitable results by requiring USF & G to repay all disbursements made by Tolliver.

Text: ¶ 41. During Tolliver's service as conservator, he never obtained prior court approval for disbursements made from Melson's conservatorship. This fact is undisputed by the parties. ¶ 42. Miss.Code Ann. § 93-13-38(2) (Supp.2001) states: It shall be duty of the guardian of wards as defined by Section 1-3-58, Mississippi Code of 1972, to improve the estate committed to his charge, and to apply so much of the income, profit or body thereof as may be necessary for the comfortable maintenance and support of the ward and of his family, if he have any, after obtaining an order of the court fixing the amount. And such guardian may be authorized by the court or chancellor to purchase on behalf of an in the name of the ward with any funds of such ward's estate sufficient and appropriate property for a home for such ward or his family on five (5) days' notice to a member of said family, or the necessary funds may be borrowed and the property purchased given as security. The guardian is empowered to collect and sue for and recover all debts due his said ward, and shall make payment of his debts out of the personal estate as executors and administrators discharge debts out of the estate of decedents, but the exempt property of the ward shall not be liable for debts, and no debts against such estate shall be payable by such guardian unless first probated and registered, as required of claims against the estate of decedent. ¶ 43. The special chancellor, in the bench opinion, stated that Miss.Code Ann. § 93-13-39 absolutely required prior approval of expenditures and without such prior approval, the conservator would be liable. The special chancellor relied on Conservatorship of Mathews, 633 So.2d 1038, 1039-40 (Miss.1994). In Mathews, Dan Mathews (Dan) was appointed conservator for his aunt, Frances Mathews (Frances). Dan's first three accountings were approved by the chancellor. However, Dan was later removed as conservator upon the petition of another one of Frances's nephews. During the conservatorship, Dan made expenditures from the conservatorship without first obtaining court approval, among other issues. ¶ 44. This Court in Mathews, in criticizing the actions of the conservator stated: It shall be the duty of the guardian ... to improve the estate committed to his charge, and to apply so much of the income, profit or body thereof as may be necessary for the comfortable maintenance and support of the ward and of his family, if he have any, after obtaining an order of the court fixing the amount ... The guardian is empowered to collect and sue for and recover all debts due his said ward ... (Emphasis added). This statute requires that a court order fixing the amount to be spent for the care and maintenance of the ward be obtained prior to making such expenditures. Dan simply made the expenditures as he saw fit. When this Court addressed such action in Welch v. Childers, 195 Miss. 415, 420, 15 So.2d 690, 691 (1943), we held: A minor under guardianship is a ward of the [c]hancery [c]ourt. All receipts and disbursements of his estate are required to be under the authority and direction of the [c]hancery [c]ourt or the [c]hancellor in vacation. The expenses for the maintenance and support of the ward cannot be proved in any other way. The object of the law is to guard against dishonesty and mismanagement of the estate by the guardian ... The law does not leave the amount of the expenditures by the guardian for the maintenance, support and education to (the guardian's) discretion. The sum must be fixed by the court. If the guardian contracts therefor without the sanction of the chancery court or chancellor, the liability therefor is personal to him, and he cannot be allowed for it in this accounts for the ward. The guardian has no power to bind the estate of his ward without the sanction of the chancery court or the chancellor. Mathews, 633 So.2d at 1039-40. ¶ 45. However, this Court in Mathews, further held that the chancellor has authority to consider the expenditures made without court approval. Id. at 1041. The Court found that the sole question for consideration in Mathews was whether the chancellor abused his discretion in removing Dan as conservator. The Court did not address the justification for any expenditures made by Dan as conservator, or their reasonableness or necessity. Id. The Court stated that these may be proper inquiries on remand. Id. ( citing Neville v. Kelso's Guardianship, 247 So.2d 828, 834-35 (Miss.1971)). ¶ 46. In Neville, this Court stated that: A guardian of a non compos mentis has a reasonable area of discretion in determining what part of the income of his ward should be spent for support, maintenance and education. Previously unauthorized but reasonable and proper expenditures from income for the n. c. m. ward may be ratified and approved by the court after they are made, either by special order or on the annual or final account. The chancery court has the power to ratify and approve such expenditures. However, the only way the guardian can protect himself absolutely (except for fraud) from a later contest of reasonableness and propriety of the expenditure from income is by obtaining a prior order. Where he fails to do so the guardian must risk disallowance by the court of the income expenditure, if it was not a reasonable and proper expense in supporting, maintaining or educating the ward Accordingly, the chancery court erred in concluding that an expenditure by the guardian from income, without previous express authority, is invalid and cannot be ratified and approved by the court. The rule which we have adopted is in accord also with the general rule in other jurisdictions. 39 Am.Jur.2d, Guardian and Ward § 70 (1968) states: A guardian may use the interest and profits of his ward's estate for the support and education of his ward and may obtain credit therefor upon the rendition of his account, even though, as a general rule, such expenses were incurred without previous authorization by the court. ¶ 47. The same text in section 72 states: As a general rule, however, even though prior authorization therefor was not obtained, a guardian will be allowed credit in his accounting for judicious expenditures made in good faith from the income of the ward's estate, and the courts of some of the jurisdictions adhere to the view that in a proper case a guardian may, without prior order of court, expend the principal of a ward's estate for his maintenance or education. See also Annot., 130 A.L.R. 113, 117 (1941). ¶ 48. In 39 C.J.S. Guardian and Ward § 88, at 155-56 (1944), it is stated: [O]rdinarily where a court order is obtained authorizing particular expenditures the guardian is protected, and the expenditures cannot be questioned, except for fraud, in the settlement of the guardian's final account. As a general rule a prior authorization by the court is not necessary, since the court may, by allowing the credit or otherwise, approve or ratify a previously unauthorized expenditure. Obviously, however, a guardian who proceeds with the management of the estate and makes expenditures without a previous court order faces the hazard that the court afterward may not ratify or approve such acts. Neville, 247 So.2d at 834-35. ¶ 49. In Neville, the Court only allowed distribution of income of the conservatorship to be made without the necessity of prior court approval. Id. at 834. The Court in Neville, quoting Deposit Guar. Bank & Trust Co. v. Mangum, 172 Miss. 443, 160 So. 386, 387 (1935), addressed the expenditure of capital without a court order by stating: In order to expend more than the income of the estate it is necessary for the guardian to secure an order of the court prior to such expenditure. Chapman v. Pentecost, 161 Miss. 600, 137 So. 539, in which it was held that a precedent order of the court or chancellor is indispensable in determining whether the guardian shall bear the expenses of a ward whose parents are living. It is true this decision was rendered in a case where a minor was involved, but the same rule is applied as to others. The statute plainly requires a previous order of court. ¶ 50. Furthermore, Miss.Code Ann. § 93-13-261 (1994) limits the ward's powers as follows: So long as there is a duly appointed conservator, the person whose property or person is in the charge of such conservator shall be limited in his or her contractual powers and contractual obligations and conveyance powers to the same extent as a minor. ¶ 51. Incompetence is not a sole issue in determining whether a conservator has the power to act on behalf of a ward since a conservator has the power to act for a ward who is also mentally competent. See Will of Mingo v. Mingo, 743 So.2d 433, 434 (Miss.Ct.App.1999). A conservatorship limits the contractual and conveyance powers of its ward. See Lee v. Lee, 337 So.2d 713, 714 (Miss.1976); Miss. Code Ann. § 93-13-261. ¶ 52. It is undisputed that no court order was obtained for disbursements made by Tolliver from Melson's conservatorship. The case law and statutory language clearly require that prior court approval be obtained before expenditure of capital. This was not done in the case at hand. USF & G notes that the special chancellor did not make a distinction as to whether all the expenditures were capital or some from the conservatorship income. ¶ 53. The facts are further undisputed that since at least February 17, 1989, Melson was mentally competent. Melson also had a Massachusetts conservator in addition to Tolliver in Mississippi. The record reflects that Melson participated significantly in the management of her assets and often communicated directly with Tolliver as to transactions in her account. She also came back to Mississippi on a regular basis, during which she would confer with Tolliver concerning her business affairs. Tolliver testified that of the $108,666.03 in challenged transactions, $62,961.71 were payments made directly to Melson at her express direction. There was no testimony that these funds were wasted in any way or that they, in fact, do not this day still remain on deposit in Melson's Massachusetts bank account. ¶ 54. Another $36,686.26 of the funds were spent on Melson's behalf, most paid to third parties at her express direction, $22,000 pursuant to the divorce decree, $15,000 to her former husband and $7,000 to her husband's divorce attorney. ¶ 55. Besides meeting with Melson, Tolliver testified as to meetings he had with O'Quinn including one in which O'Quinn advised Tolliver to pay the income taxes from the conservatorship. The taxes were also paid to the Internal Revenue Service without obtaining prior approval. [3] ¶ 56. Clearly, Tolliver should have requested prior court approval before making any expenditures from the conservatorship. To allow the payments to be made without court approval to parties other than Melson could create a dangerous precedent that would undermine the protections afforded a ward. However, forcing USF & G to repay all of the expenditures would create a windfall to Melson and produce inequitable results. Nothing in the record supports a finding that the payment of the $62,961.71 to Melson and the $22,000 pursuant to the divorce decree was driven by dishonesty on the part of Tolliver or that it resulted in mismanagement of the estate. ¶ 57. While mentally competent, Melson remained under a conservatorship. Melson also had a conservator appointed in Massachusetts. However, no evidence was presented that the $62,961.71 received by Melson was misused or wasted in any way by Tolliver. To allow the $62,961.71 in repayment to Melson would create an inequitable outcome. It is undisputed by the parties that $62,961.71 of the $108,666.03 in expenditures went directly to Melson at her request. ¶ 58. In Quitman County v. Turner, 196 Miss. 746, 18 So.2d 122, 124 (1944) this Court held that: Legislative intent as an aid to statutory construction, although often elusive to the perception of unaided vision, remains nevertheless the pole star of guidance... It is our duty to support a construction which would purge the legislative purpose of any invalidity, absurdity or unjust inequality. Robertson v. Texas Oil Co., 141 Miss. 356, 106 So. 449. (emphasis added). See also City of Jackson v. Lakeland Lounge of Jackson, Inc., 688 So.2d 742, 747 (Miss.1996); Thornhill v. Ford, 213 Miss. 49, 56 So.2d 23 (1952). Therefore, we decline to require the repayment of the $62,961.71 that was paid directly to Melson. ¶ 59. Furthermore, disbursements were also made from the conservatorship to Melson's former husband, Clarence, for $15,000 and to Clarence's divorce attorney for $7,000. Melson was obligated to pay the $22,000 by court order to Clarence and his attorney. While Tolliver did not petition the chancery court as conservator for approval of these payments in advance, both payments were made pursuant to Melson's divorce decree. Had Tolliver, as conservator, in fact petitioned for approval to make these two payments, he would have submitted his petition to the same chancellor who had granted the divorce decree and who had ordered Melson to make the payments to her former husband. No one disputes the money was paid as ordered in the divorce decree. ¶ 60. Clearly, as argued by USF & G, requiring repayment of the money specifically approved by the chancery court in the divorce is putting form over substance. The chancellor was clearly aware of the conservatorship and the extent of Melson's assets during the divorce proceedings. This transaction aptly illustrates the inequity created as to USF & G by the special chancellor's decision. ¶ 61. Without extending this case beyond the facts at hand, in order to avoid creating an absurd and inequitable result in this specific case, we find that the special chancellor's award to Melson for $108,666.03 should be reduced by the $62,961.71 paid directly to Melson, and the $22,000 paid to Melson's former husband and his divorce attorneys pursuant to the divorce decree. This reduction is solely for the purpose of preventing an unfair result and in no way is intended to weaken the protections afforded a ward under a conservatorship or beyond the specific situation at bar.