Opinion ID: 1837616
Heading Depth: 1
Heading Rank: 7

Heading: The Trial Court erred in overruling the Defendant's motion to exclude the evidence as to Elizabeth Bryan and dismiss her from the lawsuit.

Text: The Bryans assert the chancery court erred by overruling Elizabeth Bryan's motion to exclude the evidence and dismiss her at the conclusion of the plaintiff's, Holzer's, case-in-chief, and again at the conclusion of all the evidence; and, erred by holding her individually and severally liable along with her husband, and the original conservator, James Bryan. The argument is based upon the assertion that Elizabeth Bryan was only a scrivener for her husband and was not responsible for any of the transactions in the conservatorship account. She merely wrote the checks for him to sign. The evidence shows, however, that she was the direct recipient of loans and gifts coming from the monies in the conservatorship account, as were her children. She also received fees for services rendered in keeping the conservatorship books and writing the checks for the conservator to sign. The van purchased from conservatorship funds was used by both her and her husband, and was still being so used at the time of the hearing. It can also be inferred that Elizabeth enjoyed part of the benefits from the mobile home, bass boat, and other items purchased with conservatorship funds by her husband, although she had not been the direct recipient of these items. A conservator stands in the position of a trustee, has a fiduciary relationship with the ward and is charged with a duty of loyalty toward the ward. The duty of loyalty as set forth in the Restatement (Second) of Trusts § 170 (1959) provides: (1) The trustee is under a duty to the beneficiary to administer the trust solely in the interest of the beneficiary. (2) The trustee in dealing with the beneficiary on the trustee's own account is under a duty to the beneficiary to deal fairly with him and to communicate to him all material facts in connection with the transaction which the trustee knows or should know. As one court explained: A trustee cannot loan the trust fund to himself. Is he in a much better position when he loans it to his wife? Is he in that event in the neutral and prudent position which the court requires of him? Is he free to enforce the rights and remedies accruing on the bond of his own wife? It would certainly seem not; at least, he is not in a position to pursue them with that promptness, efficiency, and vigor which is demanded of trustees. In the exercise of those rights in this instance, for example, the trustee is likely to be in a conflicting position and to be tossed about between a desire to do his duty and a natural desire to be lenient and considerate of the debtor. In re Randolph, 134 N.Y.S. 1117, 1119 (Surrogates Ct. 1912). Our statutes also speak to the lending of and use of conservatorship funds. Miss. Code Ann. § 91-7-253 provides: § 91-7-253 Fiduciary not to use funds; investment by fiduciary bank in time certificates of deposit. No executor, administrator, guardian, receiver or other fiduciary appointed by or acting pursuant to the authority of any chancery court may borrow or use for his own benefit, directly or indirectly, any of the funds or property of the estate committed or entrusted to him by such court, nor purchase or acquire, directly or indirectly, any interest therein adverse to any creditor or beneficiary of such estate. Nor may he loan the same, or any part thereof, to any parent, brother, sister, son, daughter of, or one in loco parentis to the ward or himself, nor to any attorney or agent representing him or such estate, nor to the wife or any child of such attorney or agent. Nor may any court or chancellor authorize or ratify any such prohibited use, acquisition or loan. This duty of loyalty itself has been extended to the spouse of the fiduciary, so that the husband and wife are treated as one. London v. Goodman, 6 Misc.2d 277, 162 N.Y.S.2d 972, 977 (1957) (In applying the rule against divided loyalty, husband and wife are treated as one.); Rest.2d Trusts § 170. This Court in Brandau v. Greer, 95 Miss. 100, 48 So. 519 (1909), held the guardian and his wife must be treated as the same person. The guardian had permitted property to be sold under foreclosure. The guardian's wife bought the property at the sale without consideration. Where it was unlawful for the guardian to acquire the property, it could never be held that one holding so close a relation to him as that of wife, and with such identity of interest as usually exists between parties sustaining this relation to each other, could lawfully obtain the property. Brandau, 95 Miss. at 102, 48 So. at 520. In the case at hand, James Bryan was the actual conservator, but his wife acted at his request to keep the books and make out the checks. She received payment for keeping the books and received the benefit of direct loans and gifts from the conservatorship monies. She also received the indirect benefit of use of the van and other items purchased with the monies. She participated in the disbursal of the monies by writing the checks. Although she did not sign them, she clearly knew where the monies were going. Taking this all into consideration, the chancery court did not err in admitting the evidence against her or in overruling the motion of dismissal. [5]