Court Opinion

ID: 5585285
Source: CourtListenerOpinion
Date Created: 2022-01-11 01:51:41.21829+00
Date Added: 2024-06-11T08:36:13.310022
License: Public Domain

Russell, C. J., and Gilbert, J.,
dissenting.  So far as we *497are aware, the authorities generally agree that, unless the instrument creating the estate so requires, or there is an agreement between the interested parties obligating him to do so, the lifetenaut is not bound to insure the premises for the benefit of the remainderman, and either may insure for his own benefit. It is also generally agreed that if the insurance is taken out by the owners of the fee prior to the creation of the life-estate and the premises are destroyed by fire, the life-tenant is only entitled to his pro rata share of the proceeds. 17 Ruling Case Law, 642, § 32; 21 C. J. 954, § 92. A collection of authorities will be found cited in the footnotes of these publications. Where a policy of insurance is taken out by the life-tenant for his own benefit subsequently to the vesting of the estate, and the premises are destroyed by fire, the rule adopted in other States on the question of who is entitled to the proceeds is not uniform. Three rules have been declared and are stated in Corpus Juris and Ruling Case Law, with citations, as fallows: 1. If the tenant takes out insurance for his own benefit, in case of destruction by fire the remainderman has no interest whatever in the proceeds of the policy and can not compel the life-tenant to place the same in trust so as to be turned over to the remainderman after the termination of the estate, even though the moneys received from the policy of insurance are equal to the whole value of the property destroyed. 2. Another rule is that if the policy covers merely the life-tenant’s interest, he is entitled to the insurance in full; but if the policy is .issued to him for the full value of the fee and this amount is recovered by him, he is a trustee for the remainderman as to the excess of the amount received over the value of his life interest. 3. The third rule is, that, because the relation of a life-tenant to the remainderman is that of a trustee, any insurance effected by the tenant is also for the benefit of the remainderman, and any money collected by him from a total loss by fire should be used in rebuilding or should go to the remainderman, reserving the interest for life to the life-tenant and crediting him with the premium paid on the policy. Supporting the rule first stated above is the leading case of Harrison v. Pepper, 166 Mass. 288 (44 N. E. 222, 55 Am. St. R. 404, 33 L. R. A. 239). It may also be stated that this rule is supported by the weight of authority. The second rule is supported by the case of Sampson v. Grogan, 21 R. I. 174 (42 Atl. 712, 44 L. R. A. 711). This is a *498well-considered and strongly argued case, but it stands alone in so far as we have been able to ascertain. The third rule is supported by the case of Green v. Green, 50 S. C. 514 (27 S. E. 954, 62 Am. St. R. 846), also well considered and ably argued. In the cases entertaining the view that the proceeds of the insurance recovered by the life-tenant are held in any manner or proportion for the benefit of the remainderman, the conclusion is reached on the theory that the life-tenant is a trustee or quasi trustee in the transaction for the remainderman. It does not appear in the case before us that there was any agreement binding the life-tenant to insure the premises for the benefit of the remainderman, nor is there a suggestion that he did so or intended to dp so. The case is being 'considered on demurrer to the petition. It is not alleged that the life-tenant insured the property for the benefit of the remainder-man, and of course the petition must be considered most strongly against the pleader. We are considering the case, therefore, on the basis that the life-tenant insured the premises solely for his own benefit. The will creating the estate imposes no duty upon the life-tenant to insure the premises for the benefit of the remainderman, in so far as the petition discloses. There is no statute in this State imposing such a duty, nor -is there any statute making the life-tenant a trustee of the remainderman. The duty placed upon the life-tenant, under our law, is as follows: “The tenant for life is entitled to the full-use and enjoyment of the property, so that in such use he exercises the ordinary care of a prudent man for its preservation and protection, and’ commits no acts tending to the permanent injury of the person entitled in remainder or reversion.” Civil Code (1910), § 3666. The petition does not charge that the destruction of the premises by fire was due to the negligence of the life-tenant. We are of the opinion that under the circumstances due consideration should be given to the fact that the weight of authority is in favor of the first rule, especially in view of the strong arguments in behalf of that rule by the courts which have adopted them. We are especially driven to this view, because it is not an open question in this State that when an estate is given to one for life or years, with remainder to another, the life-tenant is not a trustee for the remainderman. Russell v. Kearney, 27 Ga. 96 (3), 100. There is no duty placed upon the life-tenant to insure the remainder interest for the benefit of the. *499remainderman, under the allegations of the petition; therefore, viewed simply on this aspect of the case, we conclude that the petition set out no cause of action.
We will now consider whether or not the petition set out a cause of action based on the allegations in regard to the relationship of guardian and ward. We must enquire what was the duty of Leverett, as guardian to his ward, Joycie Euth Butts. We will assume that Leverett was appointed by the ordinary guardian of the estate, as well as the person of his ward. The estate, in so far as it is concerned in this ease, is a remainder interest in a house and lot and furniture contained in the house. “With respect to the property of the infant the guardian is a trustee.” 28 C. J. 1123, § 204. “As a matter of law guardians of the property of wards are trustees whose power over the property of their cestui que trusts are defined by law.” Howard v. Cassels, 105 Ga. 412, 416 (31 S. E. 562, 70 Am. St. R. 44); Burke v. McKenzie, 124 Ga. 248, 249 (52 S. E. 653). Our code prescribes general rules for the guidance of guardians with regard to the person and property of their wards, but the question with which we are now dealing is not dealt with by the statute in terms. It is a general rule that guardians are charged with the' duty, in the management of the property of their wards, to use the same degree of care and diligence for its protection that a prudent man would use in the care and protection of his own property. “All persons acting in a fiduciary character are bound to use the same care and management that a prudent man would exercise over his own affairs. What is the requisite diligence, will depend on the attendant circumstances.” Glover v. Glover, 1 McM. (S. C.) 153; 2 Kent’s Com. 336,-337. The Civil Code (1910), § 3074, provides: “The guardian can not borrow money and bind his ward therefor, nor can he, by any contract other than those specially allowed by law, bind his ward’s property, or create any lien thereon.” And there are several other sections of the code which restrict the power of the guardian in the expenditure of the ward’s income and in the disposition of the ward’s property. The question therefore arises, whether the exercise of ordinary care for the interest of the ward in this case would require the guardian to insure the same against loss by fire. In Woerner’s American Law of Guardianship, at p. 202, it is said: “Besides keeping the buildings of his ward in good repair and *500tenantable condition, it is the guardian’s duty -to. keep them properly insured.” The author cites only one case in regard to insuring property: Means v. Earls, 15 Ill. App. 273. Under the facts of that case it was held that the guardian was not liable to the ward for the loss incurred by his failure to insure the property. In the opinion it was said: “In'the absence of any statute imposing «upon the guardian the duty of insuring the property of the ward, we may properly refer to some of the general principles of the law bearing upon the subject of the duties and liabilities of trustees.” It then cites Perry on Trusts and Wait’s Actions and Defenses, to the effect that guardians are required to use ordinary prudence and diligence in the management of the estate of their wards, and that they are liable for losses incurred through culpable indifference and negligence. The opinion concludes as follows: “The negligence, to charge the guardian, must affirmatively appear; and we are unable to conclude from the proofs there was such want of ordinary prudence, care and diligence, and such supine and gross negligence, as under the general rule respecting the liability of trustees would charge this guardian. . . It would be bad policy to impose upon guardians and administrators liabilities' and burdens of an onerous and doubtful character, as it would greatly tend to discourage fit and responsible persons from assuming such trusts.” With the general principles stated in this opinion we are in entire accord, as they constitute a mere restatement of well-recognized general rules of force in this State. In the Means case one of the facts stated is, “the guardian all the while having money of the ward in his hands with which he might have kept up the insurance.” ■ After considering all of the authorities, the conclusion is inevitable that the failure of a guardian to insure the property of his ward would not under all circumstances render him personally liable on account of loss by fire, but each ease would depend upon its own particular facts. In the present ease the allegations of the petition do not show that the guardian had in his possession funds belonging to the ward with which to pay premiums on fire insurance, nor do,es it show any other state of facts which would authorize the conclusion that ordinary diligence and prudence on his part required the guardian, as a matter of. law, to insure the remainder interest of the ward for her benefit. We therefore conclude that under the facts alleged no duty was imposed *501by law or otherwise upon the guardian, the failure to perform which renders him liable to the ward for her loss. In fact there is no allegation that damages are sought on the ground that the guardian was guilty of negligence. Recovery is sought on the ground that the proceeds of the insurance actually received constituted in equity a trust fund in part for the benefit of the ward as a cestui que trust. The ’issue does not involve the question of the guardian misappropriating his ward’s money. The proceeds of the insurance were paid by the insurance company to Leverett individually as the assured under the policy—the only person having any rights as an assured thereunder. The company indemnified Leverett, not Leverett, guardian. If Leverett insured his interest in the property for a larger sum than it was worth, the insurance company only could complain. One not a party to the insurance contract could not complain. The question of following trust funds is not involved, because the insurance proceeds never became trust funds. It is unnecessary to deal with the allegation that Leverett was also executor of the estate of his wife. That question is not involved in the case. The court, for the reasons stated above, in our opinion did not err in sustaining the demurrer to the petition.