Court Opinion

ID: 8188159
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:10:57.119775+00
Date Added: 2024-06-11T16:40:30.120117
License: Public Domain

*346The following opinion was filed January 10, 1905:
Cassoday, C. J.
1. This case must turn upon the construction and effect of the bond of January 5, 1899, upon which this action is based. The conditions of the bond are given in full in the foregoing statement. At the time of giving the bond the statute required the guardian of an incompetent person to give bond in like manner and with like condition as prescribed with respect to the guardian of a minor, with one exception not relevant here. Sec. 3981, Stats. 1898. The reference therein is to the section which declares that, “before appointing any person guardian of a minor, the court shall require such person to give a bond to the minor” as therein directed and conditioned as therein prescribed. Sec. 3966,. Stats. 1898. As stated by counsel for the defendant, the conditions of the bond here in question are in the terms required by that section. Counsel contends that the conditions of the bond are all prospective, and in support of such contention cites Holden v. Curry, 85 Wis. 504, 511, 55 N. W. 965, 967, where Mr. Justice Piktitey, speaking for the court, said that r
“All the prescribed conditions of the bond are prospective, and none of them have any relation to what has occurred in the past. The bond is therefore no protection or security to the ward for any interference or intermeddling with his property by his guardian before he was appointed such.”
As stated by the learned trial judge in a carefully prepared opinion — so much of which should have been printed in the case as is required by the rule:
“The real point there decided in this regard is that a surety on the bond of a guardian is not liable for his acts of inter-meddling with the ward’s estate before any guardian had been appointed.”
The question of “the liability of a surety on an additional or cumulative bond of the guardián” was not there involved, and of course was not adjudicated. In the case at bar Otto *347had been such guardian of Jacob for more than two years-prior to the giving of the additional bond in question. In regard to the giving of such bonds and the discharge of sureties-on bonds previously given, the statute declares that:
“The county court may, at any time, require additional' bonds to be given by any guardian whenever it shall deem it necessary, and may discharge the existing sureties from future-responsibility, after notice given as such court may direct,, when it shall satisfactorily appear that no injury can result therefrom to those interested in the estate.” Sec. 3967, Stats. 1898.
Here it affirmatively appears that no notice, as thus prescribed, was ever given, and that no examination of the guardian’s account was ever had, as prescribed by statute; much less that it was made to appear to the county court, satisfactorily, that no injury could result from the discharge of sureties on the prior bond to those interested in the estate. Secs. 3967, 3972, Stats. 1898. Under a similar statute it was held in Michigan that
“the discharge of a surety on a guardian’s bond is void where-it is made without notice to the ward or his next of kin, and without examination of the guardian’s account, but merely on the verbal application of the surety and the consent of the-guardian.” Rice v. Wilson, 129 Mich. 520, 89 N. W. 336.
In Clark v. Wilkinson, 59 Wis. 543, 545, 18 N. W. 481,. cited by counsel for the defendant, the question of the liability of a surety upon such additional bond was involved, but it appeared “affirmatively that there had been no waste of the-trust funds by the guardian at the time the defendant became-surety in the bond.” 59 Wis. 551 (18 N. W. 484). So the question of defalcation prior to the execution of the bond in that suit was not involved; but Mr. Justice Taylor, speaking-for the court, there said that:
“It is evident to us that the surety on this bond is not only liable for the failure of the guardian to account for the moneys received by him as guardian after the bond was exe*348cuted, but be is equally liable for all money in tbe bands of tbe guai’dian belonging to tbe wards at tbe time tbe bond was executed.” 59 Wis. 549 (18 N. W. 483).
It is claimed by counsel for tbe defendant that sec. 39 67 was supplemented by sec. 4, ch. 335, Laws of 1897, now contained in sec. 4281b, Stats. 1898. That section expressly authorized a surety on a guardian’s bond or bis representative to apply to the proper court by petition “to be relieved from further liability as such surety” for such acts of tbe guardian as might occur “after tbe date of tbe order relieving” him, to be granted, as therein provided, upon an order to show cause why tbe guardian should not account and give -a new bond and tbe surety be relieved from further liability. As stated in tbe opinion of tbe learned trial judge:
“Tbe bond in suit was not given pursuant to sec. 42816. No surety on tbe first bond petitioned tbe court to be released front future liability thereon; nor that tbe guardian be required by order of the court to show cause why be should not account and tbe surety be relieved; nor that the principal be required to give a new bond. No petition whatever was made in that regard. No such order to show cause was made or served. No account was rendered in obedience to such order. No new bond was given or approved pursuant to such order nor to any precedent order of tbe court. No former surety was released pursuant to bearing upon such petition or order to show cause. Sec. 4281b was not complied with in any essential respect. Tbe proceedings taken do not purport to have been taken under, nor to have bad any reference whatever to, that statute. Tbe second bond makes no reference to that statute, and contains no reference to or recital of proceedings taken thereunder. Tbe order of January 5, 1899, purporting to release tbe former sureties, contains no such reference or recital.”
Prior to tbe giving of tbe bond in question this court held that:
“In absence of express statute (such as now exists in sec. 4281b, Stats. 1898), county courts have no power, either by taking a new bond or otherwise, to discharge sureties from liability for either past or prospective misconduct of an ex-*349editor, administrator, or trustee; and a new bond, if taken,, is merely cumulative.” Richter v. Estate of Leiby, 101 Wis. 434, 441, 77 N. W. 745. To tbe same effect, Rudolf v. Malone, 104 Wis. 470, 80 N. W. 743.
Since no steps were ever taken as proscribed by statute to-relieve tbe sureties or to discharge Otto as principal on tbe original bond, it is obvious that tbe bond in question must be-regarded as an additional or cumulative bond, as mentioned in tbe statute. Sec. 3967.
It is conceded that tbe defendant company, as surety, is liable for tbe failure of Otto, as such guardian, to account for all moneys and property received by him as such guardian after tbe execution of tbe bond; but in tbe language of Mr. Justice Taylor above quoted, tbe defendant company “is-equally liable for all money in tbe bands of tbe guardian belonging to tbe ward at tbe time the bond was executed.” The-bond expressly required Otto, as such guardian, (1) to make a true inventory of all tbe estate of bis ward coming to bis possession or knowledge, and turn tbe same into tbe county court within such time as tbe judge should order; (2) to dispose of and manage all such estate according to law and for tbe best interest of tbe ward, and faithfully discharge bis trust in relation thereto; (3) to render an account, on oath, of tbe property of tbe ward in bis bands, and all proceeds or interest derived therefrom, and of tbe management and disposition of tbe same, within tbe year therein stated, and at such other times as tbe court should direct; (4) and at tbe expiration of bis trust to settle bis account as therein directed, and to “pay and deliver all the property, real and personal,, remaining in bis bands, or due from him on such settlement, to tbe person or persons entitled thereto.”
2. It appears that in bis account of January 5, 1899, Otto did not make a true inventory of tbe estate, but gave himself' a false credit, among other things, of a note dated October 26, 1897, executed by Herman Brehm, payable to Hugo Brehm, for $229, with interest at five per cent., which never belonged *350to Jacob or liis estate; also a note dated December 5, 1898, executed by Grashom and payable to Otto for $500, with interest at five per cent., which never belonged to Jacob or his estate; also a note dated October 22, 1887, executed by Muller for $50, with interest at eight per cent., indorsed paid to October 22, 1892, scheduled as uncollectible and worthless, and not charged to Otto, but fraudulently credited to him. These three notes, amounting on their face to $779, were improperly credited to Otto in his account of January 5, 1899, and, for the reasons stated, the plaintiff was justified in refusing to receive them as part of the estate of Jacob. It must be presumed that the $779 with which Otto was so falsely credited in his account with the estate was either intended as the equivalent of that amount of money in the hands of Otto at the time of executing the bond of January 5, 1899, or that he had previously converted the same to his own use from the estate, and that in either view he had breached the bond by failing at the expiration of his trust to settle his account as therein prescribed, “and pay and deliver all the property, real and personal, remaining in his hands, or due from him -on such settlement,” as therein required. Rudolf v. Malone, 104 Wis. 470, 472, 80 N. W. 743; Hutson v. Jenson, 110 Wis. 26, 85 N. W. 689; Choate v. Arrington, 116 Mass. 552; Benchley v. Chapin, 10 Cush. 173; Mattoon v. Cowing, 13 Gray, 387; 15 Am. & Eng. Ency. of Law (2d ed.) 119, and cases there cited.
3. It appears that the note and mortgage dated January 5, 1899, executed by Otto, and payable three years after date to Jacoby for $5,500, with interest at five per cent., never came to the possession of the plaintiff in any capacity, although it was credited to Otto in his account of January 5, 1899, but was, on June 5, 1899, assigned by Otto to the bank as collateral security for the payment of his own indebtedness to the amount of $3,000. Such attempt of Otto to loan the funds of his ward to himself could not in any way lessen his liability, as such guardian, upon the bond in question, nor *351the liability of his surety thereon. Thus it has recently been held by this court that “where a guardian ostensibly invested her ward’s money in a loan to herself, giving notes and mortgages on her own property to her wards, the transaction cannot be treated as in any respect an investment of the trust funds.” Hutson v. Jenson, 110 Wis. 26, 85 N. W. 689. The cases above cited are to the same effect. We must hold that upon Otto’s removal as such guardian he was bound, as prescribed in the bond, to fully account for and settle for that note and mortgage, and “to pay and deliver” the amount thereof as “due from him on such settlement,” as therein prescribed. Having failed to do so, the defendant company, as liis surety, is answerable therefor.
4. So the note dated June 6, 1898, executed by De Wilde and G-agodnigg, and payable two years after date, at the bank, to the order of Otto, guardian of Jacob, for $2,000, with interest at six per cent., never came to the possession of the plaintiff in any capacity. The note was credited to Otto in his account of January 5, 1899, as $1,500, and it appears that •$500 of the principal and the interest to June 6, 1899, were paid thereon after the account of January 5, 1899, but none of either of those payments ever came to the possession of the plaintiff in any capacity. The note was afterwards transferred by Otto to the bank, and was paid to the bank by De Wilde November 6, 1899. The facts stated in respect to that note show that the same was appropriated by Otto to his individual use, and hence, upon the principles already stated, constituted a breach of the bond for which Otto and the defendant company are liable. Other liabilities are conceded by counsel.
By the Court. — The judgment of the circuit court is affirmed.
'A motion for a rehearing was denied March 14, 1905.
KierwiN, J., took no part.