Court Opinion

ID: 9687038
Source: CourtListenerOpinion
Date Created: 2023-08-24 16:14:21.137492+00
Date Added: 2024-06-11T18:18:23.749841
License: Public Domain

WOLLMAN, Justice
(concurring in part, dissenting in part).
I agree that the evidence supports the trial court’s finding that defendant converted the guardianship funds. I would also uphold the trial court’s award of punitive damages.
Defendant contends that there could have been no conversion in the instant case because plaintiff had agreed that the insurance proceeds be disbursed to pay the Meid-ingers’ bills and to increase their equity in the real estate that they were purchasing. Although it is true that there can be no conversion where the property is obtained through the consent of the owner, Van Dusen & Co. v. Arnold, 5 S.D. 588, 59 N.W. 961; Biesmann v. Black Hills United Mining Co., 64 S.D. 82, 264 N.W. 518, the evidence supports the trial court’s finding that plaintiff’s consent to the endorsing of the insurance check and the disbursing of the proceeds was given on the condition that such procedure be legal, and that plaintiff had relied upon defendant’s representation that it was legal. Now one might argue, as does defendant, that a person of plaintiff’s experience in the business world, and I note here that plaintiff testified that he had been in the farm implement business for some twenty-one years, must have known that an accounting would be required in the guardianship and that some steps would have to be taken to recoup the funds so disbursed. This argument is belied, however, by plaintiff’s testimony, some of which is quoted in the majority opinion, that he had relied upon defendant’s assurance that the disbursements could be legally made. It will not lie in defendant’s mouth to say that plaintiff should have mistrusted defendant and should have dealt justly with his ward, for it was in response to defendant’s entreaties that plaintiff endorsed the check so that defendant could proceed to disburse the funds in blatant disregard of the statutory requirements that a fiduciary, and, perforce, his attorney, safeguard and manage the ward’s property in the best interests of the ward. See *837SDCL 30-29-7 through 30-29-9, which provide:
SDCL 30-29-7:
“A guardian of the property must keep safely the property of his ward. He must not permit any unnecessary waste or destruction of the real property nor make any sale of such property without the order of the circuit court, but must, so far as it is in his power, maintain the same with its buildings and appurtenances out of the income or other property of the estate, and deliver it to the ward at the close of his guardianship in as good condition as he received it.”
SDCL 30-29-8:
“Every guardian must dispose of and manage the estate according to law and for the best interests of the ward, and faithfully discharge his trust in relation thereto, and also in relation to the care and custody and education of the ward.” SDCL 30-29-9:
“Every guardian must manage the estate of his ward frugally and without waste, and apply the income and profits thereof, as far as may be necessary, to the comfortable and suitable maintenance and support of the ward and his family, if there be any, and to the education of the ward if a minor.”
If there is one theme that pervades SDCL 30-29, it is that a fiduciary has a solemn duty of trust to safeguard the property of his ward, a duty that is so jealously regarded that the law will brook no dealings by a guardian that will in any manner subordinate the ward’s best interests to those of the guardian. See, e. g., Haugen v. Lien, 56 S.D. 286, 228 N.W. 379; Schroeder v. Taylor, 58 S.D. 365, 236 N.W. 365. If the law presumes that a guardian will be cognizant of the responsibilities flowing from his position of trust, how can it be said that an attorney should be held to any lesser standard of awareness and responsibility? This is not to say that an attorney is an insurer of his guardian-client’s funds, but that he will be answerable in an action for conversion if he so egregiously miscounsels the guardian into disbursing guardianship funds for the benefit of others that it must be concluded that he did so knowing full well that the disbursement will constitute a clear breach of the guardian’s duty to safeguard the ward’s property. This we think to have been the situation in the instant case. We deal here with no species of attorney negligence that would relegate the injured client to a malpractice action, but with a case of outright deception. Defendant was no neophyte in the law whose errors of judgment might be explained by inexperience or simple lack of knowledge, but was an experienced attorney with a sophisticated grasp of procedural and substantive law. See, e. g., Dornbusch v. Dornbusch, 83 S.D. 524, 162 N.W.2d 283; Halvorson v. Birkland, 84 S.D. 328, 171 N.W.2d 77; Bahr v. Bahr, 85 S.D. 240, 180 N.W.2d 465. Surely defendant must have known that to counsel plaintiff that it was “legal” to deposit guardianship funds in defendant’s personal account and then disburse the money to pay past due bills of the ward’s mother and adoptive father at places such as Kirkpatrick’s Jewelry and the Goodyear Tire Store was to deprive the guardian of dominion and control over such funds for all time.
Should we be so cynical of a layman’s implicit trust in the advice of his lawyer that we can say as a matter of law that plaintiff’s testimony was inherently incredible or that no intelligent businessman of any experience would have been justified in relying on the advice given by defendant? True, there no doubt are many situations in which a layman might not be justified in relying upon legal advice that is so patently absurd that it would not warrant belief by anyone of the age of understanding, but the counsel given by defendant in the instant case does not necessarily fall within that classification in the absence of some evidence that plaintiff was otherwise aware of the legal duties imposed upon him as guardian. Once he learned that the funds would have to be accounted for and replaced, plaintiff did what would be expected of *838him — he asked defendant to return the money.
If plaintiff’s original reliance upon defendant’s advice was sufficiently well placed to justify a finding of conversion, then it justified the award of punitive damages. I would so hold, notwithstanding my firm belief that awards of punitive damages should be closely scrutinized and that the purpose of a claim for such an award should not be, as I discern the trend to be, a thinly-veiled attempt to recoup general damages in a breach of contract action.
SDCL 20-10-1 provides:
“One who willfully deceives another, with intent to induce him to alter his position to his injury or risk, is liable for any damage which he thereby suffers.”
SDCL 20-10-2 provides in part:
“A deceit within the meaning of § 20-10-1 is either:
(1) The suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
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SDCL 21-3-2 provides in part:
“In any action for the breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud, or malice, * * * the jury, in addition to the actual damage, may give damages for the sake of example, and by way of punishing the defendant.”
I conclude that defendant’s conduct can be characterized as constituting deceit, as that term is defined by SDCL 20-10-2(1), supra, which is that species of fraud that will support an award of punitive damages under SDCL 21-3-2. Rist v. Karlen, S.D., 241 N.W.2d 717. As stated above, defendant was no neophyte in the law at the time he advised plaintiff that it would be proper, and thus “legal,” to use the insurance proceeds in the manner he suggested. The trial court’s determination that defendant knowingly misrepresented the legality of the proposed disbursement of the insurance proceeds is the equivalent of a finding that defendant did not believe to be true his representation that such disbursement would be legal. Cf. Neilson v. Edwards, 34 S.D. 399, 148 N.W. 844. See generally 18 Am.Jur.2d, Conversion, § 92.
Implicit in what I have said above is my belief that the case should not be returned for additional finding on the matter of the damages suffered by plaintiff. If the deed from Sally and Bill Meidinger was intended as a mortgage, it was a poor second lien in view of the rights of the contract vendor; as an absolute conveyance it was little better than a second mortgage. Plaintiff treated the property conveyed by the deed as of no value. If defendant wanted to establish that plaintiff was either fully or partly secured, he could have introduced evidence of the value of the property conveyed by the deed. Defendant submitted no proposed finding on the issue of the value to plaintiff of land so conveyed. In the absence of such a proposed finding and of any evidence to support such a finding, I would hold that the evidence submitted by plaintiff supports the finding entered by the trial court regarding the amount of compensatory damages due plaintiff.
I agree that SDCL 21-3-3(3) does not authorize an award of attorneys’ fees in this type of action. The California courts have so interpreted California Civil Code § 3336, which contains provisions identical in language to SDCL 21-3-3(3). See Viner v. Untrecht, 26 Cal.2d 261, 158 P.2d 3; Russell v. United Pacific Ins. Co., 214 Cal.App.2d 78, 29 Cal.Rptr. 346.