Court Opinion

ID: 3544797
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:56:13.127387+00
Date Added: 2024-06-11T13:56:03.674608
License: Public Domain

The pretended trade or exchange of the sheep in question here, is, as to the interest and title of the appellant minors, utterly void and without warrant in law and the dealings thereafter had by the respondents with the animals, in denial of the appellants' title and demand, amount to a conversion as to them. While we may accept without argument the statement that the general guardian of a minor, at common law and in the absence of statute, might sell or otherwise dispose of the personal property of his ward without an order of court, and that the guardian's authority here was, indeed, at common law and without the restriction of statute, broad enough to authorize an exchange by him of one personal asset of his trust for another *Page 154 
(see 4 Bancroft's Prob. Prac. 2186, sec. 1355; Schmidt v.Shaver, 196 Ill. 108, 63 N.E. 655, 89 Am. St. Rep. 250, and the exhaustive annotation at 89 Am. St. Rep. 257, particularly at 281, and following), nevertheless there remains the question whether in this state, where the statutes prescribe with meticulous care the conditions under which a general guardian may sell the property of his ward, there remains with him any vestige of the authority which otherwise the common law may have recognized.
By section 10463, Revised Codes, the provisions of sections 10018 to 10464, "relative to the estates of decedents, so far as they relate to the practice in the district court, apply to proceedings under sections 10,401 to 10,464, of this code." Moreover, section 10440 makes directly applicable here sections 10201, 10203, and 10204, which, among other statutes, therefore directly control the manner, purpose and extent of sales of personal property by a guardian. For like reasons the mandatory provisions of section 10197, directly condemn the conduct of the general guardian at bar and as well the so-called "trades" to which she attempted to commit the assets of her trust. It will not be gainsaid that where the power of sale is granted within narrow limits, the unrestricted authority of a guardian to trade or exchange his trust assets is withheld in every particular. We submit under the statutory provisions of this state a guardian may not exchange the property of his ward at all. On at least two occasions this court has pointedly condemned, as without authority, the exchange or trade of the assets of the estate of a decedent. (In re Dolenty's Estate, 53 Mont. 33, 161 P. 524;In re Jennings' Estate, 74 Mont. 449, 241 P. 648.) Elsewhere, under the analogous statutes, the right of the ward to recover directly of the third party without resort to the liability of the guardian has been precisely ruled. The early California statutes were identical with those now in force in Montana; indeed, the Montana Probate Code was adopted substantially word for word from California. From the earliest days in California the decisions of its supreme court, in Kendall v. Miller,9 Cal. 591, and Schmidt v. Wieland, 35 Cal. 343, *Page 155 
culminating in the conclusive reasoning of the case of DeLa Montagnie v. Union Ins. Co., 42 Cal. 290, have been accepted as controlling, as unambiguous and as altogether decisive of the question at bar. There has been in Montana no remoulding of the applicable statutes. The California decisions are exactly in point in this jurisdiction. It is, moreover, noteworthy that even in California after authority had been given to an executor, administrator or guardian to sell property of his ward without the prior authorization of an order of court, it is yet thought necessary by the statutes of 1933, page 587, to make express provision for an exchange of a ward's property to be effectuated by the guardian, but only "after hearing before the court." Such an amendment to the California Probate Code, as is now to be read in its section 1540, connotes the entire absence of any such authority under any circumstances vested in a guardian by the law of California even under the earlier liberalizing amendments of 1921. (See, also, 11 Cal. Jur. 103, 716; Gentry v. Bearss, 82 Neb. 787, 118 N.W. 1077; Bohanan
v. Riddle, 145 Okla. 301, 293 P. 1031; Garrett v.Reid-Cashion Land  Cattle Co., 34 Ariz. 245, 270 P. 1044;Gillespie v. Crawford, (Tex.) 42 S.W. 621; Harrison v.Ilgner, 74 Tex. 86, 11 S.W. 1054; Browne v. Fidelity Deposit Co., 98 Tex. 55, 80 S.W. 593; Fidelity Trust Co. v.Mays, 142 Ga. 821, 83 S.E. 961; Bates v. Dunham,58 Iowa, 308, 12 N.W. 309; Slusher v. Hammond, 94 Iowa, 512,63 N.W. 185; McCutchen v. Roush, 139 Iowa, 351, 115 N.W. 903;Hendrix v. Richards, 57 Neb. 794, 78 N.W. 378; In reO'Brien's Estate, 80 Neb. 125, 113 N.W. 1001; Bachelor v.Korb, 58 Neb. 122, 78 N.W. 485, 76 Am. St. Rep. 70; Wilkins
v. Deal, 128 Neb. 78, 257 N.W. 486; Coe v. Nebraska Bldg. Inv. Co., 110 Neb. 322, 193 N.W. 708, at 709.)
The void acts of the guardian may not be ratified by order of the court. (Davidson v. Wampler, 29 Mont. 61, 74 P. 82; 11B Cal. Jur. 67, sec. 684; Texas Co. v. Bank of America etc.Assn., (Cal.App.) 45 P.2d 1015.)
The appellants were not required to make restitution to the respondents as a condition precedent to their right to bring this *Page 156 
action. The principal contention in the court below made by counsel across the table was that in any event the minors might not maintain this action, unless first they should disaffirm under section 5680, Revised Codes, and thereupon restore to the respondents the consideration received. The same argument is presented here. It may be fairly said that the trial judge regarded this question as the pivotal point of the case, and turned his decision accordingly. Because in his opinion the appellants were required to make restitution, but had not done so, judgment was rendered for the respondents. As a condition to suit the appellants need only return in any case and under any theory what they received. They have done so, and the respondents have acknowledged that restitution in writing. Nothing else has passed; there is nothing more to be given back. Every requirement of the statute and of the cases relied upon by our adversaries has been satisfied, if satisfaction be a necessary prerequisite to our standing at this bar. Wholly unjustifiable is a result which calls upon the appellants to give back what they have never received, to restore a title which never passed, to pay a debt which neither guardian nor ward promised to meet.
It is contended by appellants that the acts of the guardian in dealing with the wards' property are void, because the transaction here in question, entered into between the guardian and these respondents, was in fact an exchange or trade, which the court was without jurisdiction to authorize.
Under the general provisions of section 10407, Revised Codes, it has been held that a guardian has the care and management of his ward's estate, both real and personal, under the general supervision and control of the court, and subject, of course, to limitations, express and implied, contained in the statutes prescribing the powers and duties of guardians. (Bancroft's Prob. Prac., p. 2123; Fillmore v. Wells, 10 Colo. 228, 15 P. 343, *Page 157
3 Am. St. Rep. 567; In re Williamson, 75 Wash. 353,134 P. 1066.) It was generally recognized at common law that a guardian might sell the personal but not the real property of his ward, the rule as to guardians dealing with the personal estate of their wards being that the personal estate of the ward is necessarily subject to more unlimited control than realty and may be invested, called in, and re-invested and changed and otherwise disposed of as the exigencies of the trust in the judgment of the guardian may seem to require. (28 C.J. 1134.) Accordingly, the court has no authority in the absence of a statute to authorize a sale of the real estate of the ward. (Bancroft's, supra, p. 286.) However, the power of a guardian to sell the personal estate of his ward is said to be more liberally construed and extended than the power to sell real estate. It was generally recognized at common law that a guardian might sell the personal but not the real property of his ward, the rule as to guardians dealing with the personal estate of their wards being that the personal estate of the ward is necessarily subject to more unlimited control than realty and may be invested, called in, and re-invested and changed and otherwise disposed of as the exigencies of the trust in the judgment of the guardian may seem to require. (28 C.J. 1134.) Accordingly, the court has no authority in the absence of a statute to authorize a sale of the real estate of the ward. (Bancroft's, supra, p. 286.)
However, the power of a guardian to sell the personal estate of his ward is said to be more liberally construed and extended than the power to sell real estate, and the general authority and duty of a guardian to dispose of and manage the ward's estate according to law and for the best interest of the ward (Rev. Codes Montana 1935, secs. 10407 and 10408) is generally regarded as sufficient to permit him to sell personal property without consulting the court. (Bancroft's, supra, pp. 2186-2188; Ann. Cas. 1916C, 334; 12 R.C.L. 1124.)
A statutory limitation on the powers of guardians to sell personalty of their wards is sometimes established by requiring that authority from the court shall be obtained as a prerequisite to such sale. (De La Montagnie v. Union Ins. Co., 42 Cal. 290; *Page 158 Kendall v. Miller et al., 9 Cal. 591; secs. 5881, 10428, Rev. Codes.) The statutes requiring an order before a sale can be had are limitations on the guardian's power to sell. The power to sell and otherwise deal with the personal estate of the ward is an incident of the general power of a guardian to care for and manage the ward's estate irrespective of other statutes placing limitations on the power to sell.
It would seem clear that if, under his general powers, a guardian in the absence of statutory restriction might sell the personalty of the ward, a fortiori, he might in the absence of statutory restriction on his authority, exchange the personal property of his ward for other property, without order of the court, when a prudent man in the conduct of his affairs would have done so, and it has been so held. (28 C.J. 1136.)
Nowhere in the statutes of this state is found any limitation on the power of exchange or trade vested in the guardian by virtue of his general power to manage, care for and dispose of his ward's estate according to law, and it necessarily follows that an order is not a prerequisite to a valid exchange or trade of the personal property of the ward; but that such an exchange or trade may be made without first procuring an order of court therefor, there being no statute requiring that an order of court be first obtained.
Counsel for appellants have laid great stress on the case ofDavidson v. Wampler, 29 Mont. 61, 74 P. 82, as support for the proposition that a guardian may exercise only those powers granted in express terms by the statutes. That case held that a guardian could not mortgage the real property of the ward, as at that time, in Montana, there was no power given to the guardian by the statutes of this state, either in terms or by implication, authorizing the encumbrance of the property or the incurring of debts for the benefit of the ward for any purpose. As hereinbefore pointed out, the courts have always distinguished between real and personal property in so far as control of such property by the guardian is concerned, requiring express statutory authority to validate a sale or encumbrance of real property but not requiring it in the case of personal *Page 159 
property, holding in the latter case that the general authority given by statute to the guardian to care for, manage and dispose of the estate of the ward would authorize the sale of the personalty of the ward without express statutory authorization.
Of course, it is a well recognized doctrine that in the absence of statutory authority, a guardian may not mortgage the real estate of his ward and the court in such case, is without power to direct him to do so. (Bancroft's, supra, p. 2175;Conklin v. LaDow, 33 Or. 354, 54 P. 218; Wright v.Atwood, 33 Idaho, 455, 195 P. 625; Northwestern Guar. LoanCo. v. Smith, 15 Mont. 101, 38 P. 224, 48 Am. St. Rep. 6632;Laffranchini v. Clark, 39 Nev. 48, 153 P. 250; StockyardsNat. Bank of South Omaha v. Bragg, 67 Utah, 60, 245 P. 966.) As pointed out in the case of Northwestern Guar. Loan Case, supra, the doctrine that the guardian may not mortgage real property of his ward, is a relic of the English doctrine of primogeniture and was born of the desire to preserve for the infant the integrity of the corpus of the real estate. Such a case can hardly be given the broad construction placed upon it by counsel for appellants and we submit that the decision in the case of Davidson v. Wampler, supra, is not in point in the present inquiry.
Under the terms of section 10443, Revised Codes, it would seem clear that the district court is given a wide discretion and broad grant of authority in connection with the estates of minor wards, and the management, investment and disposition of the estate and effects of the minor is largely left up to the court and the judge thereof in the exercise of a sound discretion. Under such a statute, it can hardly be denied that an exchange of property made by the guardian and approved by order of the court made after notice to interested parties, would be valid.
In concluding the argument on this point of law, we wish to call the attention to a line of cases cited in Ruling Case Law, which are most in point in the case at bar: "Though there are decisions to the contrary, the great weight of authority is to the effect that a guardian may, without application to or an *Page 160 
order of court, sell the personal property of his ward, and it has been held that a statute authorizing a sale of the ward's personal property upon an order of court is merely permissive, enabling the guardian to obtain the advice and approval of the court; and that it does not take away his common law power to sell without such an order." (12 R.C.L. 1124, and cases cited in note 2.) Under such a view of the law, which has ample decisions to support it, clearly in this case the transaction entered into by the respondents and guardian of the minor appellants is a valid transfer and in holding pursuant to such transfer, the respondents are not guilty of a conversion of the sheep.
The position of the respondents is that, even if the guardian acted beyond her authority, and the transaction was void, the respondents would not be guilty of conversion until a restoration or at least a tender of restoration had been made. It would seem to be well settled in this state, by statute and decision, that restoration of the consideration received by the minor is a condition precedent to the right of such minor to disaffirm his contract. (Sec. 5680, Rev. Codes; Stanhope v. Shambow,54 Mont. 360, 170 P. 752; Rice v. Butler, 160 N.Y. 578,55 N.E. 275, 73 Am. St. Rep. 703, 47 L.R.A. 303; Daly v.Bernstein, 6 N.M. 380, 28 P. 764 (767); McReynolds v.Harrigfeld, 26 Idaho, 26, 140 P. 1096 (1098); Murdock v.Fisher Finance Corp., 79 Cal. App. 787, 251 P. 319.)
This action, though sounding in conversion, is directly one for rescission, "When a person has a right to rescind a contract and demand back the property which he delivered to the other party to the agreement, he is often denied the right to maintain trover for such property until he has tendered back that which he has received by virtue of the contract." (26 R.C.L., p. 1128, 12 R.C.L., p. 1148.)
Restoration is clearly a condition precedent to the right of the minors to a return of their property. In the absence of any offer to restore, they are not entitled to receive back their property, and clearly then, the respondents can be guilty of no conversion. *Page 161 
J. Newton Alexander died leaving an estate which was probated in Musselshell county. A part of his estate consisted of 842 ewes and 30 grade-bucks described in the decree of distribution as "about one thousand head of sheep, bucks and ewes." The decree of distribution distributed an undivided one-third of such property to Gertrude Germaine, the widow, and an undivided two-thirds to five minor children, the plaintiffs herein. Germaine Alexander was duly appointed by the Musselshell district court and qualified as the guardian of the persons and estates of the minor children before the decree of distribution was entered. Germaine Alexander was also the duly appointed and qualified administratrix of the estate of J. Newton Alexander.
After the decree of distribution was made and entered, and on January 18, 1933, defendants entered into an agreement in writing with "Mrs. J.N. Alexander, administrator," who is conceded to be Germaine Alexander, under the terms of which they sold to her 130 white-faced Hereford calves, which, according to the agreement, were to be fed hay and grain and cared for by defendants until April 1, 1933, at which time they were to be delivered to Mrs. Alexander at Springdale. According to the agreement, the 842 ewes and 30 grade-bucks were to be given in exchange for the calves. The ewes and bucks were to be delivered to defendants at Grey Cliff on or about January 25, 1933. They were actually delivered on January 23, and some still remained in the possession of defendants at the time of the trial in the court below; others had died and some had been sold by defendants.
On April 13, 1933, defendants entered into another written agreement with Mrs. Alexander, administratrix, whereby the calves covered by the agreement of January 18th were accepted as a down payment of $2,000 on 175 white-faced Hereford cows and six purebred Hereford bulls, reciting that there was a balance of $4,575 due, which, when deposited to the credit of *Page 162 
defendants at the Montana Livestock Loan Company of Helena, the defendants would relinquish all right and title to the cattle and convey them to Mrs. Alexander. The calves were never delivered to Mrs. Alexander but were at all times retained by and in the possession of defendants. On or about April 13, 1933, the 175 white-faced Hereford cows and six purebred Hereford bulls were delivered by defendants to Mrs. Alexander. The cows and bulls at the time of delivery to Mrs. Alexander, and at the time of the agreement of April 13, 1933, were covered by a mortgage in favor of the Montana Livestock Loan Company of Helena, as partial security for notes aggregating the sum of $85,000. The sum of $4,575 was never paid to defendants, and in October or November, 1933, the Montana Livestock Loan Company foreclosed its mortgage on the cows and bulls, the sale under foreclosure netting less than $4,575, all of which was paid to the mortgagee, and, in consequence, Mrs. Alexander neither individually nor as guardian received anything from the sale of the cattle. In January, 1935, Mrs. Alexander, in behalf of the minors as their guardian, demanded the possession of the sheep as the owners in common of an undivided two-thirds interest therein; this was refused.
This action was instituted by J.J. Lanagan, as guardian adlitem, to recover damages for the conversion of the sheep. After issues were joined, the cause was tried to the court sitting without a jury. The above facts were agreed to at the trial. It was further agreed that on March 9, 1933, Germaine Alexander filed a petition in the district court of Musselshell county, in which she recited that she individually and as guardian of the minors entered into the agreement with defendants whereby she traded the sheep for the calves. She stated in the petition that it was her belief and opinion that it was for the best interests of the minors and of herself individually that the exchange be made. She further recited therein, in substance, that it was her desire to purchase an additional 170 head of calves in order to stock a ranch which she had purchased, and which was adapted properly to range and care for 400 head of cattle; that it was her purpose to borrow money from the *Page 163 
Regional Agricultural Credit Corporation with which to buy the additional 170 head, and that she had already applied for the loan, proposing to give as security a mortgage on the 130 head obtained from defendants, as well as on the 170 head thereafter proposed to be purchased. She asked approval of her action in exchanging the sheep for the calves, and of her proposal to buy 170 more head and mortgage them all for the proposed loan of $4,500.
Thereafter, and on March 20, 1933, the court entered an order ratifying and approving the action of the guardian, Germaine Alexander, in effecting the exchange of the sheep for the calves, and authorizing the purchase of 170 additional head and mortgaging them all for a loan of $4,500.
On June 28, 1933, the guardian filed another petition in the same court, reciting that defendants were unable to deliver to her the 130 head of calves at the time delivery was called for, and that it was agreed that in lieu thereof there should be delivered to her 175 cows and six bulls, and that there should be paid to defendants the further sum of $4,500, such sum to be borrowed upon the security of the 175 cows with calves, and six bulls; that she was still desirous of borrowing $4,500 from the Regional Agricultural Credit Corporation of Spokane, for the purpose of paying for the cows and bulls, and that such action would be for the best interests of the minors and herself individually. She requested an amendment of the order of March 20, 1933, so as to approve her action in exchanging the sheep for the cows and bulls. This petition was set for hearing. On July 19, 1933, the court made an order ratifying and approving her action. The cows and bulls were delivered to her on or about April 13, 1933. It was stipulated that the value of the sheep, when delivered to the defendants, was $2,000.
The court made findings of fact in accordance with the foregoing agreed facts, and then found that no proof had been made of any offer by plaintiffs to restore to defendants a two-thirds interest in the cattle or the reasonable value thereof as a condition precedent to a disaffirmance of the exchange. It concluded as a matter of law that the transactions were voidable *Page 164 
and that plaintiffs could not disaffirm the transactions and retain the benefits thereof. It awarded judgment for defendants.
The vital point in the case is whether the various transactions above recited divested the minors of their two-thirds interest in the sheep. Plaintiffs contend that the attempted trade of the sheep for the calves did not divest them of their interest in the sheep, because, while a guardian may sell the personal property of his ward, he may not consummate a trade or exchange.
Ordinarily, the power to sell does not include the power to[1]  exchange. (See cases listed in note in 63 A.L.R. 1004, subd. II.) Our statute (sec. 10428, Rev. Codes), in addition to granting power to sell, also authorizes the court to make orders needful for the disposition of the estate and effects of the ward (sec. 10443). The power of disposition is sometimes held to include a power of exchange. (63 A.L.R. 1004, subd. III.)
Under the facts of this case, we need not determine whether our statutes authorize a guardian to exchange the ward's property for other property, such as was attempted in relation to the calves. Under the facts here, the attempted trade of the sheep for the calves was rescinded by mutual consent. The guardian, in petitioning the court the second time, recited the substance of the agreement to trade the sheep for the calves, and then alleged that "upon calling upon the said Ebert Sheep Company for delivery of the said calves so bargained for, the said company was unable to make delivery of the said calves, and in lieu thereof it was agreed that there should be delivered to your petitioner, and there was so delivered to her, 175 cows and six bulls."
The order of the court recited: "Upon reading and filing the verified petition of Germaine Alexander, guardian of the persons and estates of the above named minors, and it appearing therefrom that the action of the said guardian, as therein recited, in exchanging 872 head of sheep and grade-bucks for 175 cows and six bulls, and agreeing to pay $4,500 in addition to the said sheep and bucks in full payment for said cows and bulls, was and is for the best interests of the said minors and their estates. It is *Page 165 
hereby ordered that said action by the said guardian be and is hereby ratified and approved.
"It further appearing from the said petition that it will be for the best interests of said minors and their said estates to borrow the sum of $4,500 and $1,350 discretionary additional loan, securing such loan by a chattel mortgage upon the said cows and bulls, such loan to be obtained upon application of said guardian to the Helena Branch of the Regional Agricultural Corporation of Spokane, Washington, it is hereby ordered that the said guardian be and she is hereby authorized to obtain such loan for the purpose of completing payment for said cows and bulls, for the term of one year with interest at the rate of 6 1/2 per cent, per annum; and it is further ordered that the order of the court heretofore made on March 20, 1933, be and the same is amended and modified accordingly."
Hence, it is apparent that the agreement to trade the sheep for the calves was abandoned by the mutual consent of the parties, and what was actually consummated was a trade of the sheep for the cows and bulls and the assumption of an indebtedness of $4,500 and purported authorization of a mortgage upon the cattle in order to raise the bulk of the purchase price.
As we view the case, it narrows down to the question of the[2]  power of the court to authorize the guardian to trade the sheep for the cows and bulls and to impose a financial obligation upon the minors to pay the difference at a future time. Such a transaction has been condemned by this court as early as 1903, in the case of Davidson v. Wampler, 29 Mont. 61, 71 P. 82, where the court said: "We must, therefore, look to the Probate Practice Act in force at the date of the order to determine what power the court had in the premises. Under this Act the court had ample power to order a sale of the ward's estate upon application of the guardian, when the necessary jurisdictional facts were made to appear, for the purpose of raising funds to pay debts or to support and educate the ward. (Comp. St. 1887, Div. 2, secs. 367, 369, 370, 376, et seq.) But nowhere do we find any provision granting the power, either in terms or by implication, authorizing the incumbrance of the property or *Page 166 
the incurring of debts for the benefit of the ward for any purpose. It must follow, therefore, that the decree of the district court was wholly unauthorized."
The pertinent parts of our statutes are the same today as when the Davidson Case was decided. Under the decision in that case, the court's attempted approval of the trade of the sheep for 170 cows and six bulls, and the incurring of a debt by the minors was unauthorized.
Whether we would reaffirm the declaration in theDavidson-Wampler Case to the effect that there is no authority on the part of the court to sanction the incurring of a debt for the benefit of the ward for any purpose, we need not now decide. We think the Wampler Case was properly decided under the facts there involved, and that it has application here. Other courts have taken the same view under statutes not materially different from ours. (Harris v. Preston, 153 Ky. 810, 156 S.W. 902;Scott v. Reeves, 131 Ala. 612, 31 So. 453; In reGuardianship of Steadman's Estate, 64 S.D. 156, 265 N.W. 596;Ward v. Jossen, 218 Ala. 530, 119 So. 220; Wilkinson v.Wright, 228 Ala. 243, 153 So. 204, 205; National Surety Co.
v. Manhattan Mortgage Co., 185 A.D. 733,174 N.Y. Supp. 9.)
The order purporting to approve of the transfer of the sheep for the cows and bulls being void, no title thereto passed to the defendants. (Washabaugh v. Hall, 4 S.D. 168, 56 N.W. 82; DeLa Montagnie v. Union Ins. Co., 42 Cal. 290; Gentry v.Bearss, 82 Neb. 787, 118 N.W. 1077; Hardy v. Citizens' Nat.Bank of Keene, 61 N.H. 34; In re Hinds' Estate, 183 Pa. 260,38 A. 599; Bohanan v. Riddle, 145 Okla. 301, 293 P. 1031.)
The minors have never been legally divested of their[3]  two-thirds interest in the sheep, which two-thirds interest was conceded to be worth $1,333.33. Concededly the title to the cows and bulls never passed to plaintiffs. They received no part of the proceeds from the foreclosure sale. No benefits were received by them of any kind or character, and in consequence, if ever there must be a restoration of benefits under a void transfer, as here, nothing came into the hands of these plaintiffs which must be restored to defendants. *Page 167 
Accordingly, the judgment is reversed and the cause remanded with direction to enter judgment for plaintiffs in the sum of $1,333.33 together with interest at the legal rate.
ASSOCIATE JUSTICES STEWART, ANDERSON and MORRIS concur.