Court Opinion

ID: 3809574
Source: CourtListenerOpinion
Date Created: 2016-07-06 07:48:46.783322+00
Date Added: 2024-06-11T07:35:44.255344
License: Public Domain

I think the majority opinion reaches the wrong conclusion and is unsound in two respects.
1. It adheres to the view that a guardian who holds a secured promissory note payable to "Tom C. Waldrep, Guardian of Una Hembree, a minor," may accept in full satisfaction thereof a renewal note made payable to "Tom C. Waldrep" only. This holding is contrary to our previous decisions that a guardian, in the absence of authorization by the court, is without authority to accept anything other than the full amount, in cash, owing thereon in satisfaction of a promissory note due the ward. Mason v. Ackley, 52 Okla. 157, 152 P. 846; Mason v. Evans, 52 Okla. 484, 153 P. 133; Crume v. Rivers,178 Okla. 363, 61 P.2d 862. It is also contrary to 58 O. S. 1941 § 804, which provides that the guardian must "receive all debts due him (the ward), or may, with the approbation of the county judge, compound for the same and give discharges to the debtors on receiving a fair and just dividend of his estate and effects." The majority opinion evades the force of this statute and the former decisions of this court by holding that "a guardian may accept something other than money in full discharge of a negotiable instrument, but if he would protect himself from loss that might thereby result, he must obtain the court's approval of the transaction."
I do not agree with the majority that the only purpose or effect of 58 O. S. 1941 § 804 is to provide a method whereby the guardian may, if he so desires, protect himself from liability on his bond. I think the statute was enacted primarily for the protection of the ward, that it prescribes a limitation upon the power of the guardian to compromise claims against the ward's estate, and that a guardian's settlement of a claim against the ward's estate for anything other than the full amount due, in cash, in the absence of court approval, is voidable as against the ward. The majority opinion cites no authority for its holding and is contrary to the general rule that statutes, such as ours, providing that the guardian may compound claims "with the approbation of the court" are mandatory, limit the common-law powers of the guardian, and make compromises not approved by the court subject to avoidance by the ward. 25 Am. Jur. 68, § 106; 12 R. C. L. 1130, 1131; 28 C. J. 1124, note 54; Ross, vol. 2, Probate Law and Practice § 670; Hayes v. Mass. Mut. Life Ins. Co., 125 Ill. 626, 18 N.E. 322, 1 L. R. A. 303; Bunnell v. Bunnell, 111 Ky. 566, 64 S.W. 420; Jennings v. Jennings, 104 Cal. 150, 37 P. 794; Martin v. Ornelas, 139 Cal. 41, 72 P. 440. In the Hayes Case the Illinois court held that the statute was enacted as "an additional safeguard" to the ward, and permitted the wards to disaffirm the attempted compromise. And in the Bunnell Case the Kentucky court said that "not having the approbation of the court, the attempted compromise by the guardian was void."
I think, therefore, that a guardian, *Page 176 
unless he has obtained the approval of the county court, is simply without power to accept anything other than the full amount, in cash, due thereon in payment of a promissory note belonging to his ward, and that if he does so, the ward may avoid the transaction as against the maker.
If the guardian may, without court approval, bind the ward by accepting a note made payable to himself individually in satisfaction of a debt due the ward's estate, why may he not, with like effect, accept any other item of property, real or personal, in satisfaction of the debt? It seems that under the majority opinion he may now do so, and in my opinion the principal purpose of section 804, that of limiting the power of a guardian to compromise claims against his ward's estate without court approval, is thus destroyed.
2. The opinion also holds that a guardian holding such a note in his ward's estate, may, without approval of the county court, and without obtaining anything of value for his ward, assign the note to a bank to secure or satisfy his personal indebtedness, and thereby vest legal title to the note in the bank so that the maker, by paying the bank, will satisfy his debt to the ward. I do not agree. The authorities upon which the opinion seems to rely, Bank of Welch v. Cabell,52 Okla. 190, 152 P. 844; 8 C. J. 174, and Howell v. Flora,155 Kan. 640, 127 P.2d 721, do not support its conclusion.
In the Cabell Case the guardian had assigned the note without the approval of the county court but had received the full amount due thereon in cash. The maker, when sued by a subsequent assignee, defended on the ground that the guardian's assignment, having been made without authority, was void, but the court held that the assignment, having been made for the full amount of money due thereon, was good. The case turned on the point that the guardian had received the full amount of cash due on the note and was thus within an exception to the general rule. It is not authority for the proposition that a guardian may, without court approval, transfer good title to his ward's note by assigning it as security for, or in satisfaction of, a debt owed by the guardian personally to the assignee, as in the case at bar. It is true that the case states that legal title to such a note is in the guardian and cites cases from Mississippi and Arkansas in support of such statement. The statement, however, is dictum, and the cited cases do not support it.
In the Mississippi case the note was made payable to "E.P. Richards, guardian of James Jones." Richards died and the executor of his will endorsed the note to a third party, who endorsed it to Jenkins. The maker, when sued, defended on the ground that Jenkins could not maintain the suit. The Mississippi statute provided: "The assignee of any chose in action may sue for and recover in his own name if the assignment be in writing." The court said that "this statute settles this question," and held that Jenkins could maintain the suit. Would this court hold that if Waldrep had died his personal representative could have assigned the note and passed good title? I think not. The Arkansas case is based on the common-law rule that a guardian, unless restrained from doing so by statute, has the power to sell his ward's personal property without an order of court. 108 A. L. R. 936 at 937, note.
Furthermore there is serious doubt as to whether the rule stated in the Cabell Case now obtains in Oklahoma. In at least three later decisions we have held that "the legal as well as the beneficial title to personal as well as real property remains in the ward, and the power of the guardian is a naked trust not coupled with an interest." Title Guaranty  Surety Co. v. Cowen, 71 Okla. 299 at 302, 177 P. 563; Winona Oil Co. v. Barnes, 83 Okla. 248, 200 P. 981; Ischomer v. Fryer,105 Okla. 30, 231 P. 298.
Our Probate Code came indirectly from California, and prior to its adoption in this state the California court *Page 177 
had held that a guardian is without power to sell the personal property of his ward without an order of court and that such an attempted sale "conveyed no title to the purchaser." Kendall v. Miller, 9 Cal. 592. It had applied this rule to intangible personal property (shares of corporate stock) and allowed recovery from a purchaser thereof, even though he had purchased the same in good faith. La Montagnie v. Union Ins. Co., 42 Cal. 290. In that case the court said that "the plain intent of the statute is to make void every alienation of the property of the ward, if made by the guardian without the order of the court."
In Gentry v. Bearss (1908) 82 Neb. 787, 118 N.W. 1077, where the guardian, without authorization of the court, had sold a note and mortgage made payable to himself as guardian, the Nebraska court, relying on the above cited California decisions in the absence of an Oklahoma decision on the question, held that under the Oklahoma Probate Code the "attempted sale was void and the title to the note and mortgage did not pass to Scott" (the purchaser).
In the case of Garrett v. Reid-Cashion Land  Cattle Co.,34 Ariz. 245, 270 P. 1044, under a Probate Code substantially the same as ours, the Arizona court held that a guardian's exchange of his ward's personal property (corporate stock for other corporate stock) without "obtaining an order therefor" was void and not binding on the minor. Our statute (58 O. S. 1941 § 822) reads verbatim with the quoted portion of the Arizona statute.
In Bohanan v. Riddle, 145 Okla. 301, 293 P. 1031, relied upon by defendants in error but not cited in the majority opinion, this court held that the transfer of a promissory note in exchange for other property, with approval of the county court, but without complying with the statutory procedure, was without authority of law and void. This case refers to several sections of our Probate Code and is in harmony with the decisions from California, Arizona, and Nebraska, above cited, but does not refer to Bank of Welch v. Cabell, above. That the annotator of the note in 108 A. L. R. at page 943 considers the Bohanan Case to be contrary to the Cabell Case seems clear from the language used. See, also, 28 C. J. 1135, note 94.
The Bohanan Case and the cases from California, Nebraska, and Arizona hold, in effect, that statutes providing a method of procedure for guardianship sales abrogate the common-law rule that a guardian may dispose of his ward's personal property without court approval, are mandatory, and that compliance with such provisions is a prerequisite to the power of the guardian to transfer title to his ward's personalty, including promissory notes. I think these decisions are correct. The sections of the statute (58 O.S. 1941 §§ 821-850[58-821-850]) are intended to have this effect. It will be noticed the sections relating to guardianship sales (sections 821, 822, and 826) specifically apply to personal property as well as real estate, having been given this effect by the revision of 1910. And the various provisions of our Probate Code, including § 833, provide a complete method of procedure to be followed in conducting guardianship sales, including the petition, notice, confirmation, etc. If it was not intended that the guardian must comply with said sections in disposing of his ward's personalty, it seems useless to have so carefully outlined the procedure therefor. For a collection of other cases on the question, see 108 A. L. R. 941, note.
The text in 8 C. J. 174, relied on in the majority opinion, is based on cases having to do with the right to maintain a suit on a note made payable to one in a representative capacity, or on cases governed by statutes differing from ours, or on cases following the common-law rule that a guardian may transfer title to the personal property of his ward without court approval. The Flora Case, above, relied on in the majority opinion, is not a guardianship case, but simply holds that a trustee in whose name a note is held for the benefit of others may maintain a suit thereon in *Page 178 
his own name. These authorities do not support the conclusion reached by the majority. Undoubtedly Waldrep could have maintained a suit on the note and mortgage in his own name as guardian. But it does not follow that he could transfer the note to a third party without the approval of the county court. As I have shown, a transfer for anything other than cash in such a case is voidable so far as the ward is concerned.
Rhodd is responsible for the position in which he finds himself. It was his negligence in giving a renewal note made to Waldrep personally that enabled Waldrep to assign the note to the bank as security for his personal indebtedness. Rhodd knew that the original note and mortgage were held in the name of Waldrep as guardian and he was bound to know the duties and powers of the guardian in dealing with them. 28 C. J. 1123, § 204. If the second note was negotiated and he was thus placed in a position, because of the law of negotiable instruments, of having to pay it to the bank (a question not before us and on which I intimate no opinion), this did not relieve him of liability to the ward. The ward should not suffer because of his negligent act.
The majority opinion sets a dangerous precedent, and lets down the bars for faithless guardians to traffic with their wards' estates to the advantage of the guardians and the detriment of the wards. It is not enough to say, as the majority opinion intimates, that the ward will be protected by going against the guardian and the sureties on his bond. The bond is sometimes insufficient.
Furthermore the ward is entitled to all the protection the law gives him. He is entitled to the protection of the law forbidding the sale of his property without court approval, and he is entitled to the protection of the bond. Those under guardianship are favorites of the law, and the courts should be, and usually are, careful to see that they are not imposed upon.
For these reasons I respectfully dissent.
RILEY, BAYLESS, and ARNOLD, JJ., concur in this dissent.