In re CLARK'S GUARDIANSHIP

In re CLARK'S GUARDIANSHIP
1924 OK 913
230 P. 891
104 Okla. 245
Case Number: 14094
Decided: 10/14/1924
Supreme Court of Oklahoma

In re CLARK'S GUARDIANSHIP. NEW AMSTERDAM CASUALTY CO
v.
CLARK'S ESTATE.

Syllabus

¶0 1. Guardian and Ward--Liability of Guardian for Trust Fund Lost in Failed Bank.
A guardian, who permits a third person to take charge of a trust fund belonging to his ward, and to deposit such fund in a bank otherwise than in the name of the trust estate, and without anything to indicate that the deposit was made in his representative capacity as trustee, is liable to his ward, for the loss of the fund through a failure of the bank. without regard to the good faith or intention of the guardian in making the deposit.
2. Same--Mother as Guardian of Minor--Right to Credit for Expense of Maintenance.
Where a mother who had been appointed guardian of her minor son had made no charge against him for money expended for his support and maintenance, and obtained no authority from the county court to expend monies belonging to such child for his support, no credit can be allowed therefor, after her removal as guardian, at the instance of a surety upon her bond, as guardian, upon exceptions filed by such surety to her final report.

Kent V. Gay, for appellant.
Bruce L. Keenan, for appellee.

FOSTER, C.

¶1 This controversy grows out of exceptions to the final report of Mary A. Clark, as guardian of Levi Scott Clark, a minor, filed by the New Amsterdam Casualty Company, a corporation, as surety upon an additional bond executed by such guardian in connection with the sale of certain real estate belonging to the minor. The county court of Cherokee county, Okla., charged the guardian with the sum of $ 1,600, representing the proceeds from the sale of certain real estate belonging to the minor which had been lost through the failure of the Central National Bank of Tahlequah, in which bank the funds had been deposited by J. D. Cox, county judge of Cherokee county; credited the guardian with certain amounts, and found that said guardian and her surety were due to account to the minor for a balance of $ 1,128.30. An appeal was prosecuted by the surety to the district court of Cherokee county, Okla., wherein the court, upon a trial to the court on the 11th day of September, 1922, entered judgment, charging the guardian and her surety with the said sum of $ 1,600; representing the proceeds from the sale of the real estate mentioned, refused the guardian credit for a certain sum which it was claimed had been expended by the guardian for the support and maintenance of said minor during her tenure of office as guardian, and ordered the guardian and her surety, New Amsterdam Casualty Company, to account and pay D. O. Scott, guardian, as the lawful successor of Mary A. Clark, the sum of $ 1,087.76.

¶2 At the request of the surety, the trial court made certain findings of fact and conclusions of law, the material parts of which, are as follows:

"Findings of Fact.

"* * * That after that proceeding (referring to the probate sale) was had and a guardian's deed executed from the guardian to the purchaser, and as a part of the same transaction in which the guardian's deed was executed, the purchaser, together with the guardian, appeared in the office of the county judge of Cherokee county, to close the proceedings, and the purchaser, in the presence of and with the knowledge of the guardian, paid into court, by check, the sum of $ 1,600. That guardian's deed was delivered to the purchaser. That such payment by the purchaser was in effect a payment of the purchase price to the guardian. This is now an action between the minor, or rather a settlement of the account, between the minor and the guardian. The guardian did not take possession of or obtain control of this $ 1,600, but permitted the same to be taken charge of and under the control of the county judge, who from the evidence here, deposited this amount in the Central National Bank of Tahlequah, Okla., to his account, as county judge. That these funds, at no time were deposited in the name of the guardian, or of the ward. * * * That with regard to the claim for board, or for the maintenance and support of this minor, the court finds that this minor, together with the guardian, his mother, and other members of the family, resided upon a farm and that no expenditures were made, or included, by this guardian, for the maintenance and support of this minor, except such as were taken care of and paid by the efforts of this minor, together with the efforts of other members of the family, in the growing of farm products which were sold to take care of the family expenses and that such charges were would not be a legal charge and the guardian is not entitled to credit for maintenance and support of this minor.

"Conclusions of Law.

"As a conclusion of law, the court finds and holds that when this sum of $ 1,600 was paid in court under the sanction and approval of the guardian, that it was then the duty of the guardian, under her oath as guardian, and in the discharge of the legal duties due this ward, to whom only the minor could look for protection to have taken charge of this fund and to have safeguarded it in the manner as the law contemplates, and as her duty required her to do; and, by her failure to take charge of the funds, was such negligence on her part, as to render her and hold her accountable to this minor for this sum, which is the proceeds of the sale of the land in question.* * *"

¶3 Motion for a new trial was filed and overruled, and the New Amsterdam Casualty Company brings the cause regularly on appeal to this court on petition in error and case-made. Appellant discusses its assignments of error under two propositions, as follows:

(1) That Mary A. Clark, guardian, is not properly chargeable with the sum of $ 1,600 derived from sale of real estate belonging to Levi Scott Clark, a minor, for the reason that she exercised the care and diligence in the preservation of such fund which would have been exercised by an ordinarily prudent business man, and that the loss of said sum was not occasioned by any fault, neglect, or dereliction of duty upon her part.

(2) That the court, as a matter of common justice and equity and upon application of the surety on a guardian's bond, even in the absence of a request from the guardian, must credit said guardian's account with reasonable amounts which have been expended by such guardian for the support, maintenance, and education of the minor ward when it is shown that such expenditure, considering the financial condition of the guardian and parent, is such as to entitle the guardian and parent to such allowances if applied for by her.

¶4 Appellant states in its brief, as follows:

"* * * Appellee seems to have gotten the impression that plaintiff in error seeks to overturn the findings of fact made by the district court. This is not true as there is little or no dispute as to what actually happened at the time of the sale of real estate of Levi Scott Clark, a minor, and at the time of the delivery of guardian's deed."

¶5 The scope of our inquiry then is, Did the trial court err as a matter of law in its conclusion of law that the guardian, by permitting the county judge of Cherokee county to take charge of the proceeds of the sale of the real estate of her ward, and in permitting him to deposit these funds in the Central National Bank of Tahlequah to the credit of a person other than the guardian or the ward, fail to exercise that care and diligence in the preservation of such funds as would render her accountable to her ward for a loss of such funds through a failure of the bank in which the funds were deposited? It is emphasized in the argument that the deposit of these funds by the guardian to the credit of J. D. Cox as county judge negatives bad faith and want of care, since the county judge under the law exercises general jurisdiction of the estates of minors and dependents. This argument, however, is in our judgment without merit. It is generally held that a guardian and his surety are liable to the ward where the guardian deposits funds belonging to his ward in a bank in his individual name, notwithstanding the guardian is guilty of no negligence, where the funds are subsequently lost through a failure of the bank. Church on Probate Law and Practice, vol. 1, page 358, (2nd. Ed.); In re Wood's Estate, 150 Cal. 466, 144 P. 992.

¶6 The reason for the rule is correctly stated in 26 R. C. L., page 1315, as follows:

"A trustee must be careful to make the deposits in the name of the trust estate, and not to his personal credit, if he would avoid personal liability in case of failure of the bank. In such a case the good faith or intention of the trustee is in no way involved. Having for his personal convenience, or from whatever motive, deposited the money in his own name, thereby vesting himself with a legal title, it follows as a necessary consequence, when a loss occurs, he will not be permitted to say, as against his cestui que trust, that the fact is not as he voluntarily made it appear, and it is immaterial that he informed the bank at the time of making the deposit that the funds were held by him in trust. But the test is not so much the keeping of a separate account at the bank, as it is the parting with, and hence the losing of the identity of, the trust fund, and having in lieu thereof no obligation, contract or account on which is impressed the equitable ownership of the trust."

¶7 The guardian of a minor, not the county judge, is the custodian appointed by law for the control of the ward's funds. A deposit of funds belonging to a ward in the name of an individual not made responsible by law for the safeguarding of such funds, even though such deposit is made in the name of a public officer having general jurisdiction over the estates of minors and dependents, whatever may be the motive for so doing. is a perversion of the trust character of the estate the same as if the deposit had been made to the personal credit of the guardian. In both cases there is an obliteration of the trust character of the fund and the vesting of legal title thereto in an individual other than the party designated by law to have the control and custody of the fund. If, when the funds have been deposited to the personal credit of a guardian and loss occurs, the guardian is not permitted to deny liability, there is no good reason why he should not also be held accountable when the funds are deposited in the name of a third party, and a loss occurs without any fault or negligence on the part of the guardian. Our conclusion is that any deposit of a trust fund made by guardian other than in the name of the trust estate, and without indicating his representative character, renders the guardian liable to account to the ward for the loss of the funds in case of failure by the bank in which the fund has been deposited.

¶8 In the case of In re Wood's Estate, 159 Cal. 466, 114 P. 992, it is said: