Houston v. Deloach , 43 Ala. 364 ( 1869 )

B. E. SAEEOLD, J.

The appellant, as guardian of the appellee, on the final settlement of his guardianship, on the 18th of January, 1868, claimed a credit for $5,000 of Confederate four per cent, bonds. He alleged that he had procured them with Confederate treasury-notes, received by him in 1864, in payment of a debt due to him as guardian of his ward, under the authority of an act of the legislature, approved November 7th, 1861.

The allowance of the credit was contested, and the evidence adduced on the trial established the following facts : Mr. Bush, the former guardian of the Deloach children, of whom the appellee was one, having previously transferred the guarndianship to the appellant, paid him on the 3d of January, 1860, $9,919.26, and on the 26th of September, 1860, the further sum of $4,792.86, belonging to the said minors. These sums, when received, were entered to the credit of the appellant; the first on the books of Woolf, Houston & Co., and the second on the books of Houston, Sims & Co., the successors of the former firm, he stating at the time that the funds were the property of the Deloach children.

In March, 1864, the entire amount was paid to the appellant by Houston, Sims & Co., in Confederate treasury-notes, he declaring that it was to be invested in Confederate bonds for the Deloach children. The appellant held no bill, or bond, or note, for this money, and had no security, personal, by mortgage, or otherwise, while it was in the possession of these firms. He was a member of the firm of Woolf, Houston & Co., composed of himself and E. G. Houston, from 1855 to June, 1860, and a member of the firm of Houston, Sims & Co., from June 1st, 1860, throughout these transactions. On the 29th of March, 1864, he, as guardian of John Deloach, the appellee, procured the $5,000 of four per cent. Confederate bonds, with the Confederate treasury-notes above mentioned, and his action was ratified and confirmed by the probate court, on the 16th of May, 1864.

The court, on the final settlement, refused to allow the credit, and charged the.guardian with the amount and interest. The correctness of this judgment is the matter to be determined.

The guardian having received the money of his ward, loaned it to a firm of which he was a member. He took no obligation or security for its repayment. It was entered on the books of the firm to his individual credit. Nothing distinguished it from his own property but his declarations to his partners. As a member of that firm, he was individually liable to the ward for the entire amount. It was a loan to himself ; a conversion of the property.

Unless the act on which he relies for protection is valid, it may be unnecessary to inquire whether he could pay his own debt to his ward in Confederate currency, as well as receive it in payment from others.

Minors are the peculiar objects of the law’s care. The government properly assumes the guardianship of their persons and property. In view of the law, discreet persons are chosen as the trustees, bonds are required for their fidelity, strict rules are prescribed for their guidance, and a special court is provided to exercise rigid surveillance over the due management of the ward’s interests. These trustees are, ordinarily, not even shielded from liability by such care as a prudent man is apt to take of his own affairs, if they violate the regulations circumscribing their conduct. This is the general course of the law.' The federal and State constitutions both forbid the citizen to be deprived of his property, without due process of law. “ Every citizen is entitled to hold his life, liberty, property and immunities under the protection of general rules which govern society.” Every thing which may pass under the form of an enactment, is not the law of the land. The words “ due process of law,” were intended to secure the individual from the arbitrary exercise of the power of government, unrestrained by the established principles of private rights and distributive justice.—Bank of Columbia v. Oakley, 4 Wheat. 235; Cooley on Const. Lim., p. 353, 355. The act of 1861 was special legislation. It was a departure from the general law, having for its purpose, aid to the war against the United States. The welfare of the children of the State was wholly disregarded, and their entire property was staked on the hazard of successful revolution. This act deprives the ward of his property without due process of law, by substituting for it that which is not property. It impairs the obligation of contracts by exchanging his solvent credits for what is not gold and silver, or their equivalent. These objections would attach to it, if it had been the act of a lawful legislature. In addition, it was'the legislation of an insurrectionary government in support of rebellion against the United States. For all of these reasons, it was void.

The guardian, then, must be thrown upon his individual responsibility. If the rightful laws of the State, and their due administration, were suspended, so that the proper direction and authority to him to act could not be obtained, and out of concern for his ward’s interest, he took such action as a prudent and efficient man would have taken in the management of his own affairs, then, in equity and good conscience, he ought not to suffer. The numerous instances in which guardians, executors, and administrators have become complicated with transactions in Confederate treasury-notes and bonds, ought to stand each on its own merits. There may be cases where the solvent credits of a ward, possessed by the guardian, before the war, were well collected in Confederate currency, on account of the threatened insolvency of the debtors. But great discrimination should be exercised in such cas.es. The entire field of his discretion should be surveyed, and when he prudently received payment in such currency, he ought speedily to have invested it in substantial property.

During the progress of the war, in the absence of any lawful currency, trustees were obliged, in the necessary administration of their trusts, to incur expenses, for the payment of which, a sale of some property, or the collection of interest on credits was necessary.’ Where this was done judiciously, the trustees ought to be held harmless, though the currency perished in their keeping. But when property or solvent credits were sacrificed by the indifference or infidelity of the trustee, or by his sympathy with the rebellion, he ought to be made liable for such loss. No general rule can be laid down to test the liability of guardians in these cases. A due regard for the rights and interests of both the trustee and the beneficiary should be sedulously observed. The trustee should not be held to a degree of success beyond human capacity to achieve, nor should the child be made to pay for the folly, caprice, or disloyalty, of one who had the discretion of free action, and the observation and experience of manhood. Trustees were not at liberty to meddle in this illegal and disloyal currency, further than the insurrectionary power, and the necessity of circumstances compelled them to do.

In the case under consideration, the guardian, in effect, used the money of his ward obtained before the war, and in the third year of its duration, set apart to him this currency, worth not one-thirtieth of what he received, and rendered still more precarious by the necessity of a forced conversion into four per cent., bonds, or by a tax of 33g-per cent, to be afterwards increased to 100 per cent. A prudent person would not so have disposed of his own property.

The decision of this court in the case of Watson v. Stone, 40 Ala. 451, is based solely on the idea, that the government which existed in the State during the war, was a de facto government. This decision on that point, has been overruled in the case of Chisholm v. Coleman, decided at the January term, 1869, and in the case of the State of Texas v. White et al., at the last term of the supreme court of the United States.

It may be insisted that transactions which had occurred under the authority of the act of 1861, were ratified and confirmed by ordinance 26, of the State convention of 1865. That ordinance did not seek to, and could not, confirm what was unconstitutional.

The judgment is affirmed.