Brown v. Wright , 39 Ga. 96 ( 1869 )

Brown, C. J.

The evidence shows, in this case, that the guardian acted with the caution of a prudent man, in the loan made to Meredith Brown; as he took a mortgage on negro property worth, at the time, $3,000 00, to secure the payment of $1,940. It is the duty of a guardian to keep the money of his ward at interest, and if he fails to do so, without good cause, he is liable for interest. Prior to the adoption of the Code, 1st January, 1863, the practice in this State was for the guardian to keep the money invested; and, if he acted continuously as a prudent man acts in the transaction of his own business, and loaned the money of his ward in good faith, upon security which was undoubted at the time, and, by any unforeseen event or casualty, the security became insufficient, and the debt was lost, without fault on his part, he was not liable. This seems to have been a reasonable rule.

1. The rule in England was never adopted, in practice, in this State, in all its stringency. The debt of England is immense, and, in order to sustain the public credit, it has been necessary to create, as far as possible, a demand for the public securities. Hence sprung the rule of the English Chancery, requiring all trust funds, not secured by real estate, to be invested in them : See Story’s Equity Juris., 1269-1275. The English Chancellors had generally been politicians-in earlier life; and they very well understood the public policy-'which demanded a strict enforcement of the rule. The condition of Georgia was very different. Prior to 1861, her debt was merely nominal, and there was no public policy which required the trust funds of her people to be invested in her own securities. By the Act of 1845, such investments are authorized, but there is nothing compulsory in the Act: Cobb’s Digest, 333. In this case, we hold that the guardian was not liable for the amount lost by the emancipation of the slaves, the security, by mortgage on the slaves, having been ample at the time it was taken.

2. The Ordinance of the Convention of 1865 declares “ that all acts and sales of executors, administrators, trustees, and guardians'; and of judicial and ministerial officers, had, done, or performed, and made bona fide, and in pursuance of, and under color of law, since the 19th day of January, 1861, which are not in conflict with the Constitution of the United States, and of the Constitution of this State, be and the same are hereby ratified and confirmed,” etc. The Act of 1866 is to the same effect. The Ordinance of the Convention of 1868 adopts the Ordinances of the Convention of 1865, which are of a legislative character, except certain Ordinances mentioned, and gives them the force of law. The 12th section of the 11th article of the new Constitution of this State, adopts allOrdinances of the Convention of 1868, of a mere legislative character, and gives them the force of law, till otherwise provided by the General Assembly. These Ordinances and this provision of the Constitution ratify the acts of guardians and other trustees who invested trust funds in good faith, in State or Confederate securities during the war, under the Acts of the . Legislature authorizing such investments.

A guardian or other trustee, who, in good faith, received Confederate or State notes or securities, in payment of a debt due on account of the trust; when prudent men' were generally receiving them in payment of all dues in the transaction of their own business, will, in like manner, be protected. And if he loaned out the funds so received, at interest, on what was at the time, by prudent men, considered good security, and they were afterwards lost by the results of the war, without fault on the part of the guardian or trustee, he is not liable.

3. We hold that section 2304 of the Revised Code changes the rule as it existed prior to 1st January, 1863. That section provides that “ any trustee holding trust funds, may invest the same in stocks, bonds or other securities issued by this State, making a true return of the price paid and time of purchase. Such investments shall be free from taxation so long as held for the trust estate. Any'other investments of trust funds must be made under an order of the Superior Court, within the term,, or .granted by the Judge in vacation, or else at therisk of the trustee.” We think this language broad enough to embrace guardians, as well as all other trustees, or persons having the management of trust funds. The policy of the State, at the time of the adoption of the Code, seems to have changed. The expenses then being incurred in the prosecution of the war, were heavy and the debt which our people then expected to pay, was increasing, and it became an object to have trust funds invested in State securities; and all other investments were declared to beat the risk of the trustee, if not made under the order of the Superior Court, or the Judge of that Court in vacation. If this guardian, without an order of Court, invested the funds or currency, which he held in trust, after the 1st January, 1863, in securities other than the stocks, bonds, or other securities issued by this State, he did so at his own risk, and he is liable for the value of such currency at the time of such investment.

Whether such an investment, made at the time, might not have resulted in a total loss of the sum invested, by the repudiation of the State war debt, we need not enquire. Such was the requirement of the law as it then stood, and as it now stands. If the guardian had followed the law, and loss had resulted, it would not have fallen upon him.

We do not deem it important to enquire whether or not the Court erred in rejecting the note for want of a stamp. If the guardian loaned the currency after the 1st of January, 1863, and took personal security, without an order of Court, he is liable for its value, in any event, under the rule just laid down, and the Judge did right to reject the note when tendered in evidence, whether stamped or not stamped.

We reverse the judgment of the Court below, and direct that a new trial be had under the rules above laid down.