American Surety Co. of New York v. Adams , 190 Ga. 575 ( 1940 )

1. There is no authority of law for a guardian by private contract to invest funds of his ward in land. Such an investment is a breach of the guardian's statutory bond that will authorize suit to recover the amount from the guardian and his surety.

2. "Guardians are authorized to invest any funds held by them as such guardians in lands: Provided, that an order to that effect shall first be obtained from the judge of the superior court, who is authorized to consider and pass upon such applications either in term time or vacation." Code, § 49-216. A petition of a guardian to invest funds of his ward under this law is an ex parte proceeding of the ward acting through the guardian. It does not require appointment of a guardian ad litem for the ward. Callaway v. Bridges, 79 Ga. 753 (2) (4 S.E. 687). See also Sanders v. Hinton, 171 Ga. 702, 709 (156 S.E. 812); Marshall v. Citizens Southern National Bank, 54 Ga. App. 123, 128 (187 S.E. 240). In such proceeding the guardian acts in a fiduciary capacity, and is bound to utmost good faith with the court and the ward in the interest of the latter.

3. In such proceeding, the guardian and the ward being widow and minor child of a decedent, if the petition describes land in which it is prayed for leave to invest individual funds of the ward, and the land has in fact been previously set apart from the estate of the decedent as a statutory year's support to the widow and minor children, but the guardian in her petition omits to inform the court of such fact or that the guardian (widow) has an individual interest in the land, such omission, in view of the confidential relations and duty of disclosure, is actual fraud upon the court whose jurisdiction is invoked, which will authorize a decree in equity setting aside an order granting the prayer of the petition for investment.

(a) The guardian occupies a dual position in relation to the land. Her personal interest was to obtain the highest price, while that of her wards was to pay the lowest price; and not to pay at all for an interest in the land they already had. Appropriate is the language of Lumpkin, J., in Loyless v. Rhodes, 9 Ga. 547, 551: "I ask, would the ordinary — would any honest court, have granted this dismission, with a knowledge of the facts charged in the bill?"

(b) If under such order the guardian invests the individual funds of the ward in the land so set apart as a year's support, the whole transaction will be a breach of the guardian's bond that will support an equitable action against the guardian or her legal representative, and the surety on the guardian's bond, to set aside the order for investment, and to recover the amount of the invested fund.

4. Applying the foregoing principles, the petition for equitable relief alleged a cause of action, and the judge did not err in overruling the demurrer of the surety.

Judgment affirmed. All the Justicesconcur.

No. 13170. JULY 12, 1940. E. E. Montford Jr., died on December 25, 1925, leaving a widow and three children aged nine, seven, and four years respectively. A statutory year's support was set apart from the estate of the decedent to the widow and minor children, which included a house and lot on Sawyer Street in Dublin, Georgia, being lot number 54 in block 124. The report of the appraisers was duly admitted to record on February 1, 1926. Afterwards a pecuniary legacy of $1901.40 was left to the children by their grandmother. On April 6, 1931, the widow, being natural guardian and having acquired a different married name, was appointed guardian of the property of the children. On the same day a guardian's bond in the sum of three thousand dollars was duly executed with the American Surety Company of New York as surety. On May 10, 1932, the guardian applied for and obtained from the superior court an order granting leave to invest funds on hand of the minors, amounting to $1983.08, by purchase of the above-mentioned house and lot at the price of $1600. The petition for leave to invest did not disclose that the house and lot had been set apart to the applicant and her minor children as a year's support, or that the applicant had an interest in the land. The minors were not served, nor was there any order appointing a guardian ad litem for them. The order was immediately granted upon proof that the property was worth $3000. The widow individually in her second married name executed a warranty deed dated May 10, 1932, purporting to convey to the children in fee simple the house and lot "in consideration of $1600 and love and affection." The deed did not make any reference to the application and order for investment, or to the allowance of the year's support. On the date of the deed the widow as guardian drew against the fund of her wards, in her individual favor, a check for $1600, which she collected "and converted to her own use." From the fund of the wards the guardian paid also $355 for improvements on the house. She also made other payments as for municipal taxes, fire insurance on the property, attorney's fees, and court costs incidental to procurement of the judgment for investment of the fund, aggregating $138.45. In 1939 after death of the widow, grant of administration of her estate, and appointment of a successor guardian for the children, the ordinary of the county, for the use of the said successor guardian, instituted an equitable action against the administrator of the widow's estate and the surety on her bond as guardian, seeking judgment for $2047.93 principal, with interest thereon from April 6, 1931, and to have declared void the order of court authorizing investment of the wards' fund, and to have the deed by the widow to the children canceled; all this on the grounds (1) that the court did not acquire jurisdiction of the subject-matter or persons of the wards, because the applicant, having a personal interest in the land hostile to the interest of her wards, did not cause them to be served and have a guardian ad litem appointed for them; (2) that the applicant, having an interest in the land under the year's support, committed a fraud on the court by failing, in the application for leave to sell, to disclose the facts that the land had been set apart as a year's support, and that she had an individual interest in the land; (3) that on account of her personal interest hostile to the interest of her wards the guardian breached her trust by investing the funds of the wards in the land; (4) that it was also a breach of duty to the wards for the guardian to apply their funds to the payment of taxes, insurance, and improvements on the land which retained its character as year's support. The exception is by the surety company to the overruling of its general and special grounds of demurrer to the petition as amended.