Brave Bull v. Ordway ( 1928 )

In a petition for rehearing the appellate states this court has failed to "determine some of the vital points presented upon appeal." The first proposition said to be overlooked is that this court did not pass upon the question of whether a guardian "who honestly and in good faith invests the funds of his ward is liable to the ward for loss resulting from such investment." The main opinion expressly refers to defendant's claim that he acted honestly and in good faith. This court held that the only thing which would relieve the guardian from liability for an investment was a proper order from the county court. Thus while we may not have specifically said that acting in good faith was not a defense it is very clear this feature was not overlooked. Appellant states that good faith is a defense. This court as far back as the case of Shepard v. Hanson, 9 N.D. 249, 83 N.W. 20, held "a guardian, in making contracts relating to the estates of his wards, can bind himself only, and can bind neither his wards personally nor their estates." In the petition for rehearing in that case this court said (p. 253): "The law requires investments to be made in a particular manner, and a guardian in this state may not either sell his ward's property or make investments of his ward's funds, save on an order of the county court. The office of a guardian is highly fiduciary in its nature and has been made the subject of careful regulation by statutory provision."

Appellants cited us to the case of Re Waite, 190 Iowa, 182,180 N.W. 159, as supporting the proposition:

"That a guardian making investments without any order authorizing him is not liable for loss, where he acted honestly and exercised a sound discretion."

We find nothing in the case cited which sustains this proposition. We were also cited to the case of Mumford v. Rood,36 S.D. 80, 153 N.W. 921. This case cited says, at page 923 of 153 N.W.: "Upon the other hand, if his investments are not such as he should have made, he can only protect himself from liability by showing that he was acting in accordance with an order of the court." The same decision goes on to say that the filing of annual reports and their approval by the county court does not absolve the guardian from liability and does not amount to a ratification. The court proceeds on the theory that a guardian who invests property without the authority of the court assumes all responsibility and is "presumed to be doing so when no order has been procured," and that "if a guardian desires protection through any act of the court he must procure an order."

In his petition for rehearing the appellant cites us to the case of Luce v. Jestrab, 12 N.D. 548, 97 N.W. 848, as showing that the contract made is not invalid but merely voidable. The case cited however is dealing with a contract made by a minor, that is by the ward himself, and is based upon entirely different statutes. We had the question of the good faith of the guardian in mind.

The second proposition advanced is that the court erred in failing to determine whether an incompetent "may repudiate an investment of her funds in the purchase of real property and require her guardian to repay the principal with interest without a restoration or offer to restore the benefits received." We pointed out in the main opinion that the position of the defendant proceeds upon an erroneous theory of the case. This is not an action brought against a former guardian to compel him to repay. It is a matter which arises over an account filed by the guardian. The court disallowed an item — namely the investment of this fund — and required the guardian to account for the money. There is no contention that the ward may compel the guardian to account for the investment and at the same time permit the ward to retain the real property secured. The district court recognized that the method which the appellant must employ in order to recover the real property for himself is not involved in this case. The ward through the new guardian requires her former guardian to account to her for her money. Because he took title to real property in her name, and finds it difficult to get a deed to himself or to get the grantor to take back the land is no reason why he should not account for an unauthorized investment.

The next two propositions are general in their nature and deal largely with the alleged failure to determine the weight of evidence introduced. We neet not pass upon this here because we have held that the guardian, to protect himself, must have an order from the court and when he proceeds without an order he does so at his own risk. The record shows conclusively there was no order from the court — the alleged order being a nullity. The appellant, however, argues that the district court erred in requiring him to pay interest on the investment because the new guardian collected rents from this particular property and credited these rents to the estate of the ward. Our statute (§ 8893), requires the guardian to apply the estate of the ward for her maintenance and where he advances an amount for that purpose not disproportionate to the value of the estate he is entitled to credit therefor in his settlement (§ 8894), and there is nothing in this decision which precludes him from appearing in the matter of the estate of his ward and getting credit for any sums which he has expended or which have been obtained from his own investment for her benefit, and use this as an offset to any claim which she has against him for a wrongful investment of her funds. The petition for a rehearing is denied.

NUESSLE, Ch. J., and BURKE, BIRDZELL, and CHRISTIANSON, JJ., concur.