First National Bank v. United States Fidelity & Guaranty Co. , 207 S.C. 15 ( 1945 )

I sincerely regret the necessity of dissenting from the opinion of the majority of the Court, but I think the proposed reversal of the judgment in this case would work a grave injustice, and without impelling precedent. No prior decision of this or any other Court involving similar facts has been cited. On the other hand, I think that the decree on circuit by trial Judge Henderson contains a just and lawful disposition of the issues and I adopt it as a dissenting opinion. Let it be reported. In addition, I take the liberty of stating, as briefly as I can, some of the reasons why I think the main opinion is ill-founded.

The latter rests first upon the doctrine of res judicata, which seems to me to be plainly inapplicable to the facts of this litigation. The bank was not a party to Snyder v. Scott. Nor did it have a right then against appellant for it had not yet been made to refund its ward's loss. To say that it and the ward were privies and it thereby bound by the judgment is stretching the term further than I have ever seen before. Guardian and ward are not privies, according to all the definitions available to me. It is an unusual relationship; like that of trustee and cestui, yet the ward holds the legal title to its property. 28 C.J., 1128, 39 C.J.S., Guardian and Ward, § 75; 25 Am. Jur., 8, 69. The guardian has no beneficial title, but is merely the custodian, manager or conservator. I have read the Am. Jur. citation in the leading opinion and its context and find nothing to support the conclusion reached.

In none of the various classes of privies (blood, representation, estate or contract) do I find guardian and ward. 2 Bouvier Law Dict., Rawle's 3d Rev., 2714. A good discussion of privity is found in 50 C.J. I quote the following excerpts which I think negative the contrary views expressed in the leading opinion (p. 405): "Identity of interest is essential to privity." And from p. 408: "A privy in estate (which guardian and ward must be, if of any kind — interpolated) is a successor to the same estate, not to a different estate in the same property." Surely these observations put guardian and ward without the pale of a proper definition of privies. And that is the basis of the proposed application of the rule of res judicata to bar respondent's action.

A recent definition of privies is found in our own case ofBailey v. United States F. G. Co., 185 S.C. 169,193 S.E., 638, 641, wherein the following is quoted with approval from 2 Black on Judgments, 637: "Privies are those who are so connected with the parties in estate, or in blood, or in law, as to be identified with them in interest, and consequently to be affected with them by the litigation, as lessor and lessee, heir and ancestor, executor and testator. Allothers not included in either of these classes are of coursestrangers." (Emphasis added.) Then the Court, per Chief Justice Stabler, said: "It seems clear from the above definition of privies and from our examination of other authorities in reference thereto, that Bailey, under the admitted facts of this case, does not come within any class of those above defined as privies. It appears therefore that no privity exists between the respondent and Thomas, the insured, as contended by the appellant, which would give to the declaratory judgment against Thomas alone the effect of barring the rights of Bailey."

Clearly and without doubt there is no "mutual or successive relationship to the same rights of property" between guardian and ward, and therefore no privity between them as such term is used in the doctrine of res judicata. I repeat for emphasis that the latter is not and cannot be, applicable to this case and I think it is a serious mistake to attempt to apply it.

It is, at least impliedly, said that the bank is bound, although its loss and resulting right had not then accrued, by the judgment in Snyder v. Scott because the latter was purportedly a class action and advertisement was had for claimants against the surety upon the bonds of the faithless probate judge. But I do not think such is the law. The case of First Nat. Bank v. Edwards, 134 S.C. 348,132 S.E., 824, is apposite and enlightening. There the first syllabus is: "One creditor or member of class may sue for benefit of all, but others are not bound unless they participate in proceedings, prove their claims, or otherwise join in proceeding." In that case certain judgment creditors of Edwards brought action against him and his grantee to set aside deeds upon the ground that they were voluntary and in fraud of the grantor's creditors. It purported to be a class action and it was sought to subject the land to the payment of the debts of the grantor according to their rank and priority. The Court found that the bank, the plaintiff in the subsequent action, was without notice of the pendency of the first action (quoting), "nor was it invited in, nor did it take any part therein." The first action resulted in a judgment for the defendants who contended in the second that since the first was in the nature of a creditor's bill, brought by creditors who belonged to the same class as the plaintiff and the latter would have shared in the fruits of victory, the judgment in the first action was a bar to the second, and bound the plaintiff in the latter, but this Court said not, and, in effect, that it would violate justice and right to hold that one is bound by the judgment in a case to which he is not a party and over which he had no control. High authority was cited for the following elementary principles of justice:

"The principle is as old as the law, and is of universal justice, that no one shall be personally bound until he has had his day in court, which means until citation is issued to him, and opportunity to be heard is afforded.' Mason v.Eldred, 6 Wall., 231, 18 L.Ed., 783. ``One creditor or member of a class, may sue for the benefit of all, but the others are not bound unless they participate in the proceedings, prove their claims, or otherwise join in the proceeding. 34 C. J., p. 1002; note to Goldberg v. Loan Co., 140 Am. St. Rep., 787; note to Hill v. Bain, 2 Am. St. Rep., 877.'"

The circuit judgment in the aforementioned Edwardscase, which was adopted by this Court on appeal, concluded as follows:

"It can be said that it is hard on the defendants to be made to defend another action which has for its object the same purpose, but that it not so harsh as it would be to deprive the plaintiff of its day in court. It is therefore ordered that so much of the answer of defendants as set up the judgment of the court in the former action by war of bar to this action, be stricken out, and it is ordered, adjudged, and decreed that the plaintiff in this action is not precluded from maintaining this action by reason of the said judgment in the said former action."

And it must be borne in mind that the plaintiff in theEdwards case had suffered its loss before the first action was commenced, so the bank in the instant action is in stronger position on that account for it had not suffered previous loss.

Furthermore, fraud and deceit of the probate judge were not issues in Snyder v. Scott or within the scope of the pleadings. The parties upon this appeal are, of course, bound by the reference to that action in the "Statement" in the agreed Transcript of Record, which is, in material part, as follows: "A representative action in the nature of a creditor's bill was brought against Mrs. Scott in 1931, a receiver was appointed, all creditors were called in and made parties, and United States Fidelity Guaranty Company, the surety on Mrs. Scott's official bond, was also made a party. The allegation of the complaint was that Mrs. Scott had carelessly invested the money in her hands and that there would be a substantial loss on account of her negligence in the investment of the funds of her office, and that consequently she was personally liable, and that the surety on her official bond was likewise liable for any loss that might result from her negligent conduct of her office."

It is very well settled that a former action is a bar to a subsequent one (res judicata) with respect to an issue which was not tried, but might have been, only when the parties are the same or are in privity (which they were not here). This was last said by this Court in Bagwell v. Hinton, 205 S.C. 377,32 S.E.2d 147. Conversely, in other cases, as here, a former action can be a bar only when the precise point (here the fraud of the court) has been ruled; and the point here involved (fraud) was certainly not "ruled" (decided) in Snyder v. Scott, as the parties hereto have, in effect, agreed per the "Statement" quoted above.

The undisputed testimony in the case at bar is that the respondent bank heard nothing of its former guardianship from the time of its fictitious discharge until the ward sued it about 1940. It is fairly inferable from this testimony that it did not know before of the previous action of Snyder v.Scott. This case is thus like that of First Nat. Bank v. Edwards, supra. But granting knowledge of the bank of the pendency of the Snyder case, why did not the bank intervene or appear? That query might be answered with another: Why did not the surety act to bring in the bank as a party? Both questions have an obvious answer. The bank had not then been made liable to its ward. Should the Court ignore the obvious and cover its eyes with the sands of the fiction that the bank was a party to Snyder v. Scott or in privity with its subsequent, successful antagonist, its former ward? I, most emphatically, do not think so.

In the reasoning relating to res adjudicata in the majority opinion there occurs the following: "If then the Bank had been made a party (to Snyder v. Scott) and the award had not been made a party the judgment of the Court against the guardian would of course have been binding upon the ward." This is a new and untenable doctrine to me. How could this or any other infant be bound as to its property rights by judgment in an action to which it was not a party, or privy to a party? Nowhere else have I found it held that jurisdiction of a minor is obtained by the inclusion of the guardian of its property as a defendant. Moreover, the asserted good faith of the Guaranty Company, the appellant, is, I think, entirely irrelevant to the questions of res judicata and privity. They are legal doctrines of definite limitations, within which I do not think this case falls.

The finding of fraud on the part of the probate court by trial Judge Henderson is clear and unequivocal. This is a law case and conclusions of fact of the Circuit Court are binding upon this court, if there was any evidence to support the findings. Weston v. Morgan, 162 S.C. 177,160 S.E., 436, per former Chief Justice Blease, and many other (some more recent) decisions which may be found in 3 S.E. Dig., 673, and pocket part, Appeal and Error, Key 1010 (1). Only to ascertain whether there was such can this Court review the evidence. Const. of 1895, Article 5, Section 4. We cannot re-try the case, as in equity, and that, I think, it what is being done by the majority.

Without taking time to repeat all of the testimony, I have no hesitation in saying that it amply supports the factual conclusions of the Circuit Court. However, the following is taken from the "Statement" in the agreed Transcript of Record, by which the parties are bound: "In 1925 the bank decided to give up the guardianship, and its trust officer went to see Mrs. Scott about doing so. She told him that she was authorized as public guardian to take over the fund, and would do so and discharge the bank upon a proper accounting. The bank made an accounting and gave Mrs. Scott as probate judge its check for the unexpended balance of the fund, and she entered an order discharging the bank." The bank's trust officer testified to the following false assurances of the judge and that but for them, upon which he relied, he would not have turned the estate over to her and accepted her spurious discharge: "The Probate Judge told me to make up a Final Report and turn the balance of the fund over to her, that she had the authority to receive it and to handle it as Public Guardian until a successor guardian was appointed. Acting upon her instructions I prepared the final return of this Estate and turned it over to the Probate Judge together with a check for the balance of the account." Mrs.Scott did not testify and there is no explanation in the recordof her failure to do so. The fast and loose way in which she thereafter manipulated this guardianship is evidence of evil intent from the time she got her hands upon it. Further reference will be made to the latter.

In connection with the foregoing excerpts from the record and the recitals in the circuit decree there should be read the judgment in the related case of Chamberlain v. Bank,202 S.C. 115, 24 S.E.2d 158, which is expressly a part of this appeal record by stipulation. There will be found the fantastic history (shot through with palpable and repeated frauds of the court) of this guardianship, which is evidence of the Court's fraud from the inception of its control, as has been said. The facts of it do not, in my opinion, reasonably admit of the inference of ignorance alone in the conduct of the guilty probate judge; and such inference is a foundation stone of the conclusion (on this point) of the leading opinion.

Respondent suffered its substantial loss because of the misrepresentations and wrongs of the probate judge, made and done in her official capacity, which were, therefore, her official acts. This, I think, creates a liability upon her official bonds. The surety upon the latter should not escape at the expense of an innocent and well-intentioned fiduciary who was subject to the jurisdiction and orders of the guileful court. The latter did not "well and truly perform the duties of the office," the conditions of the bonds, which were therefore violated, and they should be made to respond in damages to the injured respondent.

In the master's report, adopted and published as a part of the decision in Snyder v. Scott, 174 S.C. 403,177 S.E., 665, 668, it was said: "It is indeed true that where the probate judge, or any other public official under bond, fails to discharge the duties of his office as may be required by law, for instance, where he negligently fails to require a good and sufficient bond for an administrator or any other fiduciary, then and in such case the sureties on his bond would become liable," citing Williams v. Weeks, 70 S.C. 1,48 S.E., 619, and Gullick v. Slaten, 169 S.C. 244,168 S.E., 697. See also the late case of Hunter v. Boykin, 195 S.C. 23,10 S.E.2d 152, the facts of which are strikingly similar to those of this case, involving official misrepresentation and deception.

The finding that the bank was the author of its own wrong and therefore estopped to recover is, I think, without basis in justice or reason. Actually, it was the victim of the wrongful acts and representations of the probate judge, whose surety appellant was. It might with comparable reason be said that the surety was the author of its liability because of its assumption of risk upon the bonds. It, too, should have known better than to trust Mrs. Scott. She was unworthy of the confidence of appellant and respondent alike, but appellant had voluntarily and for profit guaranteed her good faith and conduct in office.

For the foregoing reasons, some of which are additional to those set forth in the circuit decree which will be published, and for the concisely stated reasons and conclusions which it contains, I think the reversal of this judgment would constitute a denial of justice which the Court should not countenance. The result would be to allow the surety to hide behind its compromise payment of twelve thousand dollars upon its total liability of twenty thousand as the volunteer bondsman of a dishonest public official and leave a citizen holding the bag of liability when it was innocent of all save ignorance. Such is far short of ideal justice under the law and I have found no precedent in the latter for so severe a result.

The decree of the Circuit Court (reported herewith) should, I think, be affirmed.

MR. ASSOCIATE JUSTICE FISHBURNE concurs.

The Order of Judge Henderson:

In 1924, Lillie Chamberlain, a minor, lost both feet in a railroad accident, and as compensation the sum of $1,500.00 was paid to her guardian. The plaintiff, the First National Bank of Greenville, maintains a trust department and is duly qualified to act as guardian of the estates of minors. On March 17, 1924, it was appointed guardian of this estate by the Probate Judge for Greenville County. After a short time the bank desired to discontinue its duties as guardian, since the infant ward had moved her residence from Greenville County. The bank as guardian thereupon applied for a discharge to Mrs. Fannie C. Scott, who was then the Probate Judge. On October 22, 1925, at the suggestion of the Probate Judge the trust officer of the bank delivered the unexpended funds in his hands, amounting to $1,055.26, to Mrs. Scott, as Judge of Probate, and received a discharge.

This fund was never paid over by Mrs. Scott. Some time later an action was brought in a case entitled Ola Snyder v.Mrs. Scott, as Probate Judge, and Others, in which United States Fidelity Guaranty Company, the surety of the Probate Judge, was a party. All persons having claims against the Probate Judge or her bondsman were called in, and among many others Lillie Chamberlain was duly made a party to the proceeding. Upon the payment by the surety of the sum of $12,000.00, it was ordered that it be released and discharged from all further liability on its $20,000.00 bonds. In that case it was held that Lillie Chamberlain was not entitled to relief against the Probate Judge or her bondsman. The Court pointed out the distinction "between the failure or neglect of a public official to discharge some duty imposed upon him by the law and where he acts without any authority of the law," and held that as there is no statutory law in this state authorizing or permitting Mrs. Scott to receive in her official capacity funds from guardians, she acted without authority of law, and her official bond was held not liable to Lillie Chamberlain. This decision in the Supreme Court is found at 174 S.C. 403, 177 S.E., 665,666.

Some time thereafter Lillie Chamberlain brought an action against her guardian, the First National Bank of Greenville, for recovery of the balance of $754.25 of the funds which had been wrongfully paid by the bank to the Probate Judge. In this case, reported at 202 S.C. 115,24 S.E.2d 158, 162, it was held that Lillie Chamberlain was entitled to a judgment against the bank, her guardian. The Court said that the payment of the funds by the bank to Mrs. Scott as Probate Judge was no more effective than the payment of such funds to a stranger to the proceeding, and that as no proper steps had ever been taken by the bank to secure its discharge as guardian, it was liable to the ward for the funds. It was further stated that "it follows from this that the act of the Bank in improperly — although I am sure the Bank acted in good faith — paying over these funds to the Probate Judge was the proximate cause of the loss which resulted. The act of the Bank in improperly paving these funds over to the Probate Judge made possible the manipulation of the funds which followed", but that "the question as to whether the surety on the Probate Judge's bond is also liable for dereliction on the part of the Probate Judge in receiving these funds is not before this Court, as said surety is not a party to this proceeding."

In the action now before the court, the First National Bank of Greenville is suing the United States Fidelity Guaranty Company, the bondsman of the probate Judge, alleging in its complaint that when the plaintiff requested that it be relieved of the guardianship, Mrs. Scott, as Probate Judge, advised the plaintiff to turn all of the guardianship estate over to her as public guardian, and that acting upon these instructions and representations of the Probate Judge, the plaintiff in good faith turned over to Mrs. Scott, as public guardian, the funds of the estate; and that a purported discharge was prepared by the Probate Judge in which it was recited that advertisement was not necessary, and that the funds had been turned over to her as public guardian. The plaintiff also alleges that Mrs. Scott was not qualified and required by law to receive funds as public guardian and that the instructions and representations made by her were willfully and fraudulently made for the purpose of inducing the plaintiff to turn the funds over to her so as to enable her unlawfully to manipulate and control the same, and that but for such instructions and fraudulent representations of the Probate Judge, and the discharge she purported to give the plaintiff, it would not have turned the funds over to her. The complaint then sets forth that as a result of the suit brought by Lillie Chamberlain, it was obliged to pay her $754.25, with interest and expenses aggregating $1,669.19. The plaintiff contends that the acts of Mrs. Scott constituted a breach of her official duty and consequently a breach of the terms and conditions of her official bond, and asks for judgment in the sum of $1,669.16.

In the answer the defendant, as bondsman for the Probate Judge, among other things pleads that the judgment in the case of Snyder v. Scott is a bar to the plaintiff's cause of action in this case. It further pleads that the plaintiffs stand in the shoes of Lillie Chamberlain and can have no greater rights than she had; that Lillie Chamberlain was a party to the suit of Snyder v. Scott and the Court there held that she had no cause of action on the Probate Judge's bond, and the plaintiff in this case, therefore, is barred.

As another defense it is alleged that the loss, if any, of the plaintiff was caused by its negligent and unlawful acts in turning money belonging to Lillie Chamberlain over to Mrs. Scott without warrant of law and in her individual capacity, and that such negligent and unlawful acts were the proximate cause of its alleged loss and damage, and that the judgment in the case of Chamberlain against the bank isres adjudicata of all questions upon which demand is now being made by the plaintiff. Finally the defendant contends that the negligent and unlawful acts of the plaintiff were the cause of its loss and that it is therefore estopped from recovering against the defendant.

The case was referred to the very able Master for Greenville County to take the testimony and to report it, together with his findings of fact and conclusions of law. He duly filed his report on October 6, 1944, in which he holds that in the Snyder case the plaintiff was in privity to Lillie Chamberlain. He says that "the plaintiff bank was privy to Chamberlain and is bound wherever Chamberlain is bound," and he concludes "that the law of this case has been laid down in the Snyder and Chamberlain cases, supra; that any loss suffered by the plaintiff was due to its own negligent conduct which, in the Chamberlain case, supra, has been adjudged by the Supreme Court as being the proximate cause of the loss which resulted; that what it did made possible the manipulation of the funds which followed; that the bank is in no better position than if the funds in controversy had been paid by it to a stranger; that the bond by defendant herein has already been adjudged not to be liable and that plaintiff is estopped and should not recover."

The case comes before me upon exceptions filed by the plaintiff bank to the report of the Master.

It clearly appears from the evidence, and I so find as a fact, that the former Probate Judge fraudulently induced the plaintiff to pay over the money to her. This payment was made upon the advice and instructions of the Probate Judge, who represented that she had authority as public guardian to receive them, though she well knew that she had not qualified as public guardian. The plaintiff acted upon these instructions and in good faith turned the funds over to Mrs. Scott. The Probate Judge prepared the discharge, though well knowing that she had no authority to issue it without proper advertisement and notice to the ward. These representations were fraudulently made by Mrs. Scott for the purpose of obtaining possession of the funds. The plaintiff relied upon the instructions, and but for them would not have parted with the funds.

As a result of the action brought against it by Lillie Chamberlain, the bank had to pay to her the sum of $1,251.11 and incurred the expense of $154.30 as Court costs, $143.75 for printing the appeal, and $150.00 as attorney fees.

I think that a proper determination of the action revolves about the cases of Snyder v. Scott, Chamberlain v. Bank, and Hunter v. Boykin, 195 S.C. 23, 10 S.E.2d 152.

In my opinion, unless the Snyder case operates as resadjudicata, the plaintiff in this action is entitled to a recovery under the case of Boykin and Hunter.

Indeed, in the order of former Circuit Judge Oxner, overruling a demurrer to the present complaint, he states that considering the facts alleged as being true on the demurrer, "I think the case comes within the principle expressed" in the Hunter case.

In that case the distributees, at law of Simpson Hunter brought the action against L.D. Boykin, administrator of Simpson Hunter, and his bondsman, American Surety Company, for about $1,800.00, which the plaintiffs alleged had been misapplied by the administrator. On motion of the defendants there were brought in as parties the Probate Judge and his official bondsman, Hartford Accident Indemnity Company. The Circuit Judge stated that the sole matter presented for his decisions was "the question of the liability of the bonds of the defendants, American Surety Company and Hartford Accident and Indemnity Company," and this was the question which was passed upon by the Supreme Court.

L.R. Jones was the Probate Judge and his bond provided in the usual form that he should well and truly perform the duties of his office as now or hereafter required by law. Near the end of the administrative year the Probate Judge wrote to Boy kin, the administrator, to come to his office and make his return. The question arose as to the disbursement of money belonging to some of the heirs whose whereabouts were unknown, and the Probate Judge told the administrator that he would attend to the matter of the advertisement. The Probate Judge then prepared the petition and a discharge, and after publication of the advertisement Boykin received his discharge and paid funds over to the Probate Judge for the absent heirs, together with funds for the distributive share of a minor heir. These checks were made upon the advice and instruction of the Probate Judge. The proceeds of the two checks were appropriated by the Probate Judge, who converted them to his own use.

The Circuit Court held that the loss should fall upon the bondsman of the administrator and that the Hartford Company, the bondsman of the Probate Judge, should be dismissed without liability. Upon appeal to the Supreme Court the lower Court was reversed, the Supreme Court stating that "the record clearly establishes the liability of the administrator and his bondsman to plaintiffs for the missing funds. However, in praiseworthy prevention of another litigation it is sought to apply the alleged liability of the Probate Judge and his bondsman to the administrator, in the nature of recoupment by the latter, directly to the payment of plaintiffs' claim." The Court points out that the administrator acted under the express direction of the Probate Judge and refers to the acts of fraud and imposition by the Probate Judge upon the administrator, who was thereby misled. The Court then says that "consideration of the applicable statutes leaves no doubt that it is the duty of a Probate Judge to properly supervise the actions of the fiduciaries appointed by and reporting to his Court," and sets forth the statutes which the Probate Judge violated in that case. The Supreme Court states that "the record is convincing that the administrator parted with the funds only upon the inducement of the Judge, consisting largely of the issuance of the purported final discharge which was granted upon the fictitious account prepared by the Judge, all in knowing violation by the latter of the quoted statute. It is an inescapable inference that the administrator would have held the funds but for the inducement of the discharge and the false and fraudulent assurances of the judge."

The above recital of facts shows the marked similarity of the Hunter case to the one at bar. In the case before us, as alleged in the present complaint, and amply proven by the evidence, the present plaintiff, the bank, was misled by the fraudulent and unlawful acts and statements of the Probate Judge, and thereby induced to turn over to her the funds of the guardianship estate. Just as in the Boykin case, the Probate Judge in giving instructions to Mr. Boykin, violated the statutes, so in the present case, as was well pointed out in the decree of Hon. G. Dewey Oxner, then Circuit Judge, which decree was adopted by the Supreme Court in the case of Chamberlain v. Bank, section 213 of the Code, makes it unlawful to discharge any guardian until proper notice has been given in a newspaper, and the section further provides that no discharge shall affect a ward who has not been made a party to such application, either by personal service or by publication.

Such plain violation of the duties of the Probate Judge required by law constituted a breach of her official bond.

The case now before me differs from the Boykin case in that there was no question of res adjudicata there involved. It seems to me, therefore, that our next important inquiry would be: Is the plaintiff in this present action barred under the doctrine of res adjudicata by the cases of Snyder v.Scott and Chamberlain v. Bank?

Decisions of our Supreme Court already set forth the essentials of res adjudicata. In the very recent case of Bagwellv. Hinton, 205 S.C. 377, 32 S.E.2d 147, 156, it was said: "Before the defense of res judicata is made good, the following elements must be shown: (1) The parties must be the same or their privies; (2) the subject-matter must be the same; and (3) while generally the precise point must be ruled, yet where the parties are the same or are in privity the judgment is an absolute bar not only of what was decided but of what might have been decided."

The leading case of Johnson-Crews Company v. Folk, 118 S.C. 470,111 S.E., 15, 17, states that "the following have been declared to be the essential elements of res adjudicata: (1) Identity of the parties; (2) identity of the subject-matter; (3) an adjudication in the former suit of the precise question sought to be raised in the second suit."

I do not think that res adjudicata would apply to the case of Chamberlain v. Bank, for the reason that in that action the United States Fidelity Guaranty Company was not a party, and for the further reason that there is lacking the necessary requirement of the identity of the claim or cause of action. There the issue was the duty owed by the guardian to the ward; here the issue is the duty owed by the Probate Judge to the guardian.

That case clearly sets forth the law as to the liability of a guardian to its ward, and holds the guardian to a strict liability under the law for a proper handling of the funds. As between the guardian and its ward there could be no possible doubt that the funds were paid over wrongfully, to one who had no authority to receive them and thus the same as to a stranger; and that between the guardian and ward the act of the bank was the proximate cause of her loss. It should be noted, however, that the Court stated, as we have seen, that "the question as to whether the surety on the Probate Judge's bond is also liable for dereliction on the part of the Probate Judge in receiving these funds is not before this Court, as said surety is not a party to this proceeding."

The question then is: Does the judgment in the Snydercase operate as res adjudicata of the present action? In that case The First National Bank of Greenville was not a party, but the inquiry narrows down to the question as to whether or not the bank is bound, although not a party, on account of being in privity with Lillie Chamberlain.

In the case of Bailey v. United States Fidelity GuarantyCompany, 185 S.C. 169, 193 S.E., 638, 641, the following definition is given of the word privity: "Privies are those who are so connected with the parties in estate, or in blood, or in law, as to be identified with them in interest, and consequently to be affected with them by the litigation, as lessor and lessee, heir and ancestor, executor and testator. All others not included in either of these classes are of course strangers."

At 34 C.J., 1010, it is said the "privity means a mutual or successive relationship to the same rights of property." See, also, 50 C.J., 403.

In my opinion the bank is not a privy to Lillie Chamberlain in the former suit. It is not suing here in its representative capacity, as guardian, but solely as an individual, to recoup a loss it has sustained by reason of the fraud of the former Probate Judge. If the plaintiff had brought the instant action in the capacity of guardian of Lillie Chamberlain against the surety of the Probate Judge for her failure to account for the guardianship fund taken over by the Probate Judge, the action might be barred by reason of privity. Such, however, is not the case. The present action is not for an accounting or recovery on behalf of Lillie Chamberlain of the guardianship fund. It is for recoupment of the plaintiff's individual loss in having made good the Chamberlain fund which the bank in good faith, had paid over to the Probate Judge upon her fraudulent representations. There was no succession on the part of the bank to the same rights of property of Lillie Chamberlain. She did not represent the bank in the former suit, nor was she identified in interest with it. Her claim in the Snyder case was that the Probate Judge should account to her as ward, for funds taken over without authority of law, as she had never been appointed public guardian. In the instant case the claim is that the defendant is liable to the plaintiff for loss caused it by the active fraudulent representations of the Probate Judge. Under the Hunter and Boykin case the plaintiff has a claim against the surety of Mrs. Scott for the loss sustained by reason of the judgment recovered against it.

The question as to whether the subject-matter of two suits is identical almost always presents a difficult problem. In the Johnson-Crews case it is said that this means the same demand, claim or cause of action. The present plaintiff strongly contends that here there is no identity of the subject-matter, since the claims or demands are separate and distinct, founded on different and unlike allegations and requiring different evidence. Interesting as such a question is, I do not think that it is necessary to go into it in this case, since the defendant has failed to establish the first and the third of the essentials of res adjudicata, the parties being different and not in privity.

Certainly the precise question was not adjudicated in theSnyder case. The question decided in that action was the official duty owed to Lillie Chamberlain by the Probate Judge in connection with her funds taken over by the Probate Judge from her guardian without legal authority. It was held that the bondsman was not liable to Lillie Chamberlain for the loss of the fund and the failure of the Probate Judge to account for it. In the present case the question is the duty owed by the Probate Judge to the plaintiff, properly and honestly to supervise his acts as guardian. No such issue was adjudicated in the Snyder case.

As was pointed out in the Johnson-Crews case, the rule that a former adjudication is conclusive not only of the precise issues raised and determined, but such as might have been raised affecting the main issue, does not apply unless there is identity of both the parties and the subject-matter. Where there is no such identity, the former judgment is conclusive only as to those issues actually determined.

See, also, Lyerly v. Yeadon, 199 S.C. 363,19 S.E.2d 648.

In my opinion the Snyder judgment is not res adjudicata of the present action. If the maximum penalty of the defendant's bond had been exhausted by the claimants, in that sense the plaintiffs here would be bound by that proceeding, since there would be nothing left of the bond to pay out. But the bond was not exhausted and there remains an unexpended $8,000.00 on it against which the plaintiff asserts its claim.

As to the defense that the bank caused its own loss by paying the money over to the Probate Judge, while that was soundly held in the case of Chamberlain v. Bank, to make the guardian liable to its ward, it can have no application to the Probate Judge or her surety. For a guardian to be acquitted of responsibility of a fund he must be able to point to some legal disposition of it. This is the high duty owed by a guardian to his ward. In the case at bar, however, the duty was owed to the guardian by the Probate Judge, and Mrs. Scott's surety can not be heard to claim that the bank was negligent in relying upon the fraudulent representations of the defendant's principal. I do not see how the bank could be held to be estopped as against the Probate Judge or her surety.

At the hearing before me the principle was invoked by the defendant that where one of two innocent persons must suffer, the one responsible should bear the loss. That principle, in my opinion, has no application to the present case. As between the bank and the Probate Judge, surely Mrs. Scott could not claim to be the innocent party. The present defendant bonded the Probate Judge and guaranteed the faithful performance of her duties.

In my opinion, then, the plaintiff is entitled to a judgment against the defendant surety company, and the exceptions to the report of the Master should be sustained.

As to the amount of the judgment, I think that it should include the $1,251.11 paid by the bank to Lillie Chamberlain, the court costs of that suit amounting to $154.30, and the printing costs on the appeal amounting to $143.75. This makes a total of $1,549.16. I do not think that the item of $150.00 attorney fees paid by the bank to its attorney should be included in the judgment. As a general rule I think that it is the policy of our law that in the absence of contract one is not required to pay his adversary's attorney fees.

It is accordingly ordered that the exceptions to the report of the Master be, and they are hereby, sustained.

It is ordered that the plaintiff, The First National Bank of Greenville, have judgment against the defendant, United States Fidelity Guaranty Company, in the sum of Fifteen Hundred Forty-nine and 16/100 Dollars, together with the costs of this action.

On Petition for Rehearing.