Hammond v. Beasley ( 1885 )

Cooper, J.,

delivered the opinion of the court.

In the year 1860, James Hammond died intestate in Giles county, and in December of that year, James "White and Thos. H. Noblett were appointed and qualified as administrators of his estafe. During the same month E. A. Beasley was appointed guardian of W.. J. Hammond and Mary Jane Hammond, two children of the deceased, and qualified by giving bond, with Wm. M. Beasley and Thos. S. Fogg as his sureties, for the faithful performance of his duties. The administrators of the estate of James Hammond, in the course of the administration, made distribution of assets to the distributees, but instead of taking receipts with refunding bonds, they adopted the plan of taking the notes of the distributees for the payments, so as to be in a condition to sue for and recover back overpay-ments. During the years 1861 and 1862, the administrators made various payments to E. A. Beasley for his wards, and took his notes as guardian therefor, payable to them at one day. E. A. Beasley died, in September, 1863, and Thos. S. Fogg was appointed and qualified as administrator of his estate, the insolvency of which he suggested to the county court, on February 26, 1867. On April 9, 1866, Wm. M. Beasley was appointed as guardian of W. J. Hammond, and qualified by giving bond with James D.. Anthony, M. M. Mitchell and Jos. S. Edmondson as his sureties. ' On February 3, 1868, the guardian renewed his bond, with M. M. Mitchell and Thos. S. Fogg as sureties. In May, 1868, Mitchell applied to the county court by petition to be released as such surety, and on June 1, 1868, in compliance with a rule made upon him, Wm. M. Beasley came forward with J. P. C. Heed as a surety in place of Mitchell, who signed the old bond accordingly, and it was accepted by the county court, and Mitchell released from further liability, by formal order of the court entered on the minutes. In the meantime, White and Nob-lett, as administrators of James Hammond, when they came to make their settlements, found that the county court clerk objected to receive the notes of E. A. Beasley as receipts, and they induced Wm. M. Beasley, as guardian of W. J. Hammond, to receive four of the notes of his predecessor in office, and give them a receipt therefor. These notes seem to have been handed to Wm. M. Beasley on May 10, 1866, and he charged himself with their amount of $4,118.68, and interest, in his settlements made with the county court clerk, on January 30, 1868, August 24, 1870, and August 24, 1871, by the last of which the balance found against him was $5,938.84.

On September 10, 1870, Wm. M. Beasley, as guardian of W. J. Hammond, filed his bill against Thos. S. Fogg, as administrator of E. A. Beasley, deceased, and individually, ,and James White and Thos. H. Nob-lett as administrators of James Hammond, deceased. The object of this bill was to relieve the complainant from the charge of the $4,118.68, with interest, upon the ground that the instruments were not in reality the notes of E. A. Beasley, but only informal vouchers for the money paid over to him as guardian, by the administrators of James Hammond, deceased. The bill stated so many of the foregoing facts as bore upon this point, and asked for a settlement with Thos. S. Fogg, as administrator of E. A. Beasley of the guardianship of the latter as guardian of W. J. Hammond, and for a recovery of the pro rata of the sum found out of the estate of E. A. Beasley, which was still being administered as insolvent. It also asked that the defendant, Fogg, and the complainant, as the sureties of E. A. Beasley on his bond as guardian, be held liable for any of the recovery not realized out of the estate of E. A. Beasley. Such proceedings were had in the cause that on March 25, 1871, the court decreed that the notes of E. A. Beasley were intended by .the parties as evidence of the receipt of so much money paid to him, as guardian, by the administrators of James Hammond’s estate, and also as refunding bonds in the event he was overpaid; that the complainant as guardian, recover from Thos. S. Fogg as administrator of E. A. Beasley, the sum of $5,421.84, the amount found to be due from E. A. Beasley’s estate to his ward W. J. Hammond, to be filed for its pro rata in the insolvent suit; and that the balance of debt, after receiving the pro rata, should be paid, one-half by the complainaut and the other half by Thos. S. Fogg, as sureties on the guardian’s bond. On March 5, 1874, W. J. Hammond, who came of age on August 5, 1871, was permitted by the court to become sole complainant- in the cause and substituted to the rights of ¥m. M. Beasley, as guardian under the proceedings and former decree, and it was referred to the master to ascertain and report what had been realized in the former decree, and the balance due. At the same term, the master’s report, showing that $1,843.42 had been realized from E. A. Beasley’s estate, and paid to Hammond’s attorneys and assignee, was confirmed without objection, and a decree rendered in favor oí Hammond against ¥m. M. Beasley and Thos. S. Eogg, “jointly and severally,” for $4,529.93, and unadjudged costs, the balance unpaid of the recovery against E. A. Beasley’s estate for the money due his ward, W. J. Hammond.

On September 16, 1871, Wm. M. Beasley filed his bill against his ward, W. J. Hammond, to have the same relief against the notes of E. A. Beasley, which he had already obtained against E. A. Beasley’s administrator, and have his settlements with the clerk of the county court corrected accordingly, he having charged himself with those notes under a mistake of fact. He stated the proceedings in the previous case down to the decree of March 25, 1871. On December 26, 1871, the bill now before us was filed by W. J. Hammond against ¥m. M. Beasley and Thos. S. Fogg, as administrator of E. A. Beasley and individually, •J. P. C. Heed and M, M. Mitchell. This bill mentions the previous bill of Win. M. Beasley of September 16, 1871, craving leave to refer to the papers therein, and sought at first to be treated as a cross-bill thereto. But it was afterward filed as an original bill against all parties. The bill stated the facts as hereinbefore detailed, and charges that Wm. M. Beasley has not faithfully executed his guardianship, and calls for an account. It insists upon the liability of Wm. M. Beasley for the $4,118 with which he charged himself in his settlements with the county court, and claims, if he is not liable therefor, that he and his sureties are liable on the guardian bond for the failure of Wm.„ M. Beasley, as guardian, to bring suit against Thos. S. Eogg as surety on E. A. Beasley’s bond, and to account for his share of the loss. One prayer of the bill is that these parties be held liable accordingly, and, if necessary to a settlement of the amount of Wm. M. Beasley as guardian, that an .account be taken with said Fogg as administrator, etc.

The court, upon the pleadings and proof, made a reference to the clerk and master to take and state an account with Wm. M. Beasley, as guardian. And on final hearing the chancellor held that the proceedings in the county court had the effect to release Mitchell as surety from any further liability on the guard.ian bond of Wm. M. Beasley, and to make J. P. C. Reed and Thos. S. Eogg primarily liable for all previous breaches of the bond, if any. He held that Wm. M. Beasley was not chargeable with the notes of E. A. Beasley, but only with the money ■collected thereon by him from E. A. Beasley’s estate. He found a balance due to the complainant from Wm. M. Beasley, as guardian, of $1,716.17, and he rendered a decree in favor of complainant against Beasley, and Eogg and Reed as his sureties, for this amount and the costs. The record shows that this decree was paid by Reed on December 23, 1873. No appeal was taken from this decree, but the record was, on October 1, 1875, filed by complainant for a writ of error.

The Referees have reported in favor of affirming the chancellor’s decree with costs. The complainant excepts.

The first exception is that the Referees erred in holding that Mitchell was released by the proceedings in the county court from liability on the guardian bond. The ground of objection is that Reed, the new security, signed the last preceding bond of the guardian, when, it is insisted, the bond should have been a new bond. The proceeding in this case, as shown by the record, was under new Code, section V. 4421, by “petition in writing,” and notice. In such a case, as provided by section 4422,. the court may compel the principal to give other sufficient security, to be approved by the court. Section 4424 is: “Upon public or private application of any surety, if the principal consents to give a new bond, with satisfactory security, it may be taken without further proceedings, with the same effect as if executed upon order.” This section, it will be noticed, uses the words “ new bond,” upon which • the argument of the learned counsel is rested, but the next section, 4425, says: “On the execution of the additional bond as required, or the qualification of a successor, the applicant security is exonerated from all liability accruing subsequently.” Obviously the words, giving “other sufficient security,” “new bond,” or “additional bond,” are merely different modes of expressing the same idea, that there must be new security, to be approved by the court, in place of the old security. And the simple question is, whether that security may be approved by the court if given on the existing bond, or requires a separate instrument. The record and the bond or bonds form one whole under the statute, and there is not the least reason why the surety, so far as his liability is concerned, should not execute the old bond. It thereby becomes a “ new bond ” as to him. And the statute saves the liability of all the other sureties, notwithstanding the change of the contract, whether the surety sign with them or separately.

The second exception is that the Referees erred in not holding Mitchell liable, even if released by the proceedings in the future, for all monies which" the guardian received, or ought to have received, prior to that timé. The- chancellor held, as we have seen, and so have the Referees in effect, that Fogg and Reed were primarily liable for all breaches of the guardian bond before the release of Mitchell, if any. And it appéars that the recovery of the complainant for all breaches allowed has been fully paid. Unless, therefore, it should be found that the complainant is entitled to a larger recovery and for breaches of the-bond occurring before the release, the point becomes unimportant. Of course, the mere receipt of money before the release would not be a breach of the bond. It must be shown that the money was misappropriated, and there is no proof to that effect in this record. The bill does apparently seek to charge the guardian with a breach of duty in not suing Fogg as surety on E. A. Beasley’s bond at an earlier date. But this pari; of the bill has been abandoned in the progress of the cause, perhaps because the complainant was content with the guardian’s proceedings in the suit to which he made himself complainant when he came of age, and took the benefit of the decrees rendered therein. The chancellor was not asked directly, or by exception to the master’s report, to pass upon that part of the bill. The order of reference was broad enough to cover any breach of the guardian’s bond, and the failure of the clerk to report upon a particular breach would have been a proper ground of exception. And the question being one of diligence and good faith on. the part of the guardian, in the matter under consideration, it was, under the peculiar circumstances of the case, the duty of the complainant to have had the matter directly acted on.

The third exception is to the refusal of the Referees to hold the guardian liable for the E. A. Beasley notes. But the proof clearly shows that these notes were .really intended as receipts of so much money, put in such a form as also to operate as refunding bonds. The administrators of James Hammond could not have recovered judgment upon them except to the extent of an overpayment, and could not, of course, long after the maturity of the notes, transfer by their assignment any higher right to the -new guardian. They were received under a plain mistake of fact, that they were binding as notes.

The next exception is that the Referees erred in holding that the guardian, without the sanction of the chancery court, could exceed the income of his ward’s ■estate. The credits allowed upon the master’s report do exceed the income of the funds charged, although it is otherwise in the settlements with the county court, where the guardian is charged with the Beasley notes. But we find, upon examination, that the amount with which the guardian is charged by agreement, what he received on the Beasley notes, and what was recovered on the decree obtained by the guardian against Beasley’s estate will exceed $5,000, which would be increased several hundred dollars by the annual interest on the first two items. The disbursements allowed for five years are a fraction under $1,500. The excess of disbursements in one year may be equalized out of the profits of other years: New Code, section 3405. The disbursements are, therefore, not in excess of the interest on .the realized assets. Besides, the complainant does not by his bill or by the proof undertake to surcharge and falsify the credits, or any one of them. The settlements in the county ■co.urt are by law to be taken as prima facie correct: New Code, section 4535. And this meets the last exception, the absence of vouchers for credits.

Confirm report, and affirm the chancellor’s decree, with the costs of this court against the complainant.