Opinion
No. 21669.
April 7, 1952.
APPEAL FROM THE CIRCUIT COURT OF CARROLL COUNTY, JAMES S. ROONEY, J.
Chas. L. Graham, Christian F. Stipp, Carrollton, for appellant.
D. D. Thomas, Jr., Carrollton, for respondent.
This is an action in equity to recover the sum of $1,500 with interest on a promissory note of a guardian of an insane person, Richard F. Cook, since deceased, claimed as a lien on his real estate, and for further relief as prayed. Judgment was for the plaintiff and against the defendant administrator for $1,500, with interest at six percent per annum from December 22, 1948, until paid, and the court decreed that the judgment be certified to the Probate Court of Carroll County, Missouri, as an allowed claim against the estate of Richard F. Cook, deceased, and that it be paid by his administrator, as provided by law. Defendant Jennie Vaughan, sole heir of the deceased, has appealed.
The petition names numerous defendants, including Jennie Vaughan, the appellant, Wade W. Maupin, guardian of Richard F. Cook, a person of unsound mind, and Wade W. Maupin, administrator of the estate of Richard F. Cook, deceased. At the trial the cause was dismissed as to all the defendants except those three.
The petition alleged that Lockie A. Cook, wife of the deceased Richard F. Cook, had predeceased him; that she died possessed of certain real estate described which, under her will set forth in the petition, was devised to the said Richard F. Cook, subject to certain other provisions of said will; that on October 18, 1948, Richard F. Cook was declared insane by the Probate Court of Carroll County, Missouri, and defendant Wade W. Maupin was thereupon legally appointed the guardian of his person and estate, and qualified as such; that on December 22, 1948, said Wade W. Maupin, guardian aforesaid, made application to said Probate Court for an order to borrow $1,500 from the plaintiff, a banking corporation, located in said county, to pay necessary expenses incurred for the said ward and for his future maintenance; that the court on that date considered the application and entered an order authorizing and directing the guardian to borrow the sum of $1500 from the plaintiff and to execute the necessary instruments to effectuate the purpose of the order; that on the same date and pursuant to the order the said guardian did borrow from the plaintiff the sum of $1,500 and made, executed, and delivered to plaintiff his certain promissory note as such guardian, whereby, for value received, the guardian promised to pay to plaintiff on demand said sum of $1,500, with interest from date, at the rate of six percent per annum, payable annually.
The petition further alleged that all the money so borrowed was used for the necessary support, maintenance, hospital and medical expense of said Richard F. Cook, insane; that at the time of the execution of said note and at all times during the lifetime of Richard F. Cook, he had an interest in the real estate described under the will of Lockie A. Cook, and that the same became, was and is impressed with a lien in favor of plaintiff to secure payment of such indebtedness; that due demand was made by plaintiff upon the guardian during the lifetime of Richard F. Cook for payment of said note and interest, and that said guardian made no payment thereof. The petition further avers that on December 26, 1948, Richard F. Cook died, leaving as his sole and only heir the defendant Jennie Vaughan, his sister; that Wade W. Maupin was thereafter on December 31, 1948, duly appointed administrator of the estate of Richard F. Cook, deceased, by the Probate Court of Carroll County, Missouri, and that he is now the duly qualified and acting administrator of said estate; that at the time of the appointment of said administrator the said indebtedness was and still is due and owing to the plaintiff and remains a lien on the real estate aforesaid; that the defendants claim some right, title and interest in the real estate by reason of the Last Will of Lockie A. Cook, deceased, or by reason of the death of the said Richard F. Cook.
The prayer of the petition was for "judgment for said note and interest with the costs of this action against the defendant Wade W. Maupin, as guardian, aforesaid, and against defendant Wade W. Maupin, as administrator, aforesaid"; and it was further prayed that the judgment be certified to the said Probate Court for allowances provided by law, and that if personal assets of the estate of Richard F. Cook be insufficient to pay the judgment in full, the real estate described be ordered sold to satisfy the judgment, and for general relief.
Referred to by the petition, marked as exhibits and attached thereto respectively, were the following entry of the Probate Court of December 22, 1948, and a carbon copy of the note of the same date:
"Plaintiff's Exhibit A.
"In Matter Estate Richard F. Cook, Insane, Wade W. Maupin, Guardian. Order to Make Loan.
"Now comes Wade W. Maupin, Guardian of the person and estate of Richard F. Cook, insane, and makes application to the Court for an order to borrow money in the amount of $1500.00 from the First National Bank of Carrollton, Missouri, until such time as the real estate belonging to said estate can be sold; it appearing to the Court that the following bills due at the time of the appointment of said Guardian and also bills accrued for the support and maintenance of said ward since the appointment of said Guardian are to be paid out of said $1500.00, to-wit: (Then follows a list of items aggregating $1301.89)
"After hearing and considering said application, and being satisfied that it is to the best interest of said estate and not prejudicial to any person interested therein that said order be made. It is therefore ordered by the Court that said amount of $1500.00 be borrowed from said First National Bank of Carrollton, Missouri, to pay said bills, heretofore itemized and to pay for the future support and maintenance of said ward, and said Guardian is further authorized to execute the instruments of writing necessary to effectuate the purpose of this order."
The carbon copy of the note attached to the petition read as follows:
"$1500.00 Carrollton, Mo., December 22, 1948.
On Demand ____ days after date we promise to pay at The First
National Bank of Carrollton, to the order of The First National Bank of Carrollton, Mo., Fifteen Hundred No/100 . . . . . . . . . . . Dollars, For value received, negotiable and payable without defalcation or discount, and with interest from date at the rate of 6 per cent per annum. Interest payable annually, and if not so paid to become principal and bear same rate of interest. It is expressly agreed that if this note after maturity is placed in the hands of an attorney or collector for collection, whether suit is brought on the same or not, then and in that event to pay to the owner or holder of this note ten per cent additional of the principal and interest hereon as attorney's fee or commission for collection. "/s/ Wade W. Maupin Guardian of the Person Property of Richard F. Cook. "No. ___ Due OD Plaintiff's Exhibit B."
Thereafter defendant Jennie Vaughan, by her attorney, field her motion to dismiss the petition on the ground (1) that it fails to state a claim on which relief can be granted. (2) that if the alleged note was executed by said guardian, as alleged, it was executed contrary to law and is void, and that the alleged order authorizing the guardian to borrow the sum of money alleged is contrary to law and void. She also filed a motion to drop the defendant guardian as a defendant in said cause for the reason that at the time of the filing of the petition there was and now is no such person as Wade W. Maupin, guardian of Richard F. Cook, a person of unsound mind. Both of the above motions filed by appellant were overruled.
Thereafter defendant Jennie Vaughan filed her separate answer, consisting of specific denial of parts of the petition. Affirmatively she pleaded the adjudication of Richard F. Cook as of unsound mind on October 18, 1948, the appointment of Wade W. Maupin as guardian of his person and estate, the filing by said guardian of an inventory, consisting of real estate of $6,010, and personal property valued at $3,848.07; that all of said property, real and personal, was available throughout the course of the guardianship for the support and maintenance of Richard F. Cook, insane; that none of the personal property, excluding cash, and none of the real estate of the ward was sold or mortgaged during the period of the guardianship for any purpose; that the guardian made no effort to sell or mortgage any of the real or personal property of the ward; that on December 22, 1948, said guardian made application to said Probate Court for an order to borrow $1,500, which application was not made in writing, and is void; that the order of the court purporting to authorize the same did not direct that the personal property or real estate be mortgaged, leased or sold and such order is void; that on December 26, 1948, Richard F. Cook died; that on January 18, 1949, said guardian filed his final settlement and was discharged; that no claim based on said promissory note was filed at the time of the final settlement by the guardian; that such final settlement of the guardian showed total expenditures of the guardianship for all purposes of $4,599.69, an amount less than half of the value of the assets of the estate available to the guardian for the support and maintenance of the ward; that the said guardian acted without authority of law in executing said note, and that the same is void.
The joint answer of Wade W. Maupin, as administrator of the estate of Richard F. Cook, deceased, and of Wade W. Maupin, as guardian of Richard F. Cook, a person of unsound mind, was filed and was in the nature of a general denial. Plaintiff's reply denied the allegations of any new matter contained in the above joint answer.
According to the evidence, Dr. Richard F. Cook of Carrollton, Missouri, was found to be a person of unsound mind by the Probate Court of Carroll County, on October 18, 1948. Wade W. Maupin, a local attorney, was appointed guardian of his person and estate, and qualified as such, filing inventory December 6, 1948. The inventory showed real estate approximating the value of $6,010, and personal property in the total amount of $3,848.07. Becoming quite ill, Dr. Cook was taken to St. Luke's Hospital in Kansas City, Missouri. The heavy expense rapidly increasing because of Dr. Cook's illness, the guardian became apprehensive that there would not be sufficient funds for his ward's care and maintenance, and on December 15, 1948, applied for and obtained an order in the Probate Court to sell the real estate. This order was never carried out because of the death of Dr. Cook, eleven days thereafter. In the meantime, the guardian desired to obtain immediate funds for the maintenance and care of his ward pending the sale of the real estate, and on December 22, 1948, orally applied to the Probate Court for and obtained an order authorizing him to borrow $1,500 from the plaintiff with which to pay the bills accured and for future support and maintenance of the ward.
Upon obtaining such order the guardian conferred with the president of the plaintiff bank about the load and was told to go ahead and draw checks for the accounts. The guardian then went to Kansas City, where Dr. Cook was then confined in a hospital, and wrote checks on the guardian's account for the obligations of the ward for hospital, nurses, ambulance and certain other items of the ward's indebtedness, and had Dr. Cook taken to Farmington, Missouri. Returning to Carrollton, the defendant guardian then went again to the office of the plaintiff bank, reported the issuance of his checks in Kansas City and was requested to and did sign and deliver the promissory note for $1,500, payable to plaintiff, as stated. The guardian's account was then credited with the amount of the note. The evidence shows that all of the expenditures made by the guardian were for the benefit of the ward or his estate. There is no contention that the guardian retained any of the funds for his own use.
On December 26, 1948, four days after the date of the above order and note, Dr. Richard F. Cook died. Wade W. Maupin was, on December 31, 1948, appointed administrator of the estate of Richard F. Cook, deceased. On January 18, 1949, Wade W. Maupin, as guardian, filed his final settlement, which was approved by the Probate Court, and he was thereupon discharged. Thereafter he turned over to himself, as administrator, the balance of the borrowed funds unexpended ($68.38), the real estate and other assets of the guardianship estate. At no time had the guardian applied for authority to sell any of the personal property or to mortgage any of the real estate of the ward. No demand was ever presented to the guardian for payment of the note. As administrator he filed inventory and appraisement in which was listed the same real estate and personal property except such cash as had been expended.
On June 9, 1949, plaintiff filed its claim against the estate of Richard F. Cook, deceased, in the Probate Court. Notice was waived by the administrator, allowance consented to and the claim allowed by the Probate Court. Afterwards, the Probate Court set aside the allowance, the claim was withdrawn and the present action was filed in the Circuit Court of Carroll County.
The defendant Jennie Vaughan, appellant, contends that plaintiff's petition purports to state a cause of action upon the existence and breach of an express contract, if any cause of action at all; that the case was tried on that theory and plaintiff is not entitled to recover on any other theory; that the petition does not and cannot state a cause of action against defendant Wade W. Maupin, as guardian, theretofore discharged; that it does not state a cause of action against the deceased heirs of Lockie A. Cook, and that it does not state facts sufficient to state a cause of action against Wade W. Maupin, administrator of the estate of Richard F. Cook, deceased; that the express contract was a promissory note, which was void; that the Probate Court, of limited and statutory powers, had no authority to enter an order for the guardian to borrow money on his unsecured promissory note, and the guardian was without authority to execute such a note; that guardians have only such powers as prescribed by statute. She contends further that a guardian cannot bind the estate of his ward by contract, and that all claims against the guardian must be presented to the guardian and cannot be presented to the administrator of the estate of the ward after the death of the ward.
The plaintiff contends that the expenditures were necessary and lawful and subject only to the confirmation of the Probate Court, which was obtained; that the Probate Court had authority to order the borrowing; that the suit is one in equity to recover on a debt, the note or contract being merely evidence of the debt.
It was aptly stated in St. Louis v. Hollrah, 175 Mo. 79, 85, 74 S.W. 996, 998: "The probate court is a court of limited jurisdiction, possesses only such power as is conferred upon it by statute, and can exercise its jurisdiction only in the manner prescribed by statute." See, also, State ex rel. Barlow v. Holtcamp, 322 Mo. 258, 268, 14 S.W.2d 646, 650; In re Delany, Mo.App., 226 S.W.2d 366, 372; Dietrich v. Jones, 227 Mo.App. 365, 369, 53 S.W.2d 1059, 1061. A judgment or order of the probate court, or other court, if void on its face, binds no one and can be attacked collaterally. Abernathy v. Missouri Pacific Ry. Co., 287 Mo. 30, 36, 228 S.W. 486. Guardians and curators of the persons and estates of insane persons are creatures of the statutes. Their authority is fixed by the statutes of their creation. Their relationship to the ward is such that they have no inherent powers in administering the affairs of the ward, but can perform only such things as the statutes authorize and in the manner therein prescribed. Scott v. Royston, 223 Mo. 568, 609, 123 S.W. 454, 466; Greever v. Barker, 316 Mo. 308, 289 S.W. 586. Hence, neither the Probate Court nor the guardian can legally authorize or perform any act respecting the estate of an insane person for which there is no statutory authority. Upon the death of the ward, a guardianship ipso facto terminates and the guardian is thereupon shorn of all functions of his office, except to settle his accounts and deliver the estate and effects of his ward to the latter's personal representative. Evans v. York, Mo.App., 216 S.W.2d 124, 128; Section 458.550 RSMo 1949, V.A.M.S.
Chapter 458 RSMo 1949, V.A.M.S. prescribes the powers and authority of the Probate Court and guardian acting thereunder in reference to the persons and estates of insane persons. If there be insufficient assets of the estate of the insane ward to pay all allowed claims in full, the court may make an order prorating such assets equally among the holders of such allowed claims. Section 458.330. The court, if it be to the interest of the ward, may allow renewal or extension of any mortgage on real estate to repair or pay taxes on the same, or for support of the ward and his family. Section 458.380. Or to pay off existing mortgages on real estate out of the personal estate if it be to the best interest of the ward. Section 458.370. If the personal estate be insufficient to discharge his debts, maintain himself and family, or to educate his children, the court, upon petition setting forth such facts, may order the mortgage, sale or lease of the real estate of the ward or as much as necessary. Sections 458.410, 458.420, 458.430. If the whole estate be insufficient to pay the debts of the ward, maintain him and his family, or educate his children, the guardian may apply to the county court for an appropriation for the support of his ward. Section 458.580. Nowhere in Chapter 458 can there be found any authority for the guardian of an insane person to borrow any sum of money on the unsecured promissory note of the guardian, as such, nor for the Probate Court to authorize the same.
In the case at hand, without the use of the remaining personal property on hand, and before any sale or mortgage of the real estate belonging to the ward, the Probate Court issued an order purporting to direct the guardian to borrow $1500 from the plaintiff bank to pay the bills of the ward accrued, and for his future maintenance, and to execute the necessary instruments therefor. Thereupon the guardian proceeded to and did execute and deliver to the plaintiff his promissory unsecured note as such guardian for $1,500, with interest, payable to the plaintiff on demand, and undertook thereby to render the guardian's estate liable for its payment.
In Greever v. Barker, 316 Mo. 308, 316, 289, S.W. 586, the guardian had agreed with plaintiffs that they should occupy and maintain the farm of the ward, provide him with a home, pay taxes and interest on the land, furnish him food, clothing and medicines until he died, when the farm would be sold, and out of the proceeds the plaintiffs were to be paid the reasonable value of their services, less the reasonable rental, the claim to be a lien on the proceeds of such sale. The allowance of the plaintiffs' claim against the estate of the insane ward after his death, was held to be a nullity. The court said, 316 Mo. at page 316, 289 S.W. at page 589: "Generally speaking, a guardian whether of a minor or of an incompetent has no authority whatever to bind either the person or the estate of his ward by contract. Grove v. Reynolds, 100 Mo.App. 56, 71 S.W. 1103; Reading v. Wilson, 38 N.J.Eq. 446. More specifically: `Neither guardians, nor the courts having jurisdiction over the estates of incompetent persons, have power to bind the person or estate of such persons, unless expressly authorized to do so by law.' Andrus v. Blazzard, 23 Utah 233, 63 P. 888, 54 L.R.A. 354. In this state the powers and duties of probate courts and guardians appointed by them, with respect to the person and estate of insane persons, are prescribed by article 18, chapter 1, R.S. 1919 [Section 458.020 et seq. RSMo 1949, V.A.M.S.], and that article will be searched in vain for authority on the part of a guardian to make any such contract as was attempted to be made in this case. The statute seems to contemplate that the guardian in providing support and maintenance for his ward shall proceed on an approximately cash basis, and under the immediate direction and supervision of the probate court. If the income arising from the ward's estate is not sufficient, the court may order the whole or any part of the estate to be leased mortgaged, or sold. But the mode to be pursued in leasing, encumbering or selling is definitely prescribed. In none of its provisions is there any warranty for a guardian to farm out his ward's estate, during the life of the ward, and pledge the assets of the estate for the payment, at the end of the period, of the reasonable value of the services that shall have been rendered and a refund of the moneys that have been advanced in that behalf. Clearly the contract in question is unenforceable against the estate of Aaron Hilbrant, deceased."
In view of the authorities we are compelled to rule that the indebtedness sued on in this case was one which was never lawfully incurred by or on behalf of the ward during his lifetime, and for that reason alone, if for no other reason, it is not a valid claim after death against his representative. Neither the note nor the order of the Probate Court directing the same was authorized by law.
Does the fact that this proceeding is one in equity entitle the plaintiff to any relief? It would appear from Greever v. Barker, supra, that the general rule is that a guardian cannot bind his ward's estate by contract, nor is such contract binding on the administrator of the estate of the ward after death. There are cases wherein obligations of the guardian in connection with transactions specifically authorized by the statutes, although defective or irregular in certain particulars, have been recognized and enforced in proceedings in equity and certain relief granted in respect to same in the interest of justice.
In McKay v. Snider, 354 Mo. 674, 190 S.W.2d 886, the guardian of one Arnold, a person of unsound mind, borrowed from himself as guardian of one Lawrence, a person of unsound mind, the sum of $1,000, and mortgaged the real estate of the Arnold estate for that amount. The loan and proceedings were approved by the Probate Court. There were questions of compliance with the procedural requirements of the statutes as to application, nature of the transaction and court entries, and the character of the debts paid, but on the question of the right of the plaintiff to an equitable lien on the real estate described in the deed of trust the court pointed out that the estate received the benefit of the proceeds of the loan, that the money borrowed had been used to discharge a prior lien on the same real estate, which the court deemed necessary for the maintenance of the ward, that the estate still held the real estate, that good faith throughout the dealings was shown, and that in equity and good conscience the Lawrence estate should be subrogated to the rights of creditors of the Arnold estate, whose claims had been discharged. However, in the opinion, the Supreme Court points out, 190 S.W.2d at page 893: "Under the statutes the described real estate could be mortgaged or sold for the payment of these debts", and again at the same page it was said: "The statutes authorized the guardian and curator, under the facts shown, and with the consent and approval of the Probate Court, to mortgage the ward's real estate for the payment of debts."
In a later case the Supreme Court dealt with a proceeding in equity to decree equitable title to real estate in the purchasers under contract with a guardian, whose insane ward died before the sale was consummated. Capelli v. Bennett, 357 Mo. 421, 209 S.W.2d 109. The contract of sale was made, part payment of the purchase price made, the contract of sale was reported to the probate court and order was entered to sell in accordance with the contract, the sale was completed and the court approved the same. Upon the death of the ward before the remainder of the purchase price had been paid, and before the deed was delivered, the executor of the estate of the deceased ward repudiated the contract of sale and brought suit against the buyers for rent and possession of the real estate. The defendants, by counterclaim, contended that they were equitable owners of the real estate, tendered the balance of the purchase price, and prayed that title be decreed in them. The trial court rendered a decree for the plaintiffs. On appeal the Supreme Court ruled that the approval by the probate court of sale of the real estate of the ward vested in the defendants an equitable title to the real estate, although the purchase price had never reached the ward's estate during his lifetime. The judgment of the trial court was reversed and remanded with directions to enter a decree vesting full legal title in the plaintiffs. In the course of the opinion the court said, 357 Mo. at page 426, 209 S.W.2d at page 112: "Respondent says that `a guardian has no authority to bind either the person or the estate of the ward by contract.' That is only partly true. The guardian can bind the ward's estate by contract made in pursuance to statute and under the orders and approval of the probate court. Respondent also says that the guardianship terminated on the death of the ward and the sole function of the guardian thereafter was to settle the accounts and deliver the estate to the personal representatives of the ward. True, but would not the guardian still have power to pay claims which had been allowed and complete contracts which had matured before the ward's death? We need not answer the question, for whether or not that power survived to the guardian it certainly may be enforced by decree of a court of equity."
But there again, as in McKay v. Snider, supra, it must be noted that in the Capelli case the transaction involved was a sale or mortgage of real estate of the ward and the Supreme Court was careful to say, 357 Mo. at page 425, 209 S.W.2d at page 111: "Sections 475 to 480 (Rev.Stat.Mo., 1939 [Sections 458.410 to 458.460 RSMo 1949, V.A.M.S.], inclusive, provide for sale of real estate belonging to insane persons under order of the probate court."
Thus neither McKay v. Snider, nor Capelli v. Bennett are authorities for the recovery, even in equity, on contracts made by the guardian of an insane person where such contracts are not authorized by the statutes governing such estates. Respondents have not cited us any case and in our research we have found none that permits recovery even in equity on an unsecured promissory note of a guardian of an insane person, thus obligating the estate to its payment, even though the Probate Court approved such a transaction, and even though the proceeds of such loan were applied to the benefit of the ward's estate. The very basis of the claim in such an action would be one without any authority of law. To evade the invalidity of such a transaction through an action in equity would be to render useless the wise limitations of statutory powers of the guardian.
"Courts of equity have no more authority to disregard plain provisions of a statute than do courts of law. Equity follows the law. * * *' Courts of equity can no more disregard statutory and constitutional requirements and provisions than can courts of law. They are bound by positive provisions of statute equally with courts of law. * * * So wherever the rights or the situation of the parties are clearly defined and established by law, whether it be common or statutory, equity has no power to change or unsettle those rights or that situation.'" Aetna Ins. Co. v. O'Malley, 342 Mo. 800, 816, 118 S.W.2d 3, 10.
The futility of recourse to equity in a situation such as here is not as harsh as may first appear. In this case it was shown that the officers of the plaintiff bank had long known both Dr. Cook and his later guardian; knew he had been adjudged insane; that a guardian had been appointed to act for him; knew the nature and purpose of the proposed loan, and knew that the note was the note of the guardian in his representative capacity. "It is elementary that one who deals with a curator in his capacity as such must ascertain the curator's authority for any proposed action, since he not only knows that the curator is dealing with the funds or property of his ward, but is also charged with knowledge that a curator's powers and duties are defined and circumscribed by statute." Continental Casualty Co. v. Pleitsch, Mo.App., 111 S.W.2d 956, 959. While the party dealing with a guardian may not be charged with knowledge of defects or irregularities not appearing of record, he must at his peril, in the absence of fraud, ascertain the authority, if any, of the guardian to enter into a transaction of the nature at hand. Phillips v. Phoenix Trust Co., 332 Mo. 327, 332, 58 S.W.2d 318.
We conclude that under the authorities the petition in this case fails to state sufficient facts to constitute a cause of action, and that the evidence fails to establish a claim on any theory. In view of the foregoing, it is not necessary to discuss the question of survival of any contractual liability of the ward's estate after his death as against his personal representative, nor to consider the various other points made on this appeal. The judgment and decree of the trial court should be reversed and the petition dismissed. It is so ordered.
All concur.