Summary
In Jones this Court stated that "[c]ompound interest ordinarily is chargeable in cases of fraud, gross negligence, or abuse of trust on the part, of the guardian, but only simple interest will be charged in cases of simple neglect of duty without fraud or intentional misconduct."
Summary of this case from In re Guardianship of DuckettOpinion
No. 38576.
December 15, 1952.
1. Guardian and ward — wills — adult non compos mentis.
There is no authority of law for a testator to name a guardian for an adult non compos mentis although the latter was the daughter of the testator.
2. Guardian and ward — exceptions to guardian's account.
When on exceptions to the guardian's account the findings of fact by the chancellor are not against the great weight of the evidence and not manifestly wrong, such findings will not be disturbed on appeal.
3. Guardian and ward — commingling funds of ward with those of guardian — simple interest.
When an amply solvent guardian of a non compos mentis ward commingles the funds of the ward with those of the guardian, the latter and his bondsmen become liable, as in debt, with the simple debt rate of interest at 6% per annum for the amount of the funds thus converted, less expenditures lawfully allowed; and the statute which charges the guardian with 8% interest per annum on surplus funds which he permits to lie idle without reporting the same to the court and asking for an order for the disposition thereof is not applicable, nor is the interest to be compounded. Secs. 36, 421, Code 1942.
4. Guardian and ward — compound interest.
Compound interest ordinarily is chargeable in cases of fraud, gross negligence, or abuse of trust on the part of the guardian, but only simple interest will be charged in cases of simple neglect of duty without fraud or intentional misconduct.
Headnotes as approved by Hall, J.
APPEAL from the chancery court of Leflore County; R.E. JACKSON, Chancellor.
Hardy Lott, for appellant.
I. Status of Ralda N. Jones as guardian. Sec. 2401, Code 1906 (Sec. 402, Code 1942); Campbell, et al. v. Mansfield, 104 Miss. 533, 61 So. 593; Hemphill v. Smith, 128 Miss. 586, 91 So. 337; Muse v. Muse, 76 Miss. 372, 24 So. 168; Barney, et al. v. Barney, (Miss.), 33 So.2d 823; Sec. 1991, Code 1917 (Sec. 430, Code 1942); Sec. 397, Code 1917 (Sec. 432, Code 1942).
II. Effect of decrees postponing guardian's reports. Sec. 1998, Code 1930 (Sec. 439, Code 1942); Secs. 631, 632, 638, 641, Code 1942; Hayes v. Nat. Surety Co., 169 Miss. 676, 153 So. 515.
III. Statement and argument of facts.
1. Amount of principal due appellant. Secs. 631, 632, 638, Code 1942.
2. Manner in which Ralda N. Jones handled guardianship assets.
A. Ralda Jones bank accounts and deposits.
B. Harris transaction.
C. House constructed guardianship money. Alexander v. Hancock, 177 Miss. 590, 171 So. 544.
IV. Argument of the directly applicable law. Secs. 421, 439, 619, Code 1942; Russell v. Russell, 164 Miss. 335, 144 So. 542.
V. Amount appellant entitled to recover and method of computing interest.
VI. Guardian's commissions and fees. Reeves v. Reeves, et al., 157 Miss. 448, 128 So. 330.
Alfred Stoner, for appellee and cross-appellant.
Filed a lengthy brief dealing in the main with a factual argument in a complicated and somewhat obscure situation, during the course of which he cited and discussed the following cases: Bryan v. Bryan, 175 Miss. 367, 167 So. 56; Campbell v. Mansfield, 104 Miss. 533, 61 So. 593; Davis v. Sturdivant, 197 Miss. 139, 19 So.2d 499; Hayes v. National Surety Co., 169 Miss. 676, 153 So. 515; Hemphill v. Smith, 128 Miss. 586, 91 So. 337; Jelks v. Barrett, 52 Miss. 315; Y. M.V.R.R. Co. v. Levy, 141 Miss. 199, 106 So. 525.
And concluded as follows:
We submit that the will relieved Mrs. Jones from accounting and this relief was ratified by the court, although such ratification was unnecessary; that the Mississippi decisions uphold the right of a testator to relieve his trustee from accounting, regardless of the name under which she acts, that Mrs. Jones faithfully accounted to the court until the year 1933 and no fault was found by either side with her accountings up to that time; that when Mrs. Jones realized that the court morally or legally honored the provisions of the will relieving her from accounting, she did exactly what would be expected of a widow who had just finished rearing five children; namely, she decided that she would go on looking after her own child and that it was not necessary to keep records unless there was a further order of the court, whereupon she would take up where she left off; that nobody knows how Mrs. Jones spent some of the money that was shown by her last report, and some of the difference between the amount collected from the Union Central Life Insurance Company and the amount paid Stewart Home; that Mrs. Jones very naturally decided that the whole thing had been left to her; that the insufficiency of actual records, under the circumstances, is more a creation of the law and the will than a creation by Mrs. Jones; that when Mrs. Jones died her daughter, as executrix, produced her ledger and check stubs and went as far as she possibly could in making the report, and that the final report filed in the "guardianship" by Mrs. Parker shows sincerity and that she is doing the best she can, and that even though the final account does not account for $3,045.93, still it may be that some or all of that was spent for Mary; that this suit is governed by equity; that the burden of proof was definitely on the appellant for the reason that Mrs. Jones was relieved from accounting by both the will and the court, and if they find any fault with Mrs. Jones' doings then they must point out and show the discrepancy by legal proof; that the court below put the burden of proof on them and that no complaint is made thereat; that although there is no legal proof of discrepancy, there is a definite showing that Mrs. Jones in her way of accounting, considered that the said Lot 6 which was sold to Ralph Lembo for $4,000 belonged to Mary and had it assessed to her; that there is no deed conveying the lot to Mary, but even so the appellee desires that Mary have the sales price plus interest from the date of the death of Mrs. Jones until the time of the trial, aggregating $4,384.62 as above pointed out; that Mrs. Jones built the house evidently with Mary's money or at least a part of it was Mary's money, which house was built on a lot owned by Mrs. Jones which was later sold to Lembo; that Mrs. Jones built the house and gave it to Mary soon after the Harris loan was paid and that although the amount paid by Harris was greatly insufficient to build the house and certainly did not near equal the value of the house and lot, it appears that this was Mrs. Jones' method of accounting to Mary. If Mrs. Jones had thought that she owed Mary more money she would have paid it to her before her death. It is evident that in Mrs. Jones' mind, Mary would be fully paid in the value of the house and lot that she sold to Lembo. We believe that morally, Mary should have the proceeds of the house and lot and even though a portion of it might be a gift to Mary, the remainder of its value must have been considered by Mrs. Jones as covering everything to which Mary would be entitled. We, therefore, respectfully submit that this cause should be reversed on cross-appeal and that judgment should be entered here for the sum of $4,384.62.
S.F. Jones died in 1925 leaving a last will and testament whereby he undertook to appoint his widow, Mrs. Ralda N. Jones, as guardian of their daughter, Mary V. Jones, a non compos mentis, who was born in 1899 and who was then confined in Stewart Home School in Frankfort, Kentucky. This appointment was of course invalid since (Hn 1) there was no authority of law for a testator to name a guardian for an adult non compos mentis. Nothing was left by this will to the daughter, Mary V. Jones, but S.F. Jones left a life insurance policy payable to Mary V. Jones whereby she was to receive a guaranteed payment of not less than $100 per month for life, with a total guaranteed payment of not less than $18,000.
Mrs. Ralda N. Jones, mother of the non compos mentis, on petition to the chancery court without reference to the will, was appointed and qualified as guardian of Mary V. Jones on October 25, 1925, after a proper adjudication that the ward was insane. Thereafter she made regular accounts of her guardianship showing receipts and disbursements under order of the court through September 16, 1933. No account has been filed since that time. On March 25, 1935, the chancellor entered a decree relieving the guardian from making further reports until further order of the court. There was then in effect a decree of September 1, 1931, authorizing and empowering the guardian to expend for the support and maintenance of the ward, until further ordered by the court, a sum of money not to exceed $100 per month, in the discretion of the guardian, which decree was never revoked or modified.
At the last account on September 16, 1933, the guardian had on hand $4,321.65. Since then she received from the insurance company $19,976, making a total of $24,297.65 to be accounted for. Mrs. Ralda N. Jones suffered a cerebral hemorrhage on December 24, 1948, and died on March 9, 1949. Her daughter, Mrs. Lillian Jones Parker, a widow who had lived with her mother for several years and who was the largest beneficiary in her mother's will, qualified as executrix of her mother's will and as such executrix filed a final guardian's account for her mother, to which exceptions were filed by S. Frank Jones, a brother of Mrs. Parker, who had been appointed guardian for Mary V. Jones. Hearing was had on this final account and the exceptions thereto. The chancellor charged Mrs. Jones' estate with the above mentioned receipts, all of which had been handled by Mrs. Jones through her personal bank account, commingled with her own funds, and allowed credit for disbursements made for the benefit of Mary V. Jones in the amount of $14,295.27, and found that the estate of Mrs. Ralda N. Jones is indebted to Mary V. Jones in the amount of $10,002.38 for which he granted a recovery, but he specifically denied an allowance of interest thereon. From that decree the guardian of Mary V. Jones appeals and contends that he is entitled to recover interest on the amount found to be due the estate of his ward. Mrs. Parker prosecutes a cross-appeal and contends that the principal amount awarded is excessive and should not have exceeded the sum of $4,384.62.
The record before us is voluminous and (Hn 2) without detailing the evidence offered at the trial, we simply say that it is amply sufficient to support the decree in determining the principal amount due. The chancellor's finding is not against the weight of the evidence and is not manifestly wrong as to this feature and therefore we are not authorized to disturb it. Williams v. Barlow, 205 Miss. 449, 38 So.2d 914.
(Hn 3) As to the disallowance of interest we are of the opinion that the decree is clearly in error and should be reversed. Appellant contends that interest should be allowed at the rate of 8% per annum under Section 421, Code of 1942, which applies where a guardian permits surplus funds to lie idle without reporting the same to the court and asking for an order for disposition thereof. In the case of Reily et al. v. Crymes, 176 Miss. 133, 147-148, 168 So. 267, this Court said: "When a guardian converts the money of the ward to his own personal use, without previously having arranged by proper proceeding under Section 1885, Code 1930 (Section 421, Code 1942), to borrow the funds upon security approved by the court, the guardian has been guilty of a breach of his bond, Pan-American Life Ins. Co. v. Crymes, supra, 169 Miss. 701, at page 716, 153 So. 803, and he and his bondsmen have become liable as in debt for the money thus converted; and having become thus indebted, there is no authority in any court in this state to release that debt except upon payment thereof, not in property nor in securities, but in money." (Emphasis supplied). It is thus seen that this court has held that a conversion of funds amounts in effect to a simple debt. The interest rate for a simple debt is fixed by our statute at six per cent per annum, Section 36, Code of 1942, Section 1946, Code of 1930, and we are of the opinion that appellant is entitled to recover from appellee simple interest at said rate of six per cent per annum on the various amounts received by Mrs. Ralda N. Jones from time to time, less the expenditures made by her from time to time for the maintenance of the ward, and the decree will accordingly be affirmed on cross-appeal and likewise affirmed on direct appeal as to the award of the principal sum of $10,002.38, but it will be reversed as to the disallowance of interest and will be remanded for computation of simple interest at the rate of six per cent per annum.
Appellant argues that, if he is not entitled to eight per centum interest under the aforesaid statute, then under the authority of Russell v. Russell, 164 Miss. 335, 342, 144 So. 542, the interest allowed should be compounded at the rate of six per cent per annum. That case involved a gross fraud by a fiduciary who had become hopelessly insolvent. In the case at bar appellant concedes in his brief that "if Mrs. Ralda N. Jones had lived she would have correctly accounted for all of the guardianship assets including the profits that she made with them; and the court below was of the same opinion." It is not contended that Mrs. Jones was guilty of any fraud or intentional misconduct. Her estate is not insolvent; on the contrary, she left cash and liquid assets, consisting of bonds, stocks and securities, in the value of more than $44,000 in addition to unincumbered real estate the exact value of which is not shown by the record. In 39 C.J.S., p. 153, Guardian and Ward, Sec. 87d, it is said: (Hn 4) "Compound interest ordinarily is chargeable in cases of fraud, gross negligence, or abuse of trust on the part of the guardian, but only simple interest will be charged in cases of simple neglect of duty without fraud or intentional misconduct." We are of the opinion that that authority fits and should be applied to the case here presented.
Affirmed on cross-appeal; affirmed in part on direct appeal, and in part reversed and remanded.
McGehee, C.J., and Alexander, Kyle and Holmes, JJ., concur.