Opinion
(Filed 26 April, 1904.)
Guardian and Ward — Limitations of Actions — Suretyship — Code, sees. 154, 155, 163, 169, 1402, 1488, 1510, 1525, 1577, 1580, 1617, 1619 — Bonds.
An action by the ward against the sureties on the bond of the guardian is barred after three years from the time the ward becomes twenty-one years old if the guardian makes no final settlement; and within six years if the guardian makes a final settlement.
MONTGOMERY, J., dissenting.
ACTION by the State on the relation of Annie J. Self and another against J. L. Shugart and others, heard by Judge W. H. Neal, at April Term, 1903, of the Superior Court of SURRY County. From a judgment for the plaintiffs the defendants appealed.
Watson, Buxton Watson and W. L. Reece for plaintiffs.
Carter Lewellyn and Glenn, Manly Hendren for defendants.
On April 23, 1888, the defendant Shugart qualified as guardian of Annie and James Franklin and gave bond in the penal sum of $150, with Hollifield and McKaughan as sureties. The guardian made no returns to the clerk (except returning the sale of some real estate May 3, 1888) until September 11, 1902, which was after the plaintiffs had made a demand for settlement in August, 1902. Annie Franklin became of age in April, 1890, and married in January, 1896. James Franklin became of age in April, 1895. The plaintiffs resided in Alabama. No demand for settlement was made on the (186) guardian till August, 1902.
The guardian is insolvent, and the question whether or not he is protected by the statute is not raised. The sole controversy is whether the sureties are released by either the three, six or ten year statute of limitations, all of which are pleaded. If the sureties are released by the failure of the wards to bring suit within three years after arriving of age, neither the subsequent demand and refusal nor the filing a final account, after the statute became a bar, would revive it and set it in motion. Under The Revised Code, ch. 65, sec. 4, and statutes prior thereto, a delay of the ward for three years after attaining his majority to have a final settlement or to bring suit absolved the sureties from liability. Johnson v. Taylor, 8 N.C. 271; Williams v. McNair, 98 N.C. 332. But the plaintiffs contend that this is otherwise since the adoption of The Code of Civil Procedure. It has been held expressly against this contention of the plaintiffs in Norman v. Walker, 101 N.C. 24. There the guardian qualified in July, 1872, the ward became of age in September, 1876, the guardian died before the ward became of age without having settled his trust or made any of the required returns; in 1887 the ward made his demand upon the sureties and brought action against them. It was held that it was the duty of the guardian within three months after his appointment to exhibit his account under oath to the clerk of the court and to make annual returns (The Code, secs. 1577, 1580); that his failure to do so was a breach of the bond, and that by The Code, sec. 155 (6), an action against the sureties on the official bond could be brought only within three years thereafter, except that by virtue of section 163 the beginning of the running of the statute as to a minor was postponed till his arrival at age. The plaintiff's contention that the statute ran only from (187) the filing of a final account (The Code, sec. 154) was overruled, and Williams v. McNair, 98 N.C. 336, was distinguished and held not in point. In Norman v. Walker, supra, the guardian having died before the ward became of age, the failure to settle with the ward at his majority was not relied on as a breach, but his failure to file his annual accounts.
In Kennedy v. Cromwell, 108 N.C. 1, Norman v. Walker was quoted and approved, and it was held:
1. That an action for breach of the bond of an executor, administrator or guardian is barred as to the sureties after three years from the breach complained of. The Code, sec. 155 (6).
2. That when a final account has been filed, an action to recover the amount shown thereby to be due is barred as to the sureties in six years from the filing of the account. The Code, sec. 154 (2).
3. Whether a final account is or is not filed, if there is a demand an refusal, the principal, as well as the sureties, is absolved from liability if no action is brought within three years thereafter. This is because the refusal puts an end to the trust.
4. When there is neither final account filed nor demand and refusal, whether the executor, administrator or guardian himself is protected by the lapse of six years or ten years was left an open question, though it was intimated that ten years would certainly be a bar.
5. That when no final account has been filed, the statute begins to run from the arrival of the ward at age (The Code, sec. 163), but whether in such case three years or ten years bars as to the principal, quaere.
6. When the statute begins to run the subsequent marriage of the feme plaintiff will not stop it. The Code, sec. 169.
These authorities are conclusive that, though there has been (188) a change in the phraseology of the statute, the ward's right of action accrues against his guardian upon his arrival at age, and that the sureties on the guardian bond are protected by failure to bring action thereon within three years from any breach by failing to file his final account and settlement with his ward, which it is the guardian's duty to do upon the majority of the ward, while if a final account is filed, though there is no breach of the bond, yet as to the sureties the balance shown by such final account is conclusively presumed to be paid after the lapse of six years.
The general rule is, as above, that the statute of limitations begins to run against the maintenance of an action by the ward against his guardian and his bond at his majority. 15 Am. Eng. Ency. (2 Ed.), 82, 121, and cases there cited; Angell on Limitations, sec. 178. The cases relied on by the plaintiffs are Williams v. McNair, 98 N.C. 336, which was held not applicable to a case like this by Norman v. Walker, 101 N.C. 24; Woody v. Brooks, 102 N.C. 334, which was cited and followed in Kennedy v. Cromwell, supra; and lastly, Stonestreet v. Frost, 123 N.C. 290. This last was an action against an administrator, whose office and duties, unlike those of a guardian, do not expire and absolutely terminate ex vi termini at a definite and predetermined date, and it was held that in such case, when there had been a demand and refusal to settle and an action brought within three years thereafter, the sureties were not absolved from liability, although there had been a failure of the administrator prior to the three years before action brought to file his annual account.
We think the true rule is that it is the duty of a guardian to settle with his ward on his arrival at age, and a failure to do this is such breach that if the ward fails to bring action within three years the sureties on the guardian bond are absolved from liability under The Code, sec. 155 (6), for such failure to settle is necessarily (189) "the breach complained of" in an action to recover any balance due by the guardian, when no final account was filed, while if such final account is filed in apt time the balance shown thereby to be due the ward is presumed paid (as to the sureties) after six years. As the guardianship ceases ex vi termini upon the arrival of the ward at age, the failure of the guardian to settle then is a breach of his duty, for which the ward can maintain an action to recover the amount due, and the failure by the ward to bring such action within three years thereafter must release the sureties on the guardian bond, who have been exposed to an action during these three years, unless a final account is filed showing a balance due, and then the statute is six years. The provision in The Code, sec. 1619, that the clerk may require the guardian to file his final account at any time after the lapse of six months from the ward's coming of age, is not intended to bestow upon the guardian the ward's moneys and properties for six months after he becomes of age, nor to deprive him of the right to bring an action to recover them during the period, but simply means that the guardian is presumed to have settled with his ward within such six months, and after its lapse the clerk can call on the guardian to file his final account, with the receipts of the ward, in full settlement to complete the record in his office, for that section states that such return shall be "audited and recorded." Such final account is intended to be subsequent to the settlement with the ward, not preparatory thereto. The six-years statute, not the three-years statute, begins to run as to the sureties from this required final return if any unpaid balance is shown, as the six-year statute also runs from the final return of the administrator or executor which is required to be filed at the end of two years from his qualification (the Code, sec. 1402); but three years after the lapse of such two years is (190) not a bar to an action against the sureties on the bond if the final account is not filed at the end of two years. That the three years runs as to sureties on the guardian bond from the arrival of the ward at age, is held in Kennedy v. Cromwell, 108 N.C. 1, paragraph 5 of the headnote.
Upon the facts agreed, judgment should have been entered in favor of the defendant sureties.
Reversed.