Koch v. Le Frois — 40 N.Y. St. Rep. 561

Majority

p. 561

Mary Koch, an Infant, App’lt, v. Jacob Le Frois, Resp’t.

(Supreme Court, General Term, Fifth Department,

Filed October 23, 1891.)

Headnote

■ Guardian—Fraud.

An action may be maintained by an infant against her guardian to recover damages tor fraud and conspiracy by which he sold her real estate for less than it was worth and after its consummation shared with his co-conspirator the profits of the fraudulent enterprise, without resort to his bond as special guardian, although he has not accounted. The requirement that an accounting must be had before action applies only to actions on the bond of the guardian.

Appeal by the plaintiff from a judgment entered on an order of the court, at the Monroe circuit, dismissing the complaint on the pleadings.

G. D. Gillette, for app’lt; H. R. Hallock, for resp’t.

The motion of the defendant, at the circuit, was in the nature of an oral demurrer to the complaint, on the ground that it did not state facts sufficient to constitute a cause of action. For the purposes of the motion, therefore, all the allegations of the complaint stand admitted. Those allegations, as summarized in the points of the respondent on this appeal, are as follows :

The complaint alleges that the plaintiff is an infant, and that in October, 1890, one Julius Schmidt was by order of this court, appointed her guardian ad litem; that Michael Koch, plaintiff's-father, died intestate in November, 1884, seized of the premises-described in the complaint, which consist of about nineteen and one-half acres of land on Hudson and Norton streets in the town of Irondequoit, Monroe county, leaving him surviving his widow,, and Frank Koch, Mary Koch (plaintiff), and Michael Koch, his-children and heirs at law; that in November, 1884, the defendant was appointed general guardian of plaintiff by the surrogate of Monroe county, and duly qualified and entered upon the discharge1 of his duties as such guardian.

That in November, 1889, the defendant petitioned the Monroe County court for leave to sell the interest of plaintiff and others-in the real estate hereinbefore mentioned, and to have himself appointed special guardian with respect to said proceedings; that, on the 16th of November, 1889, the defendant was appointed such-special guardian by order of the said Monroe county court, and qualified and entered, upon the discharge of his duties as such ; that he violated his duty as such special guardian by failing to sell plaintiff’s interest in the _real estate upon the best terms obtainable, and -wilfully and fraudulently connived and conspired with-one Frank Koch, a surety on his bond as general guardian, to prevent a fair sale of the premises to the highest bidder; that he wilfully and knowingly defrauded the plaintiff and her co-tenants by selling the premises to Frank Koch for a less price than responsible and bona fide purchasers had given him notice that.they were willing and ready to pay therefor ; that-he falsely reported to the court on November 18, 1889, that his agreement made pursuant to an order of said court to sell the premises to Frank Koch, for $5,325, said Koch to take the premises subject to two mortgages amounting to $5,700, making altogether $11,025, was for the best terms for which he cóuld sell the property, and that at the time of the making of such report he well knew that he could sell said premises to responsible purchasers for over $16,000; that the defendant, pursuant to the-agreement of sale, did sell and convey to Frank Koch the interest of the plaintiff and others in the real property for $5,325, subject to' $5,700 in mortgages thereon, and that soon after purchasing said property Frank Koch sold the same for about $17,000, and thereupon the defendant fraudulently and corruptly shared with said Frank Koch the profits of the purchase and sale, amounting^ to-$5,975, and that by such fraudulent conduct in said proceeding" the defendant violated his duty as such special guardian, and wih fully defrauded plaintiff to her damage in the sum of $1,600, for which amount the plaintiff demands judgment.

p. 563

This complaint seems to have been dismissed under the supposed doctrine of Stilwell v. Mills, 19 Johns., 304 ; Salisbury v. Van Hoesen, 3 Hill, 77 ; Hood v. Hood, 85 N. Y., 561 ; Perkins v. Stimmel, 114 id., 359; 23 N. Y. State Rep., 657, and other ■cases, all of which are cited and relied upon by counsel for the respondent here. We do not consider these cases as authority for the disposition made of this case. All of them are cases of actions on the bond of the trustee, guardian or personal representative; and against the sureties on such bond. That is the action which, in all of the cases cited, it is held cannot be maintained until af;er an accounting, in equity, by the trustee. The case of Stilwell v. Mills, supra, is the leading case, followed throughout the whole list, and the gist of that decision, which is substantially re-echoed in all the cases, is contained in the following language •of the court: “It would be peculiarly unfit to submit the accounts (of the guardian) to the decision of a jury or of referees. * * * 'The true effect of the condition of the bond is to render an account to the court of chancery, and as this has not been required, the condition of the bond is not violated.” The case in 3d Hill, .supra, was an action of debt on the bond, and the court, following the case in Johnson, cites the statute of 1815, providing that the bond, if forfeited, can be prosecuted only “by the direction of the •chancellor,” which direction will be given only after proceedings for an accounting before him. The case in the 85th H. Y. holds that the default of the executor must be established by proper proceedings against him before the sureties can be prosecuted upon their bond, and so throughout the list of cases cited.

But neither of those cases partakes of the character of the case •at bar. Here is not an action against either principal or sureties on their bond, nor is there any question of an accounting involved in this case. Here is an action for damage by the fraud and conspiracy of the defendant, who, as it is alleged, taking advantage of his position as special guardian of this infant, has conspired with another to defraud her of one-half the value of her inheritance, by a sale of the land for one-half its value as known to him; and who after the consummation of the fraud has shared with his ■co-conspirator in the profits of the fraudulent enterprise.

Surely the infant may have her remedy by action for such a wrong without resort to the bond of the special guardian, and it is only to an action on the bond that the doctrine of the cases •cited applies.

The provisions of the Code of Civil Procedure (sections 2351 ■and 2353) are equivalent to those of the act of 1815 referred to in the case in 3d Hill, supra, and both are statutory declarations ■of the principle of the common law stated in the case in 19th ■Johnson, viz., that the bond is not forfeited until a failure to account, or to pay over after an accounting by the trustee. We do not regard that principle as involved in this case, and know of no reason why the infant may not maintain her action against the guardian personally for such positive and specific fraud as is charged in the complaint in this action. ■

We think that the motion for a non-suit was improperly

p. 564

gi’anted, and that the judgment entered thereon must be reversed.

Judgment reversed and a new trial granted, with costs to the-appellant to abide the euent.

Macomber and Lewis, JJ., concur.