Poultney v. Randall — 22 N.Y. Super. Ct. 232

Majority

p. 232

Benjamin Poultney, Guardian of Maria Poultney, &c., Plaintiff, v. John Randall, Defendant.

Headnote

1. An agreement between the guardian of an infant and the person becoming X surety in his official bond, that the latter shall hol'd the property of which

the guardian is custodian, for Ms own indemnity is void, because subversive of the objects of the appointment and security, and contrary to public policy. The guardian cannot pledge the property of Ms ward as security to his own surety.

2. Hence it is no defense, in an action by the guardian, against one who has collected moneys of the estate and refuses to pay them over, to show that the defendant became the guardian’s surety upon such an agreement, and that the guardian is insolvent, and to offer to pay the money into Court.

(Before Bosworth, Ch. J., and Moncrief and Robertson, J. J.)

Submitted, February 13, 1862;

decided, March 15, 1862.

This is an action by the plaintiff as the general guardian of an infant and her estate, to recover moneys admitted by the defendant to have been collected by him, to the us©

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of the plaintiff as such guardian. The defendant, admitting the sum of $1,132.47 to be in his hands, belonging to said infant, set up in his answer, and claims by way of defense, that he became surety for such guardian upon condition that he, this defendant, should receive and collect the rents and income belonging to the infant, so that the defendant might hold himself safe and harmless in case of the default of the guardian to fulfill the condition of his bond. That the guardian executed a power of attorney to the defendant to collect, &c. That said guardian is insolvent, and if the defendant is compelled to pay over the moneys he has collected, the guardian could not pay the said bond, and that such payment would fall wholly upon the defendant.

Upon the trial, which was before Mr. Justice White and a Jury, on November 22d, 1861, the plaintiff having proven his appointment by the Supreme Court, as general guardian, &c., rested his case; the defendant thereupon offered to prove the several matters alleged in his answer; the counsel for the plaintiff objected to the evidence, and it was excluded and the defendant duly excepted. The Judge thereupon directed the Jury to find a verdict for the plaintiff, for the sum of $1,196.93, which was accordingly found; and directed the exceptions to be heard in the first instance at the General Term of this Court, and judgment to be stayed until the decision of the General Term.

Alexander W. Bradford, for defendant, submitted the following points:

I. The distinction between legal and equitable remedies no longer continues. (Voorhies’ Code, 217, § 150.)

II. Consequently the answer may set up new matter of an equitable nature constituting a defense to the action. (Code, 214, § 149, notes e, /.)

III. The plaintiff became general guardian under an agreement with his sureties for their indemnity, and for the security of the fund. He now seeks to repudiate the

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agreement, and, by action at law, obtain possession of the fund. This breach of contract should not be made the basis of pecuniary injury to the defendant, unless there be some insuperable barrier to granting relief.

IV. If, as general guardian, the plaintiff can bring an action in any Court, in respect to the proceeds of the sale of real estate, under special proceedings, then the defendant can avail himself of his equitable defense before the tribunal so selected.

V. Though the action is instituted by the plaintiff, as general guardian, yet it is not brought for the property of the ward, but for money collected by the defendant, and mixed with his funds. It was not necessary, therefore, for the plaintiff to declare in his representative character. (1 Chitty’s Plead., 23.)

VI. As soon as the surety’s obligation to pay is absolute, he is entitled in equity to require the debtor to exonerate him, and he may file a bill to compel an exoneration, although the creditor has not demanded payment, of him. (Theobald, Principal and Surety, 169.) A surety, generally speaking, may come into a Court of Equity and apply, for the purpose of compelling the principal debtor, for whom he is surety, to pay in the money and deliver him from his obligation. (Nisbet v. Smith, 2 Bro. C. C., 579.)

VII. In this case the principal is endeavoring to deprive the surety of the counter-security, on the faith of which he became surety. His insolvency alone would justify equitable relief on an original bill by the surety. Certainly the Court cannot .place this fund in his hands when apprised by the answer of its unsafety.

VIII. If it be said that the defendant cannot avail himself of the defense in this Court, then the plaintiff cannot bring his aetion in this Court.

This objection is, of course, based on the idea that the subject of the action is the proceeds of a fund derived from the sale of real estate by order of the Supreme Court.

If the minor is to be considered as a ward of the Supreme Court, that Court has sole and exclusive jurisdiction over

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the defendant, who was the “ person intrusted with the disposition of the income, &c.” And, if not a ward of that Court, then there is no bar to giving the proper equitable relief in this Court.

» In the former case, the complaint should have been dismissed; in the latter, the judgment should have been for the defendant, on payment of the money into Court.

Charles H. Sunt, for plaintiff,.submitted the following points:

I. The alleged agreement is not inter partes. The trust estate is not. bound by the strictly personal undertakings of the trustee, whether entered into before or after his appointment.

II. The agreement set up by the defendant is illegal and void. 1. It was an agreement to do what the law will not permit to be done, namely, the private abdication of the office of trustee. (Hill on Trus., 266; 1 Pars, on Cont., 116.*) 2. It was immoral; an agreement to deceive the Supreme Court, and trifle with the estate of the infant cestui que trust.

III. The kind of relief which the defendant pretends to claim cannot be granted by this Court. As a part of the Chancery jiirisdiction, now lodged by the Constitution in the Supreme Court, the latter has judicial control over the persons and estates of infants, including the appointment and removal of guardians, and has exercised that jurisdiction here, satisfying itself in the way pointed out by law. (As to jurisdiction in. removal of trustees see 1 R. S., 730, § 70.)

IV. Ho Court, having jurisdiction of the subject, would remove the plaintiff on the suggestion of a mere meddler, like the defendant. The application should be made on behalf of the infant, and by a person showing some kind of right to represent her. (Same statute.)

V. Finally, no Court having the jurisdiction would exercise it, under any idea of protecting a man who says that he assisted in procuring a bad appointment by committing a fraud upon the Supreme Court.

An agreement between the guardian of an infant and his surety, that the surety shall hold all the property of which the guardian is the legal custodian, for his own indemnity, is subversive of the objects of the appointment, and of the purposes of requiring the guardiap to give security.

If effect be given to such an agreenient, it would be ' beyond the power of the guardian to perform his duty. He could not compel the surety to pay him the money belonging to the infant; and failing to perform his duty, the infant’s remedy would be against the surety. And that he would be compelled to seek through a substituted guardian, if the facts stated in the answer constitute a defense.

Upholding such a defense would lead to great abuse. Sureties for guardians would be persons who, as a condition of becoming sureties, would stipulate for the custody of the estate. Its proper use and safety would not depend in any degree upon the capacity or fidelity of the guardian. Whether it would be applied as the duty of the guardian required, would depend on the will of the surety, not on that of the guardian.

The guardian, if he has individual property, may pledge or mortgage it to indemnify his surety. But he may not pledge the property of his ward as security to his own surety, that he will do what the surety contracts he will do, viz., duly perform his duties as guardian.

Any agreement between the guardian and his surety, in respect to the property of the ward, which interferes with the guardian’s power to perform all the duties in respect to it, devolved upon him by his appointment, should be treated as void, upon considerations of public policy, and a fraud upon the statute requiring security for the due performance, by the guardian, of his duties as such.

It is not suggested that this Court has power to remove the guardian and should do so as a part of the relief to which the defendant is entitled in this action. If, within the knowledge of the surety, the guardian is unfit to be

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continued, the surety cannot keep the infant’s money and act as guardian de facto. The facts 'stated in the answer constitute no defense to the action, and judgment should be entered for the plaintiff in accordance with the verdict.

Bosworth, Ch. J., and Robertson, J., concurred in this opinion.