State ex rel. v. Hardy et al.

It will be observed that the bond sued on was a new bond given as surety for Hardy as guardian and curator in his private capacity and not as public guardian by virtue of being public administrator. Hence it was not an additional bond to guarantee the faithful performance of his duties as public administrator and guardian nor are the terms of the bond such as to make is retrospective in character.

For the purpose of showing that liability was on the sureties of his bond as public administrator and not on the present or second set of sureties, the defendant introduced Hardy as a witness to prove that he converted the heirs money before the present bond was executed and that he did not have any money of these heirs in his official hands at the time the bond in suit was executed, and that none had come into his hands as guardian since, except the rents heretofore mentioned which rents he said he had correctly accounted for and paid out for expenses. His testimony, however, is very indefinite and unsatisfactory. He was asked if he had any of the money or personal property of the Miller heirs at the time the bond in suit was executed or at any time for a period of six months before that, and he answered in the negative. But he could not be induced on cross-examination to say when he converted the Miller money, and his testimony as a whole tends to show that it is only his conclusion that he had converted the money of these heirs at that time. He kept all funds in his hands as public adminstrator, including the Miller money, in one general fund in a Public Administrator Account at the bank. This account was not introduced in evidence, nor was he able to testify with reference to it and admitted he had not examined it. No showing whatever was made as to when this Public Administrator account was exhausted if it ever was. So far as the evidence shows there may have been money in this account at the time the second bond was executed and thereafter, but that he had considered the Miller money had been checked out

State ex rel. v. Hardy et al.

either in settlement of other estates or in loans on notes made payable to himself personally. But if there was any money in said account, which was an ex-officio guardian account, then such money could as well be said to be Miller money as any other. If there was money in said account at the time the present bond was executed, he should not be allowed to say it was not Miller money. How could he make a distinction and say no money belonging to the Miller heirs was in the account and that the money remaining in the fund belonged to other estates when no such distinction existed in the fund? If when the present bond was given, there was money in the Public Administrator account to which that estate could have laid claim, this was an actual holding of funds as guardian sufficient to cause his sureties on the personal bond to be liable for a subsequent conversion thereof. For these reasons we do not think the defense of a prior conversion was sufficiently established to warrant us in reversing the case outright even if the question of the rents were not in the case.

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The testimony in this case is unique and peculiar for another reason. It shows that Hardy all along had, and now has, enough cash in his personal account together with the aforesaid notes payable to himself personally, to cover the amount of this estate; that at the time of the trial he had notes aggregating between $3100 and $3500; that he could cash his other property for at least $2500 and perhaps more. In other words, while the testimony states as a conclusion that Hardy converted the funds from his official to his private hands, shows he is not insolvent and that even if he did violate his duty during the time of the old bond, still such violation did not render him incapable of doing his duty during the time of the new bond by restoring the fund and thereafter paying it over to his successor when ordered to do so. His sureties under the new bond agreed to stand good for his breaches of duty occurring after the execution of their bond. One of these duties was to collect moneys due the estate and when done

State ex rel. v. Hardy et al.

another duty arose to pay it over when ordered. If during all the time of the second bond he was solvent and able to replace the money said to have been theretofore taken, and did not do so, then it is somewhat difficult to see why, in reason and logic, this was not a breach of duty under the new bond; and such breach, together with his breach in refusing to pay over when ordered, caused, or at least was one of the causes of, the loss to the estate. This was not the sole cause of the loss it is true; the conversion during the time of the new bond also caused it, and for this reason the first bondsmen are also liable. In the situation aforesaid, it would seem that both sets of bondsmen ought to be liable to the estate, though, of course, the latter could have but one satisfaction. This would not result in injustice to the second set of bondsmen since they would have the right to have contribution of the first set, and the estate meanwhile, for whose benefit both bonds were given, would be withdrawn from litigation.

There is no question, however, but that the general rule is that "where an officer proves a defaulter, and has held the office under different appointments with several sets of sureties, it must now be conceded by established precedent that the sureties will be responsible who were on the bond at the time the defalcation occurred." [State ex rel. v. United States F. and G. Co., 188 Mo. App. 700, 704 and cases cited.] The rule is further that such sureties are liable only for those breaches occurring after the execution of the bond on which they are obligated and they are not liable for prior defaults unless made so by the terms of the bond. [State to use v. Jones, 89 Mo. 470, 480; State ex rel. v. Chatham Nat'l. Bank, 98 Mo. 532, 573.] This rule applies in the case of guardians the same as in that of other officers; and "in order to determine which set of sureties are liable, it is only necessary to ascertain when the defalcation occurred, for each set of sureties is liable for the malfeasance which their principal commits during the period they were standing for him.'

State ex rel. v. Hardy et al.

[State ex rel. v. Holman, 93 Mo. App. 611, 617 and cases cited.]

The foregoing statements of the general rules are well enough and cause no difficulty when the sureties sued are those on the bond at the time the funds were converted; and the general statement of the rules above mentioned cause no difficulty even when the suit is against a set of sureties who became such after the conversion, if the principal was not, during the continuance of the second bond, able to return the fund theretofore converted. But is it strictly and logically accurate to apply the above general rules so as to absolutely exonerate the sureties on the second bond, even though the technical coversion took place prior to the giving of said second bond, if, notwithstanding the prior conversion, the principal was solvent and able to replace said fund during the entire existence of said second bond. For example, a curator under one bond converts property of his ward by changing it from his official to his personal possession, but remains solvent and able to replace it. While matters are thus, he gives a new bond. The sureties under this last bond do not obligate themselves to stand good for such prior conversion, nor any prior breaches of duty. Nor should they be required to pay for any loss occasioned solely by such prior conversion or breaches. But if by reason of the prior conversion and the subsequent solvency and ability of the principal to replace the fund, the loss results from both the prior and subsequent breach why should not the estate be entitled to look to both sets of sureties, requiring them to ultimately adjust their liabilities between themselves? The preservation of the estate is what the two bonds were given for. And if it is difficult to fix ultimate liability because it is difficult to ascertain when solvency or insolvency exists, that is a difficulty which the bondsmen should shoulder. It is true the second set of bondsmen do not agree to stand good for prior breaches, but in the present instance are there not two breaches, one arising under the first bond and the other under the second, both of which have contributed

State ex rel. v. Hardy et al.

to cause the loss? The second bondsmen do agree to stand good for the failure of their principal to perform the duties incumbent upon him after their bond was executed. Among these duties thus subsequently arising is first to replace the fund in the guardian's official hands and next to pay it over when required. Of course, the sureties do not agree to stand good for a failure to discharge a duty that was impossible at and before the time the bond was executed; but if he was able to discharge it, then it was not impossible. If it be said the sureties only agreed to be responsible for the funds actually in the guardian's official hands at the time of the execution of the bond, it can be said in reply that the terms of the bond do not so provide. As a matter of fact they are liable for all funds which the guardian could have collected from some other person but did not. Why then should they not be liable for funds he could have collected from himself but did not? For a failure to turn over the balance due on final settlement, the bondsmen ought to be technically liable even though the defaulting principal never was able during the time of the second bond to replace money he had theretofore converted, but, in such case, they would be liable in nominal damages only, since the loss or damage was caused solely by the breach of duty prior to the second bond and not by the technical breaches thereafter. But where the curator, after such prior breach of duty remains solvent after giving his second bond, and fails to perform duties which he could have performed because he was solvent, then is there not also a breach of duty under the second bond, a breach which has caused, or has joined in causing, the loss? If this be so, then it would seem that the sureties on the second bond should not be wholly absolved from liability. The fact that the first set of bondsmen are also liable for the breach under their bond ought not to exonerate the second set so far as the estate is concerned. The second set should be released only when the first breach was the sole cause of the loss.