State Ex Rel. Robinson v. Ham

WiNBORNE, J. Taking the evidence in the light most favorable to plaintiff and giving to her the benefit of every reasonable intendment and reasonable inference to be drawn therefrom, is there sufficient evidence *27 of lack of good faith and want of due diligence on the part of the defendant guardian in making the loans challenged by plaintiff and in the management of his ward’s estate to take the case to the jury? Careful consideration of all the evidence and review of the decisions of this Court impel us to hold in the negative. It is a settled rule of law that a guardian is not an insurer of loans and investment of guardianship funds. All that sound public policy requires is that he shall act in good faith and in the exercise of due care and diligence. Deberry v. Ivey, 55 N. C., 370; Nelson v. Hall, 58 N. C., 32; Sheets v. Tobacco Co., 195 N. C., 149, 14 S. E., 355; Stroud v. Stroud, 206 N. C., 668, 175 S. E., 131. A loan of the ward’s funds on good and sufficient real estate security, within the jurisdiction of the court, is always a proper investment. 28 C. J., 1142. By statute, guardians in this State are given power to lend any portion of the estate of their wards, upon bonds with sufficient surety, which they may assign to the ward on settlement with him. C. S., 2308; Goodson v. Goodson, 41 N. C., 238; Cobb v. Fountain, 187 N. C., 335, 121 S. E., 614. “As a general rule a guardian may discharge himself at the termination of his trust by turning over to the person lawfully entitled thereto whatever securities he may have taken in good faith as a result of the prudent management of his ward’s estate.” Adams, J., in Cobb v. Fountain, supra. In Sheets v. Tobacco Co., supra, Connor, J., stated: “An investment of guardianship funds, made by a guardian, may be challenged by the ward or person entitled thereto upon a final settlement, upon the ground that such investment was not made in good faith and in the exercise of due diligence, unless such investment was expressly authorized by statute or by order of court obtained prior to the making of the investment. If the investment was made under statutory authority, or pursuant to an order of court, the guardian cannot be held liable for losses resulting therefrom, in the absence of fraud or gross negligence. In the case of investments not so expressly authorized, the good faith and due diligence of the guardian may be challenged, and if successfully challenged, he will be held liable for any and all losses resulting from the investment. Good faith and due diligence on the part of the guardian, however, will protect the guardian, and the sureties on his bond, from liability for losses.” Applying these principles to the factual situation of the case in hand, we fail to find evidence of bad faith on the part of the guardian, or of his failure to exercise due care and diligence in making the loans and in the management of the ward’s estate, as charged by the plaintiff. *28 The loans were secured by deeds of trust on real estate. There is no evidence that at the time the loans were made the borrowers were insolvent, nor is there evidence that the value of the real estate conveyed as security for the loans was then insufficient security therefor. There is no evidence as to the value of one of the lots at any time. Evidence of value of the other lot in 1934, at the “height of the depression” when the values of land had steadily declined, standing alone, is no criterion for judging values in 1930 and 1931. Nor can we agree that making a loan to the guardian’s uncle, and another to a corporation of which his father and uncle were officers, both loans being secured by real estate, nothing else appearing, is evidence of bad faith or lack of due diligence on the part of the guardian. While it is true that as against one lot there is evidence of past due assessments which were prior liens on the lot, the evidence shows that these assessments could be put in good standing by paying ten per cent of the assessment and spreading the remainder over a period of nine years. There is no evidence that at the time the loan was made the value of the lot was not sufficient security for the loan, even after taking into account the amount of the assessment liens. It is appropriate to note, too, that guardian’s report on 25 November, 1931, showing these loans, was audited and approved by the clerk of Superior Court. There is no error in the judgment dismissing the action as in the case of nonsuit. Affirmed. BaRwhill, J., dissents.