Baughn v. Shackleford

SlMRALL, J. : This appeal is prosecuted to determine whether certain credits claimed by the appellant, and refused by the chancery court, ought to be allowed to him. James S. Reid, guardian of Orlena and Florida Lewis, infants, under the' decree of the probate court of Madison county, in 1858, sold the real estate of his wards on a credit of twelve months. James W. Baughn became the purchaser of one parcel at $1,444.44, and J. W. Kilpatrick purchased another lot for $1,155.56. Notes with personal security were given. The deed to the purchasers recited that the statutory mortgage was retained. Baughn and Kilpatrick also executed to Reid a mortgage, with power of sale, as a further security. Subsequently, Kilpatrick sold the lot bought by him to Baughn. These wards having married, this bill was brought by them and their husbands to enforce against the lands in the hands of Baughn a balance of the original purchase money claimed to be due. The controversy is, how much, if anything, is due the complainants. The complainants assert that certain credits which appear to have been made upon the notes of the original purchasers to their guardian were not a legal discharge pro tanto. First, as to the credit of $623, made by Baughn to Reid in 1861. Reid was the debtor of Cassell & Baughn, druggists, and the arrangement was that Reid should pay his debt to the firm, of which Baughn was a partner, by giving to Baughn a credit on his note to Reid as guardian, which was accordingly done. Reid was then entirely solvent. Reid, in his annual account, charged himself with this collection and interest thereon. The “ agreed case ” concedes that both parties to this transaction were actuated by good faith, and that no wrong was meditated or intended by either to the wards. [265] Judicial tribunals are bound to administer justice according to rules prescribed beforehand by the supreme power; and although those rules, in exceptional cases, may work hardship, greater mischief would ensue if they were dispensed with and each case decided as might seem right and just to the court. The law prescribed the duties of the guardian; if he departed from them with ever so honest an intent, he exceeded the powers with which he was intrusted, and the evil, if any, should not fall upon his wards. The highest safety of the interests of wards requires that the guardian shall be held to a rigid adherence to his trust. In this instance, he converted the real estate of his wards into money. The statute under which he acted was especially cautious to insure the best price, by directing the sale to be on a credit, and was exacting that the debt should be secured beyond peradventure for that purpose, raising a statutory lien on the property, in addition to the personal obligation of the purchaser with sureties. This was the character of the debt when the exchange of credits between Baughn and Reid took place. That transaction, if it be permitted to stand, canceled pro tanto the statutory mortgage and the personal obligation of Baughn and his sureties, and substituted for the benefit of the wards the simple personal responsibility of Reid and the sureties on the bonds. Nothing will warrant an advancement or discharge of the wards’ security short of payment of the money. Hoggatt v. Wade, 10 S. & M. 106. This arrangement canceled the personal debt of Reid to Baughn and his partner, in consideration of a credit of like amount on the debt of Baughn to the wards. In principle, it is like the case of Leatherman v. Prosser, 4 How. 237, where the credit of an estate was assigned in liquidation of the private debt of the executor. The mistake made by the guardian here, and qften made, is the assumption that he has the same extent of authority to deal with [266] the assets of his wards as with his own affairs. These notes were the property of the wards; the debt was due to them. The guardian was the trustee constituted by the law to collect and appropriate it for their use. The principle has often been recognized that this sort of trustee cannot discharge the debt or the statutory mortgage to the prejudice of the cestui que trust, except upon the terms of receiving payment. Elliott v. Connell, 5 S. & M. 106; David Pressley, county superintendent of education v. Martha A. Ellis and W. H. Ellis et al. MSS. opinion, where the cases cited are collected. If the guardian had transferred to Baughn the assets of his wards in payment of his private debt, it would not be doubted, if the assignee had notice of their character, that he would take no title as against the wards. Such a transaction would be illegal and fraudulent ■ in law. Petrie v. Clark, 11 S. & R. 388; Field v. Schiefflin, 7 Johns. Ch. 155. The effect is precisely the same where the guardian credits the debt of the ward with the amount of his indebtedness to their debtor. There was no error in disallowing this credit. We think the transaction between Baughn and C. C. Shackleford, agent for Sansom, the then guardian, of the same character substantially. The money, instead of being paid to Shackleford, on account of the wards’ debt, was applied to take up Shackle-ford’s indebtedness to Madison county. The payment made by Kilpatrick of $775.66, on the 15th September, 1863, stands upon a different footing from either of the others. James S. Reid, being in the Confederate army, left Kilpatrick’s note with his brother, Dr. W. M. Reid. Kilpatrick applied to Dr. Reid to make this payment. The doctor doubted his right to receive the money, but did so, and entered the credit on the note. Four months after this, James S. Reid returned to Canton; his brother informed him what he had done; James S. made no objection, but [267] received the money and the Kilpatrick note. No steps were ever taken afterwards by James S. Reid to repudiate the transaction. It would not be disputed if the guardian in person had received'the money from Kilpatrick on the 15th of September, 1863, that it would have been a good partial discharge of the debt. In his absence in the army, the note was placed in the hands of Dr. Reid, his brother; whether simply for custody, or collection also, Dr. Reid was doubtful. Four months after receipt of the money, James S. Reid accepted it from his brother, and the note credited by it. Manifestly, if he disaffirmed the act, either because his brother proceeded without authority; or because the money was what is called “ Confederate money,” or for both reasons, it was his plain duty to have promptly notified Kilpatrick, and returned to him the money. Thomas v. Todd, 6 Hill (N. Y.), 340. Dr. Reid was not an intruder, thrusting himself into a business in which he had no concern. The scope of his authority in his own estimation was doubtful; he resolved in favor of his right to receive the money. The principal manifestly, by accepting the money, and the note credited with it, either acquiesced in the construction which the agent put upon his authority, or confirmed and ratified what had been done for him. A subsequent ratification, with full knowledge of the facts, is. equivalent to an original authority. Pickett v. Pearsons, 17 Vt. 478, is much like this case; there as here, depreciated money had been collected by an agent, and received by the principal under protest, “that he would see what would be done with ithe retained it two or three months before he decided to repudiate it. It was held, however, that he was bound to make inquiry in a reasonable time, and was bound by his delay. In other words, his conduct amounted to an acquiesence. Whether Dr. Reid had original authority or not to [268] receive the money, a subsequent ratification of his act, by accepting it from him, as collected, on the note, is conclusive upon James Reid. The acquiesence of the principal will be presumed from the lapse of time, although the strict relation of principal and agent does not exist, “ as where there are peculiar other relations as that of father and son.” The presumption of a ratification will become more vehement, and the duty of disavowal on the part of the principal more urgent when the facts are brought to his knowledge. Story on Agency, § 286. We think that this credit ought to have been allowed. There is error in the decree in disallowing. Wherefore, the decree is reversed, and cause remanded for further proceedings, in accordance with these views.