Hartford Accident Indemnity Co. v. Hembree , 193 Okla. 249 ( 1943 )

The majority opinion disapproves procedure and practice under our Probate Code which has been followed in this state for more than 30 years. It renders void innumerable orders of county courts releasing sureties on guardians' bonds. Its conclusion is unsupported by cases from this court or other courts construing statutes similar to our own.

The importance of the questions involved justifies a further discussion of the contentions of the parties and an expression of my reasons for not agreeing with the majority opinion.

The only statutes governing the release of guardians' sureties prior to final settlement in cases of this character are 58 O. S. 1941 §§ 185, 779. Said section 185 appears in the chapter pertaining to executors and administrators, and was formerly section 6278, R. L. 1910. The section was amended in 1913 merely by making the provisions thereof apply to guardians as well as to executors and administrators. It provides in substance that the surety of an executor, administrator, or guardian, if he so desire, may make application by petition to the county judge to be released from responsibility for future acts. The judge is required to issue citation to the executor, administrator, or guardian to appear at a specified time and place to give other security.

Section 186, following, provides that in event new sureties are given to the satisfaction of the judge, he may thereupon make and enter an order releasing the sureties who so applied from any liability "on their bond for any subsequent act, default or misconduct of the executor or administrator."

Guardians are not included in the latter section.

Said section 779 deals wholly with guardians' bonds. It reads as follows:

"The judge of the county court may require a new bond to be given by a guardian whenever he deems it necessary, and may discharge the existing sureties from further liability, after due notice given as he may direct, when it shall appear that no injury can result therefrom to those interested in the estate."

Other than the citation to the guardian, the court ordered no notice to anyone.

Plaintiffs say that section 779, applying only to sureties on guardians' bonds, is the exclusive remedy in cases of this character, and that the procedure therein provided must be strictly followed in order to insure the validity of the order of release. Aetna Accident Liability Co. v. Langley,68 Okla. 283, 174 P. 1046. It is urged that said section 779 made it the mandatory duty of the court to notify all parties interested in the estate of the wards, including the wards themselves, their next of kin, and especially certain designated parties who had been made guardians of the persons of said wards by order of court. The reasoning employed in arriving at that conclusion is that without notice to such parties the court would be without sufficient information to determine whether no injury would result to those interested in the estate, within the meaning of said section, by releasing the sureties.

And plaintiffs further contend that the defendant, instead of complying with the provisions of section 779 relating to notice, proceeded under section 185, supra, and 58 O. S. 1941 § 552, the latter relating to the settlement of interim accounts of executors and administrators, and made to apply to guardians' accounts by 58 O. S. 1941 § 833.

Said section 833 provides that notice of the settlement of such accounts be given by the judge in a specified manner. And plaintiffs say that since no such notice was given, the order approving the account and the order discharging the surety was a nullity. In support, plaintiffs cite Rice v. Wilson,129 Mich. 520, 89 N.W. 336; Kaspar v. People, 230 Ill. 342, 82 N.E. 816. Those cases, say plaintiffs, have been followed by this court in Aetna Accident Liability Co. v. Langley, supra.

The latter argument is apparently based upon the assumption that the approval of the guardian's account after due notice was necessary to the legal discharge of the surety.

But the above argument is wholly without statutory support. The filing of an account is not made a necessary part of the procedure on substitution of sureties in cases of this character. The court may properly order an accounting as an aid in determining sufficient security to be required. But the statutes do not even suggest an accounting. So far as concerned the release of the surety from liability for subsequent defaults, the accounting was superfluous. I find nothing in the Langley Case, supra, to indicate a contrary view.

Section 185, after the amendment of 1913, neither enlarged nor diminished the duties of the county judge as then existing in the matter of releasing sureties on guardians' bonds. The amendment merely authorized such sureties to petition the court for release and thus to invoke the court's powers. Up to that time such sureties were without specific authorization to petition for release. However, that right had been recognized by this court. Langley Case, supra.

It is true that section 185 provided that citation be served on the guardian; but section 779 contains substantially the same requirement. It clearly contemplates notice to the guardian to appear and make a new bond in lieu of the old. Where the county court's jurisdiction is properly invoked on petition to discharge sureties on a guardian's bond, the release is conditioned upon the substitution of a new bond. The amount of the new bond and the sufficiency of the sureties are matters for the court's determination, and in the absence of fraud, its decision and order substituting bonds and releasing the surety is conclusive and binding. Title Guaranty Surety Co. v. Foster, 84 Okla. 291, 203 P. 231.

In the instant case, if the county court's jurisdiction was properly invoked, and plaintiffs' charge of fraud was not established, the order releasing defendant as surety was valid and binding.

A proper petition was filed and citation issued. The guardian responded and made a new bond. The bond was approved by the court. Ordinarily, that would complete the proceedings necessary to the issuance of the order of release. However, I do not intend to say that the court on its own motion might not require a new bond and release the old one.

The question then remaining is whether the notice ordered and given was sufficient to give the court jurisdiction to act. If the notice satisfied the requirements of sections 185 and 779, it was sufficient.

The issuance of the citation constituted literal compliance with section 185.

Under section 779 the court may accept the new bond and release the old "after due notice given as he may direct, when it shall appear that no injury can result therefrom to those interested in the estate." The court directed that due notice be given to the guardian. No other notice was ordered or given. The service of notice as directed by the court was a sufficient compliance with the statute. Said section 779 does not define the character of notice nor designate the parties upon whom it shall be served. Said section leaves that matter wholly to the discretion of the court. The statute does not require notice to persons who might be interested in the estate of the wards; the court must determine merely whether any injury might result to such persons. That is a discretionary matter with the court, and the presence of such parties is not necessary to the exercise of that discretion.

I am aware of no reason why the parties interested in the ward's estate are more entitled as a matter of personal right to notice of hearing on petition to substitute bonds than they are to notice of the court's impending action in approving the original guardian's bond at the inception of the guardianship proceedings. In the latter instance they are entitled to no notice at all either by personal right or statutory requirement. And, in the instant case, the statute requires no notice upon them.

The judge may discharge the sureties "after due notice given as he may direct." The statute does not even indicate the parties to whom notice shall be given. Section 779, supra. It may be that some sort of notice would be necessary; and, based upon that very assumption, the common practice was to notify only the guardian. But the uncertainty as to notice no longer existed after the amendment of 1913 when citation to the guardian became the only prescribed notice.

It has been said that wards acquire a vested interest in the bonds of their guardians (Langley Case, supra); and so they may, but that right may be abated or divested by the intervening action of the court so far as it relates to obligations yet to accrue; and that is a matter lying within the discretion of the county court acting pursuant to statutory authority.

The record as a whole shows that the county court acted wholly within its jurisdictional powers at the hearing on the petition to discharge the surety, and that the order of release is valid on its face. That order is supported by every presumption of validity that accompanies the judgments and orders of courts of general jurisdiction, and it has the same force and effect as do the orders, judgments, and decrees of the district courts. 58 O. S. 1941 § 2; Title Guaranty Surety Co. v. Foster, supra; Calkin v. Wolcott, 182 Okla. 278,77 P.2d 96.

Plaintiffs have charged fraud in the procurement of the order of release.

The trial court found that said order showed fraud upon its face for the reasons, first, that it was therein stated that the guardian had tendered a new bond executed by himself as principal and Chas. Ross, John G. Hall, and J.A. Nolen as sureties, and that said bond was approved, when as a matter of fact no such bond was ever tendered, and did not exist.

This conclusion was based on the fact that the new bond as approved was executed by only two of the above-named sureties.

Such circumstances would constitute no indication of fraud, either legal or actual. If a new bond was executed and tendered to the court in good faith, and the same accepted and approved by the court as a substitute for the old bond, the jurisdictional requirement in this respect was fulfilled notwithstanding the recitals in the order of release with respect to the identity of the bond therein purportedly approved.

The record shows that the bond as presented, filed, and approved was accepted in lieu of the bond of the defendant. There is nothing in the record to indicate fraud on the part of defendant or collusion between the defendant, the guardian, and the court, or any two of them.

Plaintiffs would have us "take judicial knowledge that the courts and judges in Pottawatomie county participated in robbing the Hembree heirs all during the time the case was in that jurisdiction." That is rather a singular suggestion, to say the least.

Plaintiffs believe that the case of Title Guaranty Surety Co. v. Foster, supra, sustains the contention that no new bond, within the meaning of the statute, was given. In that case the county court accepted a new bond in the sum of $1,000 for the existing bond of $35,000, and at the same time restricted the guardian in the handling of the estate by ordering that all funds be deposited in a certain bank and to be withdrawn only on express order of the court; and ordering further that the use of all other property of the estate be subject to express order of the court.

On that state of facts this court held that the order releasing the old bond was "void because the court has no jurisdiction to substitute the bank and itself for the guardian bond required by statute." Obviously, the substitution of the bank and the court for a portion of the security is contrary to the statute, especially since neither the bank nor the court would be answerable as a surety to the ward.

Here, the new bond was presented and approved as and for the guardian's bond, without limitation or restriction, and it fulfilled the statutory requirement, unless fraud entered into the proceedings. Foster Case, supra.

The trial court also found that the order of release was void for the reason that fraud was practiced on the county court by the presentation of a new bond that was grossly inadequate.

I find in the record no support for this finding of fraud. In approving the new bond the court should consider the nature, extent, and value of the estate as it exists at the time; former value is of no concern. In the instant case I must presume that the county court properly exercised its discretionary powers when it accepted the new bond and released the old. The amount of the surcharge for items of loss occurring subsequent to the execution of the new bond shows that the amount of the bond was adequate. There is no evidence of a fraudulent arrangement to substitute inadequate sureties from the standpoint of ability to respond in damages.

The trial court further found that the county court participated in the fraud by accepting a bond which was wholly inadequate for the protection of the minors.

Assuming that the bond was inadequate, fraud cannot be founded upon that fact alone. There is nothing in the record to support this finding. The fact that this estate may have been grossly mismanaged, and unlawfully dissipated, as plaintiffs say it was, does not warrant a conclusion that every act of the guardian and the court was collusive and fraudulent.

We have held many times, and the statutes provide, that sureties are entitled to be released from further liability in such cases. And in obtaining such release, fraud, as in every case, is never presumed. Mere suspicion of fraud, though justified by other and separate past performances, is insufficient to support a finding of fraud.

I am of the opinion that the trial court erred in setting aside the order of release.

On accounting the trial court surcharged the guardian with items aggregating the sum of $42,695.94 and representing defalcations occurring prior to August 27, 1934, the date the order of release was entered and the new bond filed and approved. The guardian was also surcharged with the sum of $21,542.41 for defaults occurring subsequent to that date. Since defendant was legally released from further liability on said date, I am concerned only with the surcharge of $42,695.94.

Defendant objects to the procedure followed by plaintiffs in reopening the account and vacating the order approving same entered at the time of the order of release. It is insisted that said order could be attacked only in the manner provided in 12 O. S. 1941 §§ 984, 1031-1038, governing courts of record in modifying and vacating their orders and judgments. Defendant says that since the order approving said account, if valid, would shield it from liability for all acts of the guardian thereby settled, defendant was entitled to notice or summons upon the petition to vacate the order of approval.

But the county court may at any time dtiring the pendency of the guardianship call in the guardian and reopen and re-examine an annual or other interim account and surcharge the guardian without notice to the surety. Aubrey v. DeLozier, 128 Okla. 79,261 P. 192. The surety is not a necessary party (Southern Surety Co. v. Jefferson, 73 Okla. 7, 174 P. 563); and in the absence of fraud, the surety is concluded by the decree of the court. Title Guaranty Surety Co. v. Owens, 114 Okla. 166,244 P. 591.

The above statement applies only to the order approving the guardian's report. Since I am of the opinion that the order of release is valid, it is not necessary to give consideration to defendant's contention that it was entitled to notice of the petition to vacate said order.

Plaintiffs' cross-appeal questioning some of the credits allowed Waldrep may be disposed of and dismissed for failure to save exceptions to the court's special findings of fact on those items. The journal entry of judgment refers to the findings of fact and conclusions of law and is based thereon. Plaintiffs failed to except to those findings. Plaintiffs cannot now complain that they were incomplete or contrary to the evidence, or erroneous. See Stone v. Spencer, 79 Okla. 85,191 P. 197; 64 C. J. 1282, § 1162.

I think the trial court's judgment surcharging defendant with items subsequent to the date of the court's order releasing it from further liability should be reversed.