{ "id": 8653696, "name": "D. E. COBB, Administrator, v. GEORGE M. FOUNTAIN and R. S. FOUNTAIN, Administrators", "name_abbreviation": "Cobb v. Fountain", "decision_date": "1924-03-05", "docket_number": "", "first_page": "335", "last_page": "339", "citations": [ { "type": "official", "cite": "187 N.C. 335" } ], "court": { "name_abbreviation": "N.C.", "id": 9292, "name": "Supreme Court of North Carolina" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "31 S. W., 869", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "68 S. W., 407", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "67 Conn., 187", "category": "reporters:state", "reporter": "Conn.", "case_ids": [ 776485 ], "pin_cites": [ { "page": "194" } ], "opinion_index": 0, "case_paths": [ "/conn/67/0187-01" ] }, { "cite": "84 N. Y., 339", "category": "reporters:state", "reporter": "N.Y.", "case_ids": [ 2181031 ], "pin_cites": [ { "page": "343" } ], "opinion_index": 0, "case_paths": [ "/ny/84/0339-01" ] }, { "cite": "1917 A, 645", "category": "reporters:state_regional", "reporter": "A.", "opinion_index": 0 }, { "cite": "112 Me., 119", "category": "reporters:state", "reporter": "Me.", "case_ids": [ 628676 ], "opinion_index": 0, "case_paths": [ "/me/112/0119-01" ] }, { "cite": "84 Me., 545", "category": "reporters:state", "reporter": "Me.", "case_ids": [ 609526 ], "opinion_index": 0, "case_paths": [ "/me/84/0545-01" ] }, { "cite": "97 N. C., 186", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8649667 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/nc/97/0186-01" ] }, { "cite": "85 N. C., 199", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 11277346 ], "opinion_index": 0, "case_paths": [ "/nc/85/0199-01" ] }, { "cite": "71 N. C., 527", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 11278918 ], "opinion_index": 0, "case_paths": [ "/nc/71/0527-01" ] }, { "cite": "41 N. C., 238", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2102606 ], "pin_cites": [ { "page": "242" } ], "opinion_index": 0, "case_paths": [ "/nc/41/0238-01" ] }, { "cite": "39 N. C., 281", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2100072 ], "opinion_index": 0, "case_paths": [ "/nc/39/0281-01" ] }, { "cite": "36 N. C., 337", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2097095 ], "opinion_index": 0, "case_paths": [ "/nc/36/0337-01" ] } ], "analysis": { "cardinality": 677, "char_count": 11886, "ocr_confidence": 0.46, "pagerank": { "raw": 3.7053886394144577e-07, "percentile": 0.893122726460114 }, "sha256": "f1b60961977d521e8df1c1840cbd7f24e556b97223677be54a66e9dd2806f6d3", "simhash": "1:1f72734c41c00946", "word_count": 2045 }, "last_updated": "2023-07-14T20:05:52.896945+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "D. E. COBB, Administrator, v. GEORGE M. FOUNTAIN and R. S. FOUNTAIN, Administrators." ], "opinions": [ { "text": "Adams, J.\nAs 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\u2019s estate. Schouler\u2019s Domestic Relations, 544, sec. 386. \u201cThe ward is bound to accept a bond in discharge of a guardian which the latter properly took and has not made his own by fraud or laches. The Court has said that such bonds, in truth, belong to the ward, and that although they are negotiable, one who takes them from the guardian with notice must account for them to the ward. Powell v. Jones, 36 N. C., 337; Exum v. Bowden, 39 N. C., 281. It follows that in equity the guardian is entitled to transfer the bonds to the ward in satisfaction and is not bound to pay the ward in money. Indeed, the statute expressly provides that the guardian may assign any uncollected bonds to the ward and that such assignment shall be a discharge pro tanto.\u201d Ruffin, C. J., in Goodson v. Goodson, 41 N. C., 238, 242; Rev. Sts. of N. C., Vol. I, 310; C. S., 2308, 8107. But this general rule, like most others, is subject to exception. Hence, the Court afterward said: \u201cIt cannot be doubted that a guardian may discharge himself by delivery over to the ward upon a settlement of the notes which he has taken as guardian, provided there be no special reason to the contrary.\u201d Whitford v. Foy, 71 N. C., 527. Since the demurrer admits the truth of the complaint, the question is whether the facts alleged bring the case at bar within the proviso.\n\"While in its more restricted acceptation the word \u201ctrust\u201d may have acquired a meaning distinct from the confidence usually reposed in one who sustains to another the relation of guardian, it is nevertheless established as a rule of equity that where a person qualifies as the guardian of an estate and engages to act upon the trust and confidence thus reposed in him the court, in order to protect the estate, will deal with him as a trustee. Upon this principle the intestate of the defendants, upon his qualification as guardian, assumed all the responsibilities and duties of his position and obligated himself to exercise such care and diligence in the management of his ward\u2019s estate as men of ordinary care, prudence, and intelligence use in the management of their own business. His trust called for the exercise of good faith, for his personal oversight and supervision of the trust funds, and for the observance of tbe statutory provisions relating to bis fiduciary obligation. Tiffany\u2019s Persons and Domestic Relations, 318; Scbouler\u2019s Domestic Relations, 451, sec. 321; Black on Trusts and Trustees, Vol. II, sec. 499; Moore v. Askew, 85 N. C., 199; Collins v. Gooch, 97 N. C., 186. In tbe management of bis ward\u2019s funds, did tbe guardian exercise tbe degree of care demanded by tbe exigency of bis trust?\nAs it is more prudent for a guardian to invest trust funds in bis own State, where tbey may be kept under bis immediate observation and witbin tbe jurisdiction of tbe domestic courts, we tbink tbe investment of bis ward\u2019s money in securities wbicb are beyond tbe jurisdiction should be disapproved unless made under rare and exceptional circumstances. Tbe precise question has not heretofore been considered by this Court. In Collins v. Gooch, supra, tbe receiver of an estate belonging to minors deposited some of their money in a bank in Norfolk without taking additional security, and tbe bank failed. Tbe Court held that tbe guardian was liable for tbe loss, and remarked: \u201cWe tbink a guardian would be deemed derelict who should thus invest tbe estate of bis wards by deposit in toother State without security. However solvent may be tbe person or persons to whom, as principal, money is loaned, it is bis duty to require further security.\u201d Tbe decision turned upon tbe lack of security rather than tbe place of investment; but both questions were discussed in a case decided by tbe Supreme Judicial Court of Maine. There it was said: \u201cIt is true that it probably sufficiently appears upon tbe face of tbe account that these three items were investments without security, and also that tbey were made beyond tbe jurisdiction of tbe Court. Tbe former infirmity renders tbe accountant responsible for all losses thence arising, Mattocks v. Moulton, 84 Me., 545, and tbe latter, except under peculiar circumstances nonexistent in tbe case at bar, also subjects him to tbe peril of responsibility for tbe safety of tbe fund.\u201d In re Moore, 112 Me., 119; Ann. Cas., 1917 A, 645.\nOther courts have reached substantially tbe same conclusion, as will appear from a few excerpts. \u201cWhile, therefore, we are not disposed to say that an investment by a trustee in another State can never be consistent with tbe prudence and diligence required of him by tbe law, we still feel bound to say that such an investment, wbicb takes tbe trust fund beyond our own jurisdiction, subjects it to other laws 'and tbe risk and inconvenience of distance and of foreign tribunals, will not be upheld by us as a general rule, and never unless in tbe presence of a clear and strong necessity, or a very pressing emergency.\u201d Ormiston v. Olcott, 84 N. Y., 339, 343. \u201cIn view of tbe inherent objections to such investments, of tbe familiar rules of equity wbicb regard them with distrust, and of tbe careful exclusion of such mortgages from tbe broad range of permissible trust investments mentioned in tbe General Statutes, 49 S, we think that loans on promissory notes secured by mortgage of land in other States, and the purchase of such notes, cannot be regarded as prima facie a proper investment of trust funds; and that a trustee must justify such use of his funds by proof not only of good faith, hut of due diligence on his part in ascertaining the safety of the particular investment.\u201d S. v. Washburn, 67 Conn., 187, 194. \u201cThe tutor had no right to send the minor\u2019s property beyond the State except for the collection of money due on obligations. He had no right or authority to invest these funds beyond the limits of the State and out of the jurisdiction of the court having jurisdiction of the tutorship.\u201d Welsh v. Baxter, 13 So. (La.), 629. See, also, Selph v. Burton\u2019s Admr., 68 S. W., 407; Lyne v. Perrin, 31 S. W., 869.\nWhile not disposed to hold that a guardian may never invest his ward\u2019s funds beyond the jurisdiction of the domestic courts, we are of opinion that such investment is prima facie improper and that upon proof thereof it is incumbent upon him, at the risk of an adverse verdict if he fail, to proceed with evidence tending to show that he has faithfully performed the duties imposed by his trust. In the instant case the question of the guardian\u2019s fidelity or dereliction \u2014 whether he faithfully discharged his fiduciary obligation or disregarded or abused his trust \u2014 will be determined upon a full disclosure of all the facts, many of which, if not all, were essentially within his personal knowledge. We think, therefore, that his Honor, by overruling the demurrer and granting time for filing an answer, appropriately opened the way for an inquiry into all matters by which the courts may finally adjudicate the question of the guardian\u2019s neglect of duty or exemption from liability.\nWe deem it not improper to say that the plaintiff\u2019s counsel have not assailed the character of the guardian or impeached his integrity or imputed to him any intentional failure to execute his trust. But they say that upon him and, after his death, upon his personal representatives devolved the duty of disclosing the facts pertaining to the investment with a view to securing a proper settlement of the controversy between the parties.\nThe judgment is\nAffirmed.", "type": "majority", "author": "Adams, J." } ], "attorneys": [ "AT\u00cdsbro\u00f3k & Phillips for plaintiff.", "Geo. M. Fountain for defendants." ], "corrections": "", "head_matter": "D. E. COBB, Administrator, v. GEORGE M. FOUNTAIN and R. S. FOUNTAIN, Administrators.\n(Filed 5 March, 1924.)\n1. Guardian and Ward \u2014 Estates\u2014Settlement.\nThe general principle that a guardian may discharge himseli of his trust as such by turning over to the person lawfully entitled thereto whatever security he may have taken in good faith, as guardian, as a .result of the prudent management of his ward\u2019s estate, and thus discharge himself of liability, is subject to the exception that there be not special reason existing to the contrary.\n2. Same \u2014 Trusts.\nWhile the word \u201ctrust\u201d in its application to a guardian in the management of his ward\u2019s estate has a more restricted significance, upon his qualification as such, he assumes all the responsibilities of his position and obligates himself to exercise such care and diligence in the management of his ward\u2019s estate as a man of ordinary care, prudence and intelligence uses in the management of his own business.\n3. Same \u2014 Presumptions\u2014Prima Facie Case \u2014 Evidence\u2014Questions for Jury.\nThe complaint in an action against a guardian alleged that he had loaned money of his ward\u2019s Estate to one beyond the State, and the jurisdiction of our courts, on a note that was long past due and unpaid; and upon demurrer, considered as admitting these allegations, it was held the circumstances of this transaction made out a prima facie case that he had not acted with the care or prudence required of him, and raised the issue for the jury to determine.\nAppeal from Connor, J., at November Term, 1923, of Edgeoombe.\nThe material allegations of tbe complaint are substantially these: (1) Several years ago G. M. T. Fountain, deceased, qualified as guardian of Nancy L. Hargrove (who at that time and afterwards until her death was insane and cohfined in the State Hospital at Raleigh) and had the sole management of her estate. (2) As such guardian he loaned $2,400 (her money) to a resident of South Carolina and took as security therefor a mortgage or deed of trust on real property, situated in that state. (3) He never reported to the court the nature of this investment and never had the court\u2019s approval of the loan. Excepting interest no payments have been made, and it is not improbable that the loan or a part of it will be entirely lost. (4) Nancy Hargrove died in 1921 and the plaintiff is her administrator. (5) G. M. T. Fountain died in 1923 and the defendants are the administrators of his estate. (6) The note for said $2,400 with interest is overdue. (7) The plaintiff as administrator of Nancy L. Hargrove made demand upon G. M. T. Fountain and, after his death, upon the defendants as his administrators for the payment of said loan and interest, and-the defendants have neglected and refused and still neglect and refuse to pay to the plaintiff the amount so demanded. (8) The plaintiff is ready to settle in full as administrator of his intestate and to file his final account, and is prevented from doing so by the failure of the defendants to make payment of said loan. (9) The estate of said G. M. T. Fountain is solvent.\nThe plaintiff prays judgment against the defendants for $2,400, with interest thereon from 14 January, 1923, and costs.\nThe defendants demurred to the complaint on the following grounds :\n1. It does not show that defendant\u2019s intestate failed to use such degree of care and prudence as guardian of plaintiff\u2019s intestate as to render his estate liable for any loss plaintiff\u2019s intestate\u2019s estate may sustain.\n2. It does not show that plaintiff\u2019s intestate has sustained any loss or damage. -\n3. It does not allege that said loan was not made in good faith and in the exercise of that degree of care and diligence required by law.\n4. Said complaint does not show that said transaction complained of has ever been repudiated by plaintiff or those he represents.\n. 5. Such complaint fails to set forth facts and circumstances necessary to charge the defendant\u2019s intestate\u2019s estate with personal liability.\nJudge Connor overruled the demurrer, and the defendants appealed.\nAT\u00cdsbro\u00f3k & Phillips for plaintiff.\nGeo. M. Fountain for defendants." }, "file_name": "0335-01", "first_page_order": 405, "last_page_order": 409 }