Metropolitan Life Insurance v. Cull
Metropolitan Life Insurance v. Cull
Opinion of the Court
Plaintiff as assignee brought action to foreclose its first mortgage of $37,000, and the petition recites that certain wards, now of age, are defendants, and have an interest, junior and inferior, because of a second mortgage on said premises, and an accounting is asked. The former wards filed cross-petition, in which they allege that plaintiff’s mortgage is inferior to their interests- in said property. Many other defendants answered, and Herbert Rhoades, the guardian of. said wards, filed a special appearance, objecting to the jurisdiction of the district court over him, on the ground that the claims of the cross-petitioners against the guardian are pending in the probate court of Burt county, which has original jurisdiction thereof, upon which ground the special appearance" was sustained by the district court,
It is- most difficult to set out even the substance of the pleadings, which occupy over 100 pages in the transcript, but the petition recites that on July 8, 1927, defendants Abraham L. Cull and Christine L. Cull executed and delivered to E. H. Lougee, Inc., their promissory note in the sum of $37,000, bearing interest at 5 per cent, per annum, with ten interest coupons. Coupons numbered 1 to 6 inclusive were fully paid and satisfied, but interest coupons due August 1, 1936, and August 1, 1937, each in the amount of $1,850, are past due and wholly unpaid.
The defendants executed and delivered to E. H. Lougee, Inc., a mortgage deed as security therefor upon certain tracts of real estate in Burt county, Nebraska, containing in all 402 acres. Said E. H. Lougee, Inc., sold and assigned said mortgage to the plaintiff, Metropolitan Life Insurance Company, and plaintiff is entitled to a foreclosure of its said mortgage for the satisfaction thereof.
The petition also alleges that Herbert Rhoades was the duly appointed guardian for Dorothy V. Porter Rothrock and Eloise E. Porter Shoup, and that they have now reached their majority and, together with Herbert Rhoades as guardian, have some interest in said mortgaged premises by virtue of the mortgage recorded February 27„ 1936, securing $9,800, but that whatever interest they have, if any, is subject, junior and inferior to the lien of plaintiff’s mortgage.
On March 11, 1938, Herbert Rhoades, guardian, filed a separate answer, admitting the corporate capacity of plaintiff and the execution of the note and mortgage, and denying every other allegation contained in the petition, and he further alleges that for years he was guardian of the defendants Dorothy V. Porter Rothrock and Eloise E. Porter Shoup, but that several years ago the said defendants be
The answer of Dorothy V. Porter Rothrock and Eloise E. Porter Shoup, filed March 12, 1938, alleges that said defendants have an interest in said mortgaged premises, which is superior and prior to the interest of any and all other parties to the suit.
For cross-petition they allege that on July 13., 1923, letters of guardianship on the estates of Frank L. Porter, Dale W. Porter, Fern F. Porter, Dorothy V. Porter and Eloise E. Porter, minors, were issued by the county court for Burt county to Herbert Rhoades; that on September 28, 1923, the said guardian received from the clerk of the district court the sum of $23,467.22 as trust funds for his said wards; that during and prior to the year 1927 said Herbert Rhoades was discharged as guardian of Frank L. Porter and Dale W. Porter, but continued to act as such guardian of the three remaining minors. On September 17, 1923, said guardian made application to the county court for authority to lend not to exceed $15,000 from the property of the minors Fern F. Porter, Dorothy V. Porter and Eloise E. Porter for a period of five years, at the rate of 6 per cent, interest, to Abraham L. Cull, of Oakland, Nebraska, W. S. Newmyer, of Lyons, Nebraska, A. C. Holmquist, of Oakland, and W. H. Harding, of Oakland. To secure the payment of said proposed loan, the said parties agreed to give a mortgage, subject to a prior mortgage of $35,000, on the land in Burt county involved in this suit. Hearing on the application of the guardian to make loan was held on September 24, 1923, and on said date the county court entered an order approving the application, and directing the guardian to make said loan of $14,700 on the land, subject to a prior mortgage of $35,000
On March 2, 1927, Fern F. Porter became 21 years of age, and demanded her estate of the guardian, and in order to obtain money with which to pay Fern F. Porter the amount owing to her, the guardian, without any right or authority so to do, professed to enter into a new contract with the mortgagors, whereby the said Abraham L. Cull would advance sufficient cash to enable the guardian to pay to his said ward, Fern F. Porter, the $4,900 due her.
-It is alleged that, pursuant to the wrongful agreement, said Herbert Rhoades, guardian, wrongfully canceled and released in writing the $14,700 mortgage, and the said Abraham L. Cull professed to give to the said E. H. Lougee, Inc., a new mortgage against said land for the sum of $37,000, to mature August 1, 1937, and to draw interest at the rate of 5 per cent, per annum, and said mortgage was filed on July 23, 1927. Thereafter Herbert Rhoades, guardian, paid to his ward, Fern F. Porter, such sums as were due her, and was discharged as her guardian.
Thereafter, it is alleged, the said Herbert Rhoades wrongfully and negligently accepted a second mortgage, pretended to secure the payment of $9,800, being the total sum due Mrs. Rothrock and Mrs. Shoup from their said guardian, said second mortgage being against the land involved herein, and being expressly subject to the prior mortgage thereon in the sum of $37,000 in favor of E. H. Lougee, Inc.
The cross-petition alleges that, in connection with the pretended investment of said wards’ funds in the second mort7 gage of $9,800, the guardian made no application to the county court for and received no authority from said county court to cancel or release the note of $14,700, or the mortgage securing same, and said defendants and cross-petitioners now have a first lien on the premises for the payment of the balance of the principal sum of $9,800 with accrued interest.
It is alleged that no part of said $9,800, with interest thereon, except interest to August 1, 1935, has been paid to
The plaintiff, for reply to the answer and cross-petition, denies that the mortgage held by Herbert Rhoades as guardian for Dorothy V. Porter Rothrock and Eloise E. Porter Shoup is a first mortgage lien, and alleges that said mortgage is subject, junior and inferior to the lien of the mortgage set out in plaintiff’s amended and substituted petition.
Herbert Rhoades, guardian, filed special appearance, objecting to the jurisdiction of the court against him as guardian for the following reasons: (1) That the matters and claims set forth are brought as an original action, and not on appeal from the probate court for Burt county; (2) the matters and claims of said cross-petitioners are wholly matters, facts and claims over which the probate court has original jurisdiction, and over which the district court has appellate jurisdiction only; (3) all the matters, facts and claims set out in the cross-petition are now pending in the probate court on the final report and application of guardian for discharge and the objections thereto filed by said- cross-petitioners. and in which proceedings the probate court has not yet entered any judgment or final order; (4) the district court is without jurisdiction to hear and determine the matters, facts and claims against the guardian as set out in said cross-petition.
The cross-petitioners present a number of errors relied upon for reversal. They insist that the court erred in not directing the foreclosure of the unpaid mortgage of $14,700, or the other mortgage in the sum of $9,800; that the court erred in granting the plaintiff a first lien against the real estate on the ground that the same was not supported by sufficient evidence; that the court erred in finding that Herbert Rhoades, guardian, had legally and validly released the $14,700 mortgage of his wards, and it is argued that the guardian had no legal right or authority to release the mortgage of $14,700 on July 21, 1927, by a marginal release, without first having applied formally to the county court for authority to make said release, and without the county court granting any authority therefor, and that such marginal release is null and void, and the mortgage of $14,700 remains in full force and effect.
In regard to the release of a mortgage by a guardian, Chancellor Kent, in deciding the case of Field v. Schieffelin, 7 Johns. Ch. :;;150, 11 Am. Dec. 441, in New York in April, 1823, said: “Though it be not in the ordinary course of the guardian’s administration to sell the personal property of his ward, yet he has the legal right to do it, for it is entirely under his control and management, and he is not obliged to apply to this court for direction in every particular case. It was said by Lord Hardwicke, in Inwood v. Twyne, Amb. 419, that he might change the nature of the infant’s estate, under particular circumstances, and the court would support him in the act, if the court would have directed the change under the same circumstances.”
The cross-appellants rely upon the case of Federal Land Bank v. Tuma, 116 Neb. 99, 216 N. W. 186, 56 A. L. R. 186, in which case Agnes Turna was appointed guardian for her
We see nothing in this Turna case which invalidates the release entered by the guardian in the case at bar. The abstract showed a release of the mortgage by a duly appointed and acting guardian, the named mortgagee. We see nothing in such a record to require the attorney examining such title to inquire into the state of the guardianship funds, and he has a right to assume that the guardian was acting in the interest of his wards. See Federal Land Bank v. Worley, 135 Neb. 493, 282 N. W. 476.
A purchaser who deals fairly with a guardian has a right to presume that the guardian acts for the benefit of his ward, and such purchaser is neither bound to inquire into, the state of the trust, nor to be responsible for the guardian’s faithful application of the trust money, unless the purchaser knew, or had sufficient information to put him on inquiry, that the guardian was practicing or contemplated a breach, of his trust.
The evidence shows that in 1923 Cull owned some 400 acres of land in Burt county, and made a mortgage of $35,-000, which was given eventually to the New York Life Insurance Company, and a second mortgage of $14,700, with individual signers on the note, was given to Herbert Rhoades as guardian for three minors. Rhoades had been duly authorized to make such an investment of his wards’ funds. Some four years later Cull, in securing a new and larger mortgage through the Metropolitan Life Insurance Company, secured a release by Rhoades as guardian on the margin of the record of the second mortgage of $14,700, so that the new mortgage to the Metropolitan Life Insurance Company might become a first mortgage, and when the new loan was closed Rhoades as guardian took a second mortgage for $9,800 for two of his wards, as the third one had become of age and was paid off in full.
■ After the two wards became of age they employed their own attorney, George Evens, to collect the defaulted interest on their mortgage, and $1,014 interest was collected and turned over by Herbert Rhoades, guardian, to attorney Evens. On February 26, 1936, Herbert Rhoades- filed his petition in the county court for Burt county, setting out that the two wards had become of age, and he had been unable to collect more than the $1,0.14 of principal and interest,-and prayed the court for an order directing him to surrender and release the original note and mortgage and accept a new note and mortgage from Abraham L. Cull for the balance due, the same to be subject to the first mortgagé of $37,000, and there is attached thereto the waiver and consent of Mrs.
We have carefully examined the original brief and the reply brief of the cross-petitioners, which briefs in their more than 200 pages present an exhaustive discussion of the law of the case, proceeding upon the assumption that the guardian has deliberately mishandled the affairs of his wards. It is claimed that the guardian has waived, abandoned and released without consideration the rights of the wards in their original second mortgage of $14,700, without authority of the. county court, and that the district court should restore to the wards all of the rights they would have if the $14,700 mortgage had not been so released by the guardian conspiring and cooperating together with others to destroy the value of the same, and thereby defraud the minors. It is insisted that the $14,700 second mortgage investment was in custodia legis as trust fund, and is only subject to the orders of the county court until duly disposed of by the county court; that, as no sufficient consideration was received by the guardian, such release of said second mortgage was void.
Now, this court does not share a belief that the evidence supports such allegations and charges. From an examination of the evidence, one may as easily reach the conclusion that the guardian was duly authorized to invest the funds of his wards in the second mortgage, with additional signers, for $14,700, subject to a $35,000 first mortgage to the New York Life Insurance Company; that due to natural conditions of adversity, when interest became in default, and one of the wards had reached the time when a settlement must be made, the mortgagor found an opportunity to secure a slightly larger first mortgage of some $37,0.00 through the
If the release by the guardian was unauthorized by the court, yet we cannot overlook the fact that each of the two wards, after becoming of age and employing an attorney, has received and retained the benefit of such transaction, with full knowledge of any irregularity therein and her rights in the premises. They will be presumed in law to have ratified the acts of their guardian. Borcher v. McGuire, 85 Neb. 646, 124 N. W. 111; Dame, Guardianship (3d ed.) 767, sec. 751.
In this opinion we have heretofore set out at length the rulings of the district court, and without repeating them at length we have reached the conclusion that the same were correct, and they are hereby affirmed.
Affirmed.
Reference
- Full Case Name
- Metropolitan Life Insurance Company v. Abraham L. Cull, appellees: Dorothy V. Porter Rothrock
- Cited By
- 1 case
- Status
- Published