180
FEDERAL REPORTER.
Mwou, Adm'r, eta., v.
LAMAR,
Ex'r, eta.
(Circuit Court, 8. D. New York. May 5,1881.) J. GUARDIAN-POSSESSION OF PROPERTY IN ANOTHER STATE-PAST-DuE
V RESTS-AcCOUN'fING BEFORE AND AFTER TERMINATION OF GUARDIANSHIP. It is the duty of a guardian to take into his possession, so far as he is able, the estate of his ward, wheresoever it may be; hence, where the property consisted of of stock in a Georgia bank, a transfer of which he could have procured to himself, and it did not appeal' that the guardian had taken the steps required by the laws of that state to enable a foreign guardian 'to remove property within the state belonging to his ward, held, on the evidence,-the burden of proof being upon the,guardian lO,show that he could not get possession of the property an,d invest it as required by the terms of his appointment,-that the defendant was properly charged in the accounting with the value oithe ,property. Where, the, guardian transferred to his newly-appoIntedsucceSl'lpr .raih;oad and city bonds! together with the past-due coupons !l:ccompanying them" and it was agreed that the bonds worth at the timii a certain' pet'cedt. of their face value, held, that this prtma ftki8 evideace that 'the, oveJ;.due coupons were ,worth an equallper,centage of their '.' , " rejected the investIllents m!l:de br the gua;aian, and demanded iil :money' the equivalent' of' a proper inv'estment, the rateoI' interest with: which he is to be charged during the period of the guardianship is that which, with proper llnd sde he Jnight.have realized, and therefore less than Hence, 'wherldthe guardianship long before'the legal rate 'of interest in New York state wl1schanged' from 7 't6 6);>er cent,; a guardian accounting in this court should be' charged with interest during the period of the guardianship at the rate of 6 per cent,,'-1 per cent, less than the current rate,-the account to be taken with annuafrests. King v, Talbot, 40 N, Y, 9 6 , ' From the termination of the guardianship, however, the guardian's lial>ility was simply to pay over presently a certain sum of money, not to invest or keep it invested, Therefore, t'llere is no reason for computing the account with annualrests after the termination of the guardianship, nor for charging a less rate than the legal rate of intereet in this state, which was 7 per cent, down to January 1, 1880, and 6 per cent. from that date to the present time.
George O. Holt, for complainant. O. O. Beaman, Jr., for defendant.
moou
'I).
LAMAR.
181
CHOATE, D. J. In this case, the complainant having a decree for an accounting, the case comes up again upon excep. tions to the master's report.The first point raised by the defendant is that the master improperly charged the defendant, in the case of each of the infants, with the value of one-third of 10 shares in the stock ()f the Mechanics' Bank of Augusta, irithe state of Georgia. The evidence is that these shares formerly belonged to W. W. Sims, the father of the infants, who died in 1850; and that at the tiJ!1e of the appointment of defendant's testator as .guardian they stood on the books of the bank in the name of Mrs. Abercrombie, the widow of' said ·W. W. Sims, as his administratrix. From February, 1856,. 'to February, 1859, defendant's testator,.as guardian bfeach .of the infants, received from the 'bank one-third of thedivJdends on these 10 shares, and thereafter, from the ,death of the mother, Mrs. Abercrombie, until the war, when. the stoak became worthless, he received from the bank, as guardian of each,of,the infants, one-haIfof said dividends. ,.It 'appears ,by a memorandum in the guardian's account that. in ;ranuarYl 1856, .the guardian applied to the bank .foor atramsfer to, him, as ,.guardian of the infants, of the two-third'S of the'10 shares, but the bank, though willing to· pay the dividends and'continuing thereafter to do 'so, as.abov&stated" refused to make a transfer of the stock itself. I ·think it is a proper inference from this evidence that the rea}. benefioial interest' in .oneihird of these 10 shares was in each of the infants after the death of their father. The, great lapse of time since his death, and the absence of any evidence that the property was needed for payment of his debts, warrant the conclusion that the guardian could, upon requesting it of Mrs. Abercrombie, the administratrix, have had the estate so far settled as to have procured a transfer of the infants' interest to him as .guardian. It is argued that the guardian was under no obli. gation to reduce property of this kind belonging to his ward in another state to his possession ; that the office of guardian is local, and as to property out of the state, under whose laws
>!l'See 1 FED. REp, 14.
182
FEDERAL "REPORTER.
he holds his appointment, he is only chargeable with that of which he actually takes possession. I cannot subscribe to this doctrine. I think it is the duty of the guardian to take into his possession, so far as he is able, the estate of his ward, whoever it may be, and that he is not to be justified in abandoning any part ,of it because it h!tppens to be outside of the jurisdiction of the state wherein he is appointed. rt is objected, however, that the laws of Georgia interposed an obstacle to prevent the guardian from reducing this stock to possession andremoving it from the state, Qr selling it and investing the proceeds as required by the law of New York. There was a short period, from the spring of 1859 to January, 1860, when the infants resided in Georgia with their relatives. After that they resided in Alabama, and before that, from shortly after the appointment of the guardian till when their mother, Mrs. Abercrombie, the spring of died, in Connecticut with their mother. It appears that by the, law of Georgia a foreign guardian cannot ,remove property within the state belonging to his ward without the consent of the ordinary. The matter appears to be committed to the discretion of the ordinary. I cannot conceive of any reason why the ordinary should refuse his consent, unless it were during the brief period that the wards resided in that state. It does not appear that in this case the guardian ever applied for his consent. And, the burden being upon the guardian to show that he could not get possession of the property aIfd invest 'it as required .by the terms of his appointment, I think the defendant has failed to sustain that, burden, or to show that there was any obstacle growing out of the laws of Georgia which prevented his getting possession of the stock and investing it properly. It is also claimed by defendant that he should be allowed a deduction from the value of this stock for the expense that would be necessarily incurred in reducing it to possession. There is no proof what the expense would be, or that it would be more than nominal. It is not to be presumed that the mother of the wards would have interposed any difficulties, or that the guardian wonlc1have been charged with any expenses in ob.
MICOU V. LAMAR.
183
taining a transfer of the stock. Thede·fendant was therefore properly charged with this item. .The next question is whether the master properly charged the defendant, in the case of each infant, with one-sixth of the value of these same shares of stock, and with one-half of the value of nine shares of the stock of the Bank of Commerce, a Georgia corporation. These stocks belonged to Mrs. Abercrombie, the mother of the wards, in her life-time. One·third interest in the 10 shares of the Mechanics' Bank <Jame to her from her husband, W. W. Sims, and the 10 shares stood in her name as his administratrix, as above stated. The nine shares were purchased by her, and stood in her name till her death, in the spring of 1859. On her death, her husband, Mr. Aberorombie, became entitled to her personal property. The title of eaoh of the wards in one·half of their mother's interest in these two lots of stock is derived through what is claimed to have been a surrender by Mr: Abercrombie to her two children of their mother's interest in the same. The evidence that such surrender or tra·nsfer was made is chiefly a letter of the guardian to the grandmother of the two children, dated May 23, 1859;-soon after the death of Mrs. Abercrombie, their mother,-alid the acts of the parties in apparent conformity with what the letter shows had been done by Mr. Abercrombie in respect to such a surrender. In this letter defendant's testator says:
a
"You were informed through Mary Jane that Rev. Mr. Abercrombie had offered to surrender the property he acquired through Mrs. Sims, and which had belonged to her former husband, to the two child.ren. Subsequently he made a transfer, to take effect at hi8 death, and two notes, one to each of the girls, payable six momhs after his death, for $2,750 each. Again he changed his mind and offered to make a surrender at once, and gave me deeds to two three-story houses in Brooklyn, E. D., Ufeet only,and sub. ject to $4,500 mortgage on each, with last year's taxes and some arrears fqr repairs, and only one house tenanted, at $550 rent. After inspecting the houses and taking the opinion of a judicious friend, which confirmed my own, I thought it best to decline the proposition in that shape and hold on to the notes, .2,750 each, though unsecured, because·the encumbrances on the property might entail more outlay than income for the children; This morning I have a letter from him without any further proposition, which 1 hoped he would have made; so that 1 retain the two notes and a transfer of all his interest derived through his wife to the balance of the
184
estate. This will include her one-t.hird part of the 10 shares )[echanics' Bank stock, and nine shares of the Bank of Commerce, and her third of the notes received for the Florida land. I hope the children are improving, etc. "" "" "" Their income is limited, without the notes of Rev. Mr. A. and those for the land, to between $500 and $600 each, so long as the banks continue to pay regular dividends as they have done."
From the date of that letter defendant's testator charged himself in his accounts as guardian with the receipt of the dividends on the said one-third of the ten shares Mechanics' Bank, and on the nine shares Bank of Commerce, one-half in the account with each of the wards. Among the assets and papers transferred by the defendant's testator to Mr. Micou, upon the appointment of the latter as guardian in 1867, as appears by the receipt of Mr. Micou given therefor, are the following: "The conveyance of Richard M. Abercrombie, dated tenth of May, 1859, of all he then had or might have in the estate of W. W. Sims, in right of his late wife, then deceased i" "two notes, each for $2,750, dated April 15,1859, of the said Rev. Richard M. Abercrombie, payable six months after his decease, without interest i" .. No. 136, Bank of Com-
merce certificate for nine shares stock for Mrs. M. C. Abercrombie, eighth July, 1857."
I think it is a fair inference from the letter, the recitals of Mr. Micou's receipt, and the continued collection of the divi. dends by the guardian, that Mr. Abercrombie made an immediate surrender to the guardian of. his wife's interest in the 10 shares of the Mechanics' Bank stock, and the nine'shares Bank of Commerce stock. Without these other circumstances the letter might have been taken to import that his surrender of these stocks was to take effect only at his death; but in the light of these circumstances, which strongly tend to show that a present surrender, at least of these two pieces of property, was made, I think the conclusion of the master was correct that defendant's testator could, by proper effort on his part, have reduced these stocks to his possession. It is true that to do so, and to vest the legal title in the guardian, it would have been necessary for some one to have taken out letters of administration on the estate of W. W. Sims, and also on the estate of Mrs. Abercrombie; but it is not to be presumed, in the absence of evidence, that this could not
IIICOU
v.
185
have been done. Nor do tbe circumstances tend to show that this property was needed to pay the debts of Mrs. Abercrombie. Sucb a supposition is inconsistent with the terms of the letter of Mr. Lamar. It appeared that Mr. Abercrom,. bie is living, and he was not called as a witness. There was at least prima facie evidence that the guardian had under his control, and so within his reach that he could have reduced them to possession, these two lots of stock, formerly belonging to the mother of his wards, and his failure to call Mr. Abercrombie to show that the surrender of them was not immediate, if that was the fact, does not aid his case. The same suggestions relative to the expense of obtaining possession of these stocks, and relative to any difficulty growing out of the laws of Georgia, apply to these items as to the interest of each of the wards in tbe one-third of the 10 shares Mechanics' Bank derived from her father. The next question raised is whether the defendant's testator should receive any credit for past-due coupons on one bond of the East Tennessee, Virginia & Georgia Railroad, and three bonds of the city of Memphis, which were among the securities turned over to Mr. Micou, the new guardian. It is insisted by the plaintiff that there is no evidence that at the time they were so transferred they had any value. It appears that about two years thereafter they became collectible. I think, however, there is evidence that they had value at the time of the transfer, and this is the agreed fact, that the bonds to which they belonged were then worth a certain per cent. of their face. In the absence of any evidence affecting the validity of these over-due coupous, I think it may safely be assumed they were worth at least an equal percentage on their face value. It is to be presumed that they have the same security for their payment as the principal of the bond, with the added advantage of being already due,-a circumstance which attaches to the possession of them remedies which the bonds themselves may not have carried with them. I think, therefore, the defendant's claim for this credit is reasonable, and should be allowed. I see no reason whatever for allowing a credit for the se-
186
curities turned over to the new guardian at the highest rate at which they could at any time afterwards have been sold, and the exception on the ground that such an allowance was not made must be overruled. The circumstances of this case are not such that the guardian should be refused his commissions. If he accounts fully for all the estate of his ward, the plaintiff .gets a full indemnity, though the commissions are allowed. There was no wilful misconduct on the part of the guardian. King v. Talbot, 40 N. Y. 96. The remaining questions submitted relate to the rate of interest and the mode of computing it. This matter was somewhat considered upon the settlement of the interlocu. tory decree, and the master was directed to compute interest at the rate of 5 per cent., with annual rests, the rate being fixed at the uniform rate of 1 per cent. less than the present legal rate of interest in. this state. I think, however, there is good reason to discriminate as to the rate of interest between the period of the guardianship and the period subsequent thereto. The guardianship of one of the infants terminated in 1864, on her death; that of the other in 1872, on her attaining her majority. In both cases the guardianship terminated long before the legal rate of interest in this state was reduced from 7 per cent. to 6 per cent. The rate of interest with which a trustee should be charged during the period of the. trust, under similar circumstances, was very carefully conside.red by the court of appeals in the case of Talbot v. King, ut supra, and it was fixed at 6 per cent., or 1 per cent. below the legal rate of interest in this state. If that decision is not binding on this court, it is entitled to very great consideration, and should, I think, be followed; and the change made in the legal rate, so long after the termination of these guardianships, does not affect the question of the rate during the period of the guardianship. During the guardianship the account is to be taken with annual rests. But, with respect to the period subsequent to the termination of the trust, a different principle applies. The wards having rejected the investments made by the guard-
UNITED STATES
MILLINGER.
187
ian, and demanded the equivalent in money of what would have been a proper investment, the rate of interest with which he is to be charged during the period of the guardianship is that which, with proper and safe investments, he might have realized, and therefore less than the current legal rate, as explained in the case of Talbot v. King, above referred to. From the termination of the guardianship, however, in the position assumed by the wards of rejecting the investments, the liability of the guardian was simply to pay over a certain sum of money. His duty was, not to invest it, or to keep it invested, but to pay it to the wards or their legal representatives on demand. It was due presently, and, like other sums due presently, carries interest without annual rests at the rate fixed by law therefor. The guardian could have relieved himself at any time by payment. The wards could have had their money at any time on demand. As to this period, therefore, there is no reason for computing the account with annual rests, nor for charging a less rate than the legal rate of interest, which was 7 per cent. down to January 1, 181:)0, and 6 per cent. from that date to the present time. Other questions, which might have been raised upon the exceptions as drawn, have not been presented on the argument, and, as I understand it, are not now insisted upon. Let a decree be entered in conformity with this opmion.
MILLINGER
and another. April 25,1881.)
(Circuit Court, S. D. NetD York.
OPENING. JUDGMENT-NEW TRIAL-DISTILLER'S BOND-SURETY.
A federal court has no power to open a judgment against the surety on a distiller's bond and grant a new trial, upon the ground that certain facts, existing when the case was tried, were not then put in evidence.-{ED.
Motion to Open a Judgment and for a New Trial.
188
Edward B. Hill, Asst. Dist. Att'y, for plaintiff. Roger M. Sherman, for defendant Boyd. BLATOHFORD, C. J. In this case a judgment was entered in this court, on the twelfth of October, 1872, against the defendant, for $8,288.62. The judgment was on a verdict of a jury taken on a failure of the defendant to appear at the trial. The action was on a distiller's bond, on which the defendant Boyd was surety, and was founded on an assessment of a deficiency tax to make up the amount of spirits required as 80 per cent. of the producing capacity of the distillery as fixed by the survey, the survey being made under section 10 and the assessment under section· 20 of the act of July 20, 1868. 15 St. at Large, 129, 133. In Feb. ruary, 1880, the defendant Boyd presented to this court affidavits seeking to show that the extent of the actual capacity of the distillery, with thtt materials and implements used, did not exceed the quantity of spirits returned as produced; and that, after the assessment for deficiency was made, and before this suit was brought, moneys were collected under a distraint made under the assessment, which were not credited . in entering the judgment. On these affidavits a motion was made to open the judgment, and for another trial by a jury. The court, Shipman, J., (17 Blatchf. 451,) said that the only tenable reason for opening the judgment was the omission of the credits; that the court had power to correct such a mistake on the authority of Crooks v. Maxwell, 6 Blatchf. 468; and that the judgment ought to be opened only for the purpose of allowing evidence to be given of payments made by the defendant Millinger out of his property, which ought to have been allowed and deducted from the face of the assessment of damages before entering the judgment, but not for the purpose of giving evidence of other defences to the claim of the plaintiff. It was urged to the court that, under the ruling of the supreme court in Clinkenbea1'd v. U. S. 21 Wall. 65, decided at the October term, 1874, the evidence as to the actual capacity of the distillery would have been competent if it had been offered at the trial of this suit, and that it was not offered because a course of decisions based on the
UNITED STA.TES· V. MILLINGER.
189
views stated in U. S. v. Hodson, 14 Int. Rev. Ree. 100, and in other cases, had held that the assessment of the deficiency tax could not be questioned in a suit on the bond. But Judge Shipman's view was, evidently, that the court had no power to open the judgment for the cause stated, for the purpose of permitting the defence in question to be made. At the same time that the motion in this case was made before him, a motion was also made before him in U. S. v. Teven, in this court, to open a judgment which had been rendered in 1873 and had been paid. The motion was based on alleged error in the exclusion of testimony offered at the trial by the defendant, such testimony constituting his defence. The testimony was excluded on a construction of the statute supposed to be correct. The supreme court had afterwards held, in another case, that such construction was erroneous. In denying the motion, February 2, 1880, Judge Shipman said: "The question in regard to vacating the judgment is neither one of practice, nor of procedure, nor of discretion, nor of the power of state courts in similar circumstances, but of the power of the federal courts. I am of opinion that this court has no power, on a summary motion, to vacate a judgment rendered at a previous term, upon the grounds set up in the motion papers. Bank of u. s. v. Moss, 6 How. 31; Mc.M.icken v. Petin, 18 How. 507; Wood v.I.IU8e, 4 MeL. 254."
The defendant Boyd now presents affidavits in this case seeking to show that in making the survey of the distillery, under section 10 of the act of 1868, the assessor took no part, and the person designated to aid the assessor under that section was arbitrarily required by the commissioner of internal revenue to fix the producing capacity of the distillery at what was stated in the report of survey made, which was larger than such person's own judgment as to such capacity. On this a motion is made to open the judgment and for a new trial by a jury. T think the court has no power to grant this motion. In addition to the cases cited in U. S. v. Teven, those of Medjord v. Dorsey, 2 Wash. 433; Cameron v. McRoberts, 3 Wheat. 591; Brush v. Robbins, 3 MeL. 486; and The Bankv. Labitut, 1 Woods, 11, may be referred to. It is held in some other
190
REPORTER.
courts that the power exists; that in the federal coui'ts it does not. A distinction is urged in respect to this case on the view that the error sought to be corrected was an, error of fact, while in U. S.v. Teven and other cases it was an error of law, and that in the Teven Case the judgment W/lS paid and so the parties were out of court. The evidence referred to, and sought to be introduced on a new trial, is evidence of facts which existed when the case was tried. The failure to put them in evidence did not constitute error in fact. There was no e:rror in any proceeding of the court. A mistake or illegality in conducting the survey, or the failure of the defend. ant to offer evidence thereof, was not an error of the court of any kind. The principle of the cases cited applies to and controls the present case, and requires that the motion should be denied. It is not intended to imply that there was any illegality in the mode of making the survey, as that question has not been considered.
UNITED STATES V. WISE.o UNITED STATES
THORNBURG.
(Circuit Gourt, S. D. OMo.
May 26, 1881.)
1.
NAVIGATION LAWS-REv. ST. § 4472- VARRYING PETROLEUM ON PASSENGER VESSELS-PRACTICABLE MODE OF TRANSPORTATION.
In an action to recover penalties for the violation of section 4472, Rev. St., which prohibits the carrying of petroleum and other dangerous articles upon passenger vessels, but excepts petroleum of a certain fire test, upon routes where there is no other practicable mode of transportation: Held, that although there was an all-rail route over which the petroleum might have been transported, yet, if the rates charged for transportation by rail were so high as to amount to a prohibition of the traffic in that article, it was not a practicable mode of transportation within the meaning of that section. · Reported by Messrs. Florien Giauque and J. V. Harper, of the Cincinnati bar.