The war of the rebellion, and the residence of both guardian and
ward in the enemy's territory throughout the war, did not terminate
the obligation of a guardian appointed before the war in a state
never within that territory, nor discharge him from liability to
account to the ward in the courts of that state after the war.
A receipt given to a guardian appointed in one state by a
guardian afterwards appointed in another state for specific
personal property of the ward, transferred by the former to the
latter, does not discharge the former from responsibility to
account for previous loss by his mismanagement of the ward's
property. Nor is such responsibility lessened by the person last
appointed guardian having before his appointment concurred and
aided in the acts complained of.
Admissions by a ward's next of kin during the ward's lifetime
cannot be set up in defense of a bill by such next of kin as the
ward's administrator.
The widow of a citizen of one state does not, by marrying again
and taking the infant children of the first husband from that state
to live with her at the home of the second husband in another
state, change the domicile of the children.
A guardian, appointed in a state in which the ward is
temporarily residing, cannot change the ward's domicile from one
state to another.
A guardian, appointed in a state which is not the domicile of
the ward, should not, in accounting in the his appointment for his
investment of the ward's property, be held, unless in obedience to
express statute, to a narrower range of securities than is allowed
by the law of the ward's domicile.
By the law of Georgia before 1863 and by the law of Alabama, a
guardian might invest his ward's money in bank stock in Georgia or
in New York, or in city bonds, or in bonds issued by a railroad
corporation and endorsed by the state which had chartered it.
A guardian may, without order of court, sell personal property
of the ward in his possession and reinvest the proceeds.
A guardian, appointed in New York before the war of the
rebellion, of an infant then temporarily residing there but
domiciled in Georgia, sold bank stock of his ward in New York
during the war, and there invested the proceeds in bonds issued
before the war by the Cities of Mobile, Memphis and New Orleans,
and in bonds issued by a railroad corporation chartered by the
Tennessee and whose road was in Tennessee and Georgia, and the
railroad bonds endorsed by the State of Tennessee at the time of
their issue and deposited the bonds in a bank in Canada.
Held that if in so
Page 112 U. S. 453
doing he used due care and prudence, having regard to the best
pecuniary interests of his ward, he was not accountable to the ward
for loss by depreciation of the bonds, although one object of the
sale and investment was to save the ward's money from confiscation
by the United States.
An investment by a guardian of money of his ward, during the war
of the rebellion and while both guardian and ward were residing
within the enemy's territory, in bonds of the so-called Confederate
states, was unlawful, and the guardian is responsible to the ward
for the sum so invested.
This was an appeal by the executor of a guardian from a decree
against him upon a bill in equity filed by the administratrix of
his ward.
The original bill, filed on July 1, 1875, by Ann C. Sims, a
citizen of Alabama, as administratrix of Martha M. Sims, in the
Supreme Court of the State of New York, alleged that on December
11, 1855, the defendant's testator, Gazaway B. Lamar, was duly
appointed, by the Surrogate of the County of Richmond, in that
state, guardian of the person and estate of Martha M. Sims, an
infant of six years of age, then a resident of that county, and
gave bond as such, and took into his possession and control all her
property, being more than $5,000; that on October 5, 1874, he died
in New York, and on November 10, 1874, his will was there admitted
to probate, and the defendant, a citizen of New York, was appointed
his executor, and that he and his executor had neglected to render
any account of his guardianship to the Surrogate of Richmond
County, or to any court having cognizance thereof, or to the ward
or her administratrix, and prayed for an account, and for judgment
for the amount found to be due.
The defendant removed the case into the Circuit Court of the
United States for the Southern District of New York, and there
filed an answer averring that in 1855, when Lamar was appointed
guardian of Martha M. Sims, he was a citizen of Georgia and she was
a citizen of Alabama, having a temporary residence in the City of
New York; that in the spring of 1861, the States of Georgia and
Alabama declared themselves to have seceded from the United States
and to constitute members of the so-called Confederate States of
America, whereupon a state of war arose between the United States
and the Confederate States, which continued to be flagrant for
Page 112 U. S. 454
more than four years after; that Lamar and Martha M. Sims were,
in the spring of 1861, citizens and residents of the States of
Georgia and Alabama, respectively, and citizens of the Confederate
States, and were engaged in aiding and abetting the State of
Georgia and the so-called Confederate States in their rebellion
against the United States, and she continued to aid and abet until
the time of her death, and he continued to aid and abet till
January, 1865, that the United States, by various public acts,
declared all his and her property of any kind to be liable to
seizure and confiscation by the United States, and they both were,
by the various acts of Congress of the United States, outlawed and
debarred of any access to any court of the United States, whereby
it was impossible for Lamar to appear in the Surrogate's Court of
Richmond County to settle and close his accounts there and to be
discharged from his liability as guardian, in consequence whereof
the relation of guardian and ward, so far as it depended upon the
orders of that court, ceased and determined; that for the purpose
of saving the ward's property from seizure and confiscation by the
United States, Lamar at the request of the ward and of her natural
guardians, all citizens of the State of Alabama, withdrew the funds
belonging to her from the City of New York and invested them for
her benefit and account in such securities as by the laws of the
States of Alabama and Georgia and of the Confederate States he
might lawfully do; that in 1864, upon the death of Martha M. Sims,
all her property vested in her sister, Ann C. Sims, as her next of
kin, and any accounting of Lamar for that property was to be made
to her; that on March 15, 1867, at the written request of Ann C.
Sims and of her natural guardians, Benjamin H. Micou was appointed
her legal guardian by the Probate Court of Montgomery County, in
the State of Alabama, which was at that time her residence, and
Lamar thereupon accounted for and paid over all property with which
he was chargeable as guardian of Martha M. Sims, to Micou as her
guardian, and received from him a full release therefor, and that
Ann C. Sims, when she became of age, ratified and confirmed the
same. To that answer the plaintiff filed a general replication.
Page 112 U. S. 455
The case was set down for hearing in the circuit court upon the
bill, answer, and replication, and a statement of facts agreed by
the parties, in substance as follows:
On November 23, 1850, William W. Sims, a citizen of Georgia,
died at Savannah in that state, leaving a widow, who was appointed
his administratrix, and two infant daughters, Martha M. Sims, born
at Savannah on September 8, 1849, and Ann C. Sims, born in Florida
on June 1, 1851. In 1853, the widow married the Rev. Richard M.
Abercrombie, of Clifton, in the County of Richmond and State of New
York. On December 11, 1855, on the petition of Mrs. Abercrombie,
Gazaway B. Lamar, an uncle of Mr. Sims, and then residing at
Brooklyn, in the State of New York, was appointed by the Surrogate
of Richmond County guardian of the person and estate of each child
"until she shall arrive at the age of fourteen years, and until
another guardian shall be appointed," and gave bond to her, with
sureties,
"to faithfully in all things discharge the duty of a guardian to
the said minor according to law, and render a true and just account
of all moneys and other property received by him, and of the
application thereof, and of his guardianship in all respects, to
any court having cognizance thereof,"
and he immediately received from Mrs. Abercrombie in money
$5,166.89 belonging to each ward and invested part of it, in
January and April, 1856, in stock of the Bank of the Republic at
New York, and part of it, in March and July, 1857, in stock of the
Bank of Commerce at Savannah, each of which was then paying, and
continued to pay until April, 1861, good dividends annually, the
one of ten and the other of eight percent
In 1856, several months after Lamar's appointment as guardian,
Mr. and Mrs. Abercrombie removed from Clifton, in the State of New
York, to Hartford, in the State of Connecticut, and there resided
till her death in the spring of 1859. The children lived with Mr.
and Mrs. Abercrombie, Lamar as guardian paying Mr. Abercrombie for
their board at Clifton and at Hartford, from the marriage until her
death, and were then removed to Augusta, in the State of Georgia,
and there lived with their paternal grandmother and her
unmarried
Page 112 U. S. 456
daughter and only living child, their aunt, Lamar as guardian
continuing to pay their board. After 1856, neither of the children
ever resided in the State of New York. On January 18, 1860, their
aunt was married to Benjamin H. Micou, of Montgomery, in the State
of Alabama, and the children and their grandmother thereafter lived
with Mr. and Mrs. Micou at Montgomery, and the children were
educated and supported at Mr. Micou's expense.
From 1855 to 1859, Lamar resided partly in Georgia and partly in
New York. In the spring of 1861, he had a temporary residence in
the City of New York, and upon the breaking out of the war of the
rebellion, and after removing all his own property, left New York
and passed through the lines to Savannah, and there resided,
sympathizing with the rebellion and doing what he could to
accomplish its success until January, 1865, and continued to have
his residence in Savannah until 1872 or 1873, when he went to New
York again, and afterwards lived there. Mr. and Mrs. Micou also
sympathized with the rebellion and desired its success, and each of
them, as well as Lamar, failed during the rebellion to bear true
allegiance to the United States.
At the time of Lamar's appointment as guardian, ten shares in
the stock of the Mechanics' Bank of Augusta, in the State of
Georgia, which had belonged to William W. Sims in his lifetime,
stood on the books of the bank in the name of Mrs. Abercrombie as
his administratrix, of which one-third belonged to her as his
widow, and one-third to each of the infants. In January, 1856, the
bank refused a request of Lamar to transfer one-third of that stock
to him as guardian of each infant, but afterwards paid to him as
guardian, from time to time, two-thirds of the dividends during the
life of Mrs. Abercrombie, and all the dividends after her death
until 1865. During the period last named, he also received as
guardian the dividends on some other bank stock is Savannah, which
Mrs. Abercrombie owned, and to which, on her death, her husband
became entitled. Certain facts, relied on as showing that he,
immediately after his wife's death, made a surrender of her
interest in the bank shares to Lamar, as guardian of her children,
are not
Page 112 U. S. 457
material to the understanding of the decision of this Court, but
are recapitulated in the opinion of the circuit court. 7 F.
180-185.
In the winter of 1861-1862, Lamar, fearing that the stock in the
Bank of the Republic at New York, held by him as guardian, would be
confiscated by the United States, had it sold by a friend in New
York, the proceeds of the sale, which were about twenty percent
less than the par value of the stock, invested at New York in
guaranteed bonds of the Cities of New Orleans, Memphis, and Mobile,
and of the East Tennessee and Georgia Railroad Company, and those
bonds deposited in a bank in Canada.
Lamar from time to time invested the property of his wards that
was within the so-called Confederate States in whatever seemed to
him to be the most secure and safe -- some in Confederate States
bonds, some in the bonds of the individual states which composed
the Confederacy, and some in bonds of cities and of railroad
corporations and stock of banks within those states.
On the money of his wards accruing from dividends on bank stock
and remaining in his hands he charged himself with interest until
the summer of 1862, when, with the advice and aid of Mr. Micou, he
invested $7,000 of such money in bonds of the Confederate States
and of the State of Alabama, and in 1863, with the like advice and
aid, sold the Alabama bonds for more than he had paid for them and
invested the proceeds also in Confederate States bonds, charged his
wards with the money paid, and credited them with the bonds, and
placed the bonds in the hands of their grandmother, who gave him a
receipt for them and held them till the end of the rebellion, when
they, as well as the stock in the banks at Savannah, became
worthless.
Martha M. Sims died on November 2, 1864, at the age of fifteen
years, unmarried and intestate, leaving her sister Ann C. Sims her
next of kin. On January 12, 1867, Lamar, in answer to letters of
inquiry from Mr. and Mrs. Micou, wrote to Mrs. Micou that he had
saved from the wreck of the property of his niece, Ann C. Sims,
surviving her sister, three bonds of the City of Memphis, endorsed
by the State of Tennessee, one bond of
Page 112 U. S. 458
the City of Mobile, and one bond of the East Tennessee and
Georgia Railroad Company, each for $1,000, and with some coupons
past due and uncollected, and suggested that, by reason of his age
and failing health and of the embarrassed state of his own affairs,
Mr. Micou should be appointed in Alabama guardian in his stead.
Upon the receipt of this letter, Mrs. Micou wrote to Lamar,
thanking him for the explicit statement of the niece's affairs and
for the care and trouble he had had with her property, and Ann C,
Sims, then nearly sixteen years old, signed a request, attested by
her grandmother and by Mrs. Micou, that her guardianship might be
transferred to Mr. Micou, and that he might be appointed her
guardian. And on March 15, 1867, he was appointed guardian of her
property by the Probate Court of the County of Montgomery and State
of Alabama, according to the laws of that state, and gave bond as
such.
On May 14, 1867, Lamar sent to Micou complete and correct
statements of his guardianship account with each of his wards, as
well as all the securities remaining in his hands as guardian of
either, and a check payable to Micou as guardian of Ann C. Sims for
a balance in money due her, and Micou, as such guardian, signed and
sent to Lamar a schedule of and receipt for the property,
describing it specifically, by which it appeared that the bonds of
the Cities of New Orleans and Memphis and of the East Tennessee and
Georgia Railroad Company were issued, and the Memphis bonds, as
well as the railroad bonds, were endorsed by the State of
Tennessee, some years before the breaking out of the rebellion.
Micou thenceforth continued to act in all respects as the only
guardian of Ann C. Sims until she became of age on June 1,
1872.
No objection or complaint was ever made by either of the wards
or their relatives against Lamar's transactions or investments as
guardian until July 28, 1874, when Micou wrote to Lamar informing
him that Ann C. Sims desired a settlement of his accounts, and that
he had been advised that no credits could be allowed for the
investments in Confederate States bonds, and that Lamar was
responsible for the security of the investments in other bonds and
bank stock. Lamar was then
Page 112 U. S. 459
sick in New York, and died there on October 5, 1874, without
having answered the letter.
Before the case was heard in the circuit court, Ann C. Sims
died, on May 7, 1878, and on June 20, 1878, Mrs. Micou was
appointed, in New York, administratrix
de bonis non of
Martha M. Sims, and as such filed a bill of revivor in this suit.
On October 3, 1878, the defendant filed a cross-bill, repeating the
allegations of his answer to the original bill, and further
averring that Ann C. Sims left a will which had been admitted to
probate in Montgomery County, in the State of Alabama, and
afterwards in the County and State of New York, by which she gave
all her property to Mrs. Micou, who was her next of kin, and that
Mrs. Micou was entitled to receive for her own benefit whatever
might be recovered in the principal suit, and was estopped to deny
the lawfulness or propriety of Lamar's acts because whatever was
done by him as guardian of Martha M. Sims in her lifetime, or as
guardian of the interests of Ann C. Sims as her next of kin, was
authorized and approved by Mrs. Micou and her mother and husband as
the natural guardians of both children. Mrs. Micou, as plaintiff in
the bill of revivor, answered the cross-bill, alleging that Ann
succeeded to Martha's property as her administratrix, and not as
her next of kin, admitting Ann's will and the probate thereof,
denying that Mrs. Micou was a natural guardian of the children, and
denying that she approved or ratified Lamar's acts as guardian. A
general replication was filed to that answer.
Upon a hearing on the pleadings and the agreed statement of
facts, the circuit court dismissed the cross-bill, held all Lamar's
investments to have been breaches of trust, and entered a decree
referring the case to a master to state an account. The case was
afterwards heard on exceptions to the master's report, and a final
decree entered for the plaintiff for $18,705.19, including the
value before 1861 of those bank stocks in Georgia of which Lamar
had never had possession. The opinion delivered upon the first
hearing is reported in 17 Blatchford 378, and in 1 F. 14, and the
opinion upon the second hearing in 7 F. 180. The defendant appealed
to this Court.
Page 112 U. S. 463
MR. JUSTICE GRAY delivered the opinion of the Court. He recited
the facts as above stated, and continued:
The authority of the Surrogate's Court of the County of
Richmond
Page 112 U. S. 464
and State of New York to appoint Lamar guardian of the persons
and property of infants at the time within that county, and the
authority of the supreme court of the State of New York in which
this suit was originally brought, being a court of general equity
jurisdiction, to take cognizance thereof, are not disputed, and
upon the facts agreed it is quite clear that none of the defenses
set up in the answer afford any ground for dismissing the bill.
The war of the rebellion, and the residence of both ward and
guardian within the territory controlled by the insurgents, did not
discharge the guardian from his responsibility to account after the
war for property of the wards which had at any time come into his
hands or which he might, by the exercise of due care, have obtained
possession of. A state of war does not put an end to preexisting
obligations or transfer the property of wards to their guardians or
release the latter from the duty to keep it safely, but suspends
until the return of peace the right of anyone residing in the
enemy's country to sue in our courts.
Ward v.
Smith, 7 Wall. 447;
Montgomery
v. United States, 15 Wall. 395,
82 U. S. 400;
Insurance Co. v. Davis, 95 U. S. 425,
95 U. S. 430;
Kershaw v. Kelsey, 100 Mass. 561, 563-564, 570; 3
Phillimore International Law (2d ed.) § 589.
The appointment of Micou in 1867 by a court of Alabama to be
guardian of the surviving ward, then residing in that state, did
not terminate Lamar's liability for property of his wards which he
previously had or ought to have taken possession of. The receipt
given by Micou was only for the securities and money actually
handed over to him by Lamar, and Micou had any authority to
discharge Lamar from liability for past mismanagement of either
ward's property, he never assumed to do so.
The suggestion in the answer that the surviving ward, upon
coming of age, ratified and approved the acts of Lamar as guardian
finds no support in the facts of the case.
The further grounds of defense, set up in the cross-bill, that
Micou participated in Lamar's investments and that Mrs. Micou
approved them are equally unavailing. The acts of Micou before his
own appointment as guardian could not bind
Page 112 U. S. 465
the ward. And admissions in private letters from Mrs. Micou to
Lamar could not affect the rights of the ward or Mrs. Micou's
authority, upon being afterwards appointed administratrix of the
ward, to maintain this bill as such against Lamar's representative,
even if the amount recovered will inure to her own benefit as the
ward's next of kin. 1 Greenl.Ev. § 179.
The extent of Lamar's liability presents more difficult
questions of law, now for the first time brought before this
Court.
The general rule is everywhere recognized that a guardian or
trustee, when investing property in his hands, is bound to act
honestly and faithfully and to exercise a sound discretion such as
men of ordinary prudence and intelligence use in their own affairs.
In some jurisdictions, no attempt has been made to establish a more
definite rule; in others, the discretion has been confined by the
legislature or the courts within strict limits.
The Court of Chancery, before the Declaration of Independence,
appears to have allowed some latitude to trustees in making
investments. The best evidence of this is to be found in the
judgments of Lord Hardwicke. He held, indeed, in accordance with
the clear weight of authority before and since, that money lent on
a mere personal obligation, like a promissory note, without
security, was at the risk of the trustee.
Ryder v.
Bickerton, 3 Swanston 80, note;
S.C. 1 Eden 149,
note;
Barney v.
Saunders, 16 How. 535,
57 U. S. 545;
Perry on Trusts § 453. But in so holding, he said: "For it should
have been on some such security as binds land, or something to be
answerable for it." 3 Swanston 81, note. Although in one case he
held that a trustee, directed by the terms of his trust to invest
the trust money is government funds or other good securities, was
responsible for a loss caused by his investing it in South Sea
stock, and observed that neither South Sea stock nor bank stock was
considered a good security, because it depended upon the management
of the governor and directors, and the capital might be wholly
lost,
Trafford v. Boehm, 3 Atk. 440, 444, yet in another
case he declined to charge a trustee for a loss on South Sea stock,
which had fallen in value since the trustee received it, and said
that "to compel trustees
Page 112 U. S. 466
to make up a deficiency, not owing to their willful default is
the harshest demand that can be made in a court of equity."
Jackson v. Jackson, 1 Atk. 513, 514;
S.C. West
Ch. 31, 34. In a later case, he said:
"Suppose a trustee, having in his hands a considerable sum of
money, places it out in the funds, which afterwards sink in their
value, or on a security at the time apparently good, which
afterwards turns out not to be so, for the benefit of the
cestui que trust; was there ever an instance of the
trustee's being made to answer the actual sum so placed out? I
answer, 'No.' If there is no
mala fides, nothing willful
in the conduct of the trustee, the court will always favor him,
for, as a trust is an office necessary in the concerns between man
and man, and which, if faithfully discharged, is attended with no
small degree of trouble and anxiety, it is an act of great kindness
in anyone to accept it. To add hazard or risk to that trouble, and
subject a trustee to losses which he could not foresee, and,
consequently not prevent, would be a manifest hardship and would be
deterring everyone from accepting so necessary an office."
That this opinion was not based upon the fact that in England
trustees usually receive no compensation is clearly shown by the
Chancellor's adding that the same doctrine held good in the case of
a receiver, an officer of the court, and paid for his trouble, and
the point decided was that a receiver, who paid the amount of rents
of estates in his charge to a Bristol tradesman of good credit,
taking his bills therefor on London, was not responsible for the
loss of the money by his becoming bankrupt.
Knight v.
Plymouth, 1 Dick. 120, 126-127;
S.C. 3 Atk. 480. And
the decision was afterwards cited by Lord Hardwicke himself as
showing that when trustees act by other hands, according to the
usage of business, they are not answerable for losses.
Ex Parte
Belchier, 1 Amb. 218-219;
S.C. 1 Kenyon 38, 47.
In later times, as the amount and variety of English government
securities increased, the Court of Chancery limited trust
investments to the public funds, disapproved investments either in
bank stock or in mortgages of real estate, and prescribed so strict
a rule that Parliament interposed, and by the statutes of 22 &
23 Vict. c. 35, and 23 & 24 Vict. c 38, and by general
Page 112 U. S. 467
orders in chancery, pursuant to those statutes, trustees have
been authorized to invest in stock of the bank of England or of
Ireland, or upon mortgage of freehold or copyhold estates, as well
as in the public funds. Lewin on Trusts (7th ed.) 282, 283,
287.
In a very recent case, the Court of Appeal and the House of
Lords, following the decisions of Lord Hardwick, in
Knight v.
Plymouth and
Ex Parte Belchier, above cited, held
that a trustee investing trust funds, who employed a broker to
procure securities authorized by the trust, and paid the purchase
money to the broker, if such was the usual and regular course of
business of persons acting with reasonable care and prudence on
their own account, was not liable for the loss of the money by
fraud of the broker. Sir George Jessel, M.R., Lord Justice Bowen,
and Lord Blackburn affirmed the general rule that a trustee is only
bound to conduct the business of his trust in the same manner that
an ordinarily prudent man of business would conduct his own, Lord
Blackburn adding the qualification that "a trustee must not choose
investments other than those which the terms of his trust permit."
Speight v. Gaunt, 22 Ch.D. 727, 739, 762; 9 App.Cas. 1,
19.
In this country, there has been a diversity in the laws and
usages of the several states upon the subject of trust
investments.
In New York, under Chancellor Kent, the rule seems to have been
quite undefined.
See Smith v. Smith, 4 Johns.Ch. 281, 285;
Thompson v. Brown, 4 Johns.Ch. 619, 628, 629, where the
chancellor quoted the passage above cited from Lord Hardwicke's
opinion in
Knight v. Plymouth. And in
Brown v.
Campbell, Hopk.Ch. 233, where an executor in good faith made
an investment, considered at the time to be advantageous, of the
amount of two promissory notes, due to his testator from one
manufacturing corporation, in the stock of another manufacturing
corporation, which afterwards became insolvent, Chancellor Sanford
held that there was no reason to charge him with the loss. But by
the later decisions in that state, investments in bank or railroad
stock have been held to be at the risk of the trustee, and it has
been intimated that the
Page 112 U. S. 468
only investments that a trustee can safely make without an
express order of court are in government or real estate securities.
King v. Talbot, 40 N.Y. 76,
aff'g S.C., 50 Barb.
453;
Ackerman v. Emott, 4 Barb. 626;
Mills v.
Hoffman, 26 Hun. 594; 2 Kent, Comm. 416, note
b. So
the decisions in New Jersey and Pennsylvania tend to disallow
investments in the stock of banks or other business corporations,
or otherwise than in the public funds or in mortgages of real
estate.
Gray v. Fox, Saxton 259, 268;
Halsted v.
Meeker, 3 C.E.Green 136;
Lathrop v. Smalley, 8
C.E.Green, 192;
Worrell's Appeal, 9 Penn.St. 508, and 23
Penn.St. 44;
Hemphill's Appeal, 18 Penn.St. 303;
Ihmsen's Appeal, 43 Penn.St. 431. And the New York and
Pennsylvania courts have shown a strong disinclination to permit
investments in real estate or securities out of their jurisdiction.
Ormiston v. Olcott, 84 N.Y. 339;
Rush's Estate,
12 Penn.St. 375, 378.
In New England and in the southern states, the rule has been
less strict.
In Massachusetts, by a usage of more than half a century,
approved by a uniform course of judicial decision, it has come to
be regarded as too firmly settled to be changed, except by the
legislature, that all that can be required of a trustee to invest
is that he shall conduct himself faithfully and exercise a sound
discretion, such as men of prudence and intelligence exercise in
the permanent disposition of their own funds, having regard, not
only to the probable income, but also to the probable safety, of
the capital, and that a guardian or trustee is not precluded from
investing in the stock of banking, insurance, manufacturing, or
railroad corporations within or without the state.
Harvard
College v. Amory, 9 Pick. 446, 461;
Lovell v. Minot,
20 Pick. 116, 119;
Kinmonth v. Brigham, 5 Allen 270, 277;
Clark v. Garfield, 8 Allen 427;
Brown v. French,
125 Mass. 410;
Bowker v. Pierce, 130 Mass. 262. In New
Hampshire and in Vermont, investments, honestly and prudently made,
in securities of any kind that produce income appear to be allowed.
Knowlton v. Bradley, 17 N.H. 458;
Kimball v.
Reding, 11 Fost. 352, 374;
French v. Currier, 47 N.H.
88, 99;
Barney v. Parsons, 54 Vt. 623.
Page 112 U. S. 469
In Maryland, good bank stock, as well as government securities
and mortgages on real estate, has always been considered a proper
investment.
Hammond v. Hammond, 2 Bland, 306, 413;
Gray v. Lynch, 8 Gill, 403;
Murray v. Feinour, 2
Md.Ch. 418. So, in Mississippi, investment in bank stock is
allowed.
Smyth v. Burns, 25 Miss. 422.
In South Carolina, before the war, no more definite rule appears
to have been laid down than that guardians and trustees must manage
the funds in their hands as prudent men manage their own affairs.
Boggs v. Adger, 4 Rich.Eq. 408, 411;
Spear v.
Spear, 9 Rich.Eq. 184, 201;
Snelling v. McCreary, 14
Rich.Eq. 291, 300.
In Georgia, the English rule was never adopted; a statute of
1845, which authorized executors, administrators, guardians, and
trustees, holding any trust funds, to invest them in securities of
the state, was not considered compulsory, and before January 1,
1863 (when that statute was amended by adding a provision that any
other investment of trust funds must be made under a judicial
order, or else be at the risk of the trustee), those who lent the
fund at interest, on what was at the time considered by prudent men
to be good security, were not held liable for a loss without their
fault. Cobb's Digest 333; Code of 1861 § 2308;
Brown v.
Wright, 39 Ga. 96;
Moses v. Moses, 50 Ga. 9, 33.
In Alabama the supreme court in
Bryant v. Craig, 12
Ala. 354, 359, having intimated that a guardian could not safely
invest upon either real or personal security without an order of
court, the legislature, from 1852, authorized guardians and
trustees to invest on bond and mortgage, or on good personal
security, with no other limit than fidelity and prudence might
require. Code 1852 § 2024; Code 1867 § 2426;
Foscue v.
Lyon, 55 Ala. 440, 452.
The rules of investment varying so much in the different states,
it becomes necessary to consider by what law the management and
investment of the ward's property should be governed.
As a general rule (with some exceptions not material to the
consideration of this case), the law of the domicile governs
the
Page 112 U. S. 470
status of a person and the disposition and management of his
movable property. The domicile of an infant is universally held to
be the fittest place for the appointment of a guardian of his
person and estate, although, for the protection of either, a
guardian may be appointed in any state where the person or any
property of an infant may be found. On the continent of Europe, the
guardian appointed in the State of the domicile of the ward is
generally recognized as entitled to the control and dominion of the
ward and his movable property everywhere, and guardians specially
appointed in other states are responsible to the principal
guardian. By the law of England and of this country, a guardian
appointed by the courts of one state has no authority over the
ward's person or property in another state except so far as allowed
by the comity of that state, as expressed through its legislature
or its courts; but the tendency of modern statutes and decisions is
to defer to the law of the domicile and to support the authority of
the guardian appointed there.
Hoyt v. Sprague,
103 U. S. 613,
103 U. S. 631,
and authorities cited;
Morrell v. Dickey, 1 Johns.Ch. 153;
Woodworth v. Spring, 4 Allen 321;
Milliken v.
Pratt, 125 Mass. 374, 377, 378;
Leonard v. Putnam, 51
N.H. 247;
Commonwealth v. Rhoads, 37 Penn.St. 60;
Sims
v. Renwick, 25 Ga. 58; Dicey on Domicile 172-176; Westlake
Private International Law (2d ed.) 48-50; Wharton on Conflict of
Laws (2d ed.) §§ 259-268.
An infant cannot change his own domicile. As infants have the
domicile of their father, he may change their domicile by changing
his own, and after his death, the mother, while she remains a
widow, may likewise, by changing her domicile, change the domicile
of the infants, the domicile of the children in either case
following the independent domicile of their parent.
Kennedy v.
Ryall, 67 N.Y. 379;
Potinger v. Wightman, 3 Meriv.
67;
Dedham v. Natick, 16 Mass. 135; Dicey on Domicile
97-99. But when the widow, by marrying again, acquires the domicile
of a second husband, she does not, by taking her children by the
first husband to live with her there, make the domicile which she
derives from the second husband their domicile, and they retain the
domicile which they had, before her second marriage, acquired from
her or from their father.
Page 112 U. S. 471
Cumner v. Milton, 3 Salk. 259;
S.C. Holt 578;
Freetown v. Taunton, 16 Mass. 52;
School Directors v.
James, 2 Watts & Sergeant 568;
Johnson v.
Copeland, 35 Ala. 521;
Brown v. Lynch, 2 Bradford
214;
Mears v. Sinclair, 1 W.V. 185; Pothier, Introduction
Generale aux Coutumes, No. 19; 1 Burge Colonial and Foreign Law,
39; 4 Phillimore International Law (2d ed.) § 97.
The preference due to the law of the ward's domicile and the
importance of a uniform administration of his whole estate require
that, as a general rule, the management and investment of his
property should be governed by the law of the State of his
domicile, especially when he actually resides there, rather than by
the law of any state in which a guardian may have been appointed or
may have received some property of the ward. If the duties of the
guardian were to be exclusively regulated by the law of the state
of his appointment, it would follow that in any case in which the
temporary residence of the ward was changed from state to state
from considerations of health, education, pleasure, or convenience,
and guardians were appointed in each state, the guardians appointed
in the different states, even if the same persons, might be held to
diverse rules of accounting for different parts of the ward's
property. The form of accounting, so far as concerns the remedy
only, must indeed be according to the law of the court in which
relief is sought; but the general rule by which the guardian is to
be held responsible for the investment of the ward's property is
the law of the place of the domicile of the ward. Bar,
International Law § 106 (Gillespie's translation), p. 438; Wharton,
Conflict of Laws § 259.
It may be suggested that this would enable the guardian, by
changing the domicile of his ward, to choose for himself the law by
which he should account. Not so. The father, and after his death
the widowed mother, being the natural guardian and the person from
whom the ward derives his domicile, may change that domicile. But
the ward does not derive a domicile from any other than a natural
guardian. A testamentary guardian nominated by the father may have
the same control of the ward's domicile that the father had.
Wood v. Wood, 5
Page 112 U. S. 472
Paige 596, 605. And any guardian appointed in the state of the
domicile of the ward has been generally held to have the power of
changing the ward's domicile from one county to another within the
same state and under the same law.
Cutts v. Haskins, 9
Mass. 543;
Holyoke v. Haskins, 5 Pick. 20;
Kirkland v.
Whately, 4 Allen 462;
Anderson v. Anderson, 42 Vt.
350;
Ex Parte Bartlett 4 Bradford 221;
The Queen v.
Whitby, L.R. 5 Q.B. 325, 331. But it is very doubtful, to say
the least, whether even a guardian appointed in the state of the
domicile of the ward (not being the natural guardian or a
testamentary guardian) can remove the ward's domicile beyond the
limits of the state in which the guardian is appointed and to which
his legal authority is confined.
Douglas v. Douglas, L.R.
12 Eq. 617, 625;
Daniel v. Hill, 52 Ala. 430; Story
Conflict of Law § 506, note; Dicey on Domicile 100, 132. And it is
quite clear that a guardian appointed in a state in which the ward
is temporarily residing, cannot change the ward's permanent
domicile from one state to another.
The case of such a guardian differs from that of an executor of,
or a trustee under, a will. In the one case, the title in the
property is in the executor or the trustee; in the other, the title
in the property is in the ward, and the guardian has only the
custody and management of it, with power to change its investment.
The executor or trustee is appointed at the domicile of the
testator; the guardian is most fitly appointed at the domicile of
the ward, and may be appointed in any state in which the person or
any property of the ward is found. The general rule which governs
the administration of the property in the one case may be the law
of the domicile of the testator; in the other case, it is the law
of the domicile of the ward.
As the law of the domicile of the ward has no extraterritorial
effect except by the comity of the state where the property is
situated or where the guardian is appointed, it cannot, of course,
prevail against a statute of the state in which the question is
presented for adjudication, expressly applicable to the estate of a
ward domiciled elsewhere.
Hoyt v. Sprague, 103 U.
S. 613. cases may also arise with facts so peculiar or
so
Page 112 U. S. 473
complicated as to modify the degree of influence that the court
in which the guardian is called to account may allow to the law of
the domicile of the ward, consistently with doing justice to the
parties before it. And a guardian, who had in good faith conformed
to the law of the state in which he was appointed might perhaps, be
excused for not having complied with stricter rules prevailing at
the domicile of the ward. But in a case in which the domicile of
the ward has always been in a state whose law leaves much to the
discretion of the guardian in the matter of investments, and he has
faithfully and prudently exercised that discretion with a view to
the pecuniary interests of the ward, it would be inconsistent with
the principles of equity to charge him with the amount of the
moneys invested, merely because he has not complied with the more
rigid rules adopted by the courts of the state in which he was
appointed.
The domicile of William W. Sims during his life and at the time
of his death in 1850 was in Georgia. This domicile continued to be
the domicile of his widow and of their infant children until they
acquired new ones. In 1853, the widow, by marrying the Rev. Mr.
Ambercrombie, acquired his domicile. But she did not, by taking the
infants to the home at first in New York and afterwards in
Connecticut, of her new husband, who was of no kin to the children,
was under no legal obligation to support them, and was, in fact
paid for their board out of their property, make his domicile, or
the domicile derived by her from him, the domicile of the children
of the first husband. Immediately upon her death in Connecticut in
1859, these children, both under ten years of age, were taken back
to Georgia to the house of their father's mother and unmarried
sister, their own nearest surviving relatives, and they continued
to live with their grandmother and aunt in Georgia until the
marriage of the aunt in January, 1860, to Mr. Micou, a citizen of
Alabama, after which the grandmother and the children resided with
Mr. and Mrs. Micou at their domicile in that state.
Upon these facts, the domicile of the children was always in
Georgia from their birth until January, 1860, and thenceforth
Page 112 U. S. 474
was either in Georgia or in Alabama. As the rules of investment
prevailing before 1863 in Georgia and in Alabama did not
substantially differ, the question in which of those two states
their domicile was is immaterial to the decision of this case, and
it is therefore unnecessary to consider whether their grandmother
was their natural guardian, and as such had the power to change
their domicile from one state to another.
See Hargrave's
note 66 to Co.Litt. 88
b; Reeve, Domestic Relations 315; 2
Kent Com. 219; Code of Georgia 1861 §§ 1754, 2452;
Darden v.
Wyatt, 15 Ga. 414. Whether the domicile of Lamar in December,
1855, when he was appointed in New York guardian of the infants,
was in New York or in Georgia does not distinctly appear, and is
not material because, for the reasons already stated, wherever his
domicile was, his duties as guardian in the management and
investment of the property of his wards were to be regulated by the
law of their domicile.
It remains to apply the test of that law to Lamar's acts or
omissions with regard to the various kinds of securities in which
the property of the wards was invested.
1. The sum which Lamar received in New York in money from Mrs.
Abercrombie he invested in 1856 and 1857 in stock of the Bank of
the Republic at New York and of the Bank of Commerce at Savannah,
both of which were then, and continued till the breaking out of the
war, in sound condition, paying good dividends. There is nothing to
raise a suspicion that Lamar, in making these investments, did not
use the highest degree of prudence, and they were such as by the
law of Georgia or of Alabama he might properly make. Nor is there
any evidence that he was guilty of neglect in not withdrawing the
investment in the stock of the Bank of Commerce at Savannah before
it became worthless. He should not, therefore, be charged with the
loss of that stock. The investment in the stock of the Bank of the
Republic of New York being a proper investment by the law of the
domicile of the wards, and there being no evidence that the sale of
that stock by Lamar's order in New York in 1862 was not judicious,
or was for less than its fair market price, he was not
Page 112 U. S. 475
responsible for the decrease in its value between the times of
its purchase and of its safe. He had the authority, as guardian,
without any order of court, to sell personal property of his ward
in his own possession and to reinvest the proceeds.
Field v.
Schieffelin, 7 Johns.Ch. 150;
Ellis v. Essex Merrimack
Bridge, 2 Pick. 243. That his motive in selling it was to
avoid its being confiscated by the United States does not appear to
us to have any bearing on the rights of these parties. And no
statute under which it could have been confiscated has been brought
to our notice. The Act of July 17, 1862, c. 195 § 6, cited by the
appellant, is limited to property of persons engaged in or abetting
armed rebellion, which could hardly be predicated of two girls
under thirteen years of age. 12 Stat. 591. Whatever liability,
criminal or civil, Lamar may have incurred or avoided as toward the
United States, there was nothing in his selling this stock and
turning it into money of which his wards had any right to
complain.
As to the sum received from the sale of the stock in the Bank of
the Republic, we find nothing in the facts agreed by the parties
upon which the case was heard to support the argument that Lamar,
under color of protecting his wards' interests, allowed the funds
to be lent to cities and other corporations which were aiding in
the rebellion. On the contrary, it is agreed that that sum was
applied to the purchase in New York of guaranteed bonds of the
Cities of New Orleans, Memphis, and Mobile, and of the East
Tennessee and Georgia Railroad Company, and the description of
those bonds, in the receipt afterwards given by Micou to Lamar,
shows that the bonds of that railroad company, and of the Cities of
New Orleans and Memphis at least, were issued some years before the
breaking out of the rebellion, and that the bonds of the City of
Memphis and of the railroad company were at the time of their
issue, endorsed by the State of Tennessee. The company had its
charter from that state, and its road was partly in Tennessee and
partly in Georgia. Tenn.Stat. 1848, c. 169. Under the discretion
allowed to a guardian or trustee by the law of Georgia and of
Alabama, he was not precluded from investing the funds in his hands
in bonds of a railroad
Page 112 U. S. 476
corporation endorsed by the state by which it was chartered or
in bonds of a city. As Lamar, in making these investments, appears
to have used due care and prudence, having regard to the best
pecuniary interests of his wards, the sum so invested should be
credited to him in this case unless, as suggested at the argument,
the requisite allowance has already been made in the final decree
of the circuit court in the suit brought by the representative of
the other ward, an appeal from which was dismissed by this Court
for want of jurisdiction in
104 U. S. 104 U.S.
465.
2. Other moneys of the wards in Lamar's hands, arising either
from dividends which he had received on their behalf, or from
interest with which he charged himself upon sums not invested, were
used in the purchase of bonds of the Confederate States, and of the
State of Alabama.
The investment in bonds of the Confederate States was clearly
unlawful, and no legislative act or judicial decree or decision of
any state could justify it. The so-called Confederate government
was in no sense a lawful government, but was a mere government of
force, having its origin and foundation in rebellion against the
United States. The notes and bonds issued in its name and for its
support had no legal value as money or property, except by
agreement or acceptance of parties capable of contracting with each
other, and can never be regarded by a court sitting under the
authority of the United States as securities in which trust funds
might be lawfully invested.
Thorington v.
Smith, 8 Wall. 1;
Head v. Starke, Chase
312;
Horn v.
Lockhart, 17 Wall. 570;
Confederate Note
Case, 19 Wall. 548;
Sprott v.
United States, 20 Wall. 459;
Fretz v.
Stover, 22 Wall. 198;
Alexander v. Bryan,
110 U. S. 414. An
infant has no capacity, by contract with his guardian, or by assent
to his unlawful acts, to affect his own rights. The case is
governed in this particular by the decision in Horn v. Lockhart, in
which it was held that an executor was not discharged from his
liability to legatees by having invested funds, pursuant to a
statute of the state, and with the approval of the probate court by
which he had been appointed, in bonds of the Confederate States,
which became worthless in his hands.
Page 112 U. S. 477
Neither the date nor the purpose of the issue of the bonds of
the State of Alabama is shown, and it is unnecessary to consider
the lawfulness of the investment in those bonds, because Lamar
appears to have sold them for as much as he had paid for them, and
to have invested the proceeds in additional Confederate States
bonds, and for the amount thereby lost to the estate he was
accountable.
3. The stock in the Mechanics' Bank of Georgia, which had
belonged to William W. Sims in his lifetime, and stood on the books
of the bank in the name of his administratrix, and of which
one-third belonged to her, as his widow, and one third to each of
the infants, never came into Lamar's possession, and upon a request
made by him, the very next month after his appointment, the bank
refused to transfer to him any part of it. He did receive and
account for the dividends, and he could not, under the law of
Georgia concerning foreign guardians, have obtained possession of
property of his wards within that state without the consent of the
ordinary. Code 1861 §§ 1834-1839. The attempt to charge him for the
value of the principal of the stock must fail for two reasons:
First. This very stock had not only belonged to the father of
the wards in his lifetime, but it was such stock as a guardian or
trustee might properly invest in by the law of Georgia. Second. No
reason is shown why this stock, being in Georgia, the domicile of
the wards, should have been transferred to a guardian who had been
appointed in New York during their temporary residence there.
The same reasons are conclusive against charging him with the
value of the bank stock in Georgia, which was owned by Mrs.
Abercrombie in her own right, and to which Mr. Abercrombie became
entitled upon her death. It is therefore unnecessary to consider
whether there is sufficient evidence of an immediate surrender by
him of her interest to her children.
The result is that
Both the decrees of the circuit court in this case must be
reversed, and the case remanded for further proceedings in
conformity with this opinion.
