172 A.2d 354
No. 4911.Supreme Court of New Hampshire Strafford.Argued June 6, 1961.
Decided June 30, 1961.
1. A conservator is under a fiduciary duty to collect and honestly account for all the assets of his ward and is under the further positive duty not to use his ward’s assets for his own private profit.
2. Since by statute (RSA 464:18) conservators are “subject to all provisions of law” in force as to guardians, the duty imposed upon guardians (RSA 462:5) to “make and return a true and perfect inventory of the estate of his ward, as inventories of the estates of persons deceased are made” applies to conservators.
3. Debts due from a conservator to his ward are assets to be accounted for as other debts (RSA 554:14) and are required to be inventoried (RSA 554:1) regardless of the financial ability of the conservator to pay, and upon his failure to do so his surety is chargeable.
4. Hence certain notes, evidencing debts of the conservator to his ward due and payable on the date of the conservator’s appointment together with the interest provided for therein were held to be debts for which the conservator was accountable. An additional note due and payable after the conservator’s resignation was accepted was held not to be an asset except as to the interest provided for therein which was due and payable prior to and during the period of his conservatorship.
5. Certain other notes carrying interest and evidencing loans made by the ward to her conservator during the period of conservatorship were held, due to the fiduciary relationship existing between the parties, to be assets for which the conservatorship was chargeable and upon nonpayment likewise renders his surety liable therefor.
PROBATE APPEALS. One was an appeal by the plaintiffs, Vinton R. Yeaton, executor under the will of Sarah A. Rollins, and F. Clyde Keefe, special administrator of her estate, from a decree of the probate court, after hearing, denying their motion to charge, Harold W. Skillings as conservator of the estate of said Sarah A. Rollins and his surety with certain items of the ward’s property and from a denial of their motion to set aside said decree.
The other was an appeal by defendants, Harold W. Skillings and his surety, Massachusetts Bonding Insurance Company, from a ruling of the probate court denying their motion to dismiss plaintiff’s petition.
Harold was appointed conservator of said Sarah on July 1946 and filed a bond in the amount of $50,000 with the Massachusetts Bonding Company as surety. On October 22, 1948 there were filed an inventory showing no assets and a first and final account with no receipts and no disbursements by the conservator. On November 8, 1948 Sarah filed a petition in probate court containing the following representations and prayer over her signature and under oath: “On the 18th day of July 1946, Harold W. Skillings . . . was appointed her conservator without her knowledge or consent . . . she did not then and does not now either want or need a conservator for any purpose whatsoever . . . Harold W. Skillings never as conservator took possession of any of her property or acted in said capacity in any way . . . she is now informed that the said Harold W. Skillings has filed an account in the Probate Court showing nothing received and nothing paid, Wherefore, your petitioner prays that the said conservatorship may be declared null and void, and of no effect, and terminated forthwith.” On December 7, 1948, the probate court granted the prayer of said petition and allowed said account of Harold W. Skillings with a decree of “no balance in the hands of said accountant” and his resignation as conservator was accepted. The ward died April 5, 1950.
In March 1952 plaintiff F. Clyde Keefe filed a petition to reopen the account of the conservator. It was granted on March 16, 1954 and the ruling upheld in Massachusetts Bonding Co. v. Keefe,
100 N.H. 361. On January 23, 1957 plaintiffs Yeaton and Keefe filed this motion in the probate court to charge the conservator and his surety with various items of Sarah’s property detailed therein.
Appeals of the parties from rulings of the probate court thereon were heard in the Superior Court which found “that the circumstances warranted the reopening and reexamination of the Conservatorship but . . . that the evidence does not sustain the claims of the Executor that the Conservator should be charged on the Bond,” and denied the appeals.
The exceptions of the parties to said decree and to findings and rulings of the Court were reserved and transferred by Griffith, J.
Fisher, Parsons Moran (Mr. Moran orally), for the plaintiffs.
Russell H. McGuirk for Massachusetts Bonding Insurance Co.
The general nature of plaintiffs’ petition is stated in their brief to be as follows: “This is an action to charge the conservator and his surety for certain sums of money owed by the conservator to his ward, being due and payable during the period of the conservatorship and which the conservator neither paid nor made any accounting. It is further sought to charge the conservator and his surety for certain items of property of the ward which the conservator either had in possession or should have had in possession during the conservatorship and for which he failed to account.”
“Conservators were originally called guardians and the legislative history of the conservator statute takes on meaning and force only to the extent that a conservator has the same powers and obligations as a guardian in so far as they relate to the property of the ward.” Crawford v. Widett, 100 N.H. 115, 118. A conservator is under a fiduciary duty to collect and honestly account for all the assets of his ward. Butler v. Legro, 62 N.H. 350; 39 C.J.S., Guardian and Ward, s. 74, p. 114. He is also under a positive duty not to use his ward’s assets for his private profit. Massachusetts Bonding Co. v. Keefe, 100 N.H. 361, 364; Hollis v. Tilton, 90 N.H. 119, 122. A person who has placed his property in the hands of a conservator cannot make a valid contract in relation thereto without his approval. Normandin v. Kimball, 92 N.H. 62, 64. See RSA 464:18; RSA 462:27.
By their motion the plaintiffs sought to charge the conservator
and his surety with the following promissory notes of Harold payable to said Sarah together with the interest due thereon; note dated December 24, 1941 in the amount of $2,000; note dated January 28, 1942 for $3,000; note dated August 11, 1945 for $12,000; note dated April 19, 1946 for $3,000; note dated October 31, 1946 for $4,000; note dated January 21, 1947 for $10,000. In an action brought by plaintiff Yeaton a judgment in the amount of $43,700 was obtained thereon against said Skillings (Yeaton v. Skillings, 100 N.H. 316) which is unpaid.
On the date of Harold’s appointment as conservator of Sarah each of the first three of the above notes was a debt due from him to his ward. In the case, of an administrator of a decedent’s estate such debts “shall be assets and accounted for as other debts.” RSA 554:14 (formerly R.L., c. 353, s. 14). They should be inventoried under RSA 554:1. It has long been the established law of this jurisdiction that an executor or an administrator is bound to account for such debts in full regardless of his financial ability to pay and that his surety is chargeable with his failure to do so. Judge of Probate v. Sulloway, 68 N.H. 511, 515; see, King v. Murray, 286 Mass. 492, 496.
RSA 464:18 provides that a conservator “shall be subject to all provisions of law now in force as to guardians, so far as they apply to the estates of their wards.” By the provisions of RSA 462:5 a guardian “shall make and return a true and perfect inventory of the estate of his ward as inventories of the estates of persons deceased are made.” We are therefore of the opinion that the rule of the Sulloway case applies to conservators. Mattoon, Judge v. Cowing, 13 Gray (Mass.) 387; note, 14 B. U. L. Rev. 677, 683, 685. We hold as a matter of law that Harold as conservator was accountable for the balance due on those notes together with interest provided for therein and that upon his failure to. account for the same his surety became chargeable therefor. Judge of Probate v. Sulloway, supra.
The fourth note executed April 19, 1946 was payable three years after date. The principal was not due at the time of Harold’s appointment and did not become due until after his resignation as conservator was accepted by the probate court and would not fall within the above rule. However by its terms interest at the rate of 5% was to be paid monthly. Interest due and payable on the date of his appointment as well as interest which became due during his conservatorship were assets for which he was bound
to account to his ward and on his failure to pay his surety became chargeable therefor.
The last two notes were evidence of loans made during the period of the conservatorship. Harold’s appointment as conservator determined that as of that date Sarah was “unfitted by reason of infirmities of age, or by other mental or physical disability to manage her affairs with prudence and understanding.” Oullette v. Ledoux, 92 N.H. 302, 305. This created a fiduciary relationship between them (Restatement, Trusts, s. 7) and imposed upon Harold a positive duty not to use his ward’s assets for his private profit. Massachusetts Bonding Co. v. Keefe, 100 N.H. 361, 364. A conservator who makes loans of his ward’s assets to himself is chargeable with the principal and interest due thereon and upon nonpayment his surety becomes liable therefor. Hollis v. Tilton, 90 N.H. 119, 122; 2 Scott, Trusts (2d ed.) s. 170.17.
The plaintiffs also sought to charge the defendants with certain sizeable sums of money, the value of a diamond ring, of certain savings accounts and of certain bonds, for a withdrawal of $3,000 by Harold from one of Sarah’s savings accounts and for the income of her property during the period between the appointment and resignation of Harold as conservator.
It could be found on the evidence that the withdrawal of $3,000 was used to purchase property for Sarah and that no loss resulted from this transaction. A careful examination of the record reveals that the evidence did not compel a finding that any breach of trust by Harold made him or his surety chargeable for any of the items enumerated in the previous paragraph. The Superior Court’s ruling of nonchargeability as to these is sustained.
The exception of the plaintiffs to the dismissal of their appeal with regard to the promissory notes is sustained to the extent previously stated.
Defendants’ exception to the denial of their motion to dismiss plaintiffs’ motion to charge must be overruled. There was sufficient evidence of irregularities and self-dealing by the conservator to warrant the Court’s action. Raymond v. Goodrich, 80 N.H. 215; Massachusetts Bonding Co. v. Keefe, supra, 363.
Plaintiffs’ exception sustained in part; defendants’ exception overruled.
WHEELER, J., did not sit; the others concurred.