Baldwin v. State Ex Rel. Hull

Boyd, J., delivered the opinion of the Court. This is an appeal from a j udgment of the Superior Court of Baltimore City, on a verdict rendered by the Court, sitting as a jury, in an action on the bond of William Woodward Baldwin, guardian of Columbus C. Baldwin, brought in the name of the State of Maryland for the use of D. Frank Hull, Collector of State and County Taxes for Washington County. In the case of Baldwin v. Washington County, 85 Md. 145 , we affirmed a decree of the Circuit Court for that county, refusing to grant an injunction to restrain the collection of a part of the taxes involved in this suit (that case including those for the years 1893 and 1894, while this also embraces those for the year 1895), on the ground that under a proper interpretation of our statutes the situs of personal property in the hands of a guardian is, for the purposes of taxation, in the county where he was appointed, and the fact that both guardian, and ward were non-residents of this State did not relieve the guardian from the payment of the taxes. It was also de ⁵⁸⁹ termined that, although the taxes were levied after the ward had become of age, inasmuch as the guardian had not settled his final account in the Orphans’ Court, it was the duty of the Register of Wills to report the property liable to taxation; of the County Commissioners to assess it, and of the guardian to pay the taxes thereon, notwithstanding the fact that the ward was of age.

In this case, as in that, there was an agreed statement of facts, and it is now agreed that on the 26th day of May, 1896, the guardian stated a final account in the Orphans’ Court, and delivered all the property to the ward, who subsequently executed a release and discharge to the defendants, both being done prior to the institution of this suit. The defendants having interposed numerous defences, they having filed originally twenty-six pleas, and afterwards twenty-four additional ones. They also offered fifteen prayers, made a motion in arrest of judgment and excepted to the rulings of the Court on various offers of evidence, but we will not attempt to discuss each plea and prayer separately, and will only refer to the principal points presented. 1. The first question to be considered is, whether the defendants, who are sureties on the bond, are responsible, even conceding their principal to be so.

It will be admitted at the beginning of the discussion that it does not necessarily follow that sureties on a guardian’s bond are liable because the guardian is. Their responsibility must depend upon the extent of the obligation created by the terms of the bond and the statutes which can be read into it. This bond is in the exact language of that prescribed by the statute, and therefore is unlike the one in State v. Hill et al., 88 Md. III, where the parties had deliberately excluded a term or condition of the statute which the plaintiffs sought to import into the contract. The condition is that the guardian “shall faithfully account with the Orphans’ Court of Washington County, as directed by law, for the management of the property and estate of the orphan under his care, and shall also deliver up the said property agreeably ⁵⁹⁰ to the order of said Court, or the directions of law, and shall in all respects perform the duty of guardian to the said Columbus C. Baldwin, according to law.” ít having been so recently decided by us that the guardian is responsible for the taxes levied for the years 1893 and 1894, and those for 1895 having been levied under the same conditions, it is useless for us to discuss that further.

The question now to be determined is, laying aside for the present the other defences urged, are the sureties on his bond liable? Section 65 of Art. 81 of the Code, provides, that “ administrators shall pay all taxes due from the decedents, and on failure, their bonds shall be put in suit for the use of the State and recovery had for the whole amount of taxes due, and interest from the time they were payable; this section shall also apply to guardians, for taxes upon property in their hands as such.” And section 9 of that Article, which requires the Registers of Wills to return to the County Commissioners a summary account of all property that shall appear by the records of the several Orphans’ Courts to be in the hands of each executor, administrator or guardian, provides that every “ executor, administrator or guardian shall be liable to pay the taxes levied thereon and shall be allowed therefor by the Orphans’ Court in his accounts.” There would seem to be no room for doubt that the bond of a guardian is liable for taxes levied on property in his hands, while he continues to be such guardian, but does the fact that his ward was of age when the taxes were levied, relieve his sureties, notwithstanding he still held the property and had not filed his final account ? Their liability for the property certainly did not cease when the ward became of age, but they could be sued at any time within twelve years from that date, at least for the benefit of the ward, if the guardian did not account with him during that time. State, use Henderson v. Henderson, 54 Md. 333 .

They were not only liable for the property he had when his ward became of age, but on the income from it until he accounted with him, unless, of course, he ⁵⁹¹ in some way discharged them. In Griffith v. Parks, 32 Md. 1 , the Court held, that the sureties were liable although after one of the wards had become of age the Orphans’ Court had passed an order authorizing and directing the guardian to deposit money in bank in the names of his wards, there to be held subject to the control of the Court, which was done, and the Court then passed another order authorizing him to withdraw the money, so deposited, for the purposes of investment, and it was placed on the ground that “ there had been no account settled with the Court and the fund had never been ordered to be paid over to the ward. ” It was also said, in that case, “ as the account is to be rendered to the Court after the ward becomes of age, its jurisdiction and control of both fund and guardian must of necessity remain until such final accounting.” If, then, the property so held by the guardian after the ward becomes of age and before he accounts to the Court is of the character liable to taxation, why are not both the guardian and his sureties liable for the taxes ? We have already determined in the other case that the guardian is, and as he still holds the property as guardian, as decided in Griffith v. Parks , by the very terms of the statute the bond is liable to be put in suit “for taxes upon property in his hands as such.” If it were not so, any guardian, resident or nonresident, who is not financially responsible, who held property that could not be reached by a tax collector, could collude with his ward and thus let the property escape taxation indefinitely. The requirement to pay taxes on the property cannot properly be said to impose new duties on the guardian or to add new responsibilities to the sureties, such as were not contemplated by the contract when they went on the bond, for he was required to pay taxes, as one of the duties imposed upon him by law, and indeed as a consequence of his having taxable property; and, notwithstanding the ward is of age, the sureties were responsible for the proper payment of the money or delivery of the property in the ⁵⁹² guardian’s hands.

It is not contended that they are liable for any additional amount not in the guardian’s hands when the ward became of age, except, of course, the income or interest, and they were already responsible for the property and its income until the guardian settled his account. The guardian is entitled to be credited with all sums he properly pays out of his income, or even out of the principal, when duly allowed by the Court, and by section g of Article 81, supra, he is expressly allowed credit for taxes paid. The only possible difference is that instead of being responsible to one person (the ward), they are responsible for the proper payment to those entitled to be paid, but that responsibility they assumed when they went on the bond. The law, then, required their principal to pay the taxes on taxable property in his possession, and it being one of the duties required of him, they undertook the proper performance of it by him, just as they did his other duties.

It is, therefore, in no sense imposing any new obligations on them or adding to the risks they assumed when they became sureties. Nor can the fact that after the taxes were levied, but before this suit was brought, the guardian settled his final account, and the ward executed a release of the defendants, affect the question. The settlement of the accounts between them cannot bind others who are not parties to it. If, as we have determined, the guardian and the appellants as sureties on his bond, were responsible for the taxes, neither of them could be relieved of the liability by such settlement.

In an action on a guardian’s bond it was held in Spedden v. State, 3 H. & J. 251 , that accounts passed in the Orphans’ Court were not final and conclusive on either the guardian or the -ward, but were only prima facie evidence of the amounts due, etc. ■ See also State v. Baker, 8 Md. 44 . Manifestly the release by the ward cannot discharge any obligations to third parties. It is said that if the plaintiff’s theory is correct, there would be no end to the liability of the sureties, but we dp ⁵⁹³ not see how such results can follow. In the first place, the right of action on the bond would be barred at the end of twelve years from the time the ward became of age.

In Henderson's case, supra, the majority of this Court held distinctly that the limitation ran from the time the ward became of age and not, as was urged in the dissenting opinion, from the time of the new breach. As, after the expiration of the time fixed by the statute, there could be no recovery by the ward against the guardian and his sureties for the property or its value, manifestly when that right of recovery ceased, a tax could not be imposed on the property so as to bind the sureties. But there would be no necessity for the sureties incurring liability for that time. It is true that section 255 of Art. 93 of the Code, cited by the appellants, which provides for the Orphans’ Court, ex-officio, requiring executors, administrators and guardians to make reports, etc., when in default, concludes by saying; that “ no guardian shall be thus summoned, ex-officio, to appear before the Court after his ward has arrived at legal age,” etc., but that does not preclude a proceeding at the instance of an interested party, such as a surety or a ward, to require the guardian to settle an account.

We do not understand why no one but the ward can sue a guardian’s bond. The fact that no case has been found where it has been done, does not of itself settle the question. Fortunately it does not often occur (and we know of no such case in this State, at least), that a guardian, after going into Court for the purpose of testing the validity of a tax imposed upon property in his hands and after the question is settled against his contention by the appellate Court of the State, will still undertake to avoid the payment of them. No better illustration of the importance ol permitting some one other than the ward to sue, could be furnished than this case.

But section 65 of Art, 81, which expressly gives the right of action on the bond, for the use' of the State, to recover the taxes, is of itself an answer to the statement that no one but the .ward can sue, and section: ⁵⁹⁴ nine requires him to pay the taxes and allows him credit for them. Of course the bond is required mainly for the protection of thé ward, at least he is the one most likely to be affected by the default of the guardian, but the condition of it is in terms broad enough to cover the rights of others interested in the estate, if there be any, as well as the ward. The guardian must deliver up the property agreeably to the order of the Court, or the. directions of law, “ and shall in all respects perform the duties of guardian.” When it is once established that his duty is to pay the taxes, does it not come within the very letter of the undertaking of the sureties ? And, if that be so, can it be possible that no one but the ward (who is more interested from a financial standpoint in not paying the taxes than the guardian is) can sue, and that if he will not, and the guardian and the property are beyond the reach of the tax authorities, that the taxes cannot be collected ?

Neither reason nor authority sustains such contention. The cases of State, use Murray v. Murray, 24 Md. 310 , and Fridge v. State, 3 G. & J. 103 , cited by the -appellants, certainly do not. In the former case the Court said that the companies which sought to get the benefit of the suit against the bond were tortfeasors equally with the guardian, and, of course, they could not sue the bond for that act, if they could for any other, and in the latter case, which was a suit for the use of the ward, it was said that if the ward had given a good release it would have discharged the guardian and his sureties from all responsibility on the guardian’s bond, but that, of course, only referred to a suit between her and the bondsmen. 2. It is next contended that the plantiff (meaning Hull) has no right to sue, and several reasons were assigned.

In the first place, it is said that section 65 of Art. 81 provides that on failure to pay the taxes the bond shall be put in suit “ for the" use of the State.” The suit must be in the name of the State, and it certainly does not mean that it must be brought by the " State of Maryland for the use of ⁵⁹⁵ the State of Maryland.” The State must act through some officer or agent, and as D. Frank Hull was the Collector of State Taxes for Washington County, a suit brought as this was, so far as the State taxes are concerned, would be for the use of the State. The State is and must be the legal plaintiff, as the bond is given to it, and there is no provision in the statute for the suit to be brought in any other way. In Fridge v. State, supra, it was determined that in a suit on a guardian’s bond, in which an