This is an appeal from a judgment rendered in the district court on appeal from the county court of Pottawatomie county, in a proceeding brought for the cancellation of an order approving and settling the account of John H. Merkle, plaintiff in error, as guardian of the estates of four minor children and surcharging the account of such guardian.
In 1927, Bert Harris, a banker of Maud, Okla., was by the county court of Pottawatomie county appointed guardian of the estates of Una, Dora, Irene, and Alva Hembree, minors. At that time the property, a small farm, which said minors had inherited, was of but little value. In the latter part of 1927, or early in 1928, oil was discovered under and produced from said land, so that the same became very valuable. In the spring of 1929, there had accumulated a large sum of money in the hands of said guardian. Some $30.000 thereof had been invested in a farm in Cleveland county. In early August, 1929, Harris had in his hands money and property belonging to said minors amounting to about $300,000. About $150,000 of this was in cash. In January, 1929, Leroy G. Cooper became county judge of Pottawatomie county. Shortly thereafter he called upon Harris for a report as guardian. Therefrom it was disclosed that Harris had more than $150,000 belonging to said estate deposited in the bank at Maud in which Harris was interested. Shortly thereafter the county judge suggested to Harris that more of the money in said estate should be invested. About that time one Earl Clay approached Harris and suggested that his, Clay's, brother, who lived near Neosho, Mo., would like to sell the guardian some real estate located in Newton county, Mo. The brother, Charles or C.L. Clay, was operating said land as a dairy farm, known as the White City Dairy Farm. It was in fact owned by a corporation known as the White City Dairy Company. All the stock of said corporation was owned by Charles, or C.L., Clay, his wife, and his wife's father. It consisted of about 446 acres of upland with considerable improvement and was fairly well equipped as a dairy farm.
The Clays, Earl and Charles, had been operating a trucking business in the oil fields about Drumright, Sapulpa, Seminole, and other oil fields, and became rather heavily indebted particularly to the Drumright State Bank.
Sometime about the early part of August, 1929, and after Earl Clay had approached Harris with the proposition to purchase said land in Missouri, the county judge called Harris over the telephone and informed him that Earl Clay was then in his, the county judge's, office, and that Clay and the county judge were ready to go with Harris to Newton county, Mo., for the purpose of looking over the land which the Clays desired to sell to the guardian. It appears that Harris in the meantime had talked the matter over with the adult brothers and sister of the minor children, and that they had objected to the purchase of the Missouri land by the guardian. Harris told the county judge that he could not get away that day to go view the land, and also that he did not desire to purchase the land, principally because of the objection of the adult brothers and sister of the minors.
Shortly thereafter, on August 19, 1929, the county judge, without citation, without request from any of the interested parties, without notice or hearing, entered an order removing Bert Harris as guardian of said minors.
On August 27, the county judge entered an order appointing John H. Merkle, plaintiff in error herein, as guardian of the estates of said minors. Shortly thereafter, on Sunday, August 31, 1929, the county judge, Earl Clay, and Merkle together drove from Tecumseh to the Clay farm near Neosho, Mo. Merkle testified that on the way from Tecumseh, Okla., to Neosho, Mo., he first learned of the proposal to purchase the land by him as guardian for said children. *Page 635
The next day a preliminary oral agreement was made for the purchase of the Missouri land by Merkle as guardian for an agreed price of $55,750. Arrangements were made for an abstract of title and an attorney was employed to examine and pass upon the title when the abstract had been prepared. There was some delay in preparing the abstract and there was some controversy as to whether certain liens existed against the land. About October 15th these matters were closed up. It appears that liens and claims against the land amounted to about $47,000. On October 18, 1929, the deal was closed to the extent that Merkle gave his check to the White City Dairy Company, aggregating about $47,000, which was in turn paid over to the various lien claimants, and a deed for the property was delivered to Merkle. The balance of the purchase price, amounting to about $8,464, was not paid at that time. A controversy arose between Merkle and the White City Dairy Company concerning the balance. Merkle apparently claimed that the White City Dairy Company, or Charles Clay, had agreed in the transaction to lease the land from Merkle for five years at an annual rental of about $3,900, or 7 per cent. of the purchase price. This resulted in a suit to recover the balance of the purchase price. The suit found its way into the federal court in Missouri, where judgment was obtained against Merkle for said sum, which he paid, and then obtained possession of the land. That case ended about July 1, 1930.
November 10, 1930, Merkle filed his resignation as such guardian, and the State National Bank of Shawnee, Okla., was appointed as guardian for said minors.
Merkle filed his final account and thereafter filed a supplemental final account. Hearing thereon was set in December, 1930, and continued until January 2, 1931, at which time a hearing was had. At said hearing an attorney for the State National Bank, the then guardian, appeared and stated in the record that from investigation made up to that time there was or would be a probable loss of $40,000 to the estate of said minors growing out of the Missouri land transaction.
It was also suggested that the final account be approved with a provision therein that it was not intended to discharge the guardian and his bondsmen against any latent fraud that might develop, and that at that time no direct evidence of fraud in connection with the transaction had been found.
Mr. Cooper, the then county judge, was about to retire from said office. His term would expire on the second Monday in January of that year. He suggested that the final discharge in nearly all cases was made to read "that the guardian is discharged from any future liability * * * but not from anything that has transpired in the past." At the close of the hearing the court announced that the final and supplemental final account of Merkle as guardian would be approved and that he and his bondsmen would be released and discharged from further liability. No formal order was filed until April 23, 1931, at which time a journal entry was filed with the court clerk signed by LeRoy G. Cooper, judge, dated as of January 2, 1931, wherein was recited:
"* * * And it appearing that said John H. Merkle has accounted for every part of property of said minors, and each of them, received by him, and that his statements of account are supported by appropriate vouchers in each instance, in the form of canceled checks covering expenditures, together with the authority therefor and the statement of the depositary banks as to the money received as such guardian, and that no profit has been made by him through any increase in said estate, or in the handling thereof, and there being no objections and the court being fully advised.
"It is ordered, adjudged and decreed by the court that the accounts of the said John H. Merkle, as such guardian, be and the same are hereby finally settled, allowed and adjusted by the court, according to the terms and tenor of said final account of the said John H. Merkle filed herein and the said John H. Merkle, and his sureties are hereby released from any liability to be hereinafter incurred.
"Done in open court this 2nd day of January, 1931."
The State National Bank continued to act as guardian until September 20, 1933, at which time it filed its resignation as such guardian. During said time no further question was raised as to the final account of Merkle.
Thereafter Walker Hembree was appointed as guardian of Irene and Alva Hembree, and Tom C. Waldrep was appointed guardian for Una and Dora Hembree. September 25, 1934 this proceeding was commenced in the county court by petition to vacate the order approving the final account of Merkle. Hearing was had in the county court, resulting in an order denying the petition. Appeal was perfected to the district court, where trial de novo was had, resulting in a judgment canceling and setting aside said account and surcharging same in the sum of $55,750, with interest, and also surcharging the account with all fees and allowances made *Page 636 to the guardian, the amount of which was not determined.
From this judgment Merkle prosecutes this appeal.
The first proposition presented is that because the final account of the guardian had been approved and the guardian discharged by the county court more than three years before this proceeding was commenced, and no appeal was taken from that order, the county court was without jurisdiction to entertain the petition to vacate and that the district court was likewise without jurisdiction in an appeal from the county court.
The jurisdiction of the county court in such matters is fully discussed and upheld in Re Appeal of Higginbottom. (Barber, Gdn., v. Haddock et al.) 176 Okla. 188, 55 P.2d 122, and cases therein cited. Therein it is held:
"Under section 1348, O. S. 1931, as made applicable to guardians by section 1474, O. S. 1931, the county court in which a guardianship is pending has jurisdiction and authority, in a proper case, to reopen and examine the accounts of a former guardian at any time prior to the final termination of the guardianship proceedings."
That is a case wherein a former guardian had filed his final account, notice of hearing given, a hearing had, and the final account approved, the guardian and his bondsmen discharged and a new guardian appointed exactly as in the instant case. The only difference is that in the instant case the new guardian had been appointed and was represented by counsel at the hearing on the final account of Merkle, the former guardian. The opinion is supported by many prior decisions of this court.
Plaintiff in error bases his contention in this regard largely upon the proposition that after a guardian has been discharged the district court has jurisdiction in equity to set aside the report and that the matter is therefore one of equitable cognizance. But most, if not all the cases cited are cases where the ward had attained his majority. But In re Higginbottom, supra, points out that section 1348, quoted therein, authorizes or gives to the person under disability (the ward) two remedies; One by moving for cause to reopen the account, Second, by action against the guardian either individually or upon his bond. While it is true that said section applies to administrators and executors in the administration of estates, yet, as pointed out by section 1474, O. S. 1931, the provisions of the statute regulating accounting by administrators are made applicable to settlements by guardians.
It is next contended that the trial court erred in overruling the demurrer to the petition to vacate the order approving Merkle's final account as guardian.
On this question plaintiff in error first cites Adams v. Martin (Cal.) 44 P.2d 572. There is a difference between the law of California and that of Oklahoma with reference to the effect of an order approving a final account and discharging a guardian. In California the law is that such order, if no appeal be taken, becomes final at the expiration of the term. The law in Oklahoma is that, until the minor becomes of age all judgments and orders sleep in the bosom of the court and may be modified, vacated, or set aside during such time upon proper notice and for good cause shown. In re Hickory's Guardianship,75 Okla. 79, 182 P. 233.
The rule, however, has some exceptions with which we are not here concerned. One exception is that the county court has no jurisdiction to set aside an order confirming a sale of the ward's land after deed is issued and title passed.
By section 1348, O. S. 1931, quoted in Re Higginbottom, supra, in any action brought under said section, the allowance and settlement of an account is made prima facie evidence of its correctness.
By section 1348, supra, persons interested in an estate in charge of an executor, administrator, or guardian are divided into two classes: First, those laboring under no legal disability; and, second, those laboring under some form of legal disability. As to the first class, the settlement and allowance of a final account by the county court on an appeal is conclusive. Such persons may attack such order only under the part of chapter 2, art. 21, O. S. 1931, governing proceedings to vacate or modify judgments in courts of record. To the second class, those laboring under any legal disability, the additional right is reserved to move for cause in the county court to reopen and examine the account, or to proceed by action in a court of competent jurisdiction against the executor, administrator, or guardian, either individually or upon the bond. Either may be done at any time before administration of the estate is finally closed.
In such actions the allowance and settlement of the account is to be considered only as prima facie evidence of its correctness. *Page 637
In the Higginbottom Case, supra, the motion to reopen merely alleged that the final account sought to be reopened "does not reflect a proper accounting and settlement by said E.T. Haddock, the former guardian, of his doings as such guardian." In considering the sufficiency of such pleading this court said:
"Under ordinary circumstances we would not hesitate to hold such allegations insufficient. But this court and the probate courts of this state owe all persons under legal disability a full measure of protection, and such courts and this court should not permit the rights of such persons to be lightly concluded against them to satisfy some technical rule of pleading."
This is as it should be.
The courts uniformly hold that orders approving and settling final accounts of administrators, executors, etc., may be vacated or modified for the same causes and under the same conditions and procedure as other judgments or orders of courts of record may be vacated or modified. If persons laboring under legal disability are required to allege with the same particularity the cause for reopening as is required under the general provisions for vacating or modifying judgments by persons not under disability, then no valuable right is saved to persons under legal disability by the provisions of section 1348, supra.
We are convinced that only allegations of the existence of a state of facts sufficient, if true, to overcome the prima facie evidence of the correctness of the final account is required of persons laboring under legal disability. Prima facie evidence, as used in section 1348, supra, means evidence sufficient in law to raise a presumption of the correctness of the final account, or evidence sufficient to establish such correctness unless rebutted.
The Legislature evidently intended to reserve to persons under legal disability some additional right or some more simple remedy against unfaithful or dishonest executors, administrators, and guardians than was given by the general law to those under no legal disability. Otherwise, the enactment of section 1348, supra, was useless and futile.
Bearing in mind, then, the jealous care with which the law guards and protects all persons under legal disability, unable to protect their own rights, and the protection due such persons by the courts, and taking into consideration that absolute honesty and good faith which is required of a guardian in the management of his trust, and that it is his duty and he is bound to make full and honest disclosure to the court of all his transactions; that he must not conceal any material fact, nor untruthfully represent any matter to the court; that the court, standing in loco parentis, must act upon the statements and representations of the guardian — all fine distinctions between fraud and dishonesty practiced in the management of the estate and fraud practiced in the procurement of the order approving and settling the final account and the fine distinction between extrinsic and intrinsic fraud therein should be brushed aside, so that allegations of facts showing deception, dishonesty, or infidelity in dealing with the ward's estate which were carried forward into the making up of a false and fraudulent report, should be and are sufficient to confer jurisdiction upon the court to reopen and examine the final account without regard to nice distinctions between frauds used in the procurement of the order approving and settling the final account.
Taking, as we do, this view of the law as applicable to proceedings under section 1348, supra, allegations of the petition to reopen and re-examine the final account of Merkle as guardian are abundantly sufficient, although rather meagre and somewhat in the nature of conclusions in charging actual fraud, extrinsic or intrinsic, exercised in the procurement of the order approving and settling the final account. We are not unmindful of certain decisions of this court which appear to hold minors and incompetents to the strict rule of pleading required by persons not under disability in attacking judgments of courts of record. But those cases apparently do not take into consideration the provisions of section 1348, supra.
The only remaining question goes to the sufficiency of the evidence to sustain the judgment of the trial court. There is an abundance of evidence tending to support the allegations of the petition, particularly that part thereof alleging fraud and conspiracy in the purchase of the Missouri land. The evidence, like the petition, is somewhat meagre as to the question of fraud practiced in the procurement of the order approving and settling the final account. But, since we have held that all acts of fraud, deceit, infidelity, etc., in the management of the estate carried forward and going into the final account are pertinent and proper matters to be considered in a proceeding by a person under legal disability brought under the provisions of section 1348, supra, we consider such evidence material. *Page 638
It is suggested that since this cause was tried insurance has been collected on account of destruction by fire of one of the buildings on the Missouri farm, and the amount collected has been paid over to the present guardian for the benefit of said minor children.
It is also suggested that one of the Hembree children has attained majority since this cause was tried and has sold and conveyed his interest in said Missouri land, and has thereby ratified the action of plaintiff in error in the purchase of said land, as to her interest therein.
These matters are not shown in the record and may not be considered other than to say that if such suggestions be true, plaintiff in error should as a matter of right be allowed to establish such facts, and if he does so, should be given credit against the surcharge of his account for the amount of insurance and should be allowed such relief against the claim of the ward who may have transferred her interest in said Missouri land as law and justice may allow.
The judgment of the trial court is modified so as to permit plaintiff in error on remand to make such showing as he may desire as to the new matters suggested, and, as so modified, is affirmed.
BAYLESS, V. C. J., and PHELPS, CORN, and HURST, JJ., concur. WELCH and GIBSON, JJ., dissent. OSBORN, C. J., not participating.