dissenting:
I do not agree that a bank, acting as guardian, is prohibited from investing the funds of the ward in its own savings account or certificate of deposit.
The majority opinion discusses the duty of loyalty owed by a fiduciary to a beneficiary and cites our recent decision in Home Federal Savings & Loan Association v. Zarkin (1982), 89 Ill. 2d 232. However, the fact that a fiduciary deals with the property of a beneficiary to its own benefit does not render such transaction void. In Zarkin, we noted that if the beneficiary gives his knowing consent to such a transaction and there is no overreaching, it will not be set aside. (Home Federal Savings & Loan Association v. Zarkin (1982), 89 Ill. 2d 232, 246; see also Bank of Illinois in Mt. Vernon v. Bank of Illinois in Mt. Vernon (1973), 13 Ill. App. 3d 711, 713.) In Bold v. Mid-City Trust & Savings Bank (1935), 279 Ill. App. 365, 374, the court held that such transactions are voidable at the instance of the beneficiary within a reasonable time after notice. Thus in this case we are dealing with voidable and not void transactions.
I pass next to the authority of a guardian to make investments. Although guardians, executors and administrators all serve in fiduciary capacities and perform similar functions with regard to the personal property of their respective estates, they do not enjoy the same status. A guardian is not vested with title to the personal estate of the ward. He is merely charged with its care and management. (2A Horner, Probate Practice and Estates sec. 1081, at 2 (4th ed. rev. 1983).) By contrast, an executor or administrator is vested with the legal title to the personal estate of the decedent and holds title as trustee for the payment of debts. 1A Horner, Probate Practice and Estates sec. 506, at 220 (4th ed rev. 1977).
This difference is reflected in the investment authority of these two classes of fiduciaries. In the absence of statutory or testamentary authority, a representative of a decedent’s estate has no authority to invest the personal estate of the decedent. (6 W. James, Illinois Probate Law & Practice sec. 1214, at 364 (1952); 1A Horner, Probate Practice and Estates sec. 516, at 237 (4th ed. rev. 1977).) The provisions of the Probate Act of 1975 also do not mandate that the decedent’s personal estate be invested. It provides, instead, that the representative of the estate “in his discretion, may invest money of the estate of a decedent ***.” Ill. Rev. Stat. 1983, ch. IIOV2, par. 21-1.
As to the guardian, however, the Probate Act of 1975 specifically provides that “[i]t is the duty of the representative [of the ward’s estate] to invest the ward’s money,” and the statute makes the guardian chargeable with interest on any money which he wrongfully or negligently allows to remain in his hands uninvested. Ill. Rev. Stat. 1983, ch. IIOV2, par. 21 — 2(a).
Different procedures are also provided for the making of investments by the two classes of fiduciaries. A representative of a decedent’s estate need not secure the authority of the court before investing in the investments listed in sections 21 — 1.01 through 21 — 1.06 of the Probate Act of 1975. See Ill. Rev. Stat. 1983, ch. IIOV2, par. 21-1.
The representative of the ward’s estate, however, without approval of the court may only invest in United States obligations and obligations of which both the principal and interest are guaranteed unconditionally by the United States. (Ill. Rev. Stat. 1983, ch. IIOV2, par. 21— 2(b).) The statute also authorizes the guardian to hold any investments received by him that may not be authorized under the Act “[u]pon receiving the approval of the court,” and the court has the power to direct the guardian in connection with these investments. (Ill. Rev. Stat. 1983, ch. llO1^, par. 21 — 2(c).) As to all other investments made by the guardian, the statute requires that a petition to make such investments be filed with the court and that the court authorize the guardian to invest only in the types of property specified in sections 21 — 2.01 through 21 — 2.14. Ill. Rev. Stat. 1983, ch. llO1^, par. 21 — 2(d).
Savings and time deposit certificates of a State bank or a national bank doing business in this State are listed as types of investments specifically provided by the Act in which a guardian may invest if authorized by the court. (Ill. Rev. Stat. 1983, ch. IIOV2, par. 21 — 2.06.) These are the types of investments involved in this case.
The majority opinion notes that section 21 — 2.06, while authorizing investments in savings accounts and certificates of deposit in State and national banks, does not expressly authorize a guardian bank to invest in itself. The opinion notes that section 21 — 1.03 authorizes a representative of a decedent’s estate to invest in savings accounts and certificates of deposit of State and national banks “even though the bank of deposit is the representative of the estate.”
I do not consider that the failure of the legislature to provide that a guardian may make such investments “even though the bank of deposit is the guardian” indicates any legislative intent that a guardian bank may not invest in its own savings accounts or certificates of deposit. There is a valid reason for making a specific provision as to representatives of decedents’ estates and not as to guardians. It must be remembered that the representative of a decedent’s estate is authorized to make these investments without court authority, and is vested with title to the property which he invests at his own discretion as authorized by statute.
A guardian, however, is only a manager of the property. The court having jurisdiction of the guardianship is said to be the superior guardian. The ward’s property is within the control of the court, and the guardian is but an agent of the court in the management of this property. (See 39 Am. Jur. 2d Guardian and Ward secs. 1, 51 (1968).) Thus it is only investments in the United States obligations, as provided by statute, that the guardian has the authority to control. As to the other types of investments, even though they be authorized by statute, the court has the authority either to authorize or refuse to authorize the guardian placing the ward’s property in these investments. There is no need for a specific authorization to be given by the statute to a bank guardian to invest in its own investments. As long as the type of investment falls within the classes specified in the statute, the court has the authority to allow or to deny the petition of the guardian to make such investments. The court’s decision is based on the best interest of the ward.
There is nothing in the statute relating to investments by a guardian that prohibits the type of investments in question in this case. In fact, as noted above, the statute specifically authorizes a guardian to invest in savings and time deposit certificates of a State or national bank doing business in the State when authorized by the court. (Ill. Rev. Stat. 1983, ch. IIOV2, par. 21— 2.06.) Citing Belfield v. Coop (1956), 8 Ill. 2d 293, 307, the majority opinion states that our function is not to read into a statute exceptions, limitations or conditions which depart from the plain meaning of the statute. However, that is exactly what the majority opinion has done in this case. The plain language of the statute is that a guardian may, when authorized by the court, invest in the type of investments that were made. The majority opinion has written into this statute the limitation that such investments cannot be made if the guardian bank invests in its own investments. The statute only limits the investments by guardians with court authority to the types of property set out in the statute. The statute provides “the court may authorize him additionally to invest in only the types of property, specified in Sections 21 — 2.01 through 21 — 2.14”. (Emphasis added.) (Ill. Rev. Stat. 1983, ch. HO1^, par. 21 — 2(d).) The statute places no limitation on the ownership of the property in which the ward’s money is invested. It is only the majority opinion of this court that writes into the statute such a limitation.
An executor occupies a position of trust in the same manner'as a guardian. If the legislature saw no evil in an unsupervised bank executor purchasing its own investments, why should this court find some sinister design when a guardian, supervised by and with the authority of the court, makes a similar investment? It would appear that there would be less likelihood of abuse by a guardian who is under the supervision of the court when making investments than there would be by an unsupervised executor. Furthermore, it is not at all unusual for a bank to act as the guardian of an estate and, upon the death of the ward and the closing of the guardianship, for the same bank to act as representative of the decedent’s estate involving the same assets as were in the ward’s estate. Under the holding of this court, the bank guardian, even with authority of the court, could not invest in its own savings and time deposits. However, when appointed executor of the same funds it can do so even without court authorization.
I noted at the outset that the transactions in which the fiduciary deals with the property of the beneficiary for its own benefit are voidable and not void. I consider the granting to the guardian by the court of authority to make such investments tantamount to a known consent given by a competent beneficiary. We held in Zarkin that such transactions will not be set aside.
This court has held that the State stands in the position of parens patriae and has the responsibility to care for infants and to protect them from abuse and fraud. This function has historically been exercised by courts of chancery and is of ancient origin. (People ex rel. Wallace v. Labrenz (1952), 411 Ill. 618, 623-24.) In Hayes v. Massachusetts Mutual Life Insurance Co. (1888), 125 Ill. 626, this court discussed the statutory requirement that the court approve a guardian’s compromise of a claim or demand of his ward. The court stated:
“For the personal discretion of the guardian there was substituted the judicial determination of an established court. And this statutory requirement is something more than a mere regulation and direction, and was intended by the legislature as an additional safeguard and protection to the ward, by requiring the terms and conditions of any proposed compromise to be submitted to, inquired into and passed upon by that court ***.” (Emphasis added.) (125 Ill. 626, 635-36.)
This court has held that the requirement of court approval is mandatory. In order to “legalize the act of the guardian and render it binding upon the ward, the approval of the court was required ***.” (Emphasis added.) (Hayes v. Massachusetts Mutual Life Insurance Co. (1888), 125 Ill. 626, 636; see also McIntyre v. People ex rel. Wilkey (1882), 103 ill. 142, 147.) Thus it would appear that approval by the court renders the act of the guardian binding upon the ward.
The legislature has inserted the requirement of court approval of guardian investments as an additional protection to the ward’s estate beyond that afforded by the common law. In view of this safeguard and the language of the court in Hayes that such approval is necessary to render the act of the guardian binding on the ward I can see no reason to fashion in this case a per se rule prohibiting such investments as are here being considered.
It is true that in this case the bank, before investing the ward’s funds, did not petition the court for authority to do so as required by statute. In failing to do so, the bank acted at its own risk. (McIntyre v. People ex rel. Wilkey (1882), 103 Ill. 142, 147.) However, an approval by the court subsequent to the investment by way of the approval of an account satisfies the statutory requirement of court approval. 2A Homer Probate Practice & Estates sec. 1109, at 30-31 (4th ed. rev. 1983).
In this case, although there was no prior authorization of the investments, there was court approval following a hearing on the final account of the guardian bank. This was not a routine, noncontested approval of an account. It was a contested hearing on objections which had been filed to the final account of the bank. The questions were fully litigated and the objections were overruled. Thus the investments now in question have received court approval as required by statute. The majority opinion states that the court did not have the authority to approve the bank’s action because the Probate Act of 1975 does not specifically allow a bank, acting as a guardian, to invest in its own savings accounts and certificates of deposit. I need not lengthen this dissent by contesting the holding of the majority that the court cannot approve unauthorized investments. As I have noted earlier, the types of investments here in question are specifically authorized by the Act. My dissent is based on that conclusion as developed above.
I do wish to point out, however, that the line of cases that support the broad statement made by the majority that the court has no authority to approve such investments were cases that dealt with courts of limited jurisdiction under the 1870 Constitution prior to its amendment in 1964. The majority opinion cites Nonnast v. Northern Trust Co. (1940), 374 Ill. 248, where the court held that the probate court of Cook County could not approve or ratify an unauthorized act of the guardian. Nonnast cited Chapman v. American Surety Co. (1914), 261 Ill. 594, as authority for that holding. However, Chapman carefully distinguishes between the limited authority of county and probate courts and the authority of courts of general jurisdiction sitting as courts of equity. In Chapman, a guardian of minors filed a petition in the probate court for leave to purchase land with the minors’ funds. The petition was granted and the land was purchased. Later, a petition was filed in the probate court to require the guardian to account and to restore the money of the minors that had been invested in real estate. The court of review held that the probate court had no authority, under the statute, to approve of the purchase of real estate since it was not an investment authorized by law. An action was filed in the circuit court seeking to enjoin the sale of the land and to retain it for the benefit of the minors. The circuit court granted the relief prayed. On review, this court stated that probate courts take all of their power from the statutes regulating them. Since there was no statutory authority to invest the ward’s personal estate in realty, the probate court could not authorize such an investment. This was the statement relied upon by the court in Nonnast.
However, in Chapman the court went on to hold that courts of equity have paramount and plenary jurisdiction over the persons and estate of infants and in exercising that jurisdiction courts of equity may cause to be done whatever may be necessary to preserve the minors’ estates and to protect their interests. This court held that where it is for the benefit of the minor, courts of equity, by virtue of their general jurisdiction over estates of minors, have the power to authorize investments not authorized by statute. (Chapman v. American Surety Co. (1914), 261 Ill. 594, 605.) This court upheld the order of the circuit court which enjoined the sale of the real estate and ratified the investment.
The amendment to the Constitution of 1870, effective January 1, 1964, abolished county and probate courts, and under that amendment and the 1970 Constitution there are no longer any courts of limited jurisdiction in this State. The court that approved the investments now under consideration was a court of general jurisdiction and would have the same jurisdiction as the court of equity which approved and upheld an investment not authorized by statute in Chapman. Therefore, the current validity of the statement in Nonnast v. Northern Trust Co. (1940), 374 Ill. 248, 259, relied upon by the majority opinion in this case would seem to be questionable. If there is now a limitation on the court’s power to approve investments not listed in the statute, that limitation must be found some place other than in the language of Nonnast.
There is language in the majority opinion which implies an overreaching on the part of the guardian bank. In the concurring opinion there is definite language to that effect, in addition to some emotional language which is certainly not relevant to this case.
The concurring opinion filed in this case makes references to “large financial institutions” benefiting “at the expense of the weak.” (106 Ill. 2d at 124.) We also find in the concurring opinion this statement: “This potential conflict ripened into an actual breach of duty when the bank bypassed attractive investments outside the bank and deposited the ward’s funds in low paying accounts in the bank.” (106 Ill. 2d at 124.) These statements are just not appropriate to this case. The dissenting opinion in the appellate court notes that the funds of the minor were at all times invested in accounts paying interest at the market rate, which led to the same result as if the bank had deposited the minor’s funds in similar accounts in another banking institution. The trust officer of the bank testified that there was uncertainty as to when the guardianship would be taken from the bank because he had been informed that the minor’s relatives wished to change guardians. He also stated he did not know in what type of investments the successor guardian would want the money invested. Because of this uncertainty he stated that a substantial amount of the minor’s funds were left in savings accounts, which was a liquid position that would facilitate distribution to the successor guardian. (In re Estate of Swiecicki (1984), 121 Ill. App. 3d 705, 714-15.) The majority opinion of the appellate court stated “it is not claimed, and there is no evidence to suggest, that the Bank acted with anything less than good faith in carrying out its responsibilities as guardian.” (In re Estate of Swiecicki (1984), 121 Ill. App. 3d 705, 708.) For these reasons I view the above-referred-to language of the concurring opinion inappropriate.
For the above reasons I dissent.