§ 386. The same general principles that apply to trustees govern the relation of guardian and ward. During the existence of the relation, a general inability to contract with each other is imposed upon them.1 No sale therefore by the ward to the guardian will be binding, while such relation continues; and even transactions entered into between them after the connection is dissolved will be closely scrutinized in equity, and unless they be in the most entire good faith, and without any undue influence or advantage taken of the ward, will be set aside; for the antecedent relationship will, in case of undue advantage, be considered as operating as an improper influence upon the bargain.2 But after the relationship has been entirely dissolved, and the accounts all settled after the coming of age of the ward, and sufficient time has elapsed to place the parties in complete independence of each other, so that they deal with each other as strangers, their transactions will be binding.3 And, although the rule is that a guardian is not entitled to claim any remuneration or compensation for his services beyond his expenses and outlay;4 nor for services before his appointment;5 yet, after the complete dissolution of the relation, where parties act in entire independence of each other, any bounty or gift by the ward will be good, and will be considered as the performance of a moral duty.1
1 1 Story, Eq. Jur. § 317; Dawson v. Massey, 1 Ball & Beat. 226.
2 Ibid.; Dawson v. Massey, 1 Ball & Beat. 229 : Wright v. Proud, 13 Ves. 136; Wedderburn v. Wedderburn, 4 Myl. & Cr. 41; Hylton v. Hylton, 2 Ves. 548; Wood v. Downes, 18 Ves. 126; 2 Kent, Comm. lect. 30, p. 230; Hatch v. Hatch, 9 Ves. 297. See Archer v. Hudson, 7 Beav. 551; Gale v. Wells, 12 Barb. 84; Hayward v. Ellis, 13 Pick. 272.
3 Dawson v. Massey, 1 Ball & Beat. 229, 232; Aylward v. Kearney, 2 Ball & Beat. 463; Hylton v. Hylton, 2 Ves. 547; 1 Story, Eq. Jur. § 320.
4 Ante, Trustees. This is the general rule, but it has been altered by statute in some of the States in this country. N. Y. Rev. Stat. vol. ii. p. 153, § 20, 21; Mass. Gen. Stat. ch. 109, § 31.
5 Clowes v. Van Antwerp, 4 Barb. 416.
§ 387. In respect to the management of the ward's property in the hands of the guardian, he is a mere trustee.2 Ordinarily he cannot change the investment of the property of his ward, whatever it may be, and he is bound to exercise ordinary skill and diligence and sagacity in investing the money which comes to his hands. If, therefore, he suffer money to lie idle and unproductive for an unreasonable length of time, or if he mingle it with his own funds so that the two funds cannot be distinguished, he is liable for simple interest;3 and if he have been guilty of gross negligence or misconduct, he will be chargeable under some circumstances with compound interest, the court ordering that rests shall be made in making up his accounts, and the interest at each rest charged as principal.4 If, however, he change the investment of property belonging to his ward, in good faith, and for the presumed advantage of the latter, it will be good if it be such as a court of equity
1 Lord Eldon, in Hatch v. Hatch, 9 Ves. 297, thus expresses himself on this subject: "There may not be," says he, "a more moral act, one that would do more credit to a young man beginning the world, or afford a better omen for the future, than if, a trustee having done his duty, the cestui que trust, taking this into his fair, serious, and well-informed consideration, were to do an act of bounty like this. But the court cannot permit it, except quite satisfied that the act is of that nature, for the reason often given; and recollecting that in discussing whether it is an act of rational consideration, an act of pure volition uninfluenced, that inquiry is so easily baffled in a court of justice, that, instead of the spontaneous act of a friend uninfluenced, it may be the impulse of a mind misled by undue kindness, or forced by oppression; and the difficulty of getting property out of the hands of the guardian or trustee thus increased. And, therefore, if the court does not watch these transactions with a jealousy almost invincible, in a great majority of cases, it will lend its assistance to fraud, where the connection is not dissolved, the account not settled, every thing remaining pressing upon the mirid of the party under the care of the guardian or trustee."
2 See Moore v. Hazelton, 9 Allen, 104; Hicks v. Chapman, 10 ib. 463.
3 Hughes1 Appeal, 53 Penn. 500 (1866). Owen v. Peebles, 42 Ala. 338.
4 2 Kent, Comm. lect. 30, p. 230; Wright v. Wright, 2 M'Cord, Ch. 185; Ringgold v. Ringgold, 1 Harr. & Gill, 11; Raphael v. Boehm, 11 Ves. 92; Schieffelin v. Stewart, 1 Johns. Ch. 620; Ex parte Baker, 18 Ves. 246. In New Jersey, guardians are chargeable with ten per cent interest, when they would order.1 Again, he is bound to lease the lands of his ward, although he cannot sell them; but if he lease them for a term extending beyond the age when his ward attains majority, the latter may avoid the lease.2
§ 388. So, also, he is bound to keep separate accounts in respect to his ward, and to distinguish all property belonging to the latter from his own, and to deposit money which he held as guardian in the ward's name; or, in case of loss, he will render himself personally liable therefor.3
§ 389. Again, a guardian cannot apply the property of the ward to his own use and profit. And if he attempt to do so, all the profit which he makes will enure to the benefit of his ward.4 All his acts relating to the property of his ward are acts of agency, for which he is bound to account. And if he commit waste, or be guilty of wilful misconduct, or be wanting in ordinary diligence, he will be responsible for the loss.5 Or if, shortly after the ward attains majority, the guardian purchases his estate at a greatly inadequate price, and without are guilty of negligence or fault in not placing their ward's money at interest. See also Revett v. Harvey, 1 Sim. & Stu. 502; Docker v. Somes, 2 Myl. & K. 665; Boynton v. Dyer, 18 Pick. 1; Vaughan v. Bibb, 46 Ala. 153 (1871); Lane v. Mickle, lb. 600.
1 2 Kent, Comm. lect. 30, p. 230; 2 Story, Eq. Jur. § 1357; Inwood v. Twyne, Ambl. 418; Pierson v. Shore, 1 Atk. 480; Ashburton v. Ash-burton, 6 Ves. 6; Dorsey v. Gilbert, 11 Gill & Johns. 87. When a guardian advances his own money in payment of debts or expenses of his ward, under such circumstances as render that course of proceeding proper, he is entitled to interest on the money so advanced. Hayward v. Ellis, 13 Pick. 272.
2 Genet v. Tallmadge, 1 Johns. Ch. 561; Jones v. Ward, 10 Yerg. 160; Roe v. Hodgson, 2 Wils. 129; Field v. Schieffelin, 7 Johns. Ch. 154; Snook v. Sutton, 5 Halst. 133.
3 Stanley's Appeal, 8 Barr, 431; Jenkins v. Walter, 8 Gill & Johns. 218; Massey v. Banner, 4 Madd. 416; Freeman v. Fairlie, 3 Meriv. 29; Worrell's Appeal, 9 Barr, 508.
4 2 Kent, Comm. lect. 30, p. 229; Fawcett v. Whitehouse, 1 Russ. & Myl. 132; ante, Trustees; Petition of Getts, 2 Ashm. 441. See Atkinson v. Atkinson, 8 Allen, 15; Martin v. Raborn, 42 Ala. 648 (1868).
5 Ibid.; 1 Story, Eq. Jur. § 90; ib. § 1269; Belchier v. Parsons, Ambl. 218; Crosse v. Smith, 7 East, 246; Massey v. Banner, 1 Jac. & Walk. 243; Harding v. Larned, 4 Allen, 426; Clark v. Garfield, 8 Allen, 427; Richardson v. Boynton, 12 Allen, 138.
settling an account, the purchaser will be deemed fraudulent.1 But if he use ordinary diligence in the preservation of the property entrusted to him, he will not be liable for losses occasioned by irresistible force or inevitable accident, such as losses by fire or robbery.2 If he receive the note of a third person in payment of a valid debt, he acts at his peril.3
1 Eberts v. Eberts, 55 Penn. St. 110 (1867).
2 2 Kent, Comm, p, 229. But see Jackson's Case, 1 Tuck. 71 (1866), that a guardian may be liable under some circumstances for property taken from him by force.
3 Lane v. Mickle, 46 Ala. 600 (1871).