                 IN THE COURT OF APPEALS OF TENNESSEE
                              AT JACKSON
                                 November 27, 2001 Session

         IN RE: GUARDIANSHIP OF ASHLEY J. TATUM, A MINOR

                 A Direct Appeal from the Probate Court for Shelby County
                  No. B-26297    The Honorable Robert L. Benham, Judge



                   No. W2001-00859-COA-R3-CV - Filed February 4, 2002


        This case involves liability for misappropriation of funds in a guardianship estate. After a
guardian was appointed by the probate court, Fidelity and Deposit Company of Maryland executed
a guardianship bond as surety. The order appointing the guardian provided for the guardian’s
attorney to have joint control of the guardianship estate with the guardian. BellSouth
Telecommunications, Inc. owed certain sums to the ward and was notified by the guardian’s attorney
of the joint control provision. The guardian’s attorney also requested that the funds be sent to him
to be deposited in the guardianship accounts. BellSouth ignored the request and sent the check
payable to the guardian. Subsequently, the guardian misappropriated the funds, and the substitute
guardian was awarded judgment against F & D. F & D filed a third party complaint against
BellSouth for the sums so paid, and after a nonjury trial, the probate court entered judgment for
F & D against BellSouth. BellSouth has appealed. We affirm.


      Tenn.R.App.P. 3; Appeal as of Right; Judgment of the Probate Court Affirmed

W. FRANK CRAWFORD , P.J., W.S., delivered the opinion of the court, in which DAVID R. FARMER ,
J. and HOLLY KIRBY LILLARD , J., joined.

Earle J. Schwarz, Memphis, For Appellant, BellSouth

Michael G. McLaren; Vickie Hardy Jones, Memphis, For Appellee, Fidelity & Deposit Company
of Maryland

                                             OPINION

         On October 19, 1995, Rosalyn W. Felder, mother and natural guardian of Ashley J. Tatum,
filed a petition in probate court to be appointed Tatum’s general guardian. The petition recited that
Tatum’s father had died, leaving Tatum as the beneficiary of various benefits available from his
employment with BellSouth Telecommunications, Inc. By order filed October 19, 1995, Felder was
appointed general guardian, and the order provided in pertinent part: “(2) That the bond in this cause
is $210,000.00. Joint control is with Philip Cooper, Atty.”1 On this same date, Fidelity and Deposit
Company of Maryland (F & D) executed the guardian bond in the amount of $210,000.00 as surety
for the guardian.

        By order filed February 18, 1998, the probate court removed Felder as guardian and
appointed a substitute guardian. On August 2, 1999, the successor guardian filed a “Petition for
Judgment Against Rosalyn W. Felder, Former Guardian of Ashley J. Tatum and Judgment Over
Against F & D Bonding Company.” The petition recited that Felder had converted funds for her
own use that were paid to her as guardian by BellSouth. F & D filed an answer, cross-claim against
Felder, and third party complaint against BellSouth. The third party complaint alleged that, because
of the death of Tatum’s father, certain monies became payable to Tatum from BellSouth. The third
party complaint further alleges that Cooper, Felder’s attorney, notified BellSouth that the order
provided for joint control and that BellSouth should send the funds directly to him to put in the
guardianship account. The complaint states that BellSouth had a duty to deliver into the proper
hands any funds that it held for the guardianship, and that it negligently and in breach of its duty sent
the guardianship funds to Felder. The complaint asserts that BellSouth was put on notice of the
probate court’s order and, therefore, F & D was entitled to judgment over against BellSouth for such
sums as it is required to pay. On November 2, 2000, an order was filed in the probate court granting
the successor guardian judgment against Felder and a judgment against F & D Bonding Company,
plus interest.

        BellSouth’s answer to the third party complaint admits the allegation of the third party
complaint that, because of Tatum’s father death, certain monies became payable to Tatum from
BellSouth. The answer denies that BellSouth was put on notice concerning the order’s provision for
joint control and denies that BellSouth had a duty to deliver the funds into the proper hands. If it had
such a duty, BellSouth claims it fulfilled that duty by delivery of the funds to Felder, the guardian
of the estate. The answer further admits that the funds were sent to Felder, and that they were never
deposited into the guardianship funds, but denies that BellSouth negligently or in breach of contract
sent the funds to Felder.

       A nonjury trial was held February 27, 2001, and on March 14, 2001, the probate court
entered an “Order Granting Fidelity and Deposit Company of Maryland Judgment Against BellSouth
Telecommunications, Inc.,” which provides:

                    1. That the father of Ashley J. Tatum, Ernest Tatum, Jr. (social
                    security no. [Redacted] was an employee of BellSouth.

                    2. Because of the death of Ernest Tatum, Jr., on January 28, 1995,
                    certain monies became payable to Ashley J. Tatum from BellSouth
                    or its agents/affiliates.

         1
           We note at this point that both parties cite in their briefs various exhib it num bers in cluding an exhibit fo r this
provision of the order. Th e exh ibits were not filed as part of the record in th is appeal, but where both parties concede
the substan ce in th e exh ibit wh ich is m aterial to our decisio n, we will consider it a stipulation of fact.

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3. That Ashley J. Tatum is a minor.

4. That on October 19, 1995, Rosalyn W. Felder (“Felder”) was
appointed by this Court as legal Guardian of the person and estate of
Ashley J. Tatum.

5. That pursuant to order of this Court dated October 19, 1995, bond
was set at Two Hundred Ten Thousand Dollars ($210,000) and F&D
became surety for Felder.

6. That the order of this Court dated October 19, 1995, additionally
provided that Guardianship funds were subject to joint control with
attorney Philip J. Cooper.

7. That by letter dated October 19, 1995, attorney Philip J. Cooper
put BellSouth on notice that (i) a Guardianship had been established
for Ashley J. Tatum and (ii) that in accordance with the joint control
required by the Probate Court of Shelby County, Tennessee, funds
held for Ashley J. Tatum should be sent to attorney Philip J. Cooper
at 251 Adams Avenue, Memphis, Tennessee 38103. Philip Cooper
enclosed with this letter the Order Appointing Rosalyn Felder
Guardian and directing Attorney Philip Cooper to share joint control
of Guardianship funds and the Certificate of Guardianship.

8. That Attorney Philip Cooper testified that there were subsequent
conversations between representatives of BellSouth and him during
which Philip Cooper repeated his request to BellSouth to direct all
funds payable to the Guardianship to him and that BellSouth
indicated that it would not comply with the aforementioned Orders of
this Court.

9. That the testimony of Philip Cooper was credible and further that
it was unrefuted by BellSouth, BellSouth choosing to have no one
testify at trial on its behalf.

10. That the Guardianship established for Ashley J. Tatum was the
entity to receive the monies owed by BellSouth, and BellSouth was
obligated to deliver into the proper hands any funds it held for said
Guardianship.

11. That BellSouth sent guardianship funds in the form of a check
made payable to “Ashley J. Tatum, Rosalyn W. Felder Guardian of”
in the amount of $18,622.38 to Felder instead of Cooper, which funds
were never deposited into the Guardianship account.

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               12. That this payment by BellSouth was in breach of its obligations
               to the minor beneficiary, Ashley J. Tatum, whose interests were
               being protected by the Guardianship.

               13. That as a result of this breach, on April 6, 2000, an Order was
               entered by this Court against F & D requiring F & D to pay the
               Guardianship the unaccounted for funds, including the funds sent
               directly to Felder by BellSouth.

               14. That F & D tendered payment of the judgment plus ten percent
               (10%) prejudgment simple interest to the Guardianship.

               IT IS THEREFORE ORDERED, ADJUDGED AND DECREED as
               follows:

               1. That F & D is granted a judgment against BellSouth on its Third
               Party Complaint in the amount of $18,622.38 plus ten percent 10%)
               pre-judgment simple interest of $6,517.83 for a total judgment of
               $25,140.21;

               2. That BellSouth pay Court costs in this matter.

       BellSouth has appealed and presents the sole issue for review as:

               Whether the Probate Court erred in finding that BellSouth had failed
               to pay the money it owed to the ward on account of her father’s death
               when the undisputed facts demonstrated that BellSouth mailed a
               check in the appropriate amount to the court-appointed guardian and
               the guardian received the check?

We have rephrased this issue to:

               Whether the probate court erred in finding that the payment by
               BellSouth was in breach of its obligation to the minor beneficiary
               whose interests were being protected by the guardianship.

        Since this case was tried by the court sitting without a jury, we review the case de novo upon
the record with a presumption of correctness of the findings of fact by the trial court. Unless the
evidence preponderates against the findings, we must affirm, absent error of law. T.R.A.P. 13(d).

       BellSouth states in its brief that it “has been unable to find any cases that address the narrow
issue presented in this appeal,” but that “the most closely analogous Tennessee case of which
BellSouth is aware is Atkins v. Security Conn. Life Ins. Co., No. 02A01-9710-CV-00257, 1998 WL
900057 (Tenn. Ct. App. 1998). BellSouth summarizes Atkins in its brief as follows:

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               In that case, an insurance company paid death benefits based upon
               information submitted in a proper claim form that appeared to have
               been signed by the Plaintiff. As it turned out, Plaintiff, who was the
               actual beneficiary, was incarcerated at the time the claim was
               submitted and the insurance company paid the claim. Plaintiff’s
               signature on the claim form had been forged. After discovering by
               accident that he was the designated beneficiary on his father’s life
               insurance policy, Plaintiff filed suit against the insurer seeking to
               recover the death benefits that the insurer had previously paid to the
               fraudulent beneficiary.

                       On a motion for summary judgment, the trial court denied
               recovery and the Court of Appeals affirmed. This court held that the
               insurance company had satisfied its contractual obligations by paying
                in response to a claim form that appeared on its face to be proper.

         Although Atkins may have some similar features to the case at bar, there are some significant
facts in Atkins that distinguish it from the case at bar. In Atkins, the record revealed that the claim
forms submitted were in order, and the insurance company asserted that there was nothing in the
claim documents to indicate to the company that the documents were forged or otherwise improper.
Plaintiff, Atkins, presented no evidence of anything in the documents that might have put the
insurance company on notice of an irregularity. The Atkins court, affirming the judgment for the
insurance company, relied upon the principle adopted in other jurisdictions that “an insurer is
discharged from all subsequent liability when it makes good faith payments to a purported
beneficiary without notice of any competing claims.” Id. at 86; (citing Crosby v. Crosby, 986 F.2d
79, 83 (4th Cir. 1993) and other cases).

        The difference between Atkins and the case at bar is easily seen. In the case at bar, it is
undisputed that the order of the probate court required joint control, and the evidence does not
preponderate against the trial court’s finding that BellSouth was duly notified of the provision and
rejected the request of the ward’s attorney that the funds be sent to him for deposit in the
guardianship estate. BellSouth’s action resulted in a loss to the ward’s estate, and BellSouth makes
no issue that upon reimbursement of the estate by the surety, the surety stands in the shoes of the
ward.
        BellSouth was fully informed that joint control was provided for by the court, and if
BellSouth had complied with the attorney’s request, the funds would not have been misappropriated
by the guardian. If there had been some confusion on the part of BellSouth, further inquiry would
have resolved this confusion and thus again prevent a loss from occurring. “Where one of two
persons must suffer loss by the acts or fraud of a third party, he who enables that third party to
occasion the loss or to permit the fraud ought to be the sufferer.” William H. Inman, Gibson’s Suits
in Chancery § 2 (7th ed. 1988). See also Commercial Bank and Trust Co. v. Southern Indus.
Banking Corp., 66 S.W.2d 209 (Tenn. Ct. App. 1932).



                                                 -5-
       In the case before us, BellSouth’s deliberate choice to ignore the court order and the
attorney’s request allowed the guardian to misappropriate the funds.

        Accordingly, the order of the probate court is affirmed. The case is remanded to the probate
court for such further proceedings as may be necessary. Costs of the appeal are assessed against
appellant, BellSouth Telecommunications, Inc., and its surety.



                                              __________________________________________
                                              W. FRANK CRAWFORD, PRESIDING JUDGE, W.S.




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