Lawyer Ordered to Return Funds Taken by Conservator


Michigan Attorney William R. Ford represented Preshus Graves, who had been appointed as conservator of her son Calvin Graves. Calvin Graves, then not quite three years old, had been injured in an automobile accident, and his mother had pursued a personal injury action against the driver of the other vehicle. When the case settled (for a total of $9,300, or $6,122.70 after payment of costs and attorneys fees) the probate judge appointed Ms. Graves as conservator for her son, approved the settlement and ordered her to deposit the proceeds into a court-controlled account. Instead she took the money.

The order appointing Ms. Graves as her son’s conservator was clear. To further reduce the possibility of error, the court also issued a “Notice to Attorney of Duties Under Conservatorship of a Minor.” That document, addressed to lawyer Ford, directed him to accompany his client to the bank, to make sure the account was titled as a conservatorship account, and to see to it that the account was clearly marked as unavailable to the Ms. Graves or anyone else unless they could present a court order allowing distribution of some or all of the funds.

Instead of following the instructions given to him by the probate court, Mr. Ford simply wrote two checks to Ms. Graves for the net settlement proceeds. Nothing on the checks indicated that they really belonged to her son, and nothing alerted the bank to the need to block any account set up with the money. Mr. Ford handed the checks to his client in his office, and did not accompany her to the bank.

A few months later, when the appropriate bank restrictions had not been filed with the court, Ms. Graves was removed and a new conservator was appointed. The new conservator filed a petition to surcharge both Ms. Graves and her lawyer. Mr. Ford responded by blaming the entire matter on his client; he had instructed her on what to do, he said, and her failure to follow the court’s order was her own fault.

After some legal maneuvering (and Ms. Graves’ failure to sign a promissory note for the missing money, as she had promised she would do), the court ordered Mr. Ford to return the missing money. He appealed the surcharge order.

The Michigan Court of Appeals agreed that, on these facts, at least, the attorney is liable for the loss of conservatorship money. Although they upheld the finding, the appellate judges disagreed with the trial court’s reasoning. The “Notice to Attorney” was not a court order, and so Mr. Ford could not be held liable for violation of any court order for not taking Ms. Graves to the bank himself. But by issuing the checks to her in her individual capacity, he effectively gave away the assets of Calvin Graves to an unauthorized person. Matter of Estate of Graves, October 27, 2009.

The difference between a court “notice” and an “order” may be the sort of hair-splitting that appeals primarily to lawyers, but the problem is a real one. Out of ignorance, need or avarice, family members may sometimes be unable to resist the temptation to use a minor’s (or incapacitated adult family member’s) assets improperly. If the probate court wants to make sure that the money is properly placed, how better than to instruct the family member’s lawyer to follow specific rules?

Arizona probate courts (and those in most other jurisdictions) recognize a similar “blocked account” arrangement for protecting funds belonging to minors. As in Michigan, Arizona courts rely on the attorneys involved to see to it that the accounts are properly set up in the first instance.

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