[219 NJSuper Page 680] This is an application for approval of the settlement of an infant's claim and the investment of the infant's net recovery in something other than the surrogate's co-mingled investment funds. For the reasons set forth on the record on April 29, 1987, the settlement in the gross amount of $20,000 is tentatively*fn1 approved, along with the payment of $1,000 for costs and
$4,750 for counsel fees. See R. 4:44-3. The proposed settlement includes a request that the court approve defendant's purchase (at a price represented to be $14,750) of what was described as an annuity. In fact, this is a contract with a set rate of interest, 7.5%, which is guaranteed to pay to the infant, upon reaching the age of 18, the sum of $20,362. The child is now 13 years-of-age, and the investment contract covers approximately a five-year period.
The question presented is whether this court has the discretionary power to approve such an investment of the infant's funds. There is no reported decision that addresses this very question. The court has reconsidered its initial negative ruling, and continues to hold that the investment is not permissible.
The court rules applicable to this question are R. 4:48A and R. 4:44-3. The statutes that must be examined are N.J.S.A. 3B:15-1, -11, -12, -16 and -17. N.J.S.A. 3B:15-16 provides:
Where the estate of a minor for whom a guardian has been or is to be appointed by a surrogate, consists of or is likely to consist of the proceeds of a judgment recovered in favor of the minor in any court of this State, the court, on application of the guardian or a person entitled to be appointed as guardian, by its order may dispense with the giving of a bond by the guardian where the order directs that the moneys be paid into the Superior Court for the benefit of the minor and that the moneys, or any part thereof, shall be deposited to the credit of the court in an interest-bearing account in, or in interest-bearing certificates of deposit of a responsible bank, savings bank or trust company, or in an account in, or in interest-bearing certificates of deposit of, any savings and loan association of this State, or any federal savings and loan association, having its principal office in this State, the accounts of which are insured by the Federal Savings and Loan Insurance Corporation, designated by the court. [Emphasis supplied]
Thus on its face, the statute, N.J.S.A. 3B:15-16, is applicable to the proceeds of a judgment in favor of a minor. This "friendly" settlement results in just such proceeds. The statute, however, is permissive. The court "may dispense with the giving of a bond by the guardian" if the funds are deposited with the court. N.J.S.A. 3B:15-17 allows the court to direct the
surrogate to invest such funds in U.S. savings bonds,*fn2 or in a banking institution. It is N.J.S.A. 3B:15-1 that provides:
The court or surrogate appointing a fiduciary in any of the instances enumerated below shall secure faithful performance of the duties of his office by requiring the fiduciary thereby authorized to act to furnish bond to the Superior Court in a sum and with proper conditions and sureties, having due regard to the value of the estate in his charge and the extent of his authority, as the court shall approve:
d. When the office to which the person is appointed is any form of guardianship of a minor or mental incompetent, except as otherwise provided in N.J.S. 3B:12-16 or N.J.S. 3B:12-33 with respect to a guardian appointed by will. . . .
Only by first reading the general statute, N.J.S.A. 3B:15-1, does the permissive language of N.J.S.A. 3B:15-16 and the language of R. 4:48A make sense. The general statute requires a bond for any guardianship of a minor's property (with exceptions not relevant here). The specific statute allows the court to "dispense with the giving of a bond by the guardian" where the funds are proceeds of a lawsuit and (if $5,000 or more) are to be deposited with the court or the surrogate. Rule 4:48A(a) provides:
In the event of a judgment for an infant after trial or settlement, the court shall dispense with the giving of a bond and, except as otherwise ordered by the court, shall direct the proceeds of the judgment, if it does not exceed $5,000 to be disposed of pursuant to N.J.S.A. 3B:12-6, and if it exceeds the same, then to be deposited in court pursuant to N.J.S.A. 3B:15-16 and -17. A copy of the order ...