My sister had guardianship of my 17 yr old. I found out yesterday that she signed over guardianship back over to the state and she is now living in a foster home with her 3 yr old daughter. I was told by friends that she don't have to stay there if she didn't want to, and that I could go get her and there's nothing anyone can do. Would I get in trouble for kidnapping my own daughter, and grand-daughter, and would she get into trouble for leaving?

Since she is still a minor, the state has her until she becomes an adult or another acceptable guardian steps forward. The bad part is that even when she becomes an adult they don't have to let her have her child unless they feel she can properly support her. Also since they are minors and wards of the state you and/or her could be charged with kidnapping.

Without more, I would say yes you could get into serious trouble. You can not go by what people say, you need the facts: who has legal custody at this time is it the state welfare agency? If so, then you can be arrested and jailed if you were to take her.

However, nothing prevents you from going to court and seeking legal custody of her. Barring any issue of your unfittness, you should be awarded custody as the biological father.

As a side issue, in many jurisdictions bearing a child qualifies the mother to be "emancipated" either by name or de facto. As a first step, I would talk to your daughter and the agency that has custody of her and get the facts.