Gurganus v. McLawhorn

212 N.C. 397

Opinion

Clabkson, J.

The material questions involved on this appeal are set forth by R. H. McLawhorn, executor, as follows:

First. “Was the court in error in overruling defendant executor’s motion to dismiss, for that: (a) The cross action does not state a cause of action; (b) there was a misjoinder of action; (c) the purported cross action was improperly brought; (d) under the will, the defendants represented in the cross action are estopped from setting up said cross action ?”

"We think all these questions must be answered against the contentions of the executor, R. H. McLawhorn. The executor, R. H. McLaw-horn, J. F. J. McLawhorn, trustee and individually, and the heirs at law of Ira J. Frizelle and the widow, were all made parties defendant to the action brought by plaintiff to have his judgment paid out of the assets of the estate of Ira J. Frizelle.

N. C. Code, 1935 (Michie), see. 135, is as follows: “In addition to the remedy by special proceeding, actions against executors, administrators, collectors, and guardians may be brought originally to the Superior Court at term time; and in all such eases it is competent for the court in which said actions are pending to order an account to be taken by such persons as said court may designate, and to adjudge the application or distribution of the fund ascertained, or to grant other relief, as the nature of the case may require.”

Section 136: “If it appears at any time during or upon, or after the taking of the account of a personal representative that his personal assets are insufficient to pay the debts of the deceased in full, and that he died seized of real property, it is the duty of the judge or clerk, at the instance of any party, to issue a summons in the name of the personal representative or of the creditors generally to the heirs, devisees and others in possession of the lands of the deceased to appear and show cause why said lands should not be sold for assets. Upon the return of the summons the proceeding shall be as is directed in other like cases.”

In a civil action to settle estates and subject real estate to the payment of debts, concurrent original jurisdiction with the clerk of the Superior Court is conferred on the Superior Court. In Fisher v. Trust Co., 138 N. C., 90 (98), it is said: “The jurisdiction of courts of equity to entertain administration suits at the instance of creditors, devisees, or legatees has been uniformly recognized and frequently exercised. Such suits are less frequent since the distinction between legal and equitable assets has been abolished and full powers in the settlement of estates conferred upon courts of probate. Whatever doubt may have existed in respect to the jurisdiction after the establishment of our present judicial system was removed by the Act of 1876, ch. 241, Code, sec. 1511 (C. S., 135); Haywood v. Haywood, 79 N. C., 42; Pegram v. Armstrong, 82 N. C., 327.”

In S. v. McCanless, 193 N. C., 200 (205), it is stated: “In the present action the administrators and sureties on their bond, and administrators personally, heirs at law and distributees and widow of N. B. McCanless, are all made parties defendant. Plaintiff has obtained a judgment of $4,000 and interest against the administrator and it is unpaid. As to surety, see C. S., 358. The action is in the nature of a bill to surcharge and falsify the account. It was well settled under the old practice that an action of this hind could be brought in the court of equity. C. S., 135 (ch. 241, sec. 6, Laws 1876-7), supra, is in confirmation. We think the Superior Court has jurisdiction of the defendants and the subject of the action.”

Plaintiff, who had a judgment against the executor, alleged in the complaint that the personal property of the estate has been exhausted and demand has been made and refused by the executor to sell a certain tract of land to make assets to pay the debts. The executor admits the judgment rendered and that the personal estate has been exhausted, and says “That defendant knows of no way to satisfy said judgment except by sale of real estate.” J. E. J. McLawhorn, trustee, individually and as guardian ad litem, of the infant defendants, heirs at law of Ira J. Erizelle, in answer says there are sufficient personal assets to pay plaintiff’s claim, and sets up a cross action and affirmative defense to “surcharge and falsify” the executor’s account. At this stage of the pleading the executor did not make the contention he now does. He makes reply and denied the material allegation of the cross action, and prays- that he go without day and recover his costs. This raised issues of fact, and the clerk made an order transferring the cause to the Superior Court for trial before a jury.

Section 511: “The defendant may demur to the complaint when it appears upon the face thereof, either that: . . . (6) The complaint does not state facts sufficient to constitute a cause of action.”

We think the cross action states a cause of action and there was no misjoinder of action. All objections except those on the ground that the court has no jurisdiction of the person of the defendant or the subject matter of the action, and that the complaint does not state facts sufficient to constitute a cause of action, are waived unless they are taken by demurrer or answer. But the exceptions referred to may be taken advantage of by demurrer even in the appellate court. Clements v. Rogers, 91 N. C., 63, 64. See see. 518 and the note thereto. S. v. McCanless, supra, p. 206.

The personal property of the estate of Ira J. Erizelle must be exhausted before resort to the real estate held by J. F. J. McLawhorn, trustee., may be had. The will provides, under Item 3, that the “Tuten Place” and personal property thereon and his life insurance be used to pay his debts referred to in Item 1, where he provides that his “just debts” be paid by the executor, except those secured by real estate deed of trust and mortgage. This controversy relates primarily to the “Tuten Place” and the personal property thereon. Then again, the residuary clause in the will leaves all assets not disposed of to “my next of kin.” If his personal property and real estate were not exhausted, J. F. J. McLawhorn, trustee, and tbe beirs at law bad tbe right to see that this was done and to “surcharge and falsify” tbe executor’s account. They were all parties to tbe action and they are not estopped to do this under tbe will of Ira J. Frizelle and tbe cross action was proper. Lee v. Beaman, 101 N. C., 295; Smith v. Brown, 101 N. C., 347; Fisher v. Trust Co., 138 N. C., 90; Thigpen v. Trust Co., 203 N. C., 291; Barkley v. Realty Co., 211 N. C., 540. While tbe lands may be sold where tbe personal estate is insufficient, tbe rule is that tbe personalty must be first applied before resorting to tbe realty; and this, even though tbe debts are secured by mortgage on realty. C. S., 74; Wadford v. Davis, 192 N. C., 484; Creech v. Wilder, ante, 162 (165). Ira J. Frizelle’s last will and testament, under tbe facts in this case, does not change tbe above rule.

Second. “Was tbe court in error in denying defendant executor’s right to a trial by jury?” We think not. In tbe judgment of tbe court below, in part, is tbe following: “The court being of tbe opinion that tbe plaintiff and tbe defendant E. H. McLawhorn, executor, have waived their right to a jury trial, for that tbe plaintiff and tbe executor have failed to tender issues upon their respective exceptions in accordance with tbe practice and procedure in cases of compulsory reference by failing to assert their right to a trial by jury definitely and specifically under each exception to the referee’s report, and for that tbe issues tendered are not pertinent to tbe inquiry, tbe court thereupon proceeded to bear tbe report of tbe referee upon tbe exceptions of tbe plaintiff and tbe executor appearing in tbe record.”

In Driller Co. v. Worth, 117 N. C., 515 (521), it is said: “We think that tbe court erred in bolding that the defendants were entitled to a jury trial upon any exception which did not embody a definite and specific demand for a trial by jury upon that particular exception. It was error also to bold if such specific demand bad been made that the right extended further than tbe issues ‘raised by tbe pleadings.’ ” S. c., 118 N. C., 746.

In Cotton Mills v. Maslin, 200 N. C., 328 (329), it is held: “A party who would preserve bis right to a jury trial in a compulsory reference must object to tbe order of reference at tbe time it is made, and on tbe coming in of tbe report of tbe referee, if it be adverse, be should seasonably file exceptions to particular findings of fact made by tbe referee, tender appropriate issues based on tbe facts pointed out in tbe exceptions and raised by tbe pleadings, and demand a jury trial on each of tbe issues thus tendered. Wilson v. Featherstone, 120 N. C., 446, 27 S. E., 124; Yelverton v. Coley, 101 N. C., 248, 7 S. E., 672. This was not done in tbe instant case. Although a party may duly enter bis objection to tbe order of reference, be may yet waive bis right to a jury trial by failing to assert sucb right definitely and specifically in each exception to the referee’s report and by bis failing to tender the proper issues. Alley v. Rogers, 170 N. C., 538.” Texas Co. v. Phillips, 206 N. C., 355 (358); Ogden v. Land Co., 146 N. C., 443 (446); Robinson v. Johnson, 174 N. C., 232; Booker v. Highlands, 198 N. C., 282; Bank v. Fisher, 206 N. C., 412.

In N. C. Prac. & Proc. in Civil Cases (McIntosh), sec. 525, at p. 567, it is said: “A party claiming a jury trial in a compulsory reference must protect his right in the following manner: (1) He must object to the order of reference at the time it is made, and he may designate the particular issues of fact to be tried, but it is held that a general objection and exception in the form, ‘defendant’s counsel except to the above order of reference,’ is sufficient to preserve the right. (2) When the report of the referee is filed he should file exceptions to particular findings of fact in apt time, tender appropriate issues based upon such facts, and demand a jury trial on each issue; filing exceptions without tendering specific issues or designating the specific points upon which he demands a jury trial is not sufficient,” citing many authorities.

The plaintiff, in his brief as Amicus Gurice, says: “In general the profession does not appear to have strictly followed these decisions. . . . And it so happens that the plaintiff in this particular case filed exceptions and followed the usual custom. Not being advertent at the time to the particularity required by the decisions above cited, plaintiff’s exceptions, however, were filed solely for the purpose of staying-in court until the defendants shall have litigated and determined the controversy between them now before this Court.” The brief cites authorities sustaining the ruling of the court below. The plaintiff, Amicus Gurice, concludes his brief as follows: “It is respectfully submitted to the Court that upon a reading of the evidence before the referee the same strongly supports the findings of the court below, and upon rereading becomes stronger and stronger, and no doubt had the same been submitted to a jury identical findings would have resulted. The plaintiff is only interested in the collection of his debt, and a new trial or reversal in this cause will further delay plaintiff in realizing upon his indebtedness, and since the defendant executor has had his day in court, the plaintiff now respectfully submits to the court that no reversible error has been committed below and that the judgment entered below should be affirmed.”

The executor failed to follow the procedure set forth in the decisions of this Court. J. E. J. McLawhorn, trustee, individually and as guardian ad litem of the heirs at law of Ira J. Erizelle, did so in accordance with the opinions and with unusual particularity, as will be seen by tbe record. Contracting Co. v. Power Co., 195 N. C., 649; Anderson v. McRae, 211 N. C., 197. It seems tbat tbe learned judge in tbe court below followed carefully tbe decisions of tbis Court on tbis aspect.

Third. Further, tbe executor’s questions involved: “(3) "Was tbe court in error in excluding testimony and allowing other testimony over tbe objection of tbe defendant executor? (4) Was tbe court in error in overruling exceptions of defendant executor in tbe report of tbe referee ? (5) Was tbe court in error in sustaining tbe report of tbe referee? (6) Was tbe court in error in denying defendant executor’s motion to dismiss? (7) Was tbe court in error in its findings of fact and conclusions of law? (8) Was- tbe court in error in signing tbe judgment appealed from?” We cannot bold with tbe executor. If there was any error in allowing or excluding testimony it was immaterial and not prejudicial. Tbe law in reference to tbe conduct of an executor in dealing with estate of bis testator is well settled in tbis jurisdiction.

In Taylor v. Taylor, 108 N. C., 69 (73), citing authorities, it is written: “An administrator cannot purchase property at bis own sale, even in good faith, fairly, and for a fair price; certainly be cannot in any' case without tbe sanction or' ratification in some sufficient way manifested by those interested. Tbis rule is well settled and founded in reason, justice and sound policy.” Tbe dealings where trust relationship exists is fully gone into in Hinton v. West, 207 N. C., 708; Harrelson v. Cox, 207 N. C., 651.

Tbe court below did not perfunctorily affirm tbe referee’s findings of fact and conclusions of law, but passed on each in detail and carried out to tbe letter what is required in tbe decisions of tbis Court.

In Trust Co. v. Lentz, 196 N. C., 398 (at p. 406), it is said: “In view of tbe position taken by some of tbe parties tbat<tbe judge was without authority to change the report of tbe referee — -the reference being by consent — it is sufficient to say tbat, in a consent reference as well as in a compulsory one, upon exceptions duly filed, tbe judge of tbe Superior Court, in tbe exercise of bis supervisory power and under tbe statute, may affirm, modify, set aside, make additional findings and confirm, in whole or in part, or disaffirm tbe report of a referee. Contracting Co. v. Power Co., 195 N. C., 649; Mills v. Realty Co., 196 N. C., 223.” Abbitt v. Gregory, 201 N. C., 577 (596); Polikoff v. Service Co., 205 N. C., 631 (634).

T.be competent evidence was sufficient for tbe court below to find tbe facts as set forth in tbe record and affirm tbe referee’s report. Tbis is binding on tbis Court if there was sufficient competent evidence to support them. Dent v. Mica Co., ante, 241 (242). We think there was. We see no error in tbe conclusions of law. Tbe parties men-tioiied by the executor we do not think necessary parties for the determination of this controversy. Higgins v. Higgins, ante, 219. The stipulation was “without prejudice” and waived no right.

From a careful review of the whole record we can find in law no prejudicial or reversible error. The judgment of the court below is

Affirmed.