Felton v. Felton
| Decision Date | 02 March 1938 |
| Docket Number | 36. |
| Parties | FELTON et al. v. FELTON et al. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Perquimans County; J. Paul Frizzelle Judge.
Action by Minnie L. Felton and others against Ealey A. Felton administratrix of W. J. Felton, deceased, and others, to recover the value of a note for devastavit. Judgment for plaintiffs, and defendants appeal.
Reversed and remanded, with directions.
Action to recover value of note for devastavit.
The uncontroverted facts are: The plaintiffs are the children and the defendant Ealey A. Felton is the widow of W. J Felton, who died in October, 1931. The widow qualified as administratrix of the estate of the decedent on November 10, 1931, and executed bond with the United States Fidelity & Guaranty Company as surety. In the course of the administration a promissory note in the sum of $2,500 executed by Henry B. Williams, payable to W. J. Felton or order, secured by a mortgage deed on a lot of land in the town of Hertford, N. C., and on which there was due a balance of $1,500, came into the possession of the administratrix who sold at private sale and assigned and delivered the note and mortgage to defendant J. R. Stokes. On petition of J. R. Stokes, the clerk of superior court appointed H. Clay Stokes, son of J. R. Stokes, as "trustee in the mortgage" in lieu of the original mortgagee. At foreclosure sale by H. Clay Stokes, trustee, J. R. Stokes bid in the property described in the mortgage for the price of $500, and pursuant thereto deed was made to him. He in turn sold and conveyed the lot to defendant Alphonso Reed, who entered into possession, but has not paid the purchase price.
Plaintiff alleges in substance: That the administratrix sold the note to J. R. Stokes for the sum of $155, of which $85 represented her personal indebtedness to Stokes; that at that time the value of the lot, which secured the note, was not less than the total principal and interest due thereon; that the condition of the estate did not justify a sale of the note; that the sale constituted a waste or devastavit; that the administratrix has filed a final account and there are no debts against the estate, and, therefore, the distributees are the real parties in interest; that the administratrix is insolvent; that the appointment of H. Clay Stokes as substitute trustee, the sale and deed by him to J. R. Stokes, and the deed from J. R. Stokes to Alphonso Reed, are void.
The defendants J. R. Stokes and Alphonso Reed filed answer in which they deny material allegations of the complaint, and assert in substance: That the administratrix "in the course of her administration of said estate found it necessary to convert said note into cash, in her opinion"; that, at that time, the maker of the note was insolvent, the property securing the note was in bad state of repair, and taxes aggregating $600 to $700 due to the town of Hertford and the county of Perquimans were a first lien thereon; that she offered the note for sale to a number of people in the vicinity who were able to buy it; that the offer of J. R. Stokes to pay $155 was the best she was able to obtain; that that offer was reasonable and was the full and fair value of the note under the existing circumstances; that the administratrix represented to Stokes that she had the right to sell the note and that "she had consulted the other interested parties and that they all told her to go ahead and sell the note"; and that in buying Stokes acted in good faith.
At the trial below, after the pleadings had been read, and after introducing in evidence the admission in the pleadings and records referred to in such admissions, plaintiffs moved for judgment thereon. The court allowed the motion, and, among other things not here necessary to enumerate, adjudged that the assignment of the note by the administratrix to J. R. Stokes was void and passed no title; that the appointment of the substitute trustee and his sale were void and passed no title; and that the action be dismissed as to United States Fidelity & Guaranty Company.
Defendants J. R. Stokes and Alphonso Reed appealed therefrom to the Supreme Court, and assigned error.
C. R. Holmes, of Hertford, for appellants.
P. H. Bell, of Plymouth, and H. S. Ward, of Washington, N. C., for appellees.
Four questions are presented on this appeal:
(1) Can distributees of the estate of the intestate, whose debts are paid, maintain action for waste or devastavit?
(2) Has an administratrix the right and authority to sell a note, an asset of the estate, at private sale made in good faith and for fair value?
(3) Does purchaser of a note, an asset of the estate, at private sale from the administratrix, for fair value and without notice of bad faith, if any, of the administratrix in making sale, obtain a good title?
(4) Did the court below err in rendering judgment on the pleadings?
Careful consideration of the record leads to the conclusion that each question must be answered in the affirmative.
(1) Until the debts have been paid or the assets of the estate exhausted, the estate is not settled, and the duties and obligations of the administratrix continue. C.S. § 105. Creech v. Wilder, 212 N.C. 162, 193 S.E. 281; Rocky Mount Savings & Trust Co. v. McDearman, 213 N.C. ---, 195 S.E. 531. Until the settlement and distribution of an estate, the administration is incomplete. Taylor v. Brooks, 20 N.C. 273. The appointment of an administrator de bonis non is proper only where a vacancy occurs before full administration and distribution of the estate. 24 C.J. 1143. While the administratrix lives and the administration is incomplete, the distributees can maintain an action for alleged waste or devastavit committed by her. University v. Hughes, 90 N.C. 537, at page 541; Merrill v. Merrill, 92 N.C. 657, at page 662.
(2, 3) In accordance with a long line of decisions of the court administrators, having the legal title to the personal assets of their intestate's estate, may sell or pledge them, or may discount notes of the estate, if the exigencies of the...
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