Frederick v. Southern Fid. Mut. Ins. Co, 743.

• Decision Date: 05 June 1942
• Docket Number: No. 743.,743.
• Court: North Carolina Supreme Court
• Parties: FREDERICK. v. SOUTHERN FIDELITY MUT. INS. CO.

20 S.E.2d 372

221 N.C. 409

FREDERICK.

v.SOUTHERN FIDELITY MUT. INS. CO.

No. 743.

Supreme Court of North Carolina.

June 5, 1942.

Appeal from Superior Court, Durham County; Clawson L. Williams, Judge.

Action by Corrine R. Frederick against the Southern Fidelity Mutual Insurance Company for an amount paid by the plaintiff as executrix of a decedent's estate to the defendant, a creditor of the estate, by reason of mutual mistake of fact regarding ownership of the money, which was subsequently repaid by the plaintiff individually to the rightful owner thereof. From a judgment overruling a demurrer, the defendant appeals.

Affirmed.

Hedrick & Hall, of Durham, for plaintiff-appellee.

Marshall T. Spears and C. O. Pearson, both of Durham, for defendant-appellant.

SCHENCK, Justice.

The allegations of the complaint, as amended, were substantially that the plaintiff on or about September 15, 1938, was duly appointed and qualified as executrix of the estate of her late husband, N. J. Frederick, in the probate court of Richland County, South Carolina; that the defendant is a North Carolina corporation, engaged in writing fiduciary bonds, with its principal office in Durham, North Carolina; that soon after her qualification as such executrix, the plaintiff discovered a checking account in the Victory Savings Bank of Greenwood, South Carolina, in the amount of $3,030.87, in the name of N. J. Frederick, attorney, which she was then advised and believed belonged to the estate of her testator; that after the discovery by the plaintiff of said checking account in the Victory Savings Bank, the defendant, Southern Fidelity Mutual Insurance Company, filed a claim with the plaintiff, as executrix as aforesaid, for $2,500 for indemnity against said estate by reason of the alleged payment of said amount on certain indemnity and/or surety bonds executed for said Frederick by said defendant; that at the time the defendant filed its claim with the plaintiff, as executrix as aforesaid, she understood that the estate of her testator, N. J. Frederick, had funds in hand, including the said $3,030.87, with which to pay, or partially pay, the claim filed by the defendant; that the defendant, at the time it filed its claim, also understood that the $3,030.87 was part of the funds constituting the personal estate of N. J. Frederick; and also at said time the Victory Savings Bank understood that the said $3,030.87 belonged to the personal estate of said Frederick, and was subject to withdrawal by the plaintiff as executrix thereof; that the plaintiff, as executrix as aforesaid, recognized the claim of the defendant, Southern Fidelity Mutual Insurance Company, for $2,500, together with other claims filed against the estate of her testator, and in the course of the administration of the estate paid out of said sum of $3,030.87 to the defendant the sum of $1,-025, which would have been the amount to which the defendant would have been entitled had the first mentioned sum belonged to said estate; that after the disbursement of the said $3,030.87, by the plaintiff, as executrix as aforesaid, in the course of the administration of said estate, the plaintiff was informed that said sum was not the personal fund of her testator, but belonged to the estate of the late C. H. S. Henderson, of which her testator, N. J. Frederick, was executor and had been held by him only in his fiduciary capacity, for which his estate was liable to the Bank of Greenwood as administrator d. b. n., c. t. a., of the estate of C. H. S. Henderson, deceased; that the facts with respect to the ownership of said sum of $3,-030.87, at the time of its disbursement, were not known to the plaintiff, either individually or as executrix, and were likewise unknown to the defendant, the Southern Fidelity Mutual Insurance Company, which received $1,-025 of it and to the Victory Savings Bank, which permitted the plaintiff, as executrix, to withdraw the same from its bank for the purpose of paying claims against the estate of N. J. Frederick, deceased; and that the sum of $1,025 was paid to the defendant "asa result of the mutual mistake of fact of this plaintiff, individually and as executrix, of the defendant, Southern Fidelity Mutual Insurance Company, and of the said Victory Savings Bank, * * * the said sum of $1025.00 being in fact the property of the Bank of Greenwood as Administrator d. b. n, c. t. a., of C. H. S. Henderson, deceased, and that said sum would not have been disbursed * * * but for the mutual mistake of facts"; that the plaintiff was the wife of N. J. Frederick, deceased, who was a practicing attorney, but she knew nothing of his relationships with his clients and was ignorant of his personal and professional affairs; that subsequent to the disbursement by her, as executrix as aforesaid, of the' said sum of $3,030.87, she discovered that said sum was a balance in the Bank of Greenwood belonging to the estate of C. H. S. Henderson, deceased, of which her late husband was executor, after he, the late N. J. Frederick, had taken large sums therefrom with which to purchase various properties for his own use; that after the discovery by her of the mistake she had made in disbursing funds not belonging to the estate of her testator, which mistake was participated in by the defendant, Southern Fidelity Mutual Insurance Company, she, as an individual and as executrix, undertook to make restitution to the estate of C. H. S. Henderson of the funds which had been improperly used by N. J. Frederick, the late executor thereof, and as executrix of the said N. J. Frederick she obtained possession of properties acquired by him with funds belonging to the estate of his testator and returned them to the Bank of Greenwood, administrator d. b. n., c. t. a, of the estate of C. H. S. Henderson, and after doing this there was still due said estate $3,660.50, and this plaintiff individually paid said sum to the said bank as administrator as aforesaid, "whereupon she was duly and legally individually subrogated to the rights of the Bank of Greenwood, administrator d. b. n, c. t. a. of C. H. S. Henderson, deceased, which said subrogation is...