In re Estate of Parrish, COA00-348.

• Decision Date: 01 May 2001
• Docket Number: No. COA00-348.,COA00-348.
• Citation: 143 NC App. 244,547 S.E.2d 74
• Court: North Carolina Court of Appeals
• Parties: In the Matter of the ESTATE OF General Jackson PARRISH.

547 S.E.2d 74

143 NC App. 244

In the Matter of the ESTATE OF General Jackson PARRISH.

No. COA00-348.

Court of Appeals of North Carolina.

May 1, 2001.

Mozart A. Chesson, Fairview, VA, for appellant.

Williams, Mullen, Clark & Dobbins, P.C., by Robert L. Samuel, Virginia Beach, VA, for appellees.

TIMMONS-GOODSON, Judge.

In his Last Will and Testament, General Jackson Parrish ("Parrish" or "decedent") designated his daughter, attorney Lucille S. White ("White"), executrix and residuary legatee of his estate. In her capacity as the estate's personal representative, White filed an action in federal court to recover damages related to Parrish's death. White settled the federal court action in July 1998 for $275,000.00. After paying the attorneys' fees, White paid herself a commission of $133,500.00 and reimbursed herself for expenses in the amount of $40,216.41. White prepared to distribute the remainder of the court action proceeds to Parrish's heirs, pursuant to North Carolina's Wrongful Death Act, but ultimately distributed a share of the proceeds to only one heir.

On 23 February 1999, the Clerk of Superior Court ("the Clerk"), Vance County, issued an "Order to Appear and Show Cause for Failure to File Inventory/Account" against White, requesting that she appear and show cause concerning why she should not be held in contempt for failing to file an annual accounting of Parrish's estate. White filed an "accounting" on 5 March 1999 that designated the federal court action proceeds as "Estate Settlement Proceeds," which had been distributed to "Lucille S. White." White submitted an amended accounting and time sheets reflecting the work she performed in pursuing the federal court action to the Clerk via facsimile. Following the show cause hearing and in an order entered 1 April 1999, the Clerk found the accountings filed by White unacceptable. The Clerk noted that the federal action proceeds should have been designated as wrongful death proceeds and that the faxed amended accounting should have been submitted in person, accompanied by canceled checks and receipts. The Clerk further noted that White failed to prove that the federal action proceeds existed and was unaware of certain information relating to the bank accounts in which the proceeds had been deposited.

The Clerk concluded that White was "negligent in her duties in filing accountings, distribution of [the] proceeds from the Wrongful Death action, and proof that the funds are still available to distribute according to the Intestate Succession [Act]." The Clerk further found that White "paid herself an unapproved fee ... and reimbursed herself an unapproved amount ... for her expenses." As a result, the Clerk ordered White to submit all proceeds from the federal court action, less attorneys' fees, for deposit into a trust fund, and revoked the letters testamentary issued to White. The Clerk further ordered White to submit information concerning her personal bank accounts and information relating to the debts and expenses incurred by Parrish's estate, including all canceled checks and receipts. The Clerk removed White from all duties relating to decedent's estate and appointed the Public Administrator "to finalize th[e] estate."

White appealed the Clerk's order to the Superior Court, specifically requesting that the court determine the nature of the federal court action proceeds. On 21 April 1999, the Clerk issued an interlocutory order, pursuant to North Carolina General Statutes section 28A-9-5, ordering "the assets of the said estate and the proceeds of the settlement of the said wrongful death action be forwarded and paid into the hands of the Clerk ..., for safe keeping, pending the final resolution of the appeal in this matter." See N.C. Gen. Stat. § 28A-9-5 (1999).

Following a trial de novo, the trial court concluded that the federal court action proceeds were indeed wrongful death proceeds and not assets of the estate. The court further concluded that because White breached her fiduciary duty, she forfeited any right to a personal representative commission. In an order entered 18 August 1999, the court ordered White to submit the wrongful death proceeds to the Clerk, less White's approved expenses. The court found White in contempt of court for the disbursement of proceeds following the entry of the Clerk's 1 April 1999 order, but allowed White to purge the contempt by submitting the full amount of the wrongful death proceeds. Finally, the court revoked the letters testamentary granted to White.

The beneficiaries to the wrongful death proceeds participating in the proceedings below— Mary Jenkins, John Parrish, Edward Parrish, David Parrish, and Reo Parrish ("the beneficiaries")—moved for an award of attorneys' fees in Superior Court. White moved to dismiss the motion, arguing that the court did not have jurisdiction to award attorneys' fees. Finding that it did indeed have jurisdiction, the court granted the beneficiaries' motion in an order entered 18 August 1999.

White now appeals the 18 August 1999 orders of the Superior Court revoking the letters testamentary and awarding attorneys' fees.

White first contends that because the trial court found that the federal court action proceeds were not assets of the estate, the Clerk retained no authority to oversee the distribution of the proceeds. Therefore, White argues, neither the Clerk nor the trial court had jurisdiction to order an accounting of the wrongful death proceeds, to remove her as the estate's personal representative, to impose sanctions against her based upon alleged misconduct concerning the proceeds, or to order the proceeds submitted to the Clerk or Public Administrator. We disagree.

"The clerk of superior court ... shall have jurisdiction of the administration, settlement, and distribution of estates of decedents...." N.C. Gen.Stat. § 28A-2-1 (1999) (emphasis added). It is well-established that proceeds from wrongful death actions are not part of a decedent's estate. In re Below, 12 N.C.App. 657, 184 S.E.2d 378 (1971). Therefore, "[i]n receiving funds paid in settlement of a wrongful death claim[,] a personal representative of a decedent's estate is not acting for the estate but as a trustee for the beneficiaries under the law." Id. at 660, 184 S.E.2d at 381. Because wrongful death proceeds are not assets in the decedent's estate, these proceeds are not subject to the assessment of costs, id. at 659, 184 S.E.2d at 380, and are not subject to the payment of estate debts, N.C. Gen.Stat. §§ 28A-15-10 and 28A-18-2 (1999) ("Where there has been a recovery in an action for wrongful death, the same shall not be applied to the payment of debts and other claims against the estate of decedent").

Therefore, we must determine whether the Clerk retained jurisdiction to revoke the personal representative's letters testamentary and order other related relief concerning the alleged mishandling of monies that were not assets in decedent's estate. The resolution of this issue depends upon a careful reading of the applicable statutory authority.

The clerk of superior court's jurisdiction over a decedent's estate encompasses the "[g]ranting of letters testamentary" to personal representatives. N.C.G.S. § 28A-2-1; In re Estate of Adamee, 291 N.C. 386, 230 S.E.2d 541 (1976). Sections 28A-9-1 and 28A-9-2 of our General Statutes grant a clerk the authority to revoke a personal representative's letters testamentary. N.C. Gen.Stat. §§ 28A-9-1 and 28A-9-2 (1999).

Personal representatives are fiduciaries in administering and distributing an estate. N.C. Gen.Stat. § 28A-13-2 (1999). Although wrongful death actions may not yield assets for the estate, a personal representative's authority to commence and settle these actions is "[i]ncident to the collection, preservation, liquidation [and] distribution of a decedent's estate." N.C. Gen.Stat. § 28A-13-3(a) (1999).

Personal representatives are obligated by statute,

for so long as any of the property of the estate remains in [their] control, custody or possession, [to] file annually in the office of the clerk of superior court an inventory and account, under oath, of the amount of property received by [them], or invested by [them], and the manner and nature of such investment, and [their] receipts and disbursements for the past year.

N.C. Gen.Stat. § 28A-21-1 (1999); see cf. Godfrey v. Patrick, 8 N.C.App. 510, 512, 174 S.E.2d 674, 676 (1970) ("the court has the inherent power to require any appointed fiduciary to file periodic accounts"). Our General Statutes further provide that "[a] personal representative shall be chargeable in [her ] accounts with property not a part of the estate which comes into [her] possession at any time." N.C. Gen.Stat. § 28A-13-10 (1999) (emphasis added); see also N.C. Gen. Stat. § 28A-21-3 (1999) (accounting must include "[t]he amount and value of the property of the estate" as well as "property on hand constituting the balance of the account, if any" and "[a]ll payments, charges, losses, and distributions").

If a personal representative fails to file an accounting in accordance with the aforementioned statutory provisions, a clerk of superior court may compel her to do so. N.C. Gen.Stat. § 28A-21-4 (1999); Ingle v. Allen, 53 N.C.App. 627, 629, 281 S.E.2d 406, 408 (1981) (citations omitted) (finding that original jurisdiction over accountings "should properly be initially exercised by the clerk"). If, after being compelled to file an accounting, the personal representative fails to do so or files an unsatisfactory account, "the clerk may remove [her] from office." N.C.G.S. § 28A-21-4 Letters testamentary are further revocable if "[t]he person to whom they were issued has violated a fiduciary duty through default or misconduct in the execution of [her] office." N.C.G.S. § 28A-9-1(a)(3) (emphasis added).

Section 28A-23-3(a) mandates that the clerk has discretion in compensating a personal representative out of the...