Pearson v. Pearson

• Decision Date: 11 December 1946
• Docket Number: 596
• Citation: 40 S.E.2d 477,227 N.C. 31
• Parties: PEARSON et al. v. PEARSON.
• Court: North Carolina Supreme Court

40 S.E.2d 477

227 N.C. 31

PEARSON et al. v. PEARSON.

No. 596

Supreme Court of North Carolina

December 11, 1946

Action to try title to land and to have defendant Pearl G. Pearson declared the holder of the title thereto as trustee for the use and benefit of plaintiffs.

W S. Pearson, the testator of defendant executrix, was administrator d.b.n., c.t.a. of A. L. Pearson. While acting as such and while in possession of the locus, farming the same under order of court, he purchased the land at a foreclosure sale. He left a will in which he devised the land to his wife, the defendant. She assumed possession, claiming the same as her own. Thereupon this action was instituted by devisees and the representatives of deceased devisees under the will of A. L. Pearson.

Defendant pleads (1) the three-year, seven-year, and ten-year statutes of limitations, (2) estoppel by release, (3) seven years' possession under color, and (4) laches.

In the trial below plaintiffs offered certain evidence appearing of record and rested. The court sustained defendant's motion to dismiss as in case of nonsuit and entered judgment dismissing the action. Plaintiffs excepted and appealed.

Fred W. Bynum and George S. Steele, Jr., both of Rockingham, for plaintiffs appellants.

McLeod & Webb, of Rockingham, and Varser, McIntyre & Henry of Lumberton, for defendant appellee.

BARNHILL Justice.

Plaintiffs' evidence tends to show the following facts:

W. S Pearson was appointed administrator d.b.n., c.t.a. in 1925 to succeed J. R. Bennett, resigned executor. He went into possession of the locus in the spring of 1925 under an order of court permitting him to continue the farming operations. At that time the mortgage indebtedness on the eight-horse farm containing 330 acres was $1,900. Other indebtedness, including over $2,000 due W. S. Pearson, amounted to approximately $5,350. He never thereafter filed an account of his administration. In 1927 he told Moncu Chavis (excluded by the court below) 'he was not going to pay the mortgage--he was going to let the mortgagee sell it, and he was going to buy it. ' The trustee foreclosed the mortgage outstanding at the time of the death of A. L. Pearson and W. S. Pearson became the purchaser. On 30 January 1930 the trustee executed foreclosure deed to him individually. He remained in possession until his death in June 1944.

We cannot say this evidence, as a matter of law, fails to disclose that plaintiffs possess a valid and enforceable interest in the locus.

While, strictly speaking, real estate is not an asset in the hands of the administrator, it is an asset to which he may have recourse when the personal estate is insufficient to discharge the debts and the costs of administration. G. S. s 28-148; Creech v. Wilder, 212 N.C. 162, 193 S.E. 281. Here it had been sequestered by the court and placed in the hands of the administrator. He was in actual possession. He had the right, with the approval of the court, to mortgage the land, G.S. s 28-82, or, at a sale thereof, to purchase for the protection of the estate. G.S. s 28-183; Woody v. Smith, 65 N.C. 116. Yet he made no application to be permitted to borrow the relatively small amount due the mortgagee to protect the land from sale under foreclosure. Instead he elected to borrow a much larger sum in his own name and purchase for his own benefit. Having purchased, he has never accounted for the excess above the amount due the mortgagee, or disclosed the results of his farming operations, or the financial status of the estate at the time of the foreclosure sale.

A trustee who acquires an outstanding title adverse to that of his cestuis que trustent is considered in equity as having acquired it for their benefit and cannot set it up as his own. Brantly v. Kee, 58 N.C. 332; Haskill v. Freeman, 60 N.C. 585; Keaton v. Cobb, 16 N.C. 439, 18 Am.Dec. 595; Boyd v. Hawkins, 37 N.C. 304; 54 AJ 175. 'A purchase of testator's land by executors, at their own sale, whether directly or indirectly, and however fair, is fraudulent in law.' (3rd syllabus) Shute v. Austin, 120 N.C. 440, 27 S.E. 90. It will, as of course, be set aside at the instance of the parties interested. Stilly v. Rice, 67 N.C. 178; L.R.A.1918B, 13n, 36n; Froneberger v. Lewis, 70 N.C. 456; Shearin v. Hunter, 72 N.C. 493; Tayloe v. Tayloe, 108 N.C. 69, 12 S.E. 836; McNeill v. Fuller, 121 N.C. 209, 28 S.E. 299; Tomlinson's Executors v. Detestatius' Executors, 3 N.C. 284; Creech v. Wilder, supra; Stianson v. Stianson, 40 S.D. 322, 167 N.W. 237, 6 A.L.R. 280.

The rule which prohibits an executor or administrator from purchasing at his own sale applies where the sale is brought about by another. 21 A. J. 735; Anno. 77 A.L.R. 1514, 1521.

The administrator is a trustee and so, in the absence...