Woody v. Brooks

• Decision Date: 18 March 1889
• Citation: 102 N.C. 334,9 S.E. 294
• Court: North Carolina Supreme Court
• Parties: Woody v. Brooks.

9 S.E. 294

(102 N.C. 334)

Woody

v.Brooks.

Supreme Court of North Carolina.

March 18, 1889.

Masters in Chancery — Reference — Administrators—Limitation op Actions.

1. It is error to direct a reference to a master while a good plea of the statute of limitations, dependent on a question of law, remains undisposed of.

2. Code Civil Proc. N. C. §§ 154, 155, requiring actions on the official bond of an administrator to be brought within six years after the filing of his final account, and also requiring such an action, as against the sureties, to be brought within three years from the breach of the bond, does not apply to an action, brought against the administrator alone, to surcharge and falsify his final account.

Davis, j., dissenting.

Appeal from superior court, Person county; W. M. Shipp, Judge.

Action by——Woody, one of the distributees of the estate of Moses A. Woody, deceased, against J. W. Brooks, administrator de bonis non of said estate, to surcharge and falsify the final account of the defendant. Erom an order referring the cause to a master the defendant appeals.

W. W. Fuller and E. C. Smith, for appellant.

Smith, C. J. This was a civil action tried before Shipp, J., at September term, 1888, of Person superior court. The plaintiff alleges that he is one of the next of kin of Moses A. Woody; that the defendant, as administrator of said Woody, on the 17th of May, 1879, "made a final settlement ex parte, before the clerk of said court, * * * showing a large amount of money received by him, and a large amount due" plaintiff on a final settlement. The fifth allegation is "that said final settlement is false, and a fraud upon the rights of the plaintiff, and all the heirs and distributees of said Woody." The sixth allegation is that "the facts contained in article five of the complaint did not come to the knowledge of the plaintiff before the last three years previous to the beginning of this action, but were discovered within said three years." He prays that the said final account "be declared false, and a fraud upon the rights of the plaintiff, that it be restated by order of the court, and for other and further relief." The defendant substantially admits the allegations of the complaint, except articles 5 and 6. These he denies, and, as a further defense, he pleads the statute of limitations, for that more than six years have elapsed since the filing and auditing of saidfinal account. The plaintiff moved for a reference to state the account. The defendant objected, and insisted that he was entitled to judgment upon the pleadings. This action was commenced on the 6th of April, 1888. The court declined to give judgment as prayed for by defendant, and ordered a reference to state an account, without passing upon the plea in bar.

The plea of the statute as a defense to the action, if its applicability depended on any disputed fact, should have been disposed of before making an order of reference by the finding of the jury, or of the court with the consent of the parties. But there was no controversy here as to the facts, and hence a questiou of law was raised which it was the duty of the court to decide, and thus put the defense out of the way, or put an end to the action, as the court should determine. It was irregular to postpone the ruling until after a reference and report, even though it was reserved, and the defendant was entitled to a ruling upon the point; and if the objection is valid, and a fatal impediment to the prosecution of the action, the refusal to pass upon it, made as it was at the proper time, was the denial of aright, and in effect an adverse ruling, open to correction as error in an appeal to this court, as decided in numerous cases. Dean v. Ragsdale, 80 N.C. 215; Sloan v. McMahon, 85 N.C. 292; Commissioners v. Raleigh, 88 N.C. 120; Humble v. Mebane, 89 N.C. 410; Grant v. Hughes, 96 N.C. 177, 2 S. E. Rep. 339.

The inquiry is then presented whether, upon the admitted facts, the action is obstructed by the statutory bar by the lapse of time since the filing and auditing the final administration account in the office of the clerk. It will be noticed that a distinction is made in the enactment that interposes a barrier to suits prosecuted against the personal representative in his fiduciary capacity, upon the liability that results from it, and those which seek to enforce the obligation created by his bond. The creditor must bring his action within seven years next after the qualification of the representative, "and his making the advertisement required by law for creditors of the deceased to present their claims, where no personal service of such notice in writing is made upon the creditor, " and this bar is applicable alike to a surety to the debt. Code, § 153, subsec. 2. To give effect to this provision, both conditions must concur and be shown, —the prescribed period of inaction, and the making the advertisement directed in the Code. Cox v. Cox, 84 N.C. 138. The action upon the bond, as superadding a legal to an equitable obligation, incurred in the assumption of the office, must be begun "against any executor, administrator, collector, or guardian on his official bond within six years after the auditing of his final accounts by the proper officer, and the filing of such audited account." Code, § 154, subsec. 2. While the sureties have this protection in common with their principal, they have a further exoneration, unless sued within three years after breach of the bond. Id. § 155, subsec. 6.

The rulings upon this subject, in cases that have come before the court requiring a construction to be put upon the statute, do not seem to be in entire harmony, yet on examination they will be found to be so. In Bushee v. Surles, 77 X. C. 62, the action was for the recovery of the distributive shares claimed by the plaintiffs against the administrator of one Patience Bushee, and, delivering the opinion, Bynum, J., says: "The defendants relied on the statute of limitations in the court below, but do not press the point here. The statute does not run in favor of administrators against the suit of the next of kin for their distributive shares." In Vaughan v. Hines, 87 N.C. 445, the suit was instituted by the administratrix de bonis non of one Henry Vaughan, appointed on February 21, 1881, on April 4th thereafter, against a surety to the bond of the former administrator, who died in 1874, to recover the unadininistered assets in his hands. The recovery was resisted on the ground that more than six years had passed since the return of the final account by the deceased in May, 1873, before the issuing of the summons. It was held that the statute was a bar to the action, and this ruling was sustained in this court. This was an action on the bond, not at the instance of the next of kin, but of the succeeding administrator, and yet it was declared that the statute began to run against the next of kin, and continued to run against the plaintiff. This determines, in effect, that in an action on the bond it must be prosecuted within the six.years after the filing the specified account, as well by the next of kin as by creditors, in order to escape the statutory obstruction. In Grant v. Hughes, 94 N.C. 231, the administrator de bonis non sued the executor of the first administrator for an account and settlement, and the qualification of the former was during the same year as the death of the latter, and the suit was instituted shortly after the plaintiff's appointment. The defense was twofold, —the alleged conclusiveness of the final account of the state of the assets, and the bar of the statute. Both objections were overruled, and Merrimon, J., speaking for the court, declares: "The court properly held that the statute of limitation invoked by the defendant did not bar the action. The action is not brought upon the official bond, as administrator of the testator of the defendant. It is brought to compel an account and settlement of the estate of the intestate of the plaintiff in his hands in his life-time. He was a trustee of an express trust, and the statute of limitation did not apply." In Andres v. Powell, 97 N.C. 155, 2 S. E. Rep. 235, the action was by the administrator de bonis non of one A. J. Shipman against the executors of A. F. Powell, one of the sureties to the ad-ministration bond of J. W. Ellis, the first administrator, who relied upon the six-years bar under section 154, and the defense, as in Vaughan v. Hines, supra, was sustained.

This review of the adjudications establishes the proposition that confines the operation of the section which fixes the filing and auditing the final account, as the initial point at which the statute begins to run, to actions upon the bond for a breach of its obligations, but leaves the representative, in his fiduciary capacity, exposed to the demand of the fiduciary or creditor; the latter losing his remedy under the conditions set out in section 153. It would be a singular, and not to be accepted, result, unless plainly declared, that the representative holding the trust fund in his hands, an uncontested residue of the estate, could, after the defined period, disown responsibility to any one therefor, and keep and apply the fund to his own use; and this might happen when there has been no violation of fiduciary duty under the bond or otherwise, and when the estate is kept intact awaiting the demand of the party entitled to it. It is most obvious this was not intended in the discriminating provisions of the statute, and that the representative is left, under such circumstances, responsible as any other trustee. There was no error, then, in disregarding the plea, which is unavailing as a defense to the action, and in ordering the reference; the reservation of the ruling upon it being without prejudice to the appellant.

We do not mean, however, to say that in no case does the statute bar the next of kin. Until a final account is filed and audited, there can be no bar;...