In re Gorham, 177 N.C. 271 (1919)

April 2, 1919 · Supreme Court of North Carolina

177 N.C. 271

In re E. E. GORHAM, Administrator of JOHN C. GORHAM, Deceased.

(Filed 2 April, 1919.)

1. Evidence — Deceased Persons — Transactions and Communications — Statutes — Executors and Administrators — Dower—Principal and Agent.

Where the administrator has brought proceedings to sell the lands of the intestate to pay his debt, subject to widow’s dower, and it appears that only a part of the lands was owned by the intestate, and that he had taken title in the other part to facilitate transactions as selling agent for a bank, but to which proceedings the bank was not a party, the officers of the bank have no such direct legal or pecuniary interest in the result of a subsequent action, between the administrator and the widow, as would disqualify them from testifying to the fact of agency, under the provisions of Revisal, sec. 1631, in favor of the administrator and against the widow claiming her right of dower in the whole of the lands; and where their testimony was as to the contents of a written contract of such agency, it was not necessarily of a conversation or transaction between the bank and the deceased.

2. Judgment — Estoppel—Executors and Administrators — Sales—Assets.

Where a decree, in proceedings by an administrator to sell lands to make assets to pay a debt due by the estate to a bank, the bank not having been made a party, orders the lands to be sold subject to the widow’s right of dower, leaving the entire funds subject to the further order of the court, and it appears that thereafter the administrator ascertained that the intestate acquired title to a part of the lands only as the selling agent of the bank, it does not estop the administrator from showing the facts of the agency and the amount due the bank, this matter not having been adjudicated or passed upon in the special proceedings.

' 3. Dower — Widows—Rents—Sales—Interest.

The widow’s claim of dower in the lands of her deceased husband, while paramount to that of the heir, is not an estate but a right until allotment, continuing from the death of her husband; and from that time she is entitled to damages, measured by the rental value, for the-time she has been kept out of possession; and in case of sale of the lands, to make assets to pay the debts of the deceased, interest on her proportionate part from the sale until payment, charging her interest, in return, for such sums as she may be indebted to the estate. The common-law principles relating to this subject and the statutory changes, discussed, by Mr. Justice Allen.

4. Same — Heir in Possession — Election of Widow.

Upon the principles allowing the widow the rents from the lands of her deceased husband by way of damages for being kept out of her dower interest therein, the heir is chargeable only with the rents received while dealing with the property in good faith, or for the reasonable value of the premises if occupied by himself; and this principle obtains as to the proceeds of the sale of her dower lands when bought by her, except, at her election, she may take one-third of the rents collected after the sale in lieu of interest for the period covered by the rents, and she will be-chargeable with interest on the purchase price.

5. Courts — Equity—Clerks of Court — Jurisdiction—Executors and Administrators — Sales—Assets.

While a statutory method by proceedings before the court is- provided for the assertion by the widow of her right of dower in the lands of her deceased husband, the jurisdiction of the court of equity has not been disturbed, though usually some equitable element, such as the necessity for an accounting, must be alleged in the suit.

Appeal by both parties from Lyon, J., at chambers, on case agreed,, February, 1919, from Cumberland.

A controversy having arisen between E. E. Gorham, administrator of the estate of John C. Gorham, and the commissioner appointed to sell the lands of his intestate to create assets for the payment of the debts, of the estate, on the one hand, and Mrs. Georgia Chedester, the intestate’s widow, who has since married II. C. Chedester, on the other, and wishing the same to be determined without action they submitted a case, the material parts of which are as follows:

1. That John C. Gorham died intestate, 28 February, 1910, leaving-him surviving the aforesaid widow, a brother, and sisters.

2. That E. E. Gorham qualified as administrator upon his estate 10-March, 1910, the widow renouncing in his favor.

3. That on .... May, 1911, said administrator filed a petition to sell intestate’s lands to make assets to pay his debts, to which ex parte proceeding the widow and heirs at law of the intestate and F. H. Cotton and wife, lia II. Cotton, as well as E. E. Gorham as an individual, were parties, which petition and all of the orders, reports, judgments, and decrees therein are hereby made a part hereof and asked to be so considered.

4. That at a public sale of some of the lands on 16 December, 1912,, the intestate’s widow became the successful bidder for the first or residence tract, at the price of $9,200, and upon report thereof the'same was confirmed on 12 May, 1913.

7. That by agreement the $9,200 was not paid but was to await the determination of her claims against the estate, and she and the administrator have been constantly endeavoring to ascertain the exact amount due her by him so that she could pay the difference, if any, between such sum and the amount of her said bid.

That the administrator rented the said residence from 10 July, 1912, until 10 October, 1917, the amount of rent ($1,890) being used by him as assets in his- hands, for the payment of debts of the estate, and his annual accounts are made a part hereof and asked to be so considered.

13. That prior to the filing of the aforesaid petition in May, 1911, there was another special proceeding in said court, to which the administrator of John O. Gorham and the intestate’s widow and heirs at law were parties, and also F. H. Cotton and his wife, numbered 2,066 and 2,214 on the special proceeding docket, in which E. E. Gorham was appointed commissioner to sell the McKethan lots, Nos. 5, 6, 7, and 9, alleged and adjudged to have been owned by intestate and F. H. Cotton, under authority of which the said commissioner sold lots 5, 6, and 7 for $2,900 on 1 December, 1910, and lot No. 9, 8 February, 1912, for $1,600. It was further alleged in the petition and adjudged by the court that the indebtedness due the bank on the purchase price of said lots was about $2,600. The aforesaid proceeding is made a part hereof and asked to be so considered. The administrator now contends that his intestate and F. H. Cotton were not in fact the owners of the said McKethan lots, but were the selling agents for the Bank of Fayetteville, who were the owners, and that they had taken title thereto to facilitate a conveyance of the same; that under the terms of the selling agreement with the bank the administrator turned over all proceeds of sale to the bank and received $275 as full payment of the amount due the estate of John C. Gorham on the sale of all the said lots; and that the allegations of the petition and the judgment rendered thereon were based upon such information as the administrator then had as to the ownership of said lots and the indebtedness due thereon, and which information he believed to be true at the time said petition was filed and judgment rendered, but which information he afterwards found to be incorrect and the facts to be as hereinbefore stated. Mrs. Ohedester pleads the said proceeding as an estoppel against such claim and contention. She denies that John O. Gorham and F. H. Cotton were not the owners of said lots. Subject to her denial and plea of estoppel as aforesaid, it is agreed that the judge to whom this controversy is submitted may bear competent evidence on tbis point and find tbe facts in regard thereto.

It was also agreed that tbe administrator was due Mrs. Chedester certain amounts from tbe proceeds of sales of certain lands as tbe value of her dower interest, but tbe parties could not agree as to tbe dates from which these amounts would'bear interest.

Tbe special proceedings referred to in tbe findings 3 and 13 were ex parte and were for tbe purpose of selling tbe McKethan lots for assets.

It was alleged in tbe petition in these proceedings that E. H. Cotton was owner of an undivided one-half interest in said lots and that tbe heirs of John C. Gorham were tbe owners of tbe other one-half, subject to tbe dower, and that all of said interests were subject to tbe claim of tbe Fourth National Bank of Fayetteville for $2,600, tbe balance of purchase money, and tbe decree of confirmation in tbe proceedings were in accordance with tbe allegations, in tbe petition and recited tbe several interests as therein set forth.

Tbe decree further required tbe administrator to collect tbe purchase money, total of tbe McKethan lots $4,500, pay off tbe bank debt, and hold one-half of tbe balance for distribution under tbe orders of tbe court.

Tbe bank was not a party to the proceeding.

Tbe McKethan lots were conveyed by tbe Bank of Fayetteville to tbe Southern Real Estate Company and then by tbe Southern Real Estate Company to Frank II. Cotton and John C. Gorham.

At tbe bearing of tbe agreed case tbe administrator was permitted to prove by John O. Ellington and Dr. Lilly, officers and stockholders of tbe bank, that at tbe time Cotton and Gorham took tbe title to said lots there was a written agreement, which was lost, that they would bold tbe title to tbe lots, as selling agent for tbe bank, to repay a larger sum than $2,600, and that after tbe sales were made and upon a settlement in accordance with tbe agreement that there was only $275 which went into tbe bands of tbe administrator from tbe McKethan lots, and this was paid as commissions for making tbe sales.

. Mrs. Chedester objected to tbis evidence: (1) Because Ellington and Lilly were incompetent to testify under section 1631 of the Revisal. (2) Because tbe administrator was estopped by tbe special proceedings to show that more than $2,600 was .due to tbe bank.

His Honor found upon tbis evidence “that Gorham, administrator and commissioner as aforesaid, is not estopped by tbe proceedings for tbe sale of said property, and that Cotton and Gorham held tbe same as selling agents for tbe bank, and that intestate’s estate was entitled to $275 as commissions, and that Mrs. Ckedester is not entitled to dower in said property.”

Mrs. Ckedester again excepted.

His Honor entered judgment upon tke agreed case from wkick Mrs. Ckedester appealed, assigning as error, in addition to tke exceptions before stated, tke following:

1. “For tkat tke court did not find and adjudge tkat Mrs. Ckedester is entitled-to interest on tke value of ker dower from 28 February, 1910, tke date of tke deatk of ker former kusband, John Gorkam, and tkat if ske is not entitled to it from tkat date, tken from tke filing of tke petition for tke sale of tke McKethan lots as to tkem, to wit, 19 November, 1910, and from tke filing of tke petition as to all tke otker lands, to wit, May, 1911; and tkat in no event skould tke. interest be calculated for a less period of time tkan from 10 Marck, 1912, wkick is two years after tke qualification of E. E. Gorkam as administrator, as claimed and contended for in tke case agreed, paragraphs 15 (a) and (&).

2. “For tkat tke court did not find and adjudge tkat ske is entitled to interest on tke value of ker dower in tke home place in accordance with ker contentions as above set forth in tke twenty-second assignment, instead of from 18 September, 1916, tke date of Judge Winston’s judgment in tke former action between tke parties concerning ker claim for lien on said property, during which time tke administrator received tke rents therefor.”

Tke facts and rulings thereon entering into tke judgment of Judge Winston will be found in 173 N. C., 272.

Q. K. Nimochs attorney for administrator.

Sinclair & Dye attorneys for Mrs. Ghedester.

Allen, J.

Tke appeal presents three questions for decision:

1. Were tke witnesses Ellington and Lilly competent under section 1631 of tke Revisal to testify tkat Cotton and Gorkam held tke title to tke McKetkan lots as selling agents for tke bank of wkick they were stockholders ?

2. If competent to testify, is tke administrator estopped by tke special proceedings to sell lands for assets?

3. What are tke rights of tke widow of John C. Gorkam as to interest on tke value of ker dower in tke proceeds of lands sold and as to rents ?

1. Tke interest, wkick disqualifies one from testifying under section 1631 of the Revisal, is a direct, legal or pecuniary interest in tke event of tke action (Helsabeck v. Doub, 167 N. C., 205), and as tke bank has been paid in full, and there is no effort to make it refund any part of the money collected, and it is in no way interested in the result of this action, there is nothing which disqualifies the witnesses Ellington and Lilly to testify.

Besides,- they were not necessarily testifying to a conversation or transaction with the deceased but as to the contents of a lost paper, and their testimony was in behalf of the administrator and not against him.

2. The decree in the petition to sell land for assets did not purport to finally adjudicate the rights of the widow as to dower in the proceeds of sale, and, on the contrary, it only gave her a dower right in the interest of John C. Gorham after payment of the amount due the bank, stated to be $2,600, and left the entire funds subject to the further order of the court.

The bank was not a party to the proceeding, and its debt was not in issue nor was it litigated, and the amount was stated simply as one of the reasons for asking for a sale of the lands, and the proceeding therefore cannot operate as an estoppel to prevent the parties from showing the true amount due to the bank.

The case of Latta v. Russ, 53 N. C., 111, which is approved in Austin v. Austin, 132 N. C., 265, and in Trust Co. v. Stone, 176 N. C., 272, is in point.

There a petition was filed to sell land for assets, in which the several debts were stated and decrees of sale and confirmation entered, the lands sold, and the proceeds applied to the payment of debts. The administrator then died and an action was commenced for an accounting of the estate, in which a referee found that, allowing credits for vouchers, there remained in the hands of the administrator $882.22, but if the debts be allowed as stated in the decrees, there would be in hand only $252.45.

The judge of the Superior Court held that the decrees were binding on the parties as to the amount of the debts as stated in the petition, but this was reversed on appeal, the Court saying: “We do not concur with his Honor in the view taken by him of the question reserved, in respect to the effect of the decree giving the administratrix license to sell the land. That decree was an adjudication that it was necessary to sell and is conclusive in favor of the title acquired by the purchaser, but it is not conclusive of the question of debt or no debt as against or in favor of creditors, or as against or in favor of the heirs.”

As the evidence was competent and as there is no estoppel, the finding thereon by his Honor is binding on us and concludes the claim of the widow to dower in the McKethan lots.

3. The claim of the widow for dower, while paramount to that of the heir, is not an estate but a right until allotment. Spencer v. Weston, 18 N. C., 214. “It is true, indeed, that she cannot enter until assignment made, and tbat in point of tenure, for feudal reasons, sbe bolds of tbe beir or of tbe person in wbom is tbe reversion of tbe land for dower; but, in point of title, ber estate does not arise or take effect out of tbe ownership of tbe beir or other person making tbe. assignment, but is considered a continuation of tbat of the husband; and although between tbe death of tbe husband and tbe assignment of dower a seizin of tbe beir or other person intervenes, yet upon tbe assignment sbe is in by relation from tbe death of tbe husband, for Tbe law adjudgeth no mesne seizin between tbe husband and wife.’ Perkins, s. 411, Co. Lit., 241.” Norwood v. Marrow, 20 N. C., 584, approved in Love v. McLure, 99 N. C., 295, and in other cases.

This being tbe nature of tbe estate, it was held at common law to be tbe duty of.the beir to allot dower to tbe widow immediately upon tbe death of tbe husband, and under Magna Cbarta sbe could remain in tbe mansion bouse forty days until tbe allotment was made, called ber right of quarantine, and, upon default on tbe part of tbe beir, sbe could sue out ber writ of dower; but, although establishing ber right, sbe could not recover damages, nor was sbe entitled to an accounting of tbe rents and profits. This remained tbe law until tbe Statute of Merton, 20 Henry III, which not only perfected tbe process for tbe assignment of tbe dower, but also stimulated tbe beir to activity by permitting tbe recovery of damages for tbe detention of tbe dower.

Tbe proceeding was at first in tbe courts of tbe common law, but tbe broader and more generous rules of equity being better adapted to adjust tbe rights between tbe beir and tbe widow, it soon became recognized as within tbe jurisdiction of courts of equity (9 R. C. L., 608 et seep), and in this State, while a statutory remedy by proceeding before tbe clerk is afforded, tbe jurisdiction of tbe courts of equity has not been disturbed, although usually some equitable element, such as tbe necessity for an accounting, must be alleged. Efland v. Efland, 96 N. C., 488, and cases cited.

Tbe recovery under tbe Statute of Merton, and under our statutory remedy, was “Not rents (which suppose a privity of estate) but damages for tbe detention of ber dower, in assessing which tbe value of tbe rents is tbe proper guide to tbe jury” (Sutton v. Burrows, 6 N. C., 81), and it was held, with some hesitation, tbat at law tbe damages could only be recovered from demand. (Spencer v. Weston, 18 N. C., 216, approved Brown v. Morrisey, 126 N. C., 772.) “But it has been long settled tbat in equity a widow is entitled to an account of tbe mesne profits from tbe death of tbe husband up to tbe assignment of dower. Indeed this was one of tbe grounds upon which tbat court assumed jurisdiction.” Pearson, J., in Campbell v. Murphy, 55 N. C., 364.

Applying these principles, this proceeding being in equity, we are of opinion that the widow, Mrs. Chedester, is entitled to an accounting of the rents and profits from the death of her husband up to the time of the sales of the several lots of land in which she was entitled to dower, and after the sales to the interest upon the value of her dower in the proceeds of the sales, and the case of Campbell v. Murphy, supra, is a direct authority upon both questions.

In that case Marsden Campbell, the husband, died in 1841 and his heirs rented the property until the buildings were destroyed by fire in 1843. In 1844 the land was sold under order of court for $4,000, and the court held that the widow was entitled to recover the rents from 1841, the time of the death of the husband, until 1843, this being the time when the heirs rented the property, and that she was entitled to interest upon one-third of $4,000 for which the land was. sold under order of court.

The Court says: “It must be declared to be the opinion of the Court that the plaintiff is entitled to recover from the defendant Murphy the interest upon one-third of the sum for which the lot was sold at the sale made by the clerk and master mentioned in the pleadings, to wit, $4,000, from the date of that sale up to the taking of the account, and also interest upon such third part of the purchase money to be paid annually up to the time of her death, for which the plaintiff will have lien upon the premises as security, unless she elects to take the bond of the said Murphy, with approved sureties, in lieu thereof, or the plaintiff may elect to take a decree for such part of the purchase money aforesaid absolutely, with interest from the date of the sale, as is equal to the value of her life estate in one-third part thereof, as to which there may be a reference.” And. again: “These defendants insist that they are not chargeable with the rent received by them for the house from the death of the husband up to the time it was burned.

“There was no judgment for damages in a writ of right, or a writ of entry, or a writ of dower at common law, on the ground that the terre-tenanb, during the time he was seized, had performed the feudal services. Damages were given against a disseizor by statute in an assize of novel disseizin; and damages are given to the widow by the Statute of Merton in a writ of dower unde nihil; but it has been long settled that in equity a widow is entitled to an account of the mesne profits from the death of the husband up to the assignment of dower. Indeed, this was one of the grounds upon which that court assumed jurisdiction.”

It will be observed that under this doctrine the heir is not chargeable as a trustee, but only with the rents received while dealing with the property in good faith or for the reasonable value of the premises if occupied by himself.

These principles also cover the claim of the widow in the proceeds of the sale of the lot bought by her, except that she may, at her election, take one-third of the rents collected after the sale in lieu of interest for the period covered by the rents, and she will be chargeable with interest on the purchase price.

The judgment will be modified in accordance with this opinion after the parties have agreed upon the amounts allowed the widow or after the facts have been ascertained by a reference.

Modified and affirmed.