Marshall v. Kemp, 190 N.C. 491 (1925)

Nov. 18, 1925 · Supreme Court of North Carolina

190 N.C. 491

H. J. MARSHALL, Administrator of FRANK RYAN, Deceased, v. E. T. KEMP and U. S. FIDELITY & GUARANTY COMPANY OF BALTIMORE.

(Filed 18 November, 1925.)

I. Executors and Administrators — Trusts—Good Faith — Ordinary Care— Insurer — Officers.'

An executor or administrator is not held to be an insurer in executing tbe trust arising from sucb position, but only to act in good faitb, with due diligence and ordinary care, in accordance with tbe responsibility of bis office.

2. Same — Evidence—Directing Verdict — Appeal and Error — New Trials.

Where an administration of tbe estate of tbe decedent is contested upon tbe ground that invalid letters bad been issued to him by tbe clerk of tbe Superior Court of tbe wrong county, and it has been determined against him acting in good faitb on appeal to tbe judge of tbe Superior Court, and by the Supreme Court on further appeal, an instruction that fixes tbe liability of tbe administrator and bis bondsmen if this evidence is accepted by the jury, for a deposit he bad made in a bank that bad since become insolvent, is reversible error, it being for them to determine further as to whether he bad acted in good faitb and tbe care required in sucb instances.

Stacy, C. J., not sitting.

Appeal by defendant from Dunn, J., at May Term, 1925, of New HANOVER.

Frank Ryan died in Pender County 1 August, 1922. On 14 August, 1922, letters of administration upon bis estate were issued by tbe clerk of tbe Superior Court of New Hanover to tbe defendant Kemp, wbo was a resident of Brunswick County; and afterwards (on 25 September) similar letters were issued to tbe plaintiff by tbe clerk of tbe Superior Court of Pender. Thereafter (29 September), tbe plaintiff filed a petition before tbe clerk in New Hanover to recall tbe letters issued to Kemp and to remove bim from tbe office of administrator on tbe ground that tbe deceased at tbe 'time of bis death was domiciled in Pender County. C. S., 1. Tbe petition was allowed and tbe appointment of Kemp was revoked on 9 October. Upon Kemp’s appeal to tbe Superior Court tbe clerk’s order was affirmed and upon bis appeal to tbe Supreme Court tbe judgment of tbe Superior Court was affirmed. In re Ryan, 187 N. C., 569. At tbe time of bis death tbe intestate bad on deposit in tbe Liberty Savings Bank, of Wilmington, tbe sum of $2,489.30; and after bis qualification as administrator tbe plaintiff drew a check for said amount and tbe bank refused to make payment for tbe alleged reasons that it did not recognize tbe plaintiff as tbe personal representative of tbe deceased and that tbe defendant’s attorney objected to tbe payment. The plaintiff alleged that the administration in New Hanover had been procured by an agreement between Thomas E. Cooper and the defendant Kemp for the purpose of keeping the deposit in said bank and preventing its withdrawal therefrom.

The defendant Kemp filed an answer admitting the appointment of the two administrators, denying certain allegations.of the complaint, and alleging by way of further defense that he had executed a bond with his codefendant as surety, and that all acts performed by him as administrator had been directed and supervised by the clerk for the purpose of preserving and protecting the estate; and further that his check for ■the amount of the' deposit had been dishonored because the plaintiff had objected to its being, paid. The Fidelity and Guaranty Company filed an answer of similar import, setting out the bond it had executed as surety for Kemp. The money remained in the Liberty Savings Bank until the day of its failure. On 2 September, 1924, the plaintiff brought this suit to recover of the defendants the amount of his intestate’s deposit namely, $2,489.30. On the trial two- issues were submitted to the jury:

1. Did the defendant wrongfully refuse to pay over to the plaintiff as administrator of Frank Ryan, the money on deposit in the Liberty Savings Bank to' the credit of said Frank Ryan? Answer: Yes.

2. "What damages, if any, has plaintiff sustained on account of said wrongful refusal to pay over said moneys? Answer: $2,489.30, with interest from 25 September, 1922.

The following instruction was given:

“The court being of the opinion, as a matter of law, that the refusal of the defendant to pay over said moneys was wrongful, and that thereafter he held said moneys at his peril, it being admitted that the letters of administration issuing to the said defendant were declared void and canceled by the clerk of this court on 9 October, 1922, the court instructs the jury upon the first issue, if it finds the facts as testified to by all the witnesses, to answer the first issue yes and the second' issue $2,489.30, with interest from 25 September, 1922.”

Judgment was rendered in favor of the plaintiff and the defendants appealed.

J ohn D. Bellamy & Sons for plaintiff.

Rountree & Carr for defendants.

AdaMS, J.

The clerk of the Superior Court of New Hanover revoked Kemp’s letters of administration on 9 October, 1922. The jury were instructed that Kemp thereafter held the money on deposit at his peril and if they found the facts to be as the witnesses had testified, the answer to the first issue should be “Yes,” and to the second the full amount of the plaintiffs claim with interest thereon from 25 September, 1922. The instruction implied either that Kemp’s liability was definitely fixed when the letters were recalled or that by virtue of his qualification as administrator he was an insurer of the assets coming into his hands. In our opinion neither of these positions can be maintained.

The liability of a public officer differs from that of a trustee or a bailee. The general rule is that an officer who enters into an obligation to account for money received by virtue of his office insures the safety of all funds received by him in his official capacity, — insures, as Justice Rodman said, against loss by any means whatever, including such losses as arise from the act of God or the public enemy. Comrs. v. Clarke, 73 N. C., 255. In Havens v. Lathene, 75 N. C., 505, Chief Justice Pearson expressed the same opinion by saying that such officer is accountable as a debtor who can relieve himself only by payment. His liability is founded on public policy and the evil consequences which would follow from a less rigid rule as well as on the language of his official bond. Wilmington v. Nutt, 78 N. C., 177; Morgan v. Smith, 95 N. C., 396; Board of Education v. Bateman, 102 N. C., 52; Presson v. Boone, 108 N. C., 78; Smith v. Patton, 131 N. C., 396. See, also, U. S. v. Prescott, 3 How., 578, 11 Law Ed., 734; U. S. v. Morgan, 11 How., 154, 13 Law Ed., 643; U. S. v. Dashiell, 4 Wall., 182, 18 Law Ed., 319; Smythe v. U. S., 188 U. S., 156, 47 Law Ed., 425.

The rule laid down for the administration of estates is not so exacting. An executor or administrator is held to the liability of other trustees; he is therefore not an insurer. He must faithfully execute his trust and act in relation to it with due diligence. Eor negligence or a want of ordinary care which evidences bad faith of course he is answerable. “Administrators, like other trustees,” said the Court in Woody v. Smith, 65 N. C., 116, “are not to be held liable as insurers or for anything but mala fides or want of reasonable diligence.” All that sound public policy requires is good faith and ordinary care (Nelson v. Hall, 58 N. C., 32) ; for, as suggested by Chief Justice Nash (Deberry v. Ivey, 55 N. C., 370), if they cannot be protected by an honest endeavor to perform their duties responsible men will rarely incur the hazard of an administration on a decedent’s estate. Beall v. Barden, 39 N. C., 76; Williamson v. Williams, 59 N. C., 62, 66; Atkinson v. Whitehead, 66 N. C., 296; Dortch v. Dortch, 71 N. C., 224; Mendenhall v. Benbow, 84 N. C., 646, 648; Torrence v. Davidson, 92 N. C., 437; Syme v. Badger, 92 N. C., 706, 715; Halliburton v. Carson, 100 N. C., 99, 108; Moore v. Eure, 101 N. C., 11, 16; Tayloe v. Tayloe, 108 N. C., 70; Smith v. Patton, supra; Twiddy v. Mullen, 176 N. C., 16; Cobb v. Fountain, 187 N. C., 335.

The duty of an administrator in dealing with assets in his possession is to he measured by the standard set up in these cases. Kemp’s liability, therefore, is not to be determined as a matter of law solely by tbe clerk’s order setting aside tbe letters tbat bad been issued to him in New Hanover County. Tbe plaintiff contends tbat these letters were void because tbe clerk in New Hanover was without jurisdiction; but this was tbe question tbat Kemp undertook to contest. It is true, be admitted tbat Ryan at tbe time of bis death was a resident of Pender; but in doing so be did not necessarily admit tbat Ryan bad bis domicile there. C. S., 1; Roanoke Rapids v. Patterson, 184 N. C., 135; In re Martin, 185 N. C., 473; Thayer v. Thayer, 187 N. C., 573; Tyer v. Lumber Co., 188 N. C., 268. And while be was not required in law to appeal from tbe clerk’s order (Pate v. Oliver, 104 N. C., 458), be bad tbe legal right to appeal therefrom to tbe Superior Court and from an adverse ruling thence to tbe Supreme Court. Constitution, Art. IV, secs. 12, 22; C. S., 633, 637, 638; Rush v. Steamboat Co., 67 N. C., 47; Rhyne v. Lipscomb, 122 N. C., 650.

Findings of fact are essentially involved in tbe question whether in contesting tbe right to administration and tbe plaintiff’s claim to tbe deposit Kemp was moved only by an honest purpose to protect tbe assets in bis bands and to discharge tbe duties imposed upon him by tbe law, or whether be was in collusion with Cooper or was impelled by an evil motive or acted in bad faith or by perversely contending with tbe plaintiff caused tbe loss of tbe money, having reasonable cause to believe tbat be was not entitled to tbe letters of administration. Any competent evidence relating to these contentions should have been submitted to tbe jury either under tbe first issue in tbe record or under tbe issue tendered by tbe defendant; and for error in tbe instruction given tbe defendants are entitled to a new trial.

New trial.

Stacy, C. J., not sitting.