State ex rel. Martin v. McPherson, 210 N.C. 194 (1936)

May 20, 1936 · Supreme Court of North Carolina

210 N.C. 194

STATE OF NORTH CAROLINA, on Relation of MARY MARTIN, WILLIE GIBSON, NANNIE GIBSON, ELIZABETH GIBSON, and LEE GIBSON, v. H. R. McPHERSON, Administrator of MITCHELL MARTIN, and HARRY N. LEVEY, Ancillary Receiver for THE NATIONAL SURETY COMPANY.

(Filed 20 May, 1936.)

Executors and Administrators K c—

An executor and the surety on his bond may not be held liable for loss to the estate by reason of the failure of the bank in which the administrator had deposited funds of the estate in the absence of evidence that the administrator had actual or constructive knowledge that the bank was in an unsound condition.

Appeal by tbe plaintiffs from Sink, J., at October Term, 1935, of Stokes.

Affirmed.

Tbe plaintiffs are the mother and tbe children of a deceased 'sister of Mitchell Martin, deceased. Tbe defendants are tbe administrator of Mitchell Martin, deceased, and tbe surety on bis bond.

Mitchell Martin died when a soldier in tbe American Expeditionary Forces. Tbe defendant McPherson qualified as administrator of Mitchell Martin on 27 January, 1930, and in tbe early part of June, 1930, collected from tbe United States Government tbe sum of $6,708.84, being a portion of tbe proceeds derived from a war risk insurance policy on tbe life of bis intestate, and deposited said amount in bis name as administrator in tbe Bank of Stokes County, at Walnut Cove, on 12 June, 1930. Tbe Bank of Stokes County was closed by tbe Commissioner of Banks on 18 November, 1930, and is now in tbe course of liquidation. Tbe Bank of Stokes County was insolvent on 18 November, 1930.

This action was commenced on 25 September, 1934, to recover of tbe administrator and tbe surety on bis bond tbe amount of tbe loss which tbe plaintiffs, as next of kin and distributees of tbe estate of Mitchell Martin, have suffered on account of tbe failure of tbe said administrator to pay over to them tbe amount collected by him. It is alleged in tbe complaint that tbe loss was caused by tbe negligence of tbe defendant administrator in placing tbe money on deposit in tbe Bank of Stokes County and allowing it to remain there until tbe bank was closed.

The evidence tended to show that the money was on deposit therein for the four months and five days next preceding the closing of the Bank of Stokes County; that the administrator was cashier of the Farmer’s Union Bank and Trust Company of Stokes County at the time of its merger with the Bank of Stokes County on 7 March, 1926, but had had no connection, other than that of a depositor, with the consolidated bank since that date; that the administrator married the sister of the wife of the cashier of the Bank of Stokes County; that there were some rumors in Walnut Cove, where the administrator lived, during June and July, 1930, that the Bank of Stokes County was in “bad shape,” and some of the stockholders and depositors had said that they did not get any dividends and could not collect their deposits, but there was no evidence that the defendant administrator had any knowledge of such rumors, or heard such statements, or that the bank was insolvent at the time.

At the close of the evidence of the plaintiff, the defendants moved for judgment as of nonsuit, upon the ground that there was no evidence tending to show that the loss which the plaintiffs had suffered by reason of the deposit by the administrator of the funds of the estate of his intestate in the Bank of Stokes County was caused by his negligence. The motion was allowed, and the plaintiffs duly excepted.

From judgment dismissing the action, the plaintiffs appealed to the Supreme Court.

E. E. Eisner and E. M. Whitman for plaintiffs, appellants.

S. Gilmer Sparger and Kenneth M. Brim for defendants, appellees.

Per Curiam.

There is no evidence tending to show that the defendant administrator was negligent in depositing and allowing to remain in the Bank of Stokes County funds belonging to the estate of his intestate. Prior to and during the time such funds were in the bank the administrator had no notice that the bank was unsound, or would probably be forced to close its doors because of insolvency. Rumors that the bank was in “bad shape,” which he did not hear, and the fact that he was a brother-in-law of the cashier of the bank, considered with all the other attendant circumstances disclosed by the evidence, were not sufficient to put the administrator on notice that the bank was in an unsound condition prior to its closing, if such was the fact. Upon the authority of Stroud v. Stroud, 206 N. C., 668, this case is

Affirmed.