Linker v. Linker, 213 N.C. 351 (1938)

April 13, 1938 · Supreme Court of North Carolina

213 N.C. 351

CHARLES E. LINKER, Administrator of the Estate of L. B. LINKER, Deceased, v. CHARLES E. LINKER, Individually, and Wife, BERTHA A. LINKER; MAE WIDENHOUSE and Husband, E. A. WIDENHOUSE; NANNIE LEE BARNHARDT and Husband, L. H. BARNHARDT; J. B. LINKER and Wife, JEWEL LINKER; PEARL LINKER HARRIS; ROBERT L. LINKER and Wife, FAY LINKER; HELEN G. RITCHIE and Husband, E. S. RITCHIE; REALTY PURCHASE CORPORATION; EFIRD’S DEPARTMENT STORE, INC.; C. F. LITTLE; SOUTHERN COTTON OIL COMPANY, a Corporation; BUCKEYE COTTON OIL COMPANY, a Corporation; W. A. NEWELL; E. L. MORRISON, Trading as E. L. MORRISON LUMBER COMPANY; MRS. LOU A. TEETER, Administratrix of the Estate of M. F. TEETER, Deceased, and C. S. McCurdy.

(Filed 13 April, 1938.)

1. Executors and Administrators § 5: Descent and Distribution § 1—

Upon the death of a person intestate bis personal estate vests in his administrator and his lands descend to his heirs, subject to be sold only if the personalty is insufficient to pay debts of the estate, and the lands are not an asset of the estate until sold and the proceeds received by the administrator.

2. Executors and Administrators § 13a—

An administrator may sell lands of the estate only if the personalty is insufficient to pay debts of the estate, C. S., 74.

3. Executors and Administrators § 13d—

Where land is sold to malse assets to pay debts of the estate, so much of the proceeds of sale as is necessary to pay debts of the estate, is to be treated as personal assets, C. S., 55, but the surplus goes to the heirs as realty in the same manner as if the sale had not been had. C. S., 56.

4. Same: Descent and Distribution § 12 — Administrator may not hold heir’s share in surplus from sale to malee assets to pay heir’s debt to the estate.

Where lands are sold to make assets to pay debts, and a surplus remains in the hands of the administrator, the administrator is not entitled to hold the share of an heir in the fund to pay a debt, which is not an advancement, due the estate by the heir, since the heir’s right to his share in the surplus is the same as though the land had not been sold. O. S., 56.

5. Descent and Distribution § 14—

When an heir is entitled to a share in the surplus remaining after sale of lands to make assets to pay debts, judgment creditors of the heir whose judgments were docketed prior to the death of the ancestor are entitled to pro rata payment out of the heir’s share.

6. Judgments § 19d — Judgment creditors are entitled to share pro rata in property acquired by debtor subsequent to docketing of judgments.

When an heir acquires land or property to be treated as realty subsequent to the docketing of the several judgments against him, the judgment creditors are not entitled to priority in accordance with the date of the docketing of their respective judgments, but are entitled only to application of the property to the judgments pro rata. O. S., 614.

Appeal by plaintiff and by defendant, Mrs. Lon A. Teeter, Adminis-tratrix, from Rousseau, J., at October Term, 1937, of Cabarrus.

Special proceeding to sell land to make assets to pay debts, in which, plaintiff and judgment creditors of one of the heirs of intestate controvert disposition of such heir’s share of surplus funds.

The parties agree to facts substantially as follows: Charles E. Linker is duly qualified as administrator of L. B. Linker, deceased, who died intestate, possessed and seized of both personal and real property in Cabar-rus County, and leaving his son, J. B. Linker, and six others as his only distributees and heirs at law. On the date of the death of L. B. Linker, his son, J. B. Linker, was indebted to him in the sum of $5,199.07 — an “unsecured indebtedness, and not advancements.” On said date there were judgments against J. B. Linker in favor of M. F. Teeter, W. A. Newell, Buckeye Cotton Oil Co., Standard Oil Co., Southern Cotton Oil Co., C. F. Little, and Efird’s Department Store, respectively, in various amounts, duly docketed in Cabarrus County in priority of time in the order named — that of M. E. Teeter having been docketed first. M. E. Teeter is now dead and Mrs. Lou A. Teeter is the administratrix of his estate. There being an insufficiency of personal property to pay the debts of the estate of L. B. Linker, the plaintiff instituted this special proceeding to sell the land of which L. B. Linker died seized in Cabarrus County to make assets to pay debts, and same was duly sold. After applying the proceeds to the payment of the debts there remained a surplus of $463.47 for each of the seven heirs at law. With reference to the J. B. Linker share, it being agreed that he is a nonresident, the parties contend: (1) Plaintiff, as administrator of L. B. Linker, contends tbat be bas and sbo.uld exercise tbe right to retain that share to apply on the indebtedness due by J. B. Linker to his father, the intestate; (2) Mrs. Lou A. Teeter, administratrix of M. F. Teeter, deceased, contends that the whole amount should be applied to the judgment of M. F. Teeter against J. B. Linker, and (3) W. A. Newell and the other judgment creditors contend that the whole amount should be distributed pro rata among and in proportion to the amounts due to all judgment creditors whose judgments were docketed against J. B. Linker at the date of the death of L. B. Linker, irrespective of priorities in date of docketing.

From judgment directing the distribution of the fund in accordance with the third contention the plaintiff, administrator of L. B. Linker, deceased, and the defendant, Mrs. Lou A. Teeter, administratrix of M. F. Teeter, deceased, each appeals to the Supreme Court and assigns error.

Armfield, Sherrin & Barnhardt for plaintiff, appellant.

W. 3. Bogle for Mrs. Lou A. Teeter, defendant, appellant.

H. 8. Williams for W. A. Newell, defendant, appellee.

Winborne, J.

Upon the facts as stated these questions arise:

I. Where there is a surplus of proceeds of the sale of land to make assets to pay debts of the estate of an intestate after such debts have been paid, has the administrator of the intestate the right to retain and apply the share of an heir in payment of an indebtedness, not an advancement, due by such heir to the intestate when judgment creditors ’ of such heir hold judgments duly docketed in the county where the land is situated at the date of the death of the intestate ?

2. If not, is the judgment creditor whose judgment was first docketed entitled to be paid in full before such other judgment creditors?

The answer to each is “No.”

Upon the death of an intestate his personal estate vests in the administrator, and the lands descend to his heirs, subject to be sold, if necessary, to make assets to pay debts of the intestate. Price v. Askins, 212 N. C., 583, 194 S. E., 284; Harris v. Russell, 124 N. C., 547, 32 S. E., 958; Avery v. Guy, 202 N. C., 152, 162 S. E., 217.

“A personal representative has no control of the freehold estate of the deceased unless it is vested in him by will, or where there is a deficiency of personal assets, and he obtains a license to sell real estate for the payments of debts. . . . The heir of the testator is not divested of the estate which the law casts upon him by any power or trust until it is executed.” Floyd v. Herring, 64 N. C., 409; Speed v. Perry, 167 N. C., 122, 83 S. E., 176, and cases cited.

Land is not an asset until it is sold and tbe proceeds received by tbe personal representative. Fike v. Green, 64 N. C., 665; Edenton v. Wool, 65 N. C., 379; Hawkins v. Carpenter, 88 N. C., 403; Wilson v. Bynum, 92 N. C., 718.

Land of wbicb an intestate dies seized may only be sold wben tbe personal assets of tbe intestate are insufficient to pay bis debts. C. S., 74; Avery v. Guy, supra.

0. S., 55, provides that “all proceeds arising from tbe sale of real property for tbe payment of debts . . . shall be deemed personal assets in tbe bands of tbe executor, administrator, or collector, and applied as though tbe same were the proceeds of personal assets.”

But under C. S., 56, it is provided that “all proceeds from tbe sale of real estate . . . wbicb may not be necessary to pay debts and charges of administration shall, notwithstanding, be considered real assets, and as such be paid by tbe executor, administrator, or collector to such persons as would have been entitled to tbe land bad it not been sold.”

Applying these principles and statutes to tbe facts of tbe present case, an undivided interest in tbe land of L. B. Linker, immediately upon bis death, vests in J. B. Linker, subject to be divested only in the event that tbe personal assets of tbe estate be insufficient to pay tbe debts of tbe estate, and then only to tbe extent that it is necessary to use tbe proceeds of sale of it to pay said debts. Tbe proceeds passed into tbe bands of the administrator for that purpose only, and only to that extent. Any surplus then reverts to tbe status of real estate as if tbe land bad not been sold. In Lafferty v. Young, 125 N. C., 296, 34 S. E., 444, it is said: “Being tbe proceeds of realty, tbe law for tbe purpose of indicating tbe channel in wbicb it shall go, by a fiction stamps it with tbe character of realty.”

Plaintiff relies mainly upon tbe cases of Wallston v. Braswell, 54 N. C., 137; Balsley v. Balsley, 116 N. C., 472; Nicholson v. Serrill, 191 N. C., 96, 131 S. E., 377, and decisions in other jurisdictions. A careful consideration of them shows each to be distinguishable from tbe factual situation here involved.

A judgment “is a lien on tbe real property in tbe county where tbe same is docketed of every person against whom any such judgment is rendered, and which be has at tbe time of tbe docketing thereof in tbe county in wbicb such real property is situated or wbicb be acquires at any time thereafter, for ten years from tbe date of tbe rendition of tbe judgment.” C. S., 614. In the present case it is not contended that any of tbe judgments are affected by tbe statute of limitations.

As to priority of tbe lien of tbe docketed judgments, in Moore v. Jordan, 117 N. C., 86, it is said: “Tbe defendant Lewis contends that, as was tbe case under our former system, tbe lien wben it attaches relates back to tbe day wben tbe judgment was docketed. . . . Neither tbe court nor counsel have been able to find any decided cases on this question in any of tbe states except one in Oregon. . . . We are, therefore, to construe our statute, Tbe Code, sec. 435 (C. S., 614), according to its meaning and on general principles of reasoning. . . . There seems to be no reason why priority should be allowed wben tbe title to tbe land and tbe several liens occur at tbe same moment. There is no equitable ground on which to place it, because one judgment debt in tbe eye of the law is as just as any other, and there is no natural justice in tbe proposition. . . . Our conclusion is that tbe proceeds of tbe land should be applied to tbe judgments pro rata.” Johnson v. Leavitt, 188 N. C., 682, 125 S. E., 490.

Tbe administrator will pay tbe cost out of tbe fund.

Tbe judgment below is

Affirmed.