Alexander v. Galloway

80 S.E.2d 369 (1954)

239 N.C. 554

ALEXANDER v. GALLOWAY et al.

No. 521.

Supreme Court of North Carolina.

March 3, 1954.

*371 Covington & Lobdell, Charlotte, for plaintiff, appellee.

Mullen, Holland & Cooke, Gastonia, for defendants, appellants.

*372 PARKER, Justice.

At the regular Civil May Term 1948 of Mecklenburg County the presiding judge rendered an order affirming the Clerk's order removing T. I. Galloway and O. F. Galloway as administrators of the estate of M. A. Galloway. Upon appeal to this Court error was found and the case was remanded to the lower court. In re Estate of Galloway, 229 N.C. 547, 50 S.E.2d 563.

When a person dies intestate his real property descends direct to his heirs at law. The sole right the administrator can have in his intestate's realty is the right to subject it to the payment of the debts of his intestate and the costs of administration, when the personalty is insufficient for that purpose. James v. Withers, 126 N.C. 715, 36 S.E. 178; Parker v. Porter, 208 N.C. 31, 179 S.E. 28; In re Estate of Galloway, supra.

In this jurisdiction, and according to the weight of authority elsewhere, it is held that a secured creditor need not present his claim for allowance to an executor or administrator in order to preserve his right to enforce his security. Dennis v. Redmond, 210 N.C. 780, 188 S.E. 807; 34 C.J.S., Executors and Administrators, § 403; 21 Am.Jur., Executors and Administrators, Sec. 360.

Where a secured creditor seeks to obtain payment either in full or of a deficiency out of the general assets of the estate and thus to enforce his claim against property not covered by his lien or held by him as security, presentation of his claim is necessary to preserve the right to payment out of the general assets of the estate. Dennis v. Redmond, supra; 34 C.J.S., Executors and Administrators, § 403; 21 Am.Jur., ibid, Sec. 360 and Sec. 367.

Petitioner's intestate died 22 October 1939. The petition alleges the appointment of T. I. Galloway and O. F. Galloway as administrators of the estate of M. A. Galloway by the Clerk of the Superior Court of Mecklenburg County on 6 March 1940, their removal on 24 April 1952, and the appointment of the petitioner as administrator d. b. n. on 6 May 1952.

The petition does not allege the presentation of a claim by the past or present owner and holder of the notes secured by the deeds of trust for allowance to the administrators, or any of them. Apparently the lien holder was satisfied with its security, or considered the estate in such shape after M. A. Galloway's death that the presentation of his claim would be useless. Therefore, it would seem under the allegations of the petition the petitioner is under no obligation to pay these secured liens.

The petition alleges pendency of a civil action in the Superior Court of Mecklenburg County brought by Annie Galloway against the estate in which she alleges the estate is indebted to her in a certain amount under an implied contract with petitioner's intestate for services rendered to him and his wife, and a similar action brought by Nelle Galloway pending in the same court on the same grounds to recover a certain amount from the estate. The respondents in their answer allege that the petitioner has denied both claims. Neither of said actions has been reduced to judgment. To sell land to pay debts, the existence of valid and enforceable debts of the estate must be shown. These two actions are contested. This is not sufficient to sell land to create assets to pay debts. 34 C.J.S., Executors and Administrators, § 539; see also Robinson v. McDowell, 133 N.C. 182, 45 S.E. 545. In the oral argument counsel for appellee stated that judgments of nonsuit had been entered in both actions.

The petition alleges whatever North Carolina inheritance tax may be due has not been determined. The respondents deny this, and allege there is no inheritance tax liability.

The petition alleges these debts against the estate: (1) A judgment in favor of E. B. Solomon, which the respondents allege has been paid in full; (2) two actions *373 pending against the estate, which the counsel for the petitioner admitted in the oral argument had been nonsuited; (3) a possible inheritance tax liability to the estate which the respondents deny; (4) and the secured claims.

Issues of fact are raised by the pleadings as to whether there is a valid and enforceable debt against the estate, and the court was without power to enter judgment upon the pleadings. Erickson v. Starling, 235 N.C. 643, 71 S.E.2d 384; Crew v. Crew, 236 N.C. 528, 73 S.E.2d 309.

After the argument in this special proceeding, attorneys for the appellee filed in the office of the Clerk of the Supreme Court what purports to be an allowance of counsel fees against the estate. This purported order is no part of the case on appeal, and is not considered. Further, it appears that the case on appeal was agreed to by counsel of record on 20 April 1953, and the purported order allowing counsel fees was entered 1 May 1953.

The heirs at law of an estate have a right to pay off the indebtedness, if any, of the estate so as to take the realty of the estate free from any claims of the administrator. James v. Withers, supra; Parker v. Porter, supra; Chambers v. Byers, 214 N.C. 373, 199 S.E. 398; 34 C.J.S., Executors and Administrators, § 554, page 502. The petitioner alleges the costs of administration have not been determined. When determined the heirs shall be allowed a reasonable time to pay the costs of administration before the realty is ordered to be sold. James v. Withers, supra.

The judgment below is set aside, and this proceeding is remanded to the end that the issues of fact raised by the pleadings may be submitted to a jury for decision. Erickson v. Starling, supra.

Error.

BOBBITT, J., took no part in the consideration or decision of this case.