1. Estate Administration--executors--revocation of letters testamentary
The trial court did not err by affirming the clerk of court's revocation of respondent
executors' letters testamentary under N.C.G.S. § 28A-9-1(a), because: (1) the clerk and the trial
court found that one of the respondents has a private interest that would tend to hinder or be
adverse to a fair and proper administration of the estate since respondent's mother owned 75% of
the funeral home that took care of decedent's funeral; (2) the clerk and the trial court found
sufficient evidence of three allegations of misconduct, including payment by the estate of
attorney fees to a law firm for creation of a limited liability company which did not benefit the
estate for which payment the estate was not reimbursed, payment by the estate to an insurance
account for which the estate was not reimbursed although respondent asserted that decedent had
no insurance, and payment by the estate to a funeral home for decedent's funeral with no
itemization or other justification for its cost; and (3) the clerk and trial court found that the
remaining respondent has evidenced no inclination to act independently of the other respondent
and has in the past been required to follow specific directions of the other respondent regardless
of the cost or waste involved to the estate or any dissatisfaction with such directions.
2. Estate Administration--removal of executors--entitlement to jury--abuse of
discretion standard
The trial court did not err in a case involving removal of executors by holding that
respondent executors were not entitled to have all issues of fact decided by a jury, because the
decision was within the trial court's discretion and the trial court did not abuse its discretion.
Thompson & Mikitka, P.C., by E. C. Thompson, III and Susan
Collins Mikitka, for petitioner-appellees.
Howard, Stallings, From & Hutson, P.A., by John N. Hutson, Jr.
and Brian E. Moore, and Beaver, Holt, Sternlicht, Glazier,
Carlin, Britton & Courie, P.A., by H. Gerald Beaver, for
respondent-appellants.
HUDSON, Judge.
Lounell Mainor and James Ervin Southerland (“Respondents”)
appeal from an order of the Superior Court affirming the revocation
of their Letters Testamentary (“Letters”) by the Clerk of theSuperior Court (“the Clerk”). We affirm.
The facts and procedural history relevant to this appeal are
as follows. Edd Dudley Monk (“decedent”) died on 19 August 1999.
His Last Will and Testament (“the Will”) provided that Respondents
should serve as coexecutors of his Estate.
For several years prior to decedent's death, Respondent Mainor
had his Power of Attorney. Several days prior to decedent's death,
Respondent Mainor wrote a check for $14,000.00 on decedent's
account to the Rose Hill Funeral Home Insurance Account.
Additionally, the Rose Hill Funeral Home was paid $35,865.00 for
decedent's funeral. Respondent Mainor's mother owned 75% of the
Rose Hill Funeral Home, and Respondent Mainor worked there on a
volunteer basis. Decedent had at one time owned the funeral home.
Decedent's will provided that certain specified lands should
be sold and the proceeds distributed among the designated
beneficiaries according to designated interests. Respondents
created a limited liability company (“the LLC”), to which some of
the lands were sold at their appraised values. Beneficiaries were
given the option of buying shares in the LLC or receiving a cash
amount equivalent to their designated interests in the appraised
value of the land. Not all of the beneficiaries chose to buy
shares in the LLC.
On 7 January 2000, Ronald Monk, Helen Newman, Robert Monk,
Marion Swan, and Margaret Nixon (“Petitioners”), who were some of
the beneficiaries of the Estate, filed a Petition for Revocation of
Letters with the Clerk of the Duplin County Superior Court. The
Clerk issued an Order Revoking Letters Testamentary on 9 March2000. Respondents appealed to the Duplin County Superior Court.
On 18 August 2000, the Superior Court filed an order affirming the
order of the Clerk. Respondents have appealed this order.
Respondents raise two issues in this appeal. First,
Respondents argue that the evidence does not support the Superior
Court's order affirming the revocation of Respondents' Letters
Testamentary. Second, Respondents argue that they are entitled to
a jury trial on all factual issues.
As this Court has explained, on appeal from an order of the
Clerk,
the trial judge reviews the Clerk's findings
and may either affirm, reverse, or modify
them. If there is evidence to support the
findings of the Clerk, the judge must affirm.
Moreover, even though the Clerk may have made
an erroneous finding which is not supported by
the evidence, the Clerk's order will not be
disturbed if the legal conclusions upon which
it is based are supported by other proper
findings.
In re Estate of Pate, 119 N.C. App. 400, 403, 459 S.E.2d 1, 2
(citations and internal quotation marks omitted), disc. review
denied, 341 N.C. 649, 462 S.E.2d 515 (1995). The trial court here
found that the evidence supported the findings made by the Clerk.
The standard of review in this Court is the same as that in the
Superior Court. See id., 459 S.E.2d at 2-3. We agree with the
trial court that the evidence supports the findings made by the
Clerk.
[1]Two grounds for revocation of Letters Testamentary are
relevant here. They are below:
(3) The person to whom [the Letters] wereissued has violated a fiduciary duty through
default or misconduct in the execution of his
office, other than acts specified in G.S.
28A-9-2.
(4) The person to whom [the Letters] were
issued has a private interest, whether direct
or indirect, that might tend to hinder or be
adverse to a fair and proper administration.
The relationship upon which the appointment
was predicated shall not, in and of itself,
constitute such an interest.
N.C. Gen. Stat. § 28A-9-1(a) (1999). Cases from our Supreme Court
and this Court make clear that the determination of whether to
revoke an executor's Letters should be guided by consideration of
whether the Estate is harmed or threatened with harm. See In re
Taylor, 293 N.C. 511, 521, 238 S.E.2d 774, 779 (1977); Matthews v.
Watkins, 91 N.C. App. 640, 645, 373 S.E.2d 133, 136 (1988), aff'd
per curiam, 324 N.C. 541, 379 S.E.2d 857 (1989); In re Estate of
Longest, 74 N.C. App. 386, 391, 328 S.E.2d 804, 808, disc. review
denied, 314 N.C. 330, 333 S.E.2d 488 (1985). Thus, for example,
our Supreme Court has held that a clerk does not abuse his
discretion in declining to remove an executor for failure to
perform duties such as filing inventories, when such duties can be
enforced by an appropriate proceeding. See Jones v. Palmer, 215
N.C. 696, 699, 2 S.E.2d 850, 852 (1939). However, an executor must
be removed, when an omission of such a duty “is sufficiently grave
to materially injure or endanger the estate.” Id.; see also
Matthews, 91 N.C. App. at 645, 373 S.E.2d at 136 (same).
With respect to a private interest, the Supreme Court has
observed that the same standard should be applied to thedetermination of whether letters testamentary should be revoked as
to the determination of whether letters testamentary should be
issued in the first instance. See In re Moore, 292 N.C. 58, 66,
231 S.E.2d 849, 854 (1977). In Moore, the Court stated that “when
it appears that the personal interests of the prospective executor
are so antagonistic to the interests of the estate and those
entitled to its distribution that the same person cannot fairly
represent both, the testator's nominee is unsuitable and
disqualified as a matter of law.” Id. at 65, 231 S.E.2d at 854.
Our Court has stated that “[w]here conditions are present, which
will prevent the executor from impartially performing his fiduciary
duties, he should not be allowed to serve.” In re Moore, 25 N.C.
App. 36, 39, 212 S.E.2d 184, 186-87, cert. denied, 287 N.C. 259,
214 S.E.2d 430 (1975).
While Petitioners have made many allegations of misconduct
against Respondents, they have identified as most significant the
following three alleged acts by Respondent Mainor: (1) the payment
by the Estate of $6,313.51 in attorney's fees to the law firm of
Pinna Johnston & Burwell, for which payment the Estate was not
reimbursed, for the creation of the LLC; (2) the payment of
$14,000.00, for which the Estate was not reimbursed, to the Rose
Hill Funeral Home Insurance Account, although Mainor asserted that
decedent had no insurance; and (3) the payment of $35,865.00 by the
Estate to the Rose Hill Funeral Home for decedent's funeral, with
no itemization or other justification for the cost. Although any
one of these, if supported by competent evidence, would besufficient to justify revoking the Letters, the Clerk and court
found the evidence sufficient as to all three, as well as others.
With respect to the payment of attorney's fees, the Clerk made
the following finding:
28. ... [T]he expenses of creating the limited
liability company were paid out of the funds
of the Estate, including a filing fee to the
Secretary of State in the amount of $225.00,
and attorneys fees to Pinna Johnston & Burwell
in the amount of $6,313.51, as reflected on
Plaintiff's Exhibit 40 and in Respondent's
notebook. The monies paid for the filing fee
were reimbursed to the Estate, but the
attorneys fees were not. Payment of such
expenses from the Estate was inappropriate.
No motion was filed with the Court or order
obtained for prior approval of such
expenditures.
Respondent Mainor admitted in her testimony before the Clerk that
the attorney's fees for creating the LLC were paid by the Estate
and that the Estate was never reimbursed for this expense.
Therefore, there was sufficient evidence to support this finding of
fact. The Superior Court found that there was sufficient evidence
to support the finding that estate assets had been used “to create
a separate entity which did not benefit the estate in any manner.”
The payment by the Estate of attorney's fees for the creation of
such a limited liability company was adverse to the interests of
the Estate. We believe the trial court properly affirmed the
Clerk's legal conclusion that payment of these expenses was
inappropriate.
With respect to the payment to the insurance account, the
Clerk made the following finding:
34. Respondent Mainor testified that decedent
had no insurance policies of any type, and
none were identified on any inventories filedin this matter. Rose Hill Funeral Home
maintains an “insurance account,” where
persons pay insurance premiums and the funeral
home handles obtaining “all kinds” of
insurance for them. Respondent Mainor's
mother owns seventy-five percent (75%) of Rose
Hill Funeral Home, and Respondent Mainor
“volunteers” at the funeral home. A check was
written from decedent's Centura checking
account approximately five days before
[decedent's] death in the amount of
$14,000.00, payable to the Rose Hill Funeral
Home Insurance Account (Plaintiff's Exhibit
29). These funds have not been reimbursed to
the Estate, despite the assertions of
Respondent Mainor that decedent had no
insurance.
This finding is entirely consistent with the record and the
transcript of Mainor's testimony before the Clerk. The Superior
Court found that there was sufficient evidence to support this
finding. This factual finding supports the Clerk's legal
conclusion that “Respondent Mainor has a private interest that
would tend to hinder or be adverse to a fair and proper
administration” of the Estate, and the court properly affirmed it.
Finally, with respect to the funeral expenses, the Clerk found
as follows:
36. The Estate has paid $35,865.00 to Rose
Hill Funeral home for decedent's funeral,
although the only outstanding factors of the
funeral were fancy programs and a gold colored
casket that opened full length. No
itemization of services was provided in
support of this figure. Decedent was placed
into a pre-existing crypt, and all that was
done with regard to his actual burial was
engraving his date of death on the crypt.
Such expenses are clearly excessive, and
further reflect Respondent Mainor's conflict
of interest in this matter, as well as her
utter disregard for the obligations imposed
upon Respondents in handling the affairs of
this Estate.
No accounting was ever provided to the Clerk to justify the amountof funeral expenses. One of the beneficiaries described the casket
as being the “most outstanding feature of the funeral.” Respondent
Mainor could speak only generally about what services were
typically included in a funeral service, and could give no details
regarding what was provided for decedent's funeral. Months after
the hearing, Respondents submitted to the trial court affidavits
from Respondent Mainor and from an owner and president of a
mortuary describing the casket in which decedent was buried. We
agree with Petitioners that this does not constitute competent
evidence. Although Respondents cite case law regarding what
constitutes reasonable funeral expenses, it is impossible to
evaluate whether the expenses here were reasonable without knowing
for what the expenses were incurred. We affirm the trial court's
finding and conclusion that there was sufficient evidence to
support the Clerk's finding that the expenses were excessive.
On review, we agree with the trial court that the acts
described above did not benefit the Estate and evidence a conflict
of interest on the part of Respondent Mainor. Respondents argue
that Respondent Southerland should not have been removed as
executor because there is no evidence of misconduct on his part,
and it was error for the Clerk and the trial court to impute
Mainor's malfeasance to Southerland. We disagree. The Clerk found
that “Respondent Southerland has evidenced no inclination to act
independently of Respondent Mainor, and has in the past been
required to follow specific directions of Respondent Mainor,
regardless of the cost or waste involved to the Estate or any
dissatisfaction with such directions.” The trial court affirmedthe “lack of independent action on behalf of Respondent
Southerland.” There is evidence in the record to support this
conclusion. For example, one of the petitioners testified that
when he asked Southerland about the Estate, Southerland answered:
“This is Lounell's thing. I'm--I do what Lounell tells me to do.”
We believe the court properly concluded that both respondents
violated their fiduciary duties and were properly removed.
The North Carolina cases cited by Respondents are inapposite.
Kerr v. Kirkpatrick, 43 N.C. (8 Ired. Eq.) 137 (1851), addressed
the issue of whether one coexecutor could be held personally liable
for misconduct of his coexecutor. Moreover, the estate in that
case consisted principally of bonds, notes, and open accounts, and
the coexecutors divided these assets between them and took
individual control over them. See 43 N.C. (8 Ired. Eq.) at 137.
Each coexecutor was thus “answerable only for that part of [the
estate] which came to his hands or was under his control.” Id. at
140. Respondents concede that the issue of whether one coexecutor
is responsible for the misconduct of another was not raised in
Longest, a case in which one coexecutor sought the removal of the
other, who had allegedly breached his fiduciary duty. See 74 N.C.
App. at 387-88, 328 S.E.2d at 805-06.
[2]Citing In re Estate of Lowther, 271 N.C. 345, 156 S.E.2d
693 (1967), Respondents assert that they were entitled to have all
issues of fact decided by a jury. However, our Supreme Court
clearly indicated in Lowther that, in cases involving removal of
executors, it is within the court's discretion whether to submitfactual issues to a jury. See 271 N.C. at 356, 156 S.E.2d at 702.
We find no abuse of discretion here.
We hold that the trial court properly concluded that there is
evidence to support the factual findings of the Clerk discussed
above, and that these factual findings are sufficient to support
the revocation of Respondents' Letters Testamentary. Additionally,
we hold that the trial court did not abuse its discretion in
refusing to submit the factual issues to a jury. Accordingly, we
affirm the order of the Superior Court affirming the order of the
Clerk.
Affirmed.
Chief Judge EAGLES and Judge HUNTER concur.
*** Converted from WordPerfect ***