Greene, et al v Hicks, (04-803) 04/05/2005

Appeal by plaintiffs from order filed 23 March 2003 by Judge Orlando F. Hudson, Jr., in Wake County Superior Court. Heard in the Court of Appeals 3 February 2005.

Ligon and Hinton, by George Ligon, Jr., for plaintiffs.

Boxley, Bolton & Garber, LLP, by Kenneth C. Haywood, for defendants.

    BRYANT, Judge.

    Jean Hill Greene, Adrienne M. Brown, and Janettarose L. Greene (plaintiffs) appeal an order filed 23 March 2004, granting summary judgment in favor of Maritza Hicks (Hicks) in her individual capacity and in her capacity as executrix of the Estate of Vivian Lenora Burt (defendants).
    The parties to this action are the beneficiaries of Vivian Lenora Burt's (decedent's) will. Hicks, the great-niece of decedent, was appointed as executrix of decedent's estate pursuant to the will. Article V, Section B of the will provided that Hicks,in addition to powers authorized by the North Carolina General Statutes, had the power to “do everything [she] deem[ed] advisable, even though it would not be authorized under the North Carolina General Statutes for fiduciaries [or] under any statute or other rule of law.”
    On 2 April 2001, Hicks filed the inventory for decedent's estate. At the time of decedent's death, she owned furniture valued at $1,500.00; real property valued at $35,000.00; and $8,228.78 in a joint banking account. To satisfy the debts of the estate which totaled $11,851.00, Hicks determined it was in the best interest of the estate to sell the real property.
    Hicks retained Attorney Paul Carruth who prepared a deed for the real property, and transferred title to Yvonne Bridges on 1 November 2001. Hicks contacted the beneficiaries on 13 November 2001, and apprised them that the real property had been sold. She mailed a copy of the will, a draft of the final account, and checks made payable to each plaintiff according to their percentage of the net estate as provided in the will. Hicks informed plaintiffs that they were to cash their checks by 30 November 2001, so she could close the estate by 2 January 2002. Plaintiffs were represented by counsel who requested, and was provided, certain information by Hicks prior to plaintiffs depositing of beneficiary checks. Hicks filed her final account on 27 December 2001, and was discharged as personal representative of the estate.
    Plaintiffs instituted this action against defendants on 24 January 2003, alleging fraud and breach of fiduciary duty. Bothparties presented motions for summary judgment. These motions came for hearing at the 23 February 2004 civil session of Wake County Superior Court with the Honorable Orlando F. Hudson, Jr., presiding. By order filed 23 March 2004, summary judgment was entered in favor of defendants. Plaintiffs filed notice of appeal on 5 April 2004.

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The issues on appeal are whether the trial court erred by: (I) granting summary judgment in favor of defendants when defendants had allegedly committed fraud, breached a fiduciary duty owed to plaintiffs, and further, should not have been allowed to assert the defense of accord and satisfaction; and (II) failing to grant plaintiffs' motion for summary judgment.

    Plaintiffs first argue the trial court erred by granting summary judgment in favor of defendants when there existed genuine issues of material fact regarding whether defendants had committed fraud and breached a fiduciary duty owed to plaintiffs. Plaintiffs also argue the trial court erred in allowing defendants to assert the defense of accord and satisfaction.
    “[T]he standard of review on appeal from summary judgment is whether there is any genuine issue of material fact and whether the moving party is entitled to a judgment as a matter of law.” Bruce-Terminix Co. v. Zurich Ins. Co., 130 N.C. App. 729, 733, 504 S.E.2d 574, 577 (1998). Summary judgment is appropriate when, “viewed in the light most favorable to the non-movant” id., “thepleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.” N.C.G.S. § 1A-1, Rule 56(c) (2003). The party moving for summary judgment must establish that no triable issue of material fact exists “'by proving that an essential element of the opposing party's claim is non-existent, or by showing through discovery that the opposing party cannot produce evidence to support an essential element of his claim or cannot surmount an affirmative defense which would bar the claim.'” DeWitt v. Eveready Battery Co., 355 N.C. 672, 681, 565 S.E.2d 140, 146 (2002) (citation omitted).
    Plaintiffs' claims for relief are based on the allegation that, after the estate was closed and after the executrix was discharged, plaintiffs discovered defendants sold the real property for substantially less than its value, and this act constituted fraud and breach of fiduciary duty. The record reveals, however, prior to the closing of the estate, plaintiffs knew the real property was being sold to satisfy the debts of the insolvent estate, knew when the real property was sold, knew the selling price of the house, and the expenses of the estate.
    Even though plaintiffs complain that the sales price of the house was substantially less than its value, by letter dated 10 December 2001, the executrix informed plaintiffs that the sales price of the house was based on the recommendation of a Century 21 real estate agent. In February 2001, the real estate agentperformed a detailed comparative market analysis to determine the value of the house. The analysis was based in part on the condition of the property and the neighborhood where the house was located. The executrix also obtained an appraisal of the property.     The executrix determined that the sales price of the house should be based on the advice of the real estate agent. The executrix outlined in her 10 December 2001 letter, the assets and debts of the estate, and included a detailed breakdown of each estate expense. An exact computation of the amount each plaintiff was entitled to under the will was provided in the letter. Therefore, plaintiffs received notice of the selling price of the real property prior to the closing of the estate and the discharge of the executrix.

    Defendants asserted the affirmative defense of accord and satisfaction in support of their motion for summary judgment. When sufficient facts exist to support this affirmative defense, it is an absolute bar to plaintiffs' assertions of tort claims for fraud, and breach of duty. See N.C. Monroe Construction Co. v. Coan, 30 N.C. App. 731, 736, 228 S.E.2d 497, 501 (1976) (“If proven, accord and satisfaction is a bar to the assertion of any claims on the underlying obligation and thus would preclude defendants from asserting their breach of contract claims.”). Generally, the existence of accord and satisfaction is normally a question of fact, but “where the only reasonable inference is existence or non-existence, accord and satisfaction is a question of law and maybe adjudicated by summary judgment when the essential facts are made clear of record.” Monroe Construction, 30 N.C. App. at 737, 228 S.E.2d at 501; see also Zanone v. RJR Nabisco, Inc., 120 N.C. App. 768, 771, 463 S.E.2d 584, 587 (1995).
    An 'accord' is an agreement whereby one of the parties undertakes to give or perform, and the other to accept, in satisfaction of a claim, liquidated or in dispute, and arising either from contract or tort. Sharpe v. Nationwide Mut. Fire Ins. Co., 62 N.C. App. 564, 565, 302 S.E.2d 893, 894 (1983). 'Satisfaction' is the execution or performance, of such agreement. Id.
    Plaintiffs first argue the defense of accord and satisfaction is unavailable to a fiduciary. Pursuant to N.C. Gen. Stat. § 28A- 13-2, an executrix is a fiduciary of the estate over which she is charged with administering. N.C.G.S. § 28A-13-2 (2003). “A fiduciary relationship is not, however, an absolute bar preventing an accord and satisfaction; rather, it is a fact that is to be considered along with other circumstances.” 1 Am. Jur. 2d, Accord and Satisfaction § 20 (1994).
    In support of this argument, plaintiffs direct this Court's attention to Honig v. Vinson Realty Co., 98 N.C. App. 392, 390 S.E.2d 744 (1990). In Honig, an agency relationship existed among the parties who were involved in a management contract concerning real property. The defendant was to be paid a percent of the gross rentals remaining under the lease in the event of a termination of the contract. A dispute arose as to the amount the agent was tocollect after termination of the contract. The agent withheld monies it contended it was due and forwarded the remainder to the principal. In the context of an agency relationship, the Court stated: “Where an agent, having money belonging to his principal, pays part of it conceded to be due, but retains the balance, claiming a right to do so, the principal's acceptance, retention or negotiation of the amount paid does not constitute an accord and satisfaction.” Honig, 98 N.C. App. at 394, 390 S.E.2d at 745.
    In an agency situation, all the money retained by the agent belongs to the principal. See id. In the type of agency relationship illustrated in Honig, where money owed is retained, the defense of accord and satisfaction does not apply. The language in the opinion was tied directly to the type of abuse of the fiduciary relationship where one party retains money belonging to another and then claims that through retention an accord is created.
    The retention of money by an agent is factually dissimilar to the instant case where the executrix is not withholding money that belongs to the beneficiaries. Here, all the beneficiaries received the entire amount of funds left to be disbursed. There is no evidence in the record that plaintiffs were entitled to a certain amount that was withheld. Instead, the dispute is whether the sales price of the real property was proper. As such, plaintiffs have failed to demonstrate that the defense of accord and satisfaction was unavailable to defendants in the instant case.
    As a fiduciary, the executrix is under an express duty tosettle the estate of the decedent as expeditiously and with as little sacrifice of value as possible. N.C.G.S. § 28A-13-2. Further, the executrix is mandated by law to file the final account within one year from the date of qualification unless good cause can be shown for an extension. N.C.G.S. § 28A-21-2 (2003).
    One of the objections plaintiffs raise concerns the use of the real property instead of personal property to satisfy estate debts. This issue is settled in North Carolina. The common law rule that personal property is to be extinguished to pay debts of an estate has been abolished by statute. 2 James B. McLaughlin, Jr. & Richard T. Bowser, Wiggins: Wills and Administration of Estates in North Carolina § 256(b) (4th ed. 2000). The statute states that both real and personal property may be used to satisfy costs, taxes and debts of a decedent's estate. N.C.G.S. § 28A-13-3(a)(1) (2003).
    As long as the will empowers the executrix to sell either personal or real property, then she needs no additional authority from the clerk of court. See N.C.G.S. § 28A-15-1(c) (2003); N.C.G.S. § 28A-13-3(a)(27) (2003). The executrix may sell the real property at a private or public sale on terms and conditions deemed by the executrix to be in the best interest of the beneficiaries of the estate. N.C.G.S. § 28A-17-8 (2003).
    In plaintiffs' affidavits they state they did not consent or condone the sale of the house, that the real property had a fair market value of $20,000.00 more than it actually sold for, and that the monies in the joint banking account should have been used topay the debts of the estate. The decision by the executrix to sell the real property for $35,000.00 to satisfy the debts of the insolvent estate, however, was known by plaintiffs at least as early as 13 November 2001, when defendants contacted plaintiffs concerning the sale. The only fact that surfaced after the final account had been audited and approved by the clerk's office was that the buyer of the house subsequently reconveyed the real property to Hicks in her individual capacity.
    As plaintiffs correctly note, Yvonne Bridges agreed prior to the transfer to reconvey the house back to Hicks. The transfer to Bridges was a purchase money deed of trust. The executrix could have kept the estate open until the note associated with the transfer was paid in full. The executrix opined that this option presented delay for each of the plaintiffs in receiving proceeds pursuant to the will. Instead, the executrix elected to sell the real property and advance $35,000.00 of her own money to the estate thereby enabling plaintiffs to avoid any delay in receiving the proceeds.
    Pursuant to N.C. Gen. Stat. § 28A-3(a)(14), the executrix has the power to advance her own money for the protection of the estate, and for all expenses, losses, and liabilities sustained in the administration of the estate. N.C.G.S. § 28A-3(a)(14) (2003). For such advances, with any interest, the personal representative shall have a lien on the assets of the estate as against a devisee or heir. Id.
    In November 2001, the executrix tendered three checks, one toeach of the plaintiffs. The checks represented the total amount each would receive as a beneficiary of the will. Each elected to endorse and deposit the check. Specifically, Jean Hill Greene deposited her check on or about 14 December 2001. Janettarose L. Greene deposited her check on or about 17 December 2001. Adrienne M. Brown deposited her check on or about 17 December 2001. Once the checks were cashed, accord and satisfaction was shown as a matter of law. Sanyo Electric, Inc. v. Albright Distributing Co., 76 N.C. App. 115, 118, 331 S.E.2d 738, 740 (1985); Sharpe, 62 N.C. App. at 566, 302 S.E.2d at 894 (“The cashing of a check tendered in full payment of a disputed claim, establishes an accord and satisfaction as a matter of law.”).
    Plaintiffs cites Cullen v. Valley Forge Life Ins. Co., 161 N.C. App. 570, 589 S.E.2d 423 (2003), for the proposition that an intentional misrepresentation invalidates a prior accord reached among the parties. Plaintiffs are correct that there can be no accord if one of the parties to the accord bases their agreement on a fact intentionally withheld by the other party. However, in Cullen, the insurance company represented that the plaintiff did not have insurance coverage when it tendered a refund for insurance premiums. This Court held that the deposit of the refund check did not create an accord and satisfaction because the accord was based on an intentional misrepresentation regarding the existence of insurance coverage. The facts in the instant case are dissimilar. Here, plaintiffs were represented by counsel who requested and was provided certain information by the executrix prior to plaintiffsdepositing of the beneficiary checks.
    Plaintiffs have failed to present evidence that there was any fraud or breach of fiduciary duty as result of the transfer, or that the defense of accord and satisfaction was unavailable to defendants. This assignment of error is overruled.