ALEXANDERv. BURTON,21 N.C. 469(1837)
JOSEPH McK. ALEXANDER, EXECUTOR OF WILLIAM J. WILSON,
v. ROBERT H. BURTON ET AL., EXECUTORS OF JAMES CONNER.
Supreme Court of North Carolina
The courts of this State have no power to make submissions to arbitration rules of Court, excepting when the subject-matter of the submission is a suit pending in them; and the Superior Court has no power to make an order appointing commissioners to audit and settle the accounts of an executor. An order of that court appointing commissioners is only obligatory so far as it sets forth a contract between the parties to it; and one made upon the joint petition of the executors and creditors, directing commissioners "to adjust and finally settle" the accounts of the former, in the absence of proof to the contrary, is taken as only authorizing them to make a statement of his receipts and expenditures, and to allow his commissions; and does not confer the right to disturb the priorities of the creditors, or in any way to interfere with the legal course of administration.
THE bill charged, in substance, that the plaintiff, being the sole acting executor of William J. Wilson, and having, shortly after the death of his testator, and in pursuance of the directions of his will, made sale of all his estate, real and personal, and having discovered that it was uncertain whether the assets would be sufficient to discharge the debts due by bond and otherwise liquidated, for the purpose of removing all difficulties that might arise between himself and the creditors having these demands, agreed to refer "the settlement of the estate and (470) the question as to whom and in what manner the assets were to be disbursed" to the arbitrament of Pearsall Thompson, the clerk of the Superior Court of Law for the county of Mecklenburg, and William J. Alexander and Washington Morrison, Esqs., and that the same might be rendered more solemn and permanent, it was agreed that a petitionPage 366should be drawn up and signed by the parties, praying the judge of the Superior Court of said county to appoint the said Thompson, Alexander, and Morrison to adjust and finally settle said estate and to place the same on the records of the court. The bill further charged that, in pursuance of the said agreement, a petition was drawn up and signed by the parties, or their duly authorized agents; that the judge ordered the matters contained in the said petition to be referred as prayed for; that the referees thereupon made an award, which was filed among the records of the court; that by said award they adjudged that certain debts should be paid off in full, and that certain other debts claimed by the creditors signing the petition, and amongst them the debt due to the testator of defendants, should be paid out of the residue of the assetspro rata— that is to say, at the rate of 53 cents upon the dollar; that the plaintiff had applied the assets as directed by the said award, had paid to the testator of the defendants in his lifetime a part of the sum awarded to him, and since his death had paid the residue thereof to his widow, who, he charged, was authorized to receive the same. The plaintiff then complained that, notwithstanding he had furnished the defendant with a copy of the award, he had instituted a suit at law to recover the whole amount of the bonds. To the bill was appended as an exhibit a copy of the petition, order of court, and award referred to.
The defendants, by their answers, denied that their testator ever did agree to submit his claim against the plaintiff as executor of Wilson to the arbitrament of any persons whatever; declared that they were informed and believed the fact to be that there was no communication (471) with him on the subject of a reference, either with respect to the validity of his claim or the amount to be paid him thereon, but that the paper-writing, called a submission (the petition), was handed to him when very ill, and that he directed James Wilson, the son of complainant's testator, to sign it, under the belief that it was simply an application for the appointment of a committee to settle the plaintiff's accounts as executor, and probably to fix the rate of his commissions; and they insisted that, upon the petition and the order of the court thereupon, it is apparent that there was no submission to an award, nor any such submission contemplated by the parties. They admitted that a sum of money was paid by the plaintiff to their testator, which was duly endorsed on one of the bonds, and that, after his death and before the probate of his will, a further sum was paid to his widow; but they peremptorily denied that either of these sums was received on account of the award, and stated that, with regard to the latter sum, it was paid to the widow wholly without any authority on her part to receive it; but the defendant Burton, after his qualificationPage 367as executor, having received from the widow the bonds, which until then had remained in her possession, and learning that so much money had been received by her on account thereof, caused the same to be endorsed as a further payment. The defendants admitted that they had brought suit on the bonds to recover the residue unpaid thereof; aver that the sum claimed is justly due; charged the plaintiff with fraud in the administration of the estate, and contended that he had assets sufficient to satisfy their demands.
Upon these answers, his Honor,Judge Saunders, continued until the hearing the injunction which had issued upon the filing of the bill to restrain the defendants from proceeding in their action upon the bond of the plaintiff's testator to the testator of the defendants; and, the defendants being dissatisfied therewith, his Honor was, upon their prayer, pleased to allow an appeal to this Court.
A. M. Burton for defendants.D. F. Caldwell contra.
GASTON, J., after stating the case as above, proceeded as follows:
We deem it necessary to enter upon the inquiry whether, if there has been the submission charged in the bill, the award thereupon does not furnish a legal defense against the action enjoined. Nor shall (472) we examine whether it may not be open for the plaintiff to show byextrinsicevidence that in truth such a submission was made; or for the defendants, on the other hand, to prove that their testator signed the petition under a misconception of its import. In the present state of the conflicting allegations of the parties, and for the purpose of deciding on the question before us, we have confined our attention to the construction of the written documents exhibited. The petition is addressed to the judge of the Superior Court of Law and Equity for the county of Mecklenburg. It states that the executor of William J. Wilson and the creditors petition his Honor to appoint the clerk of the court, together with William J. Alexander and Washington Morrison, Esquires, to adjust and finally settle with J. McKnitt Alexander, the executor, the estate of William J. Wilson, and place the same on the records of the court; and it purports to be signed by the executor, and by several persons as creditors, among whom is the testator of the defendants. The order thereupon is that Pearsall Thompson, William J. Alexander, and Washington Morrison, Esquires, be appointed a committee to adjust and finally settle the estate of William J. Wilson, deceased, with J. McKnitt Alexander, the executor. The petition is dated July, 1834, and the order is made at August Term, 1834. The award bears date 17 February, 1835. It prefixes a statement of the unsatisfiedPage 368demands against the estate, which is headed "Report of the estate of William J. Wilson by the executor"; two lists of debts paid by the executor, and a statement showing "amount of William J. Wilson's estate"; and then proceeds to declare that the said Alexander, Morrison and Thompson, being appointed by the Superior Court of law, by and with the advice and consent of the executor of William J. Wilson, on the one part, and of the creditors set forth in the preceding statement, on the other, to settle the estate of said Wilson and "decide to (473) whom and in what manner the assets of said estate should be paid," do award that the executor, having paid the amount of debts as set forth in the two lists above mentioned, do pay those contained in the first statementpro rataout of the assets, there being a deficiency to pay all the bond debts and others of equal dignity; that the executor be allowed four per cent commissions, and that Margaret Wilson (one of the petitioning creditors paid in full) pay the executor one hundred dollars in addition to the commissions above allowed. There is then subjoined or endorsed a general statement representing the amount of the estate, the balance after deduction of commissions and debts subject to no deduction; the amount of debts subject to deduction, and the excess of these above the balance of assets, showing that the executor will be enabled to pay fifty-three cents in the dollar. It does not appear when the proceedings of the committee or arbitrators were returned to court, but that they were returned would appear from the copy thereof certified by the clerk of the court. There was no action thereon by the court. The testator of the defendants died 11 April, 1835.
Executors and administrators are required by law to make a settlement of their estates with the county court, which is authorized to make to them an allowance by way of commissions on the amount of receipts and expenditures that shall appear to be fairly made in the management of the estates. It is the universal usage to make this settlement through the agency of a committee appointed by the county court, which committee also reports to the court a reasonable rate of commissions. Such settlements, however, are regarded asex partesettlements, and in no respect binding the creditors, legatees or next of kin, except as to the allowance of commissions when sanctioned by the court. The Superior Courts have no original jurisdiction over these settlements or the allowance of commissions; nor have any of our courts authority to direct a submission to arbitration to be made a rule of court, unless when the parties agree to a reference of some subject of litigation actually pending before them. To a proceeding so anomalous as that which (474) we are examining it is difficult to assign a precise character. ItPage 369has noforceas a judicial proceeding — and is binding on the parties only to the extent to which the parties have declared their will to be thereby bound. From the concurrency of the creditors with the executors in the appointment of the persons to superintend or make the settlement between him and the estate, it may be inferred that the parties intended to impart to such a settlement a character above that of the mereex partesettlements usually made by executors and administrators. This inference is strengthened by the introduction of the unusual expression, "finally," in the application for the appointment — "to adjust andfinallysettle." But whatever was to be thecharacterof the settlement, whether conclusive,ex parte, or intermediate between these extremes, the main inquiry is, what was the subject-matter of it? The petition and the order thereon show that this was "the estate of the deceased with the executor"; and such a settlement involves directly no more than an inquiry into his receipts and disbursements and the reasonable rate of commissions to be thereon allowed. Before we can hold that the rights of the creditors as against the executor, or as to priority as between themselves, were conclusively adjudicated by an award, it must clearly appear that the creditors submitted these subjects to adjudication. Had a submission of these rights been intended, we cannot but think that the language of the petition and order would have been more explicit. The persons nominated to act would have been characterized not as acommittee, but as referees or arbitrators; the subject-matter of the reference would have embraced, in terms, not merely a settlement of the estate with the executor, but in the language of the bill and the award, have set forth the questions arising between the creditors, "to whom and in what manner the assets of said estate should be paid"; and the result of the reference has been designated, not as a settlement of the estate to be returned to court, but by its well-known name of an award to be binding upon the parties. It would be dangerous to imply a delegation of authority not resulting from obvious intendment to a tribunal raised by the parties, so as to deprive them of the power of resorting to the tribunals (475) constituted by the law for the ascertainment of rights and the decision of controversies. Upon this view of the case we are of opinion that for the present, and upon the face of the exhibits, the award, as it has been termed, cannot be considered as binding the defendants to forego their claim to the unpaid residue of the bonds, for which they have brought suit.
On the trial of the suit, what effect shall be given as evidence to the accounts accompanying the report of the committee is a question on which it were improper now to express any opinion.Page 370
The Court directs that this, their opinion, shall be certified to the Court of Equity for the county of Mecklenburg, with instructions to reverse the order appealed from, and to order that the injunction heretofore granted in this case be dissolved with costs. The plaintiff must pay the costs of this Court.
PER CURIAM. Order reversed.Cited: Lusk v. Clayton,70 N.C. 188.