Carethers v. Blair

VAUGHN, Judge. We note at the outset that the provisions of Chapter 28A, governing the time and manner in which a creditor must present [235] his claim to the estate to preserve a right to recovery, have been amended twice since 1973. We must apply those provisions which were in effect on the date of decedent’s death, 6 January 1978. Both parties agree that, in the instant case, the controlling statutory version of Chapter 28A appears in the 1977 Supplement to Volume 2A of the General Statutes, and our review is accordingly limited to a consideration and interpretation of the requirements stated therein. On this record, it is undisputed that plaintiff failed to present his claim to the administrator within six months of the date of the publication of general notice to creditors, as required by G.S. 28A-14-1 (Supp. 1977). Plaintiff contends, however, that, since the administrator did not mail him a personal notice concerning the presentment of claims, his negligence action was not barred by G.S. 28A-19-3 (Supp. 1977). We agree. G.S. 28A-14-3 (Supp. 1977) plainly provides: “For a claim to be barred under the provisions of G.S. 28A-19-3, the personal representative or collector shall by certified or registered mail forward to the claimant a statement that the claim shall be barred unless presented in the time and manner set out in Article 19 of this Chapter. A claim not barred by G.S. 28A-19-3 because of the failure to mail the statement may be paid from any undistributed assets of the estate.” Thus, it is clear that, at the time this action was instituted, a creditor’s claim against an estate could only be “forever barred” under G.S. 28A-19-3(a), when it was not timely filed within the limitations of G.S. 28A-14-1, if the administrator mailed a personal statement to the particular creditor, in addition to the general publication of notice to creditors. G.S. 28A-14-3, supra. Here, the administrator has not contended, nor has he offered uncon-tradicted proof tending to show, that this required announcement was duly sent to plaintiff.1 In the absence of such notice, the claim was not barred, and the trial court erred in granting summary judgment in defendant’s favor upon this ground. Upon his receipt [236] of a favorable judgment, plaintiff could seek recovery of damages out of the undistributed assets of decedent’s estate. Id. This being so, the only remaining issue is whether decedent’s automobile liability policy, which was in full force and effect when the accident occurred, constitutes an “undistributed asset.” We hold that it does. The general rule is that a deceased’s potential right of exoneration under an insurance policy is an asset of his estate. See, Annot., 67 A.L.R. 2d 936 (1959). Our Supreme Court has adhered to this rule in several cases. In Bank v. Hackney, 266 N.C. 17, 145 S.E. 2d 352 (1965), the Court specifically stated that a decedent’s automobile liability insurance policy was an asset of his estate. The Court reasoned that “[d]uring [decedent’s] lifetime, it would protect him in respect of his personal liability and preserve his general estate from depletion; and, upon his death, such policy would constitute a valuable asset of his estate and safeguard the general assets of his estate for distribution to the beneficiaries.” Id. at 22-23, 145 S.E. 2d at 357. The Court reiterated this view in the case of In re Edmundson, 273 N.C. 92, 159 S.E. 2d 509 (1968), where it held that such a policy was “unquestionably” an asset of decedent during her lifetime and an asset of her estate upon death, and that the potential right of the administrator of decedent’s estate against the insurance company was a chose in action, an intangible asset. Id. at 95, 159 S.E. 2d at 511-12. In accordance with the rationale of the foregoing cases, the Court has also held that a hospital-expense policy with an insurance company is an asset. Graham v. Insurance Co., 274 N.C. 115, 161 S.E. 2d 485 (1968). See also In Re Scarborough, 261 N.C. 565, 135 S.E. 2d 529 (1964) (holding that a cause of action for wrongful death is an asset of an estate). This decisional authority compels us to conclude that the State Farm Mutual Automobile Insurance policy issued to the decedent, Billy Ray Blair, was indeed an asset of his estate. Moreover, we believe that this conclusion is mandated by G.S. 28A-15-1(a) (1975). That statute provides that: “All of the real and personal property, both legal and equitable, of a decedent shall be assets available for the discharge of debts and other claims against his estate in the absence of a statute expressly excluding any such property.” (Emphasis added.) Automobile liability policies are not expressly excluded by any statute from being in237 eluded as an asset in an estate, and they are, therefore, resources available for the satisfaction of claims against the estate arising from decedent’s ownership and operation of an automobile while he was alive. In sum, “[t]he correct principle is that all the chattels of the intestate are assets, if the administrator by reasonable diligence might have possessed himself of them.” Gray v. Swain, 9 N.C. 15, 17 (1822). Having first decided that decedent’s automobile liability insurance policy was an asset of his estate, we further hold that this policy was an undistributed asset under G.S. 28A-14-3 (Supp. 1977), which the administrator could enforce for the payment of any subsequent judgment plaintiff might obtain upon a full trial of his negligence claim. An “undistributed asset” is simply anything that remains, after the administration of the estate and the disposition to the various beneficiaries are completed, which is still accessible to the administrator for the satisfaction of debts or claims against the estate. For purposes of this case, it is important to understand the general nature of the liability insurance policy. The sole function of such policies is to settle claims which are covered thereunder. Proceeds are, however, dispensed only in the event that a valid claim or judgment is established against the insured. It is, therefore, obvious that the potential right of an administrator to seek indemnification from a liability insurer is an asset which can only be distributed when a proper claim is presented against the estate involving decedent’s operation of the insured automobile. Until that happens, the liability policy is an undistributed asset of the insured’s estate. An instructive case in this regard is In Re Miles, 262 N.C. 647, 138 S.E. 2d 487 (1964). There, the petitioner failed to present a claim for wrongful death, arising out of an automobile accident, against the estate within the six-month period required by former G.S. 28-113. The trial judge found as a fact that decedent possessed a policy of liability insurance at the time of the fatal accident. The Supreme Court stated the following with respect to petitioner’s failure to file a timely claim against the estate in such circumstances: “By the provisions of G.S. 28-113, if a claim is not presented in six months, the representative is discharged as to assets paid. Even if this statute applies to a claim for unliquidated [238] damages, which we do not concede, it would only bar petitioner’s claim for damages for wrongful death as to assets paid out by appellant, and he could still assert his demand against undistributed assets of the estate. ... In our opinion, failure of petitioner to file a claim for unliquidated damages with appellant does not bar his action, where he is seeking to recover damages for an alleged wrongful death of his intestate, and to collect it out of the automobile liability insurance policy issued to Miles, deceased.” Id. at 654-55, 138 S.E. 2d at 492-93. Thus, it was the Court’s view that an automobile liability policy was an undistributed asset which could be used to satisfy a tardy claim against the estate. Our interpretation of what constitutes an undistributed asset for purposes of G.S. 28A-14-3 (Supp. 1977) is consistent with that view.2 In conclusion, it suffices to say that the defendant administrator’s reliance on two decisions of this Court, Baer v. Davis, 47 N.C. App. 581, 267 S.E. 2d 581 (1980), and Anderson v. Gooding, 43 N.C. App. 611, 259 S.E. 2d 398 (1979), to support his contention that plaintiff’s claim was absolutely barred because it was not filed within six months of the publication of general notice to creditors, is misplaced. Neither case involved an application of the provisions of Article 28A as they existed in 1978, which, of course, control the disposition of this case.3 In sum, we hold: (1) plaintiff’s claim against the estate was not barred under G.S. 28A-19-3 (Supp. 1977) because the administrator did not mail a personal notice to him as required by G.S. 28A-14-3 (Supp. 1977); and (2) the decedent’s automobile liability insurance policy, which was in effect at the time of the [239] accident, is an undistributed asset, within the meaning of G.S. 28A-14-3 (Supp. 1977), available for the payment of plaintiff’s claim. For these reasons, the order of summary judgment is reversed. Reversed. Judges Clark and Wells concur. Footnotes [1] The defendant administrator admitted, in his answers to plaintiffs interrogatories, that he knew before decedent died that he had been involved in an accident with a man on a bicycle. [2] We would also comment that G.S. 28A-19-3 (Cum. Supp. 1979), which is not applicable to this case, now expressly provides that a creditor’s claim shall not be barred, even though it is not timely presented under G.S. 28A-14-1, “to the extent that the decedent or personal representative is protected by insurance coverage with respect to such claim, proceeding or judgment.” G.S. 28A-19-3(i). [3] The Baer case is also irrelevant because it only involved an application of G.S. 28A-19-3(b)(2) which is not at issue here. It is also doubtful that any reasoning in the Gooding decision is authoritative in light of the Supreme Court’s reversal thereof in 300 N.C. 170, 265 S.E. 2d 201 (1980).