On appeal of right pursuant to G.S. 7A-30(2) (1981) of the decision of the Court of Appeals, one judge dissenting, reported at
Carlton, Justice. Justice Copeland did not participate in the consideration or decision of this case.
Plaintiff initiated this action by complaint filed 11 July 1979 alleging that defendant had breached certain fiduciary duties as executor of her husband's estate and as trustee of two testamentary trusts. Defendant's answer asserted that plaintiff had failed to state a claim for which relief could be granted, denied that it had breached any duties owed plaintiff, and asserted as defenses the statute of limitations, estoppel, laches, and that plaintiff's action constituted an impermissible collateral attack on a prior adjudication.
The essential facts of the controversy are not in dispute: Defendant's predecessor, State Bank and Trust Company, was named executor in the will of plaintiff's husband who died on 28 September 1968.*fn1 Decedent's will established two trusts, both of which were for the primary benefit of plaintiff. The will named defendant's predecessor as trustee of these trusts.
At the time of his death plaintiff's husband owned a considerable amount of real estate. His holdings included a tobacco farm, two commercial lots on Cotanche Street (Cotanche property), three residential lots in the Sedgefield subdivision, and undivided half-interests in eighteen lots, also in the Sedgefield subdivision. Decedent also owned the home in which he, his wife and their three children had lived. (Decedent did not make a disposition of the home in his will, apparently because he believed that it was owned by himself and his wife as tenants by the entirety.) At the time of decedent's death he had incurred debts amounting to approximately $82,268, a substantial part of which were owed to State Bank. The will directed that the debts be paid out of the principal of the estate.
Because defendant believed that the homeplace had been owned by the decedent and plaintiff as tenants by the entirety, it
was not initially included in the estate. Of the other real property owned by decedent only the tobacco farm and the commercial lots on Cotanche Street were readily marketable. At the time of decedent's death the tobacco farm was valued at approximately $74,940 and the Cotanche Street property was appraised at $8,500. In December 1969 the defendant sold the tobacco farm and the Cotanche Street property. The properties were sold for $74,940.00 and $8,500.00 respectively. Plaintiff, acting as guardian for her children, purchased the tobacco farm with money from their separate estates.
Approximately one year later plaintiff attempted to sell the family home and discovered that the title was in decedent's name alone. In December 1970, after learning that the home had been owned by the decedent alone and was part of his estate, defendant sold the home for $60,000.
The tobacco farm was the only significant income-producing asset in the estate. In the accounting period immediately following decedent's death the tobacco farm had a gross income of approximately $25,000, and, in the years following the sale was alleged to have yielded an average yearly income to its owners of $8,400.
Plaintiff's complaint alleges that the tobacco farm's value has increased to over $1,000,000 and that the Cotanche Street property is presently worth $80,000. After the sale of the tobacco farm the yearly income receipts of the two trusts were alleged to have been approximately $2,000 and the value of the assets held by the trusts has declined from approximately $245,000 at the end of 1973 to $95,000 as of 1 January 1978 because the principal had been invaded to provide support for plaintiff and her family.
Plaintiff's action is based primarily on the claim that the defendant should have discovered that the family home was in decedent's sole name. Had defendant known that the home was an estate asset, plaintiff argues, it would have or should have sold ...