Appeal by respondents from Lamm, Judge. Order signed 23 April 1981 in Superior Court, Yadkin County. Heard in the Court of Appeals 2 March 1982.
Martin (Harry C.), Judge. Judges Martin (Robert M.) and Whichard concur.
We begin our analysis of this case with a statement of the applicable law as found in the pertinent statutes and cases construing them.
N.C.G.S. 28A-19-15 provides the mechanism by which a disputed claim against a decedent's estate may be referred. The finding of the arbitrators under this section is equivalent to a judgment, but "may be impeached in any proceeding against the personal representative" for fraud or collusion. See In re Estate of Reynolds, 221 N.C. 449, 20 S.E.2d 348 (1942); Lassiter v. Upchurch, 107 N.C. 411, 12 S.E. 63 (1890).
Under N.C.G.S. 28A-17-1, the personal representative may "apply to the clerk of superior court of the county where the decedent's real property . . . is situated, by petition, to sell such real property for the payment of debts and other claims against the decedent's estate." Although the proceeding to sell land under this section is a special proceeding before the clerk, if equities are involved over which the superior court acquires jurisdiction, it will determine the whole matter. See Baker v. Carter, 127 N.C. 92, 37 S.E. 81 (1900). See also Wadford v. Davis, 192 N.C. 484, 135 S.E. 353 (1926) (if pleadings raise an issue of fact, it can be tried by a jury); McNair v. Cooper, 174 N.C. 566, 94 S.E. 98 (1917) (upon ample evidence in the record, issue of fraud was submitted to the jury). Moreover, although the heirs are concluded by a judgment previously obtained for the debt and may not plead any defense which could have been, but was not, pleaded by the representative, this rule does not apply where fraud or collusion can be shown. See Person v. Montgomery, 120 N.C. 111, 26 S.E. 645 (1897); Tilley v. Bivins, 112 N.C. 348, 16 S.E. 759 (1893).
Person involved a proceeding to sell and pay the debts and costs of administration. The defendants denied that it was necessary to sell the lands, alleging that the personal estate was sufficient to pay the debts if properly and faithfully administered. The Court held that
[t]he heirs must be made parties to a proceeding to sell land for assets, and where they deny that it is necessary to sell, or allege that there are sufficient personal assets if properly administered, or that the debts upon which it is asked that the land be sold are not due by the estate, the Court will not order a sale until these questions are determined. . . .
120 N.C. at 113, 26 S.E. at 646.
Based on the foregoing, we first conclude that the award of the arbitrators in the case sub judice may be set aside upon a showing of fraud or collusion. Respondents properly raised the issue of the validity of the award by counterclaim under N.C.G.S. 28A-17-1. The heirs should be given the opportunity to resist and prevent the land from being applied to the payment of a debt which they allege was wrongfully obtained. Finally, the pleadings raised an issue of fact -- the propriety of the arbitrators' award -- and the matter was not one properly before the clerk for determination.
Thus, the trial court erred in both affirming the clerk's order and in concluding that "respondents are procedurally in error in filing an Answer and Counterclaim to the Petition for Sale of Realty."
Because we hold that respondents are entitled to be heard before a superior court judge on the issues raised in their counterclaim, we must address their second assignment of error relating to interrogatories submitted to the petitioner, the claimants, and the arbitrators.
N.C.R. Civ. P. 33 states that "[a]ny party may serve upon any other party written interrogatories to be answered by the party served. . . ." Thus interrogatories were improperly served on the arbitrators. They are not parties to this action. We also note that the trial court acts within its discretion in making and refusing discovery orders. ...