In the Matter of Virginia Yancey MICHAL, Incompetent.
No. 28.Supreme Court of North Carolina.
April 17, 1968.*497 M. John DuBose, Asheville, for appellant.
W. R. Chambers and E. P. Dameron, Asheville, for appellee.
LAKE, Justice.
When the trustees opened an account in the bank and deposited funds of the trust estate therein, a contractual relation between them and the bank was created, whereby the bank became the debtor of the trustees. Nationwide Homes of Raleigh, N.C., Inc. v. First-Citizens Bank & Trust Co., 267 N.C. 528, 148 S.E.2d 693; Merchants Bank v. Weaver, 213 N.C. 767, 197 S.E. 551; Woody v. National Bank, 194 N.C. 549, 140 S.E. 150, 58 A.L.R. 725. The right, if any, of the petitioner, as surviving trustee, to draw a check upon that account and to proceed against the drawee bank for its refusal to honor the check arises out of and is governed by that contract. The clerk of the superior court has no jurisdiction to determine that right or to issue any order directing the bank to honor such check upon a petition, or motion, by the surviving trustee in the special proceeding in which such trustee was appointed. There was, therefore, no error in the refusal of the clerk to sign the order tendered to him by the petitioner or in that portion of the judgment of the superior court confirming such refusal. Whatever right the petitioner may have against the drawee bank by virtue of the contract of deposit has not been adjudicated. It is not before us upon this appeal. It cannot be adjudicated in this proceeding.
The remaining question relates to the authority of the superior court judge, in this proceeding and upon this record, to direct the clerk to appoint some suitable person or banking corporation to act as cotrustee with the petitioner. In the silence of the record, we assume that no such appointment has been made as yet.
This is not a testamentary trust or a trust established by an agreement or conveyance by a settlor. This trust is in the nature of a guardianship, the trustees having been appointed by the order of the clerk in a special proceeding which, in the silence of the record, we assume was duly instituted and conducted before the clerk pursuant to G.S. § 35-2. The trustees so appointed thereby became representatives of the court. In that capacity, and in that capacity alone, they acquired whatever powers they had and incurred whatever obligations rested upon them. As such, they were and are subject to the direction of or removal by the court which appointed them, and to the power of the court to appoint such successor trustee or additional trustee as that court may, from time to time, in accordance with the appropriate procedures, find necessary and proper to protect the interests of the ward of the court.
G.S. § 35-2 provides: "The trustee * * shall be vested with all the powers of a guardian administering an estate for any person and shall be subject to all the laws governing the administration of estates of minors and incompetents." G.S. § 33-1 provides: "The clerks of the superior court within their respective counties have full power, from time to time, to take cognizance of all matters concerning orphans and their estates and to appoint guardians in all cases of infants, idiots, lunatics, inebriates and inmates of the Caswell School: * * * Provided, further, where any adult person is * * * found to be incompetent from want of understanding to manage his affairs by reason of physical and mental weakness on account of old age, disease, or other like infirmities, the clerk may appoint a trustee in lieu of a guardian for said person. The trustee so appointed shall be subject to the laws now or which hereafter may be enacted for the control and handling of estates by guardians." G.S. § 33-9 empowers clerks of the superior court to remove a guardian or trustee appointed under the provisions of Chapter 33 of the General Statutes and to appoint successors for such fiduciaries, and provides that it shall be the duty of the clerk to remove such fiduciary in certain specified *498 instances. G.S. § 36-9 confers upon the clerk of the superior court power and jurisdiction to accept the resignation of a guardian or trustee and to appoint a successor.
These statutes confer upon the clerk of the superior court the jurisdiction to appoint and to remove guardians and trustees appointed in lieu of guardians. The jurisdiction of the judge of the superior court over such matters is confined to the correction of errors of law upon appeal from the action of the clerk. In Re Simmons, 266 N.C. 702, 147 S.E.2d 231. Consequently, the order of the judge in the present instance directing the clerk to appoint a cotrustee was in excess of the authority of the judge, that matter not having been considered or passed upon by the clerk. The matter must, therefore, be, and is hereby, remanded to the superior court, with direction that the order of the judge from which this appeal is taken be corrected by deleting therefrom the provision directing and ordering the clerk to appoint a cotrustee. This is without prejudice to the authority of the clerk, if he finds it proper to do so, to appoint a cotrustee for the estate of Mrs. Michal.
In Re Estate of Smith, 200 N.C. 272, 156 S.E. 494, is distinguishable from the present case. There, the trust was a testamentary one and one of the two persons designated as trustee in the will failed to qualify. A beneficiary filed with the clerk a petition seeking the appointment of another to serve as cotrustee in lieu of the designee who had so failed to qualify. The clerk made such appointment. Upon appeal to the superior court, the judge vacated the appointment. This Court affirmed, saying:
"Where joint trustees are appointed, any one of them may execute the trust in the event of the death of his cotrustee or cotrustees or of the refusal or inability of the cotrustee or cotrustees to act. It is so provided by C.S. § 1736 [G.S. § 41-3]. The principle is this: When the testatrix appointed DeMerritt and Arend to manage her estate, she indicated her choice of their joint services and most probably the services of the survivor in preference to those of some other person in whose selection she could have no part. * * *
"The result is that the appointment of a cotrustee with DeMerritt is not a condition necessarily precedent to a faithful execution of the trust created in behalf of the petitioner. For just cause a court of equity might remove DeMerritt; but the petitioner does not ask his removal. If just cause is shown a cotrustee may be appointed, as the petitioner prays; but the necessity or expediency of such appointment should be inquired into and determined by a suit in equity in which all persons having a beneficial interest are made parties and given an opportunity to be heard and in which the complaint or bill should fully set forth facts which, if established, would justify a decree for the relief sought by the petitioner."
The present matter does not involve a testamentary trust. The determination of the number of trustees to serve and the selection of the original trustees were matters for the clerk, and he made those determinations. Whether a successor should be appointed for one of those originally named by him, who has since died, is a matter which rests in the sound discretion of the clerk. This discretion he may exercise upon his own motion or upon the motion of any interested person.
Error and Remanded.