In Re Foreclosure of Deed of Trust From Gardner , 20 N.C. App. 610 ( 1974 )

202 S.E.2d 318 (1974) 20 N.C. App. 610

In re Foreclosure of Deed of Trust from Howard T. GARDNER (Single) recorded in Book 881, Page 343, Randolph County Registry.

No. 7419SC11.

Court of Appeals of North Carolina.

February 6, 1974.

Ottway Burton, Asheboro, for respondent, Mary Gardner Brady, appellant.

William W. Ivey, Asheboro, guardian ad litem for Howard T. Gardner, appellee.

PARKER, Judge.

When respondent Brady filed answer raising issues of fact as to the ownership of the money on deposit with the clerk, the proceeding should have been transferred to the civil issue docket of the superior court for trial. G.S. § 45-21.32(c). Thereafter the clerk had no jurisdiction to adjudicate ownership of the funds which he held for safekeeping under G.S. § 45-21.31(e), his only concern being that the adjudication of this question be made by a court of competent jurisdiction. Koob v. Koob, 283 N.C. 129, 195 S. E.2d 552. Therefore, the clerk had no jurisdiction to enter the order dated 9 October 1972 purporting to adjudicate ownership in the fund.

Though that order was a nullity, when by appeal the matter came before the judge of the superior court, the judge did have jurisdiction "to proceed to hear and determine all matters in controversy." G. S. § 1-276; McDaniel v. Leggett, 224 N.C. 806, 32 S.E.2d 602; Hall v. Artis, 186 N.C. 105, 118 S.E. 901. In this connection, however, a timely demand for trial by jury having been made by respondent Brady, all issues of fact properly arising on the pleadings should have been submitted to a jury unless, upon a motion for summary judgment properly supported as provided in G.S. 1A-1, Rule 56, it was shown that there was no genuine issue as to any material fact and that one of the parties was entitled to judgment as a matter of law. The trial court, finding there were issues of fact for determination by the jury, correctly overruled petitioners' motion for summary judgment by its order dated 22 March 1973. However, by separate judgment entered on the same date, the court rendered judgment as a matter of law in favor of the respondent guardian ad litem, and the question presented by this appeal is the validity of that judgment.

At the outset, we note that the record does not reveal any motion for summary judgment under Rule 56 or for judgment on the pleadings under Rule 12(c) filed by the guardian ad litem or his ward, Howard T. Gardner. On the contrary, the judgment appealed from simply recites that "Howard T. Gardner, through his guardian ad litem, has made a special appearance before [the] Court requesting that the present value of his remainder interest be allotted to him." The precise meaning of this recitation is not clear, since the guardian ad litem was in all respects a party to this proceeding and had filed answer to the original petition. It would appear that the trial court predicated its judgment in favor of the guardian ad litem on the theory that respondent Brady's claim, as set forth in her answer "by way of a further defense and a further cause of action," was in the nature of a separate civil action for relief based upon fraud; that no service of the answer having been made upon the guardian ad litem within three years after August 1969, the date when respondent Brady alleged she first discovered the fraud, her claim insofar as the rights of the guardian ad litem and his ward were concerned was barred by the three year statute of limitations; and, these facts being shown, the guardian ad litem was entitled to judgment as a matter of law. In this there was error.

The sole matter involved in this proceeding was the determination of the rights of the parties in the funds on deposit with the clerk. Respondent Brady's claim related directly to that matter. On the facts disclosed by the pleadings her claim was not barred at the time this proceeding was commenced by the filing of the petition on 16 June 1971, nor was it barred at the time the guardian ad litem was appointed and made a party to this proceeding on 19 July 1971, nor when respondent Brady filed her answer asserting her claim on 26 July 1971. Our Supreme Court held in Brumble v. Brown, 71 N.C. 513, that a defendant's counterclaim, even one not based on the same transaction as that which gave rise to plaintiff's cause of action, relates to the commencement of the action, and that if it is not barred by the statute of limitations at that time, it does not become barred afterwards during the pendency of the action. Subsequent decisions may have modified this holding as to counterclaims not based on the same facts giving rise to the original cause of action and which are first asserted in amended pleadings. See: 1 McIntosh, N.C. Practice and Procedure 2d, § 327; Annotation, 127 A.L.R. 909. Further, it is clear that the statute of limitations continues to run as to new parties at least until they are made parties to the litigation. Acceptance Corp. v. Spencer, 268 N.C. 1, 149 S.E.2d 570; Speas v. Ford, 253 N.C. 770, 117 S. E.2d 784. In the present case, however, we see no reason why the rule announced in Brumble v. Brown, supra, should not apply. Respondent Brady's claim to the funds arose out of the same transactions as gave rise to the claims of the other parties to this litigation. Her claim was not barred when the proceeding was commenced or when the guardian was appointed and made a party. She made a timely assertion of her claim in the first and only pleading which she filed. Accordingly we hold that her claim related to the date of commencement of this proceeding, that it was not barred by the statute of limitations on that date at least insofar as the present record discloses, and that it did not become barred thereafter either as to the petitioners or as to the respondent, Howard T. Gardner, or his guardian ad litem.

Rule 5(b) of the Rules of Civil Procedure does provide in part that "[a] pleading setting forth a counterclaim or cross claim shall be filed with the court and a copy thereof shall be served on the party against whom it is asserted or on his attorney of record." This requirement, however, does not make a new or separate litigation out of a counterclaim or cross claim which arises out of the same transaction or occurrence that is the subject matter of the opposing party's claim. Therefore, whatever other consequences may flow from respondent Brady's failure to serve a copy of her answer on the guardian ad litem, such failure did not result in changing the rule of Brumble v. Brown, supra, so as to cause the statute of limitations to run against her claim until such service is accomplished.

The judgment appealed from being erroneous, it is reversed and this proceeding is remanded to the superior court for trial of the issues properly arising on the pleadings. The evidence presented and the verdict rendered will, of course, determine the nature of the legal questions which will be presented at the trial. While we refrain from expressing an opinion on questions not yet presented, we do note that even should petitioners prevail before the jury, they may not be entitled to division of the funds in the manner set forth in their petition. A life interest measured by the lives of the survivor of two or more persons is not the exact actuarial equivalent to an estate computed on the basis of the life expectancy of the youngest of such persons, since the life expectancies of the remaining members of the group affect the computation to some degree. Further, this State recognizes a tenancy by the entirety in a life estate in land, and "[a]nother peculiar incident of an estate by the entirety is, that if an estate be given to A., B. and C., and A. and B. are husband and wife, nothing else appearing, they will take a half interest in the property and C. will take the other half." Davis v. Bass, 188 N.C. 200, 124 S.E. 566.

The judgment appealed from is reversed and this proceeding is remanded to the Superior Court of Randolph County for trial.

Reversed and remanded.

BRITT and VAUGHN, JJ., concur.