Jurisdiction; Preneed Funeral Contracts

SUBJECT: Jurisdiction; Preneed Funeral Contracts; N.C.G.S. § 90-210.65(e).

REQUESTED BY: Mr. William R. Hoke, Attorney for the North Carolina State Board of Mortuary Science, and Mr. Richard Schumacher, Assistant Clerk of Superior Court, Buncombe County

QUESTIONS:

. For the purpose of N.C.G.S. § 90-210.65(e), what is a "court of competent jurisdiction?"

. In order for a court to revoke an irrevocable preneed contract, must a civil lawsuit be filed, with the parties being at least the preneed contract purchaser and the funeral home (seller)?

. If the purchaser or beneficiary of the preneed contract has been adjudicated incompetent, is the clerk of the superior court a "court of competent jurisdiction" for the purpose of the statute? If so, must a hearing be held in order for the clerk to revoke the contract?

CONCLUSIONS:

. All trial divisions within the General Court of Justice are courts of competent jurisdiction for the purposes of N.C.G.S. § 90-210.65(e).

. In order for a court to revoke an irrevocable preneed contract a civil action must be initiated by the filing of a complaint with the necessary parties being the purchaser, the preneed funeral home licensee and, if other than the purchaser, the preneed funeral contract beneficiary.

. If a purchaser or beneficiary of a preneed contract has been adjudicated incompetent, the clerk of the superior court is a "court of competent jurisdiction" and, a hearing should be held in order for the clerk to make findings establishing that it is in the best interest of the ward to revoke the contract.

DISCUSSION

Subsections (a) through (d) of N.C.G.S. § 90-210.65 address the refund of amounts paid pursuant to a revocable preneed funeral contract. Subsection (e) of that statute reads as follows:

(e) This section shall not apply to irrevocable preneed funeral contracts. Irrevocable preneed funeral contracts may not be revoked nor any proceeds refunded except by order of a court of competent jurisdiction.

The other provisions of Article 13D of Chapter 90 of the General Statutes, "Funeral and Burial Trust Funds," provide no express or implied guidance with regard to the phrase "court of competent jurisdiction" and, therefore, other authority must be referred to for assistance.

The basic statutes concerning the jurisdiction of the trial divisions of the General Court of Justice § 7A-3. Judicial power; transition provisions.

Except for the judicial power vested in the court for the trial of impeachments, and except for such judicial power as may from time to time be vested by the General Assembly in administrative agencies, the judicial power of the State is vested exclusively in the General Court of Justice . . . .

§ 7A-4. Composition and organization.

The General Court of Justice constitutes a unified judicial system for purposes of jurisdiction, operation and administration, and consists of an appellate division, a superior court division, and a district court division.

§ 7A-40. Composition; judicial powers of clerk.

The Superior Court Division of the General Court of Justice consists of the several superior courts of the State. The clerk of superior court in the exercise of the judicial power conferred upon him as ex officio judge of probate, and in the exercise of other judicial powers conferred upon him by law in respect of special proceedings and the administration of guardianships and trusts, is a judicial officer of the Superior Court Division, and not a separate court.

§ 7A-240. Original civil jurisdiction generally.

Except for the original jurisdiction in respect of claims against the State which is vested in the Supreme Court, original general jurisdiction of all justiciable matters of a civil nature cognizable in the General Court of Justice is vested in the aggregate in the superior court division and the district court division as the trial divisions of the General Court of Justice. Except in respect of proceedings in probate and the administration of decedents’ estates, the original civil jurisdiction so vested in the trial divisions is vested concurrently in each division.

§ 7A-242. Concurrently held original jurisdiction allocated between trial divisions.

For the efficient administration of justice in respect of civil matters as to which the trial divisions have concurrent original jurisdiction, the respective divisions are constituted proper or improper for the trial and determination of specific actions and proceedings in accordance with the allocations provided in this Article. But no judgment rendered by any court of the trial divisions in any civil action or proceeding as to which the trial divisions have concurrent original jurisdiction is void or voidable for the sole reason that it was rendered by the court of a trial division which by such allocation is improper for the trial and determination of the civil action or proceeding. (Emphasis added)

With regard to your first question, the significance of the above set out statutes is that the courts of both trial divisions possess the necessary jurisdiction and are competent to enter judgments regarding any civil action. It is this system of concurrent jurisdiction which allows matters in controversy of more than $10,000.00 to be within the jurisdiction of the district court absent objection from a party, see N.C.G.S. § 7A-243. Therefore, the courts of both trial divisions of the General Court of Justice are "courts of competent jurisdiction" for the purposes of N.C.G.S. § 90With regard to your second question, the following statutes are relevant.

§ 1-1. Remedies.

Remedies in the courts of justice are divided into –

. Actions

. Special Proceedings

§ 1-2. Actions.

An action is an ordinary proceeding in a court of justice, by which a party prosecutes another party for the enforcement or protection of a right, the redress or prevention of a wrong, or the punishment or prevention of a public offense.

§ 1-3. Special proceedings.

Every other remedy is a special proceeding.

§ 1A-1, Rule 2. One form of action.

There shall be in this State but one form of action for the enforcement or protection of private rights or the redress of private wrongs, which shall be denominated a civil action.

§ 1A-1, Rule 3. Commencement of action.

(a) A civil action is commenced by filing a complaint with the court . . . .

No express statement has been located as to the criteria to be used in distinguishing between a special proceeding and a civil action. However, the case of Woodley v. Gilliam, 64 N.C. 649 (1870), supports the proposition that in the absence of a statutory designation as a special proceeding or a reference to initiation by petition or similar indirect language, a civil proceeding should be deemed a civil action. Neither Article 13D of Chapter 90 nor any other statutory provision either directly or indirectly makes a reference to a special proceeding with regard to the order described in N.C.G.S. § 90-210.65(e). The judicial revocation of an irrevocable contract would appear to be a procedure for the enforcement or protection of some private right or the redress of prevention of a private wrong. Therefore, in light of the provisions of N.C.G.S. § 1A1, Rule 2, and the absence of any statutory language to the contrary, the procedure used to obtain a court order revoking an irrevocable preneed funeral contract should be a civil action. As set out in N.C.G.S. § 1A-1, Rule 3, a civil action is commenced, and a court obtains its jurisdiction, by the filing of a complaint.

With regard to the parties involved, it is clear that the purchaser and licensee as direct parties to the preneed funeral contract are necessary parties. It is the further opinion of this office that the beneficiary, if other than the purchaser, is a real party in interest because the court order revoking the contract would diminish or eliminate his or her beneficial interest in the contract. There may also be circumstances where the financial institution or the insurance company involved in the The following statutes are relevant to your third question.

§ 1-7. When court means clerk.

In the following sections which confer jurisdiction or power, or impose duties, where the words "superior court," or "court," in reference to a superior court are used, they mean the clerk of the superior court, unless otherwise specially stated, or unless reference is made to a regular session of the court, in which cases the judge of the court alone is meant.

§ 1-209. Judgments authorized to be entered by clerk; sale of property; continuance pending sale; writs of assistance and possession.

The clerks of the superior courts are authorized to enter the following judgments:

(1): . . . .
(2): All consent judgments.
(3): . . . .

§ 7A-246. Special proceedings; exception; guardianship and trust administration.

The superior court division is the proper division, without regard to the amount in controversy, for the hearing and trial of all special proceedings except proceedings under the Protection of the Abused, Neglected or Exploited Disabled Adult Act (Chapter 108A, Article 6, of the General Statutes), except proceedings for involuntary commitment to treatment facilities (Chapter 122, Article 5A, of the General Statutes) and of all proceedings involving the appointment of guardians and the administration by legal guardians and trustees of express trusts of the estates of their wards and beneficiaries, according to the practice and procedure provided by law for the particular proceeding.

§ 35A-1203. Jurisdiction; authority of clerk

(a): Clerks of superior court in their respective counties have original jurisdiction for the appointment of guardians of the person, guardians of the estate, or general guardians for incompetent persons and of related proceedings brought or filed under this Subchapter, Clerks of superior court in their respective counties have original jurisdiction for the appointment of guardians of the estate for minors, for the appointment of guardians of the person or general guardians for minors who have no natural guardian, and of related proceedings brought or filed under this Subchapter.
(b): The clerk shall retain jurisdiction following appointment of a guardian in order to assure compliance with the clerk’s orders and those of the superior court. The clerk shall have authority to remove a guardian for cause and shall appoint a successor guardian, following the criteria set forth in G.S. 35A-1213 or G.S. 35A-1224, after removal, death, or resignation of a guardian.

. . . .

§ 35A-1251. Guardian’s powers in administering incompetent ward’s estate.

In the case of an incompetent ward, a general guardian or guardian of the estate has the power to perform in a reasonable and prudent manner every act that a reasonable and prudent person would perform incident to the collection, preservation, management, and use of the ward’s estate to accomplish the desired result of administering the ward’s estate legally and in the ward’s best interest, including but not limited to the following specific powers:

. . . . .

. To maintain any appropriate action or proceeding to recover possession of any of the ward’s property, to determine the title thereto, or to recover damages for any injury done to any of the ward’s property; also, to compromise, adjust, arbitrate, sue on or defend, abandon, or otherwise deal with and settle any other claims in favor of or against the ward.

. To complete performance of contracts entered into by the ward that continue as obligations of the ward or his estate, or to refuse to complete such contracts, as the guardian determines to be in the ward’s best interests, taking into account any cause of action that might be maintained against the ward for failure to complete such contract.

. . . .

When there is an incompetent involved, the clerk’s jurisdiction arises under the provisions of

N.C.G.S. § 35A-1203 and N.C.G.S. § 7A-246. Because the property rights of an incompetent are at issue the best course of action would be to conduct a hearing before the clerk and for there to be findings of fact establishing that it is in the best interest of the ward to have the preneed contract revoked.