#### THE STATE OF NORTH CAROLINA Ex Rel. LYNN WILDER, JR., Administrator of PEARL MEDLIN RAINES, and LYNN WILDER, JR., Administrator of PEARL MEDLIN, Administratrix of O. R. MEDLIN, v. MINNIE MEDLIN, Administratrix of O. R. MEDLIN; L. T. ROSS, Administrator De Bonis Non of GASTON H. MEDLIN; THE INDEMNITY INSURANCE COMPANY OF NORTH AMERICA and THE NATIONAL SURETY CORPORATION.

(Filed 3 May, 1939.)

1. Evidence § 32 — Testimony of agreement between administrator and dis-tributee in regard to settlement of estate held incompetent in action by distributee’s administrator to recover assets.

This action was instituted by the administrator of a distributee against the administrator A. 6. n. of the estate in which the distributee was interested, and against the executrix of the prior administrator of that estate and the surety on his bond, alleging the failure of the prior administrator to account for moneys of that estate and the refusal of the administrator d. 6. n. to institute action. The administrator d. 6. n. was permitted to testify as to an agreement made between him and the dis-tributee, in the presence of the executrix and others, in which the dis-*543tributee agreed to make no objection as to tbe administration of that estate. Held: Tbe testimony related to more than a transaction between the distributee and executrix, since the witness, as administrator d. 6. n., was a necessary party to the conference and entire transaction and the agreement directly affected the manner of his handling of the estate, and the testimony was incompetent under the provision of O. S., 1795, and its unrestricted admission in evidence constituted prejudicial error as to plaintiff administrator, since it tended to show that his intestate, as dis-tributee, had agreed to forego the prosecution of the very suit instituted by plaintiff administrator.

3. Same — Witness may testify in regal’d to independent facts and circumstances not involving personal transaction or communication between the witness and deceased.

Testimony of an interested witness as to independent facts and circumstances, within his own knowledge, or as to what he saw or heard take place between deceased and a third party, are not rendered incompetent by O. S., 1795, since in such instances the testimony does not relate to a personal transaction or communication between the witness and deceased, and appellant’s exceptions to the admission of such testimony are not sustained.

Appeal by plaintiff from Harris, J., at November Term, 1938, of Wake. New trial.

Plaintiff instituted tbis action as administrator of tbe estate of Pearl Medlin Eaines against tbe administratrix of tbe estate of O. E. Medlin, deceased, to recover money for wbicb it was alleged 0. E. Medlin bad failed to account while be was acting as administrator of tbe estate of Gaston EL Medlin. L. T. Eoss, administrator de bonis non of Gaston EL Medlin, was made party defendant, as was also tbe surety on tbe administration bond of O. E. Medlin. Pearl Medlin Eaines and 0. E. Medlin were tbe children of Gaston II. Medlin and tbe only distributees of bis estate.

Tbe cause was referred to Oscar Leach, Esq., as referee, tbe defendants preserving right to trial by jury. Tbe referee reported findings of fact and conclusions of law in favor of tbe plaintiff, and defendants filed exceptions thereto, and demanded jury trial on tbe following issues:

“At tbe time of tbe death of G. EL Medlin was 0. E. Medlin indebted to him on account of money paid by G. EL Medlin for 0. E. Medlin to tbe clerk of tbe Superior Court of Wake County, and, if so, in what amount ?”

“Did O. E. Medlin, on or about 12 March, 1933, find and appropriate to bis own use any sum of money belonging to tbe estate of G. EL Medlin, deceased, and, if so, bow much?”

When tbe case was tried in tbe Superior Court, tbe jury answered both these issues “No,” and from judgment in accord with tbe verdict, plaintiff appealed.

*544 J. G. Mills and Paul F. Smith for plaintiff.

Gulley & Gulley for defendant Minnie Medlin, Administratrix, Estate of O. B. Medlin.

T. Lacy Williams for defendants L. T. Boss, Administrator d. b. n., Estate of G. H. Medlin, and Indemnity Insurance Company of North America.

DeviN, J.

Tbe only questions presented by tbis appeal relate to tbe rulings of tbe court below in tbe admission of testimony wbieb it is contended was rendered incompetent by O. S., 1795.

For a proper understanding of tbe relevancy of tbe testimony objected to and in order to determine its competency, it is necessary to consider tbe pertinent facts and circumstances as disclosed by tbe record. These may be briefly stated in chronological order as follows: Gaston H. Medlin died in March, 1933, intestate, leaving him surviving bis two children, 0. R. Medlin and Pearl Medlin Raines. In September, 1933, 0. R. Medlin qualified as administrator of bis father’s estate with defendant Indemnity Insurance Company as surety on bis bond. Without having rendered any account of bis administration, O. R. Medlin died in November, 1934, and defendant Minnie Medlin, bis widow, qualified as bis administratrix. At tbe same time defendant L. T. Ross qualified as administrator de bonis non of tbe estate of Gaston H. Medlin. In May, 1935, Pearl Medlin Raines died, and plaintiff Lynn Wilder, Jr., qualified as administrator of her estate. Plaintiff as such administrator made demand upon defendant Ross as administrator de bonis non of Gaston II. Medlin that be institute action against tbe estate of 0. R. Medlin, prior administrator of Gaston H. Medlin, and tbe surety on bis bond, for tbe recovery of money alleged to be due by O. R. Medlin to bis father’s estate. Defendant Ross declined so to do, and thereupon tbe plaintiff instituted tbis action, alleging that 0. R. Medlin was indebted to tbe estate of Gaston II. Medlin in tbe sum of $2,533.53 for money paid for him by Gaston II. Medlin to tbe clerk of tbe Superior Court of Wake County, and that 0. R. Medlin was also indebted to said estate in tbe further sum of $9,000, money found by him in tbe home of Gaston H. Medlin after bis death, and appropriated to bis own use. Plaintiff alleged bis intestate was entitled as distributee of Gaston H. Medlin’s estate to one-balf of these amounts.

Evidence was offered in support of plaintiff’s allegations. It appeared that in 1932, about a year before bis death, Gaston H. Medlin bad withdrawn $11,500 from a bank in Oxford, and that tbis was at a time when there were many bank failures in tbis and other sections of tbe country. Plaintiff offered evidence tending to show that shortly after Gaston H. Medlin’s death, O. R. Medlin found and appropriated *545$9,000 in currency belonging to bis deceased father’s estate, upon wbicb estate be subsequently qualified as administrator. Defendant’s evidence tended to explain tbe matter of tbe $2,533.53, and to impeach tbe testimony of plaintiff’s witnesses as to tbe finding of $9,000 in tbe Medlin borne.

During tbe trial, over tbe objection of plaintiff as administrator of Pearl Medlin Raines, tbe following testimony of defendant L. T. Ross was permitted to go to tbe jury:

“I bad a conference with Pearl Raines and Mrs. Minnie Medlin in your office (office of T. Lacy Williams, attorney for defendant Ross). Tbe four of us were present, myself, Mrs. Medlin, Mrs. Raines and Mr. Williams. Tbe conference took place after tbe investigation I bad made with respect to tbe assets of tbe estate of G. H. Medlin. An agreement was reached at that time between Mrs. Medlin and Mrs. Raines with respect to tbe estate. After going over tbe thing and seeing just bow it was they agreed that they were each willing to go fifty-fifty in what was on band and not bring no other objection in no way toward each other in tbe settling of it.”

In apt time plaintiff requested tbe court to instruct tbe jury that this evidence could only be considered by them as tending to explain why Ross declined to bring tbe action and in no other aspect, and that tbe jury should not consider it in connection with tbe issues submitted. Tbe court refused to give this instruction and tbe jury was permitted to consider this evidence as competent for all purposes.

Examining this evidence in its relation to tbe determinative issues in tbe suit, we think it was both incompetent under C. S., 1795, and prejudicial to tbe plaintiff. The testimony was given by a party tó tbe action, who was testifying in bis own behalf, and in behalf of another party to tbe action, against tbe administrator of tbe deceased, Pearl Medlin Raines. It involved a personal transaction and communication between tbe witness and tbe deceased.

Tbe defendant Ross testified, in effect, that, following an investigation wbicb be had made as to tbe G. H. Medlin estate, of wbicb be was administrator and in wbicb tbe deceased was interested as distributee, be bad a conference with her in tbe presence of tbe defendant, Mrs. Minnie Medlin, in tbe office of witness’ attorney, and that after going over tbe matter an agreement was entered into by tbe deceased with respect to tbe settlement of tbe estate wbicb tbe witness bad in charge. This was something more than tbe mere relation of a transaction between other parties. Tbe witness was a party to tbe conference and to tbe entire transaction, as was also tbe deceased. It materially concerned bis administration of the estate, and tbe agreement which be says Mrs. Raines entered into there constituted tbe basis upon wbicb be acted in *546dealing with tbe estate and its distributees. Tbe conference was doubtless arranged by tbe witness, as it was beld at bis attorney’s office, and was designed for tbe consideration of matters to wbicb botb be and tbe deceased were necessary parties.

Tbe restriction upon tbe introduction of testimony in tbe trial of an action contained in C. S., 1795, refers by its express- terms to a person wbo is a party to tbe action (Benedict v. Jones, 129 N. C., 475, 40 S. E., 223; Grier v. Cagle, 87 N. C., 377), or interested in tbe event, and prohibits bis examination as a witness in bis own bebalf, against tbe administrator of a deceased person, concerning a personal transaction or communication between bim and tbe deceased. Bunn v. Todd, 107 N. C., 266, 11 S. E., 1043; Bank v. Wysong, 177 N. C., 284, 98 S. E., 769. Tbis statute bas been often considered by tbis Court and its provisions analyzed for tbe purpose of determining its applicability to varying situations and circumstances. Among tbe many cases on tbe subject there are decisions to tbe effect that, notwithstanding tbe witness is a party or interested, if be merely testifies to independent facts and circumstances, within bis own observation and knowledge, or to what be saw or beard take place between tbe deceased and a third party, bis testimony would not be rendered incompetent under tbe statute. Burton v. Styers, 210 N. C., 230, 186 S. E., 248; Vannoy v. Green, 206 N. C., 80, 173 S. E., 275; Barton v. Barton, 192 N. C., 453, 135 S. E., 296; In re Mann, 192 N. C., 248, 134 S. E., 649; Abernathy v. Skidmore, 190 N. C., 66, 128 S. E., 475; In re Harrison, 183 N. C., 457, 111 S. E., 867; Zollicoffer v. Zollicoffer, 168 N. C., 326, 84 S. E., 349; Lehew v. Hewett, 138 N. C., 6, 50 S. E., 459; Johnson v. Cameron, 136 N. C., 243, 48 S. E., 640; Johnson v. Townsend, 117 N. C., 338, 23 S. E., 271; Watts v. Warren, 108 N. C., 514, 13 S. E., 232; McCall v. Wilson, 101 N. C., 598, 8 S. E., 225; March v. Verble, 79 N. C., 19; Gray v. Cooper, 65 N. C., 183.

Tbis construction of tbe statute, however, bas not been extended to include those cases where tbe facts, in connection with wbicb tbe testimony is offered, indicate a personal transaction or communication between tbe interested witness and tbe deceased. There tbe prohibition of tbe statute bas been applied according to tbe terms in wbicb it is expressed. In re Plott, 211 N. C., 451, 190 S. E., 717; Boyd v. Williams, 207 N. C., 30, 175 S. E., 832; Price v. Pyatt, 203 N. C., 799, 167 S. E., 69; White v. Evans, 188 N. C., 212, 124 S. E., 194; Brown v. Adams, 174 N. C., 490, 93 S. E., 989; Witty v. Barham, 147 N. C., 479, 61 S. E., 372; Davidson v. Bardin, 139 N. C., 1, 51 S. E., 779; Fertilizer Co. v. Hippy, 123 N. C., 656, 31 S. E., 879; Wilson v. Featherston, 122 N. C., 747, 30 S. E., 325; Bright v. Marcom, 121 N. C., 86, 28 S. E.. 60; Blake v. Blake. 120 N. C., 177, 26 S. E., 816; Lane v. *547 Rogers, 113 N. C., 171, 18 S. E., 117; Carey v. Carey, 104 N. C., 171, 10 S. E., 156; Ballard v. Ballard, 75 N. C., 190; Peoples v. Maxwell, 64 N. C., 313.

An analysis of these and other eases on the subject, in the light of the facts upon which the decisions were made to turn, makes clear the substantial uniformity of the authorities to the effect that if the testimony offered may fairly be construed to refer to and rest upon a communication by the deceased to the interested witness, or to relate to a transaction by the deceased to which the interested witness was a party, though others be present and therein concerned, it comes within the exclusion prescribed by the statute.

The evidence objected to here was rendered incompetent by the statute and the trial court should have restricted its consideration by the jury as prayed by plaintiff. The evidence was material and its admission for all purposes was harmful to the plaintiff, as it tended to show an agreement on the part of plaintiff’s intestate to forego the prosecution of the cause of action now in suit.

There were other exceptions noted by the plaintiff to certain testimony of defendant Minnie Medlin and brought forward in his assignments of error, but upon examination we find these without substantial merit. The evidence of this witness to which objections were entered may be regarded as consisting of statements of independent facts and circumstances, and not as necessarily involving personal transactions or communications between the witness and the deceased.

The findings of fact reported by the referee, to which no exception was filed, were approved by the trial judge, and are set out in his judgment.

For the reasons hereinbefore stated.there must be a new trial of the issues presented by the defendants’ exceptions to the referee’s report, and it is so ordered.

New trial.