Case Name: SHARRON Y. THORNBURG v. ROBERT ALEXANDER LANCASTER and MARTHA MITCHELL LANCASTER
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1981-05-05
Citations: 303 N.C. 89
Docket Number: No. 90
Parties: SHARRON Y. THORNBURG v. ROBERT ALEXANDER LANCASTER and MARTHA MITCHELL LANCASTER
Judges: Justices Copeland and Britt join in this dissent.
Reporter: North Carolina Reports
Volume: 303
Pages: 89–101

Head Matter:
SHARRON Y. THORNBURG v. ROBERT ALEXANDER LANCASTER and MARTHA MITCHELL LANCASTER
No. 90
(Filed 5 May 1981)
1. Torts § 7.7 — settlement as partial or complete — issue of fact — reimbursement order improper
In an action to recover for personal injuries sustained by plaintiff in an automobile accident where there was an issue of fact as to whether a payment made to plaintiff "by defendants’ insurer was a partial or final settlement, the trial court’s reimbursement order with which plaintiff did not comply was improperly entered, since under G.S. 1-540.3 acceptance of partial or advance payments, absence a properly executed full settlement agreement, does not bar the party receiving the payments from suing on the underlying claims.
2. Rules of Civil Procedure § 41 — failure to comply with erroneous order of trial court — order of dismissal improper
A dismissal under G.S. 1A-1, Rule 41(b) may not be premised upon a party’s failure to comply with an erroneous order.
Justice Huskins dissenting.
Justices Copeland and Bmtt join in the dissenting opinion.
ON appeal of right by defendants from the decision of the Court of Appeals, one judge dissenting, reported at 47 N.C. App. 131, 266 S.E. 2d 738 (1980), reversing the dismissal of plaintiffs action entered by Collier, Judge, at the 29 May 1979 Civil Session of Superior Court, GUILFORD County.
By this appeal, we construe the meaning and scope of G.S. l-540.3(a), which provides, inter alia, that the receipt of advance or partial payments for any claim, potential civil action or action in which any person claims to have sustained bodily injuries .does not bar or discharge the claims of the person receiving the payments except when the parties have properly executed an agreement in full settlement of all claims.
This case was argued at No. 61 at the Fall Term 1980.
Gerald S. Schafer for plaintiff-appellee.
Tuggle, Duggins, Meschan, ' Thornton & Elrod, P.A., by Richard L. Vanore, for defendant-appellants.

Opinion:
CARLTON, Justice.
I.
Plaintiff seeks to recover for personal injuries she sustained when her automobile collided with one owned and operated by defendants. In their answer, defendants alleged that plaintiff is barred from bringing this action because she entered into a settlement agreement with defendants' insurance carrier and was paid $3,394.50 as a full and final settlement of her claim.
Defendants filed a motion to dismiss pursuant to Rule 12 and further prayed, in the alternative, that a motion for summary judgment under Rule 56 be granted in their favor.
At the hearing on those motions, Shirley Bennett, a claims representative for defendants' insurer, testified that she handled plaintiff's claim. After several conversations and after plaintiff had furnished medical reports and bills to the claims adjuster, Bennett testified that she and plaintiff agreed to settle the case for $3,000 above plaintiff's medical expenses. After that conversation, Bennett prepared the necessary drafts and releases and mailed them to plaintiff with the following cover letter, dated 23 June 1977:
Dear Mrs. Thornburg:
As per phone conversation, enclosed are draft and releases. Please sign and have your husband witness your signature. I have paid Dr. Faga direct.
Thank you for your cooperation. Please return the releases in self addressed stamped envelope enclosed.
Yours very truly,
St. Paul Fire & Marine Ins. Co.
Shirley L. Bennett
Claims Representative
Enclosures
The releases referred to were entitled "FULL AND Final Release of All Claims."
Bennett testified that she had no further contact with the plaintiff until 26 July 1977, when the. plaintiff telephoned her to complain of additional medical bills incurred and surgery required as a result of the accident. Bennett told her that if she was not satisfied with the settlement "to send everything back." Plaintiff returned the releases with the additional medical bills on 15 August 1977, but informed Bennett by telephone that she could not return the draft because she had deposited it in her account. Plaintiff also told Bennett at that time, according to Bennett's testimony, that she, the plaintiff, "didn't think it was a final settlement because it was not marked on the draft."
Plaintiff testified that she received the release and draft on or about 26 June 1977. At about the same time, but in any event prior to depositing the draft, plaintiff discovered a knot on her chest. Plaintiff deposited the draft in her checking account sometime before 30 June but did not sign the release. The draft did not contain a release clause. During the first week of July, she consulted her physician, who told her that the knot was cartilage damage to her ribs, apparently caused by the accident. Plaintiff stated that she called Bennett "around the first week in July" to tell her that there would be additional medical expenses. Mrs. Bennett allegedly told both plaintiff and her husband to keep and cash the draft and to send the releases back with the additional bills, which the insurance company would pay. Plaintiff did so. Plaintiff testified that at that time she was unable to return the draft because she had deposited it, but that she offered to send back cash in the amount of the draft. Mrs. Bennett told her to keep it. Plaintiff also stated that she intended that settlement to cover only the "original" injpry to her back and neck and that she did not intend that it be a final settlement of all claims.
During the second week of July, plaintiff was admitted to the hospital and underwent surgery to repair the damage to her ribs. Plaintiff's complaint alleged that she incurred medical bills of approximately $1,600 and was unable to work for a period of time, resulting in lost earnings in excess of $900.
Plaintiff's husband's testimony corroborated that of plaintiff.
At the conclusion of the hearing on 4 April 1979, the court filed an order denying defendants' motion to dismiss and, in the alternative, for summary judgment. Judge Kivett ordered plaintiff to reimburse defendants the $3,073.50 paid to her and the $320.00 paid to her doctor. Plaintiff filed objections and exceptions to the order on 5 April 1979 but did not give notice of appeal. On 3 May 1979 defendants moved to have plaintiffs action dismissed with prejudice for her failure to comply with the reimbursement order. On 24 May 1979 plaintiff filed an affidavit attesting that she did not have and was unable to borrow sufficient funds to comply with the order. On 7 June 1979 Judge Collier ordered a dismissal of plaintiff's action under Rule 41(b) of the North Carolina Rules of Civil Procedure unless within ten days plaintiff complied with the reimbursement order. Plaintiff did not comply, her action was dismissed, and she appealed to the Court of Appeals.
The Court of Appeals reversed the dismissal on the grounds that there was conflicting testimony as to whether the payment was final, advance or partial. Judge Erwin, for the court, wrote that although at the time the draft was tendered the parties intended it to be a final payment, there was conflicting testimony as to the conversations between the insurance adjuster and plaintiff and plaintiff's husband, raising an issue of fact as to whether that was initially intended as final payment was converted to a partial payment by the insurance adjuster's promise that her company would pay the additional medical bills.
The court reasoned that an issue of fact as to the character of the payment rendered the reimbursement order improper because such an order cannot be entered unless the finality of the payment is undisputed. Because the trial court, in this case, necessarily had to make a factual determination prior to the entry of the order, the reimbursement order was invalid. The Court of Appeals then ordered the case remanded to the trial court for a determination of whether plaintiffs failure to comply with the erroneous reimbursement order was proper grounds for a dismissal with prejudice under Rule 41(b). Defendants' cross-assignments of error- concerning the trial court's denial of defendants' motions for dismissal and summary judgment were deemed without merit.
Judge Clark, in dissent, found no dispute as to the finality of the payment and therefore considered G.S. 1-540.3 to be inapplicable. He reasoned that because the payment was neither partial nor advance, the trial judge had authority to enter the reimbursement and the dismissal was proper.
II.
The threshold issue in this appeal is whether the reimbursement order with which plaintiff did not comply was properly entered. The propriety of the order depends on whether the payment to plaintiff was partial or final.
Our decision in this case is controlled by G.S. 1-540.3 (Cum. Supp. 1979), which, in relevant part, provides:
(a) In any claim, potential civil action or action in which any person claims to have sustained bodily injuries, advance or partial payment or payments to any such person Claiming to have sustained bodily injuries or to the personal representative of any person claimed to have sustained fatal injuries may be made to such person or such personal representative by the person or party against whom such claim is made or by the insurance carrier for the person, party, corporation, association or entity which is or may be liable for such injuries or death. Such advance or partial payment or payments shall not constitute an admission of liability on the part of the person, party, corporation, association or entity on whose behalf the payment or payments are made or by the insurance carrier making the payments. . . . The receipt of the advance or partial payment or payments shall not in and of itself act as a bar, release, accord and satisfaction, or a discharge of any claims of the person or representative receiving the advance or partial payment or payments, unless by the terms of a properly executed settlement agreement it is specifically stated that the acceptance of said payment or payments constitutes full settlement of all claims and causes of action for personal injuries or wrongful death, as applicable.
(b) . . . .
Ño claim for reimbursement may be made or allowed by or on behalf of the person or party making such advance payment or payments against the person or party to whom such payment or payments are made except a claim based on fraud.
This statute, by its express terms, applies only to partial or advance payment and prohibits claims for reimbursement only when the payment made was partial or advance; it does not affect the power of a trial judge to order reimbursement when the payment or payments made were in final settlement of all claims. Thus, the propriety of the reimbursement order in the case sub judice depends on whether the payment made was partial or final.
The rule governing this determination was altered by the enactment of G.S. 1-540.3. Prior to the passage of G.S. 1-540.3 the intention of the parties regarding the character of the payment was irrelevant. At common law, acceptance by a claimant of any payment, no matter how large or small, accompanied by a statement that the payment is in full settlement constituted accord and satisfaction and operated, as a matter of law, to bar any further claim against the party making the payment, see, e.g., Fidelity & Casualty Co. of N.Y. v. Nello L. Teer Co., 250 N.C. 547, 109 S.E. 2d 171 (1959). The obvious purpose of the Legislature in enacting G.S. 1-540.3 was to alleviate the harsh consequences of application of the accord and satisfaction doctrine to personal injury cases and to encourage the making of partial payments to the claimant prior to an agreement on a final settlement. As a result of this statute, seriously injured persons who require long-term medical treatment can now accept piecemeal payments from an insurer before any determination of liability, and those payments represent neither an admission of liability on the part of the insurer nor full satisfaction of the injured party's claims. Under the present law, acceptance of partial or advance payments, absent a properly executed full settlement agreement, does not bar the party receiving the payments from suing on the underlying claim. Thus, if the 25 June 1977 payment to plaintiff was a partial or advance payment, her negotiation of the draft does not bar this suit because there is no properly executed settlement agreement, and the entry of the reimbursement order was improper.
Although G.S. 1-540.3 is concerned solely with advance or partial payments, it nowhere defines those terms or indicates how the character of the payment is to be determined. As stated above, whether the payment was partial or final under the statute depends upon the intent of the parties giving and receiving it. The determination of intent is a question of fact and, therefore, can be resolved only by the trier of fact unless the evidence of intent is undisputed.
The reimbursement order in this case was entered prior to trial and in response to motions to dismiss and for summary judgment. Because a trial judge on such motions cannot resolve issues of fact, e.g., White v. White, 296 N.C. 661, 252 S.E. 2d 698 (1979); Page v. Sloan, 281 N.C. 697, 190 S.E. 2d 189 (1972), the order is proper only if the trial judge could find, as a matter of law, that the payment was final.
The testimony at the hearing on defendants' motion for summary judgment reveals that there was a dispute regarding the character of the settlement agreement reached. Bennett, the claims adjuster for defendants' insurance carrier, testified that she regarded the agreement as a final settlement of all of plaintiff's claims arising out of the automobile accident. Plaintiff stated that she considered the agreement to cover only the injury to her back and neck. Plaintiff's testimony that she intended the settlement to cover only her claim for the injury to her back and neck is sufficient to create an issue as to a material fact, the character of the payment, and to take her case to the jury. Thus, the trial judge could not have found as a matter of law that the payment was final; the trial court's denial of the motions for dismissal and summary judgment was proper; and the entry of the reimbursement order violated the provisions of G.S. 1-540.3, rendering it invalid. The Court of Appeals properly so held.
III.
The remaining question is whether a dismissal under Rule 41(b) of our Rules of Civil Procedure may be premised upon a party's failure to comply with an erroneous order. The Court of Appeals did not decide this question, but vacated the dismissal and remanded for a new ruling in the discretion of the trial court. With this portion of the Court of Appeals' decision, we disagree.
There is nothing in the record before us to indicate that Judge Collier, in hearing the Rule 41(b) motion, gave consideration to the propriety of Judge Kivett's earlier order of reimbursement. He acted properly in this respect, for the only question before him was whether plaintiff had complied with the earlier order. It is well settled in this jurisdiction that one superior court judge cannot correct another's errors of law or change the judgment of another superior court judge previously made in the same action. E.g., Calloway v. Ford Motor Company, 281 N.C. 496, 189 S.E. 2d 484 (1972). For Judge Collier to refuse to grant the Rule 41(b) motion on the ground that he disagreed with the earlier order of a fellow superior court judge would, therefore, have been erroneous.
We, however, are not bound by this restriction. Because we hold that the earlier order for reimbursement is invalid, the Rule 41(b) order of dismissal must now fall as well. We agree with the Court of Appeals that no North Carolina or federal case can be found on point. It requires no citation of authority, however, to know that a grave injustice would be committed were we to condone the dismissal with prejudice of an action against a party for failing to obey an earlier order in the matter which was erroneous ab initio. Judge Collier's order of 7 June 1979 is, therefore, vacated.
Defendants, appellants in this Court, argue in their new brief that plaintiff failed to appeal from Judge Kivett's order within the time allowed and, therefore, the Court of Appeals was without jurisdiction to consider its validity. However, Rule 16(a) of the Rules of Appellate Procedure provides in pertinent part:
Review by the Supreme Court after a determination by the Court of Appeals, whether by appeal of right or by discretionary review, is to determine whether there is error of law in the decision of the Court of Appeals. . A party who was an appellee in the Court of Appeals and is an appellant in the Supreme Court may present in his brief any questions going to the basis of the Court of Appeals' decision by which he is aggrieved, and any questions which, pursuant to Rule 28(c), he properly presented for review to the Court of Appeals.
Appellant in this Court was the appellee in the Court of Appeals. The question of appealability of Judge Kivett's order did not go to the substantive basis of the Court of Appeals' decision and defendants did not properly present the question for review to the Court of Appeals; indeed, defendants, in their Court of Appeals' brief, addressed the issue on the merits. The appealability of the reimbursement order is raised for the first time in defendants' brief to this Court. Clearly, the attempt to have this Court address the issue is violative of the quoted portion of Rule 16(a). We have said before that "The attempt to smuggle in new questions is not approved." State v. Grundler, 251 N.C. 177, 187, 111 S.E. 2d 1, 8 (1959); see also, Falls Sales Co. v. Board of Transportation, 292 N.C. 437, 233 S.E. 2d 569 (1977). We could, of course, address the issue pursuant to our general supervisory and discretionary powers; due to the novel substantive issue presented by this appeal and discussed above, we decline to do so.
IV.
In conclusion, we affirm the decision of the Court of Appeals insofar as it upholds the denial of defendants' motions for dismissal and summary jugment and finds the entry of the reimbursement order improper. That portion of the lower court's decision remanding the Rule 41(b) dismissal motion to the trial court for a new ruling is reversed. The dismissal of plaintiff's action for failure to comply with the reimbursement order is vacated. On remand to the trial court, plaintiff's suit shall be reinstated for trial.
This cause is remanded to the Court of Appeals with instructions to remand to the trial court for further proceedings consistent with this opinion.
Affirmed in part; Reversed in part and Remanded.
. Our decision that an issue of fact existed is not premised in any way on plaintiffs testimony as to what occurred after she cashed the draft. The dissent erroneously claims that this decision will allow a claimant to convert a final settlement into a partial or advance one by his or her unilateral action. This decision stands only for the proposition that, absent a properly executed settlement agreement, a claimant's testimony that he or she, at the time of the agreement, intended the settlement to be partial or advance creates an issue of fact and is enough to take the case to the jury.