The issue in this case is a narrow one: When does a cause of action accrue for negligent advice of an insurance agent when the person bringing the suit is the beneficiary of the life insurance policy issued in reliance on that advice? More specifically, when does the cause of action accrue when the insurance policy contains a provision permitting the policy owner to freely change the beneficiary? The trial judge agreed with defendants that the cause of action accrued at the time of the alleged negligent advice and thus dismissed the suit pursuant to N.C.G.S. § 1-52. A motion for rehearing was denied by the trial judge on 14 March 1990. On appeal by plaintiff, the Court of Appeals reversed, concluding that the cause of action accrued at the death of the insured. We agree with the result reached by the Court of Appeals, but for different reasons. We therefore modify and affirm.
I.
On 22 August 1989, plaintiff, acting in his capacity as executor of his mother’s estate and also as sole beneficiary of his mother’s life insurance policy, filed a complaint alleging the following:
On 19 December 1985, plaintiff’s mother, Norma T. Pierson, contracted with defendant Jefferson National Life Insurance Company (“Jefferson National”), through its agent, defendant John Buyher (“Buyher”), 1 for a life insurance policy in the amount of $400,000. Ms. Pierson told Buyher that the purpose of the policy was to provide liquidity to her estate. Plaintiff, Ms. Pierson’s only surviving child, was named the beneficiary of the policy. Ms. Pierson was named owner of the policy. Ms. Pierson died on 16 November 1987. Because Ms. Pierson was named owner of the insurance policy, the policy proceeds were includable in her gross estate and subject to state and federal estate and inheritance taxes. These taxes amounted to $200,000.
Plaintiff alleges that Buyher knew or should have known of the tax consequences of naming Ms. Pierson owner of the insurance policy. Buyher, the complaint alleges, was negligent in that he failed to advise Ms. Pierson of these adverse tax consequences. Ms. Pierson, the complaint alleges, justifiably relied upon Buyher’s *184 representations that the life insurance policy would afford liquidity to her estate in the full face amount of the policy.
Defendants answered by alleging, inter alia, that the cause of action accrued at the time of the alleged negligent advice, i.e., at the time Ms. Pierson procured the policy, and therefore the action, filed more than three years later, was time barred. The trial judge agreed and dismissed the complaint.
II.
The Court of Appeals reversed, concluding that the cause of action accrued on 16 November 1987, the date of Ms. Pierson’s death. Before reaching the statute of limitations issue, however, the court noted that the plaintiff had a cognizable legal action.
Pierson v. Buyher,
The Court of Appeals, after deciding that plaintiff had alleged a valid cause of action, analogized this case to professional malpractice. Turning its attention to N.C.G.S. § l-15(c), the statute of limitations for professional malpractice, the court held that defendants had a continuing duty to correct any negligent error they may have committed, a duty which extended to the day Ms. Pierson died.
Id.
at 538,
We believe the Court of Appeals erred in analogizing this case to professional malpractice. In its answer to the original complaint, Jefferson National cited the three-year statute of limitations contained in N.C.G.S. § 1-52. 2 The trial judge, in dismissing the action, cited N.C.G.S. § 1-52. At oral argument before this Court, *185 plaintiff’s attorney conceded that Buyher was not a professional and that plaintiff was not a client. The theory of the case, argued plaintiff’s attorney, is one of negligent advice, not professional malpractice. We agree that this case does not involve professional malpractice, and that the appropriate statute of limitations is the three-year period of N.C.G.S. § 1-52(5). We therefore disavow the discussion of professional malpractice and N.C.G.S. § l-15(c) in the Court of Appeals’ opinion.
III.
Assuming that plaintiff has stated a valid cause of action, the issue before this Court is when does the cause of action accrue for the
beneficiary
of this life insurance policy. We first note that an insurance policy is a contract and its provisions govern the rights and duties of the parties.
Fidelity Bankers Life Ins. Co. v. Dortch,
Plaintiff argues that the cause of action arose at the time of Ms. Pierson’s death because prior to that time his interest in the proceeds of the insurance policy had not vested. We agree. It is well settled that under a contract granting the policy owner the right to change beneficiaries, “the rights of a designated beneficiary do not vest until the death of the insured.”
Id.
at 382,
Jefferson National argues that this case should be governed by the general rule outlined in
Shearin v. Lloyd,
In general a cause or right of action accrues, so as to start the running of the statute of limitations, as soon as the right to institute and maintain a suit arises ....
It is sufficient if nominal damages are recoverable for the breach or for the wrong, and it is unimportant that the actual or substantial damage is not discovered or does not occur until later. However, it is well settled that when an act is not necessarily injurious or is not an invasion of the rights of another, and the act itself affords no cause of action, the statute of limitations begins to run against an action for consequential injuries resulting therefrom only from the time actual damage ensues.
Shearin,
In this case, plaintiff had no more than an expectancy at the time his mother purchased the insurance policy, no more than the possibility of future injury. Maybe he would be the beneficiary of the insurance policy when his mother died. Maybe he wouldn’t. Maybe there would be adverse tax consequences at the time of his mother’s death. Maybe there wouldn’t. Maybe he would suffer a monetary loss. Maybe he wouldn’t.
Until a party has a real and vested interest in the subject matter of a lawsuit, an action will not lie. The United States Supreme Court faced a similar problem in
Peak v. United States,
In rejecting respondent’s argument, the Court said: “To compute the six-year limitation period from the date of death would
*187
be to say that the beneficiary’s right to recover had expired before she could have successfully prosecuted a lawsuit to enforce that right.”
Id.
at 46,
As Justice Douglas said for the Court in Peak: “That seems to us to be the common sense of the matter; and common sense often makes good law.” Id.
The decision of the Court of Appeals is modified and affirmed.
Modified and affirmed.