Poe v. W. F. Smith & Co., 172 N.C. 67 (1916)

Sept. 20, 1916 · Supreme Court of North Carolina

172 N.C. 67

H. H. POE v. W. F. SMITH & CO., R. R. LENNON, et als.

(Filed 20 September, 1916.)

1. Mortgages — Release of Lien — Deeds and Conveyances — Fraud—Evidence.

A release by deed or otherwise by tbe mortgagee of Ms lien upon lands sold by bis mortgagor to another does not furnish any evidence per se that be participated in tbe fraudulent representations of bis mortgagor in procuring tbe sale, or in such representations made by bis own attorney acting independently of him.

2. Appeal and Error — Instructions—Record.

Where the charge of tbe lower court is not set out in tbe record, it is considered on appeal as having been a correct exposition of tbe law.

3. Deeds and Conveyances — Fraud — False Representations — Evidence— Talues.

Where a deed is sought to be impeached on tbp ground that it bad been procured by false and fraudulent representations made to tbe purchaser of tbe land, that it bad been sold to another party at a profit, and that tbe purchaser would immediately make a profit from tbe transaction, evidence that an unaccepted bid bad theretofore been made at a much less sum at a foreclosure sale under a mortgage is not material, and its exclusion by tbe trial court is not erroneous.

4. Deeds and Conveyances — Fraud—Burden of Proof — Correction.

Where a deed is sought to be set aside for fraud in its procurement, tbe burden of proof is not on tbe plaintiff to show tbe fraud by clear, strong, and convincing proof, as where a deed is sought to be corrected or reformed, but only by tbe preponderance of tbe evidence.

5. Deeds and Conveyances — Contracts—Pleadings—Statute of Frauds.

Where tbe plaintiff alleges that tbe defendant induced him to purchase a tract of land for $5,500 by false and fraudulent representations that be bad sold it to another for $7,000, and would repay him $6,100 in this deal, and that be is able, ready, and willing to comply with bis contract to convey tbe land upon receiving tbe purchase price of $6,100 agreed upon, and demands a recovery thereof: Held, tbe action is upon tbe contract to convey tbe land, and not for tbe profits thereof, and tbe contract is governed by tbe statute of frauds, requiring that tbe contract be in writing, etc. Brown v. Hobds, 147 N. C., 73, cited and distinguished.

Civil actioN tried before Devin, J., and a jury, at November Term, 1915, of HabNETT.

Tbe plaintiff declared on two causes of action, in tbe first of which be alleged that be was induced to buy certain land in Columbus County by tbe false and fraudulent representations of tbe defendants R. B. Lennon, ~W. F. Smith Company, and Hiram Baggett, for tbe price of $5,500, on which be paid $1,500, and for tbe balance of $4,000 gave bis two notes, each for $2,000, secured by mortgages; and, in tbe second, be alleged that Hiram Baggett, for himself and bis codefendants, bad agreed to buy tbe land from plaintiff, or take it off bis bands, at $6,100, wbicb would yield to plaintiff a profit of .$600, as be, Hiram Baggett, bad contracted to sell it to another at $7,000.

Tbe following portions of tbe testimony and record will sufficiently sbow tbe nature of tbe contentions and matters in controversy.

Plaintiff testified in bis own bebalf: “In tbe latter part of tbe year 1912 I bad sold my farm and moved to Lillington. I was interested in buying some farm land. I saw an advertisement in tbe newspapers of some land in Columbus County for sale by Mr. R. B. Lennon, wbo was tben merchandising in tbe town of Lillington. I called to see him with reference to this land, and as a result of tbe conversation we made an appointment and went to Columbus County together and looked over tbe property. He priced tbe property to me at $6,500. We spent two nights and one day'at Evergreen investigating tbe property. Mr. Lennon was so closely associated with me that I did not make much inquiry from other people as to tbe property. I declined to buy tbe property at bis price, but on our way back, while stopping over at Elrod, be agreed to reduce tbe price to $5,500, provided tbe W. E. Smith Company, of Fayetteville, wbo be said held a mortgage on this property and some other for $6,500, would consent to tbe sale and join with him in tbe deed. I agreed to buy an option on tbe land at tbe price of $5,500 for twelve months. We arrived in Fayetteville after night, and early next morning Mr. Lennon called Mr. Smith, of tbe W. E. Smith Company, and asked him to come down to tbe station to meet us before tbe departure of our train for Lillington. Mr. Smith agreed that tbe sale at $5,500 would be satisfactory to tbe W. F. Smith Company, provided tbe payments were made to them, and that be would stand by whatever trade Lennon made. Upon our return to Lillington, I drew an option on tbe property for twelve months and Mr. Lennon signed it. I paid him $11 for it. Later I wrote Mr. Lennon a note that I did not think I would take tbe property, and be might consider himself released from bis option. Soon thereafter tbe defendant Hiram Baggett came to me and asked if I expected to take tbe Lennon property. I told him that I bad not investigated tbe property sufficiently to buy it, and I would not buy it without further investigation. A few days afterwards I saw Mr. Baggett again, and be asked me at what price I bad gotten an option on tbe Lennon property, and I told him at $5,500. He expressed great surprise, and said that be bad taken an option from Lennon, also, but that bis option was for $6,450. He asked if my option was recorded, and said that be bad sent bis for registration, but showed me a copy of it. Mr. Baggett said be was buying tbe land for another man, and bad it sold for $7,000; that bis man did not have tbe money to get.”

Q. “What proposition did Mr. Baggett make you with reference to buying tbe land and any disposition of tbe land thereafter?”

Defendant objects. Overruled. Exception.

A. “He told me tbat be would take tbe laud, and there was an agreement drawn up, but never signed. I drew up the agreement and came downtown to sign up, and did not find him. I got up with him finally two or three times, but the agreement was never signed, and when we came to the day of trade with Lennon, Mr. Baggett said I might rely upon his word, and I did not think but what he was ready to take it at once. I was to get $600 profit between my option and his price to me. I asked him if he was thoroughly satisfied with the value and with the title, and'he said he was; that the land was worth more than $7,000, and he was selling it for that price'. I was not to pay any cash. The first payment of $1,500 was to be deferred one month to give time for the deal to. be closed. About a month thereafter, to wit, on or about 26 May, 1913, I met with R. B. Lennon, and Mr. W. F. Smith of the ~W. F. Smith Company, and a Mr. Pond of said company, at the office of Messrs. Baggett & Baggett, of which firm Hiram Baggett was a member, but who was not present at that time, and a deed was prepared and executed by R. B. Lennon and wife and the W. F. Smith Company, conveying to me the land in question, and I thereupon executed and delivered my note for $1,500 due 1 July, 1913, payable to the-W. F. Smith Company, which was secured by a mortgage on a house and lot in Lillington, and two bonds in the sum of $2,000 each, .payable to ~W. F. Smith Company,' one due 1 January, 1914, and the other due 1 January, 1915, they being secured by a mortgage on the land in controversy. On that day Hiram Baggett told me that he would go to Columbus immediately and close up his deal, conveying the land to his purchaser at $7,000. On the 27th of May I received a letter from said Baggett, dated Evergreen, 27 May, 1913, as follows:

“ T tried to see you before I left home yesterday in regard to the property here. I think my party is going to fall down on taking it. He .says he don’t think he will purchase at the price. I will let you know certainly when I get home. ‘Respectfully,

‘H. Baggett.’

“Thereafter I received from said Baggett a letter,'dated Hot Springs, Ark., on 6 June, 1913, as follows:

“ ‘Me. H. H. Poe,

Lillington, N. G.

“ ‘Deae Sib : — -My parties have refused to take the Lennon land. I did not receive this notice until I got here yesterday. I thought it my duty to inform you, so you could dispose of it to the other parties. I hope you can do as you said- — get more out of it than my option was for. My option was good until the 15th, but I release any claim on the land by reason of the option. ‘Respectfully,

‘H. Baggett.’

“Tbe reference in said letter to a conversation of mine in wbicb it was suggested that I bad said that I could get more out of it than tbis option was a conversation tbat I bad witb bim immediately after we bad closed our contract, in wbicb I told bim tbat R. B. Lennon told me not to sell at tbe price at wbicb Baggett bad agreed to take it off my bands, for I could get more from another party. Tbis conversation I bad related to Baggett, and told bim tbat be might investigate.

“After Mr. Baggett’s return from Hot Springs X approached bim about tbe matter, and asked bim what was tbe trouble, and be said tbat bis man bad fallen down on getting tbe money. I asked bim to give me tbe man’s address, and be said be would turn over bis correspondence. He said tbat be could not find it right then, but would look it up. I asked bim to give me tbe man’s name and address, and be replied tbat he would get up tbe correspondence, and put me off tbat way.

“Prior to tbe sale R. B. Lennon told me tbe two bouses in Evergreen would rent for $8 or $10 per month; but upon investigation after tbe purchase, I found they were renting for $3 or $4 per month. I do not consider tbe land was worth exceeding $2,500 at tbe date of my purchase.

“I paid to tbe W. F. Smith Company, through their attorneys, Bag-gett & Baggett, my note for $1,500 in installments as follows: $400 on 23 July, 1913; $170 on 13 August, 1913; $956.79 on 11 September, 1913.”

There was other evidence on tbe part of tbe plaintiff tending to show tbe value of tbe lands in question as from $3,360 to $3,798 at tbe time of tbe conveyance to tbe plaintiff.

Tbe option of R. B. Lennon to Hiram Baggett was introduced in evidence, showing tbat it was registered 26 May, 1913, and tbat it expired on 15 June, 1913.

At tbe conclusion of tbe plaintiff’s evidence there was motion on tbe part of "W". E. Smith Company for judgment of nonsuit. Motion allowed, and plaintiff excepted.

Tbe defendants Lennon and Baggett offered testimony tending to contradict tbe material testimony of tbe plaintiff and to show tbat tbe land was worth from $5,500 to $7,000 at tbe time of tbe sale, and tbe defendant Baggett testified, in explanation of bis option not being registered at tbe time be told Poe tbat it bad been sent on for registration, tbat be bad sent tbe same down for registration, but tbat it was held in tbe office for payment of fees until tbe 26th of May, when, the fees having been paid, it was actually registered.

Defendant Baggett denied tbat be bad agreed to buy tbe land for $6,100 or at any other price, or tbat be bad sold tbe land at $7,000, saying tbat be did tell Poe tbat be bad a prospective purchaser for tbe land, and tbat be thought be could sell it to bim at $7,000. Mr. Baggett further testified .that- be asked Mr. Poe, in the event he purchased tbe land, if be would be willing to extend tbe time of tbe option wbicb Lennon bad given to Baggett. Poe declined to do tbis, but said be would give Baggett one-balf of all be could sell tbe land for above $6,500.

Tbe plaintiff offered to prove that tbe land bad been sold at public auction by tbe W. F. Smith Company, under its mortgage from Poe, in February, 1914, and that tbe highest bid was $1,800. Tbis was after tbe suit involving tbe title to tbe property bad been commenced, and tbe offer was made on tbe cross-examination of defendant’s witnesses, after tbe motion of W. F. Smith Company for a nonsuit bad been sustained. Tbis evidence was excluded by tbe court, and plaintiff excepted.

At tbe conclusion of tbe plaintiff’s evidence defendant Hiram Bag-gett moved 'for a nonsuit as to himself, upon tbe plaintiff’s second cause of action, as set forth in bis supplementary complaint. His Honor stated at tbe time that be would reserve bis ruling upon tbis motion, and, at tbe conclusion of all tbe evidence, tbe motion was renewed and tbe court sus tained it, on tbe ground that tbe alleged contract on tbe part of tbe defendant Hiram Baggett, to take tbe land off tbe plaintiff’s bands at $6,100, or at a profit of $600 to tbe plaintiff, was not in writing, and could not, therefore, be enforced, to wbicb ruling of his Honor plaintiff excepted.

Tbe jury returned a verdict as follows upon tbe issues submitted by tbe court:

1. Did tbe defendant Hiram Baggett, by means of false and fraudulent representations, procure tbe plaintiff to purchase tbe lands as described in tbe complaint? Answer: “No.”

2. Did tbe defendant R. B. Lennon, by means of false and fraudulent representations, procure tbe plaintiff to purchase tbe lands as described in tbe complaint? Answer: “No.”

3. If so, what damages, if any, has plaintiff sustained by reason thereof ? (Not answered.)

E. F. 7oung, Clifford & Townsend, and B. C. Beckwith for plaintiff.

Sinclair & Dye and Bay for defendant Lennon.

E. G. Davis for Smith Company.

Charles Boss for Baggett.

WahkeR, L,

after stating tbe case: Tbe nonsuit as to tbe W. F. Smith Company was properly allowed. It held a mortgage on tbe land, and in order that plaintiff might acquire a good and unencumbered title to tbe land from Lennon it was necessary that tbe Smith Company should either release its security, or lien upon it; or join in tbe conveyance; but we can see nothing in tbe record wbicb tends to connect it with any fraudulent transaction in connection with tbe matter. Tbe Smith Company merely agreed to the sale and conveyance to plaintiff subject to their prior lien, and received the first payment of $1,500, in reduction thereof; but there is no evidence to show that they knew of any representations by Lennon or Baggett, false or otherwise, and the jury have found that there were none. If Lennon and Baggett committed no fraud, how can it be said that the Smith Company did? If Baggett was the attorney of the Smith Company (as contended by plaintiff), and anything he said or did to the injury of the plaintiff is to be imputed to that company, as his principal, the jury having acquitted him of all wrong, it follows, of course, that there is nothing to impute to the company. The jury have simply found the facts upon disputed testimony in favor of the defendants. But we find no evidence in the record upon which the Smith Company can be made liable to the plaintiff for any. false or fraudulent representations if such had been made by Lennon or Baggett.

As to the defendants Baggett and Lennon, the verdict is, upon conflicting evidence, that the allegations of the plaintiff as to false and fraudulent representations are not true, and, as to this feature of the case, the plaintiffs have utterly failed. The charge of the court is not in the record, and there is no exception taken to it. It stands, therefore, unchallenged by the plaintiff -and as a correct exposition of the law applicable to the evidence. This, of course, reduces the case, thus far, to a pure issue of fact, which has been settled against the plaintiff.

We do not see how the exclusion of the evidence as to the bid at the sale under the mortgage held by the Smith Company was prejudicial to the plaintiff, if it was competent and offered by him in due time. If admitted, it would not have turned the scales in favor of the plaintiff upon the issues as to whether false and fraudulent representations had been made by Lennon and Baggett. In the aspect of the case then presented, it would not have aided the jury in deciding the vital question as to the alleged representations. If Lennon and Baggett had dishonestly and intentionally misled and deceived the plaintiff by false statements, which induced him to enter into the contract, he would be entitled to the relief demanded by him without regard to the value of the land, for the alleged fraud did not depend upon value so much as it did upon the fact whether the representations had been made and were false, so as to lead the plaintiff to do what otherwise he would not have done. Value is sometimes competent to be considered, and may be a very important element in certain cases of fraud, but not here, in the light of this -evidence. The Smith Company had been dismissed from the case when this evidence was offered.

It is not a correct proposition, though, as contended by the defendants, that plaintiff must establish his allegation of fraud, in a case of this kind, by clear, strong, and convincing proof, but only by a preponderance of the evidence. Ray v. Patterson, 170 N. C., 226; Harding v. Long, 103 N. C., 1; Avery v. Stewart, 136 N. C., 426; Glenn v. Glenn, ibid., 729; Lamb v. Perry, 169 N. C., 436.

This is an action brought for tbe purpose of setting aside a deed for fraud, and not to correct or reform a written instrument or to establish a parol trust. Tbe distinction between tbe two classes of cases is ba.sed upon tbe difference in tbe presumption of tbe law arising in each. A fraud is not presumed, except where there is some confidential or peculiar relation between tbe parties, not necessary to mention, a.s it does not exist here. Tbe law, therefore, requires that be who alleges fraud must prove it; but it does presume that tbe writing of tbe parties truly expresses their agreement; and for that reason, when an attempt is made to vary it, or to reform it, tbe party who seeks to do so must take tbe laboring oar and satisfy tbe jury of tbe mistake in tbe writing by stronger proof than is ordinarily required in civil cases; in other words, by proof clear, strong, and convincing. Lehew v. Hewett, 138 N. C., 6; Lamb v. Perry, supra; Perry v. Ins. Co., 137 N. C., 402; Bay v. Patterson, supra.

Tbe only serious question in tbe case grows out of tbe second cause of. action set up in tbe supplemental complaint, where it is alleged that Hiram Baggett agreed “to take tbe land off of plaintiff’s bands at tbe price of $6,100, or a profit to tbe plaintiff of $600.” Plaintiff’s intention to charge by this language that Baggett bad agreed to buy tbe land from him for $6,100 is fully evidenced by subsequent allegations of tbe complaint, especially tbe fifth paragraph of bis complaint, and tbe prayer for judgment, which are as follows:

“That tbe plaintiff stands ready and willing to comply with and carry out tbe contract with tbe said Hiram Baggett, and to convey tbe land to tbe said Hiram Baggett or to him and bis codefendants upon payment to plaintiff by him or them of tbe purchase price agreed upon, to wit, $6,100, .and interest on tbe same from 16 May, 1913.

“Wherefore, plaintiff demands judgment that be recover of tbe defendants tbe sum of $6,100, with interest from 16 May, 1913.”

Tbe words, “and to convey to tbe said Hiram Baggett or to him and bis codefendants, upon payment to plaintiff by him or them of tbe purchase price agreed upon,” manifestly show that plaintiff was suing upon a contract to convey land* and not upon one merely for tbe division of tbe profits of a sale of tbe land to another, and tbe prayer for judgment extends to tbe entire amount of tbe price of $6,100, and is not restricted to tbe amount of tbe profit of $600. This being so, tbe case is governed by tbe principle that tbe statute of frauds requires tbe contract to be in writing and to be signed by tbe party to be charged or by bis duly authorized agent. Eevisal, sec. 976. As it is sought to charge tbe defendant Baggett upon this contract, be is protected by tbe statute. Mizell v. Burnett, 49 N. C., 249; Green v. R. R., 77 N. C., 95; Miller v. Monazite Co., 152 N. C., 608; Brown v. Hobbs, 154 N. C., 544.

This was not an executed sale, where the deed, under the contract to convey, had been made to Baggett, with a promise that upon a sale of the land to another he would divide the profits with the plaintiff, as in Brown v. Hobbs, 147 N. C., 73. The plaintiff, therefore, has failed to show a case within the principle decided in Brown v. Hobbs, supra, or Michael v. Foil, 100 N. C., 78; Little v. McCarter, 89 N. C., 233, and the cases cited in Brown v. Hobbs, 147 N. C., 73, and 154 N. C., 544. The promise here is not collateral to an executed contract of sale, but the agreement to sell and the reciprocal promise to buy are still executory in form and substance. As said by Sewage, C. J., in Hess v. Fox, 10 Wendell (N. Y.), 436, “No question can arise on the validity of the agreement to sell. That was performed, and the remaining part was to pay over money, supported by the consideration of land conveyed to the promisor.”

The rulings of the court are approved by us.

No error.