Chilton v. Smith, 180 N.C. 472 (1920)

Dec. 1, 1920 · Supreme Court of North Carolina

180 N.C. 472

M. T. CHILTON v. PATSY SMITH and JOHN R. SMITH.

(Filed 1 December, 1920.)

1. Trusts — Parol—Deeds and Conveyances — Statute of Frauds.

A parol trust cannot be established between tbe parties in favor of tbe grantor in a deed conveying an absolute fee-simple title to lands, nor can sucb deed be converted into a mortgage without allegation and proof that a clause of defeasance or redemption was omitted therefrom by reason of ignorance, mistake, fraud, or undue influence. C. S., 938.

2. Mortgages — Deeds and Conveyances — Conveyance to Mortgagee — Fraud — Presumptions—Burden of Proof.

The principle establishing a prima faoie case of undue influence, and placing tbe burden of proof on the mortgagee to disprove it when tbe mortgagor has conveyed tbe mortgaged lands to him in fee simple in payment of the debt, does not apply because the mortgagee, tbe plaintiff in bis action to recover possession, happens to be the president of a ba,nk wbicb bolds a number of the defendant’s notes secured by mortgage on his land, with tbe plaintiff as endorser, in the absence of any control or coercion on his part, and defendant bas placed his defense upon a separate and distinct ground.

Walker, J., concurring in result.

Appeal by defendants from McEiroy, J., at April Term, 1920, of Stokes.

Tbis was an action of ejectment, tried at tbe Spring Term, 1920, of Stokes, before McEiroy, J., and a jury. Tbe action was brought against Patsy Smith and Susan Smith, who answered alleging that they were bolding tbe land in controversy under and as tenants of John R. Smith, who came in and being made party defendant, filed bis answer alleging that at tbe time be executed bis deed to tbe plaintiff there was a parol agreement between them that the plaintiff would reconvey the land described in said deed, upon repayment to him by tbe defendant, out of tbe rents and profits of tbe land, all of tbe money paid by tbe plaintiff for the benefit of tbe said John R. Smith. He was allowed to amend bis answer by inserting tbe following paragraph:

“9%. Tbe said plaintiff pretended to be tbe friend of tbe defendant for tbe purpose and witb tbe intent of procuring tbe legal title to tbe land above mentioned, intending to defraud tbe defendant out of tbe legal title to tbe same; tbat tbe defendant relied upon tbe statement of tbe plaintiff tbat be would reconvey tbe land to tbe defendant, and would bold tbe same as security for money advanced by tbe plaintiff to tbis defendant, and relying upon sucb statements and assurances, tbe defendant was misled, deceived, and induced to sign tbe deed above mentioned; tbat tbe plaintiff stated to tbis defendant tbat if be would execute tbe deed to bim (tbe plaintiff) be would bold tbe same as security and reconvey tbe same to tbe defendant at a later date wben tbe defendant should repay bim tbe money so advanced, but did not intend to do so, and at tbe time tbe plaintiff made sucb statements be knew tbey were false, and made tbem for tbe purpose of cheating, and deceiving tbe defendant out of tbe land. And tbe defendant, relying thereon, was induced thereby to execute said deed, and was thereby defrauded out <of bis land.”

Tbe plaintiff, replying to said paragraph 9%, averred tbat it was “untrue, and expressly denied tbe same.”

Tbe jury responded to tbe issues submitted as follows: (1) "Was tbe deed of 31 July, 1915, executed by John E. Smith and wife to M. T. •Chilton, intended as a mortgage, and if so, was tbe redemption clause omitted from said deed by reason of tbe fraud of tbe grantee ? Answer: “No.” (5) Are tbe defendants in tbe wrongful and unlawful possession

of said land, as alleged in tbe complaint?- Answer: “Yes.” (6) What damage, if any, is tbe plaintiff entitled to recover ? Answer: “1 per • month from 23 April, 1916.”

These findings made it unnecessary to answer tbe other issues submitted. Judgment upon tbe verdict in favor of tbe plaintiff. Appeal by defendant.

McMichael, J ohnson & Hachler for plaintiff.

J ones & Clements and Holton & Holton for defendant.

Clabic, C. J.

Tbe defendant, John E. Smith,1 did not allege in bis answer tbat bis deed to tbe plaintiff was intended as a mortgage, nor did be allege, or offer proof, tbat tbe clause of defeasance or redemption was omitted therefrom by reason of ignorance, mistake, fraud, or undue influence or advantage, but admits tbat it was a deed absolute upon its' face; tbat be knew it was sucb, and was intended to be so drawn; tbat it was mailed to bim by tbe plaintiff, who was 12 miles away, and-was signed and acknowledged by bim, witb full knowledge of its contents in tbe absence of tbe plaintiff, and was then delivered by bim to tbe plaintiff.

The defendant baying failed to allege and offer proof that the clause of defeasance or redemption was omitted from the deed by reason of ignorance, mistake, fraud, or undue influence, the evidence tendered by him to show an oral agreement by the plaintiff to reeonvey, or that he made the deed relying on such promise, which the defendant did not intend to keep, was incompetent, and was properly excluded. Sowell v. Barrett, 45 N. C., 50; Brown v. Carson, ib., 272; Campbell v. Campbell, 55 N. C., 364; Briant v. Corpening, 62 N. C., 325; Bonham v. Craig, 80 N. C., 224; Egerton v. Jones, 102 N. C., 278; Norris v. McLam, 104 N. C., 159; Sprague v. Bond, 115 N. C., 530; Newton v. Clark, 174 N. C., 393; Williamson v. Rabon, 177 N. C., 302; Newbern v. Newbern, 178 N. C., 3.

In Gaylord v. Gaylord, 150 N. C., 227, it was held that a parol trust cannot be established between the parties in favor of the grantor in a deed, when the effect will be to contradict or change by a contemporaneous oral agreement the written contract clearly and fully expressed. This is a well considered case in which the subject was elaborately discussed, and which has been repeatedly recited as authority — see citations in the Anno. Ed. And it has been followed since that volume has been annotated in Newton v. Clark, 174 N. C., 394, citing numerous cases; and Williamson v. Rabon, supra, and Newbern v. Newbern, supra, where the subject was again discussed.

To permit the terms of a solemn conveyance, absolute on its face, to be contradicted by a contemporaneous parol agreement would be in the teeth of the letter and the intent of the statute of frauds. C. S., 988.

In Fuller v. Jenkins, 130 N. C., 554, it was held that “Where it was agreed between the grantor and the grantee at the time the deed was delivered that it should operate as a mortgage, the grantor is entitled to have the deed declared a mortgage by reason of such agreement,, although the redemption clause was not omitted by reason of ignorance, mistake, fraud, or undue advantage.” But this case seemingly stands alone, and in Williamson v. Rabon, 177 N. C., 306, it was fully considered and expressly overruled.

If .a mortgagor conveys to the mortgagee the mortgaged property, the conveyance is prima facie made under undue influence, because the mortgagor is in chains and the burden is on the mortgagee to prove the contrary. But that is not the case here, though there was a mortgage for $1,000 given by the defendant to secure a debt to which the plaintiff was his surety and John R. Smith was debtor to a bank, of which the plaintiff was president, for money borrowed. It is not alleged or shown that any confidential relation existed, which placed the defendant under the control or undue influence of the plaintiff. The defendant’s case rests solely upon an alleged contemporaneous oral agreement in conflict with, the terms of the conveyance.

In view of the uniform decisions of this Court, and the elaborate discussion of the principles now presented by the defendant in Gaylord v. Gaylord, 150 N. C., 222, and Williamson v. Rabon, 177 N. C., 304, we could add nothing that would justify our restatement of the principle® so clearly laid down in those and other cases above- cited.

No error.

WaleeR, I., concurs in result only.