McDonald v. Lingle, 199 N.C. 219 (1930)

July 2, 1930 · Supreme Court of North Carolina

199 N.C. 219

W. S. McDONALD, Administrator of the Estate of FRANCES McDONALD, Deceased; W. S. McDONALD, MAX McDONALD and VIOLA HADLEY, Heirs and Next of Kin of FRANCES McDONALD, v. D. C. LINGLE, Individually and as Trustee; J. A. LINGLE, Individually and as Trustee; and ODELL LINGLE.

(Filed 2 July, 1930.)

1. Appeal and Error J c — Findings of fact supported by evidence are conclusive on appeal.

The referee in passing upon the evidence of the value of certain property is not bound by the estimates of witnesses as to its value, but is at liberty to consider the situation of the property, its description and condition, and where evidence so considered supports his findings and the trial judge confirms them they are not reviewable on appeal.

2. References C c — in absence of evidence impeaching allowance of attorney’s fees by referee, confirmation by court will not be disturbed.

Where an action to set aside certain mortgages is referred to a referee, and the referee allows the payment of a prior mortgage lien securing an amount due for legal services rendered the mortgagor out of the proceeds of the foreclosure sale, and the trial court confirms the allowance, in the absence of allegation and evidence tending to impeach the transaction, the action of the trial court will not be disturbed on appeal.

3. Mortgages B a — Where mortgagee in possession is negligent in collecting rents he is liable to mortgagor for reasonable rental value.

A mortgagee or trustee in possession of the mortgaged premises under an agreement to collect the rents and apply them to the mortgage debt is chargeable with the reasonable rental value of the property while in his possession if he is negligent in collecting the rents and managing the property..

Appeal by plaintiffs and defendants from Stack, J., at October Term, 1929, of RowaN.

Affirmed on both appeals.

This action was consolidated with another entitled W. S. McDonald ■et al. v. D. 0. Lingle, trustee.

The plaintiffs, as heirs at law and next of kin of Frances McDonald, brought suit to set aside certain mortgages and deeds of trust alleged to Have been executed by Frances McDonald through, the fraudulent contrivance of the defendants. They alleged that Frances was of unsound mind, that between her and one of the defendants there was a fiduciary relation, and that she was deceived and induced to execute the assailed conveyances. By consent the cause was referred to D. A. Rendleman., He made a report containing his findings of fact, among which are the following:

The mind of Frances McDonald began to fail about ten years prior .to her death and became gradually weaker until 8 July, 1926, when she was adjudicated a lunatic'by the Superior Court of Rowan County and committed to the State Hospital for the Insane at Goldsboro. During the years 1924, 1925, and 1926 she was of unsound mind and incapable of making or understanding a contract.

At the time of her death she was seized of three lots in the city of Salisbury referred to as A, B, and C.

In March, 1925, she and D. C. Tingle entered into an agreement under which Tingle constructed for her three four-room houses on lot A, for which she executed a note for $4,650 and secured it by a deed of trust conveying to J. A. Tingle, trustee, lot A and the three houses thereon. The reasonable cost and value of the houses was $900 each, or $2,700. Frances held possession' of the houses until 1 January, 1926, when D. C. Tingle took possession under an agreement to collect rents therefrom and apply them on the note and mortgage for $4,650. He kept no personal record of the rents collected but accounted for rents in the amount of $1,212.50 from 1 January, 1926, to 15 August, 1929, by a statement prepared from rent books and receipts issued to tenants during this period. Only three receipt books were introduced out of a large number issued. More than 50 per cent of rent was lost by reason of vacancies and uncollected accounts. D. C. Tingle was negligent in. failing to keep a record of the rents collected and allowing a loss by reason of vacancies and lost accounts.

The reasonable rental value of the houses during 1926, 1927, and 1928. was $16.00 a month each and for 1929 $12.00 a month each. A loss, of one month a year is usual in rentals of this character and a loss of a month or five weeks a year should cover all rents lost, if reasonable diligence is observed.

While in possession of the houses D. C. Tingle paid necessary expenses, and accounts amounting to $598.71.

Pursuant to the terms of said $4,650 deed of trust, on 27 April, 1929, John A. Tingle, trustee, sold the lands described therein, at which sale Odell Tingle' became the last and highest bidder for the same at the price of $3,750; that no advanced or upset bid was placed on said property within ten days.

On or about 14 July, 1928, Odell Lingle loaned $150.00 in cash to Frances McDonald, wbicb was received and used by Frances McDonald in tbe payment of necessary outstanding bills and accounts; that as a part of the .same transaction, Odell Lingle sold to the said Frances McDonald one four-cylinder Buick automobile for the sum of $250.00; that said automobile was reasonably worth $250.00, but that Frances McDonald had no use for the same, was unable to use or benefit by said car and that her estate was not benefited by the same; that on 14 July, 1925, Frances McDonald executed a note in the sum of $400.00 to Odell Lingle, and to secure the same executed and delivered to D. C. Lingle, trustee, a mortgage deed of trust covering tract B heretofore described, which mortgage trust deed is registered in Book of Mortgages No. 94, page 100, in the office of the register of deeds for Rowan County, the consideration for said note and mortgage being said loan of $150.00 and-said Buick automobile.

At the time the note and mortgage for $400 were executed there were five outstanding registered liens upon the property covered by the mortgage, including a mortgage to A. A. F. Seawell and to J. M. Waggoner for legal services in contested suits involving the property of Frances McDonald.

On 10 August, 1928, after due advertisement, D. C. Lingle, trustee, pursuant to the powers contained in said $400.00 deed of trust, sold tract B to John A. Lingle for the purchase price of $1,155; that from the proceeds of such sale all prior liens, aggregating $1,237.19, and costs of sale, $71.29, total $1,308.48, were paid by the said trustee or assumed by the purchaser; that said prior mortgages have been canceled and so presented in court; that the actual value of lot B was not more than $1,308.48, and that there was no payment on said $400.00 note from the proceeds of sale thereof.

During the foregoing transactions Frances McDonald constantly sought and relied on the assistance and advice of D. C. Lingle in all business transactions. Odell Lingle and J. A. Lingle are his sons, and Eltha Lingle is his daughter.

■ The referee filed a supplemental report in which he stated $1,990.55 to be due D. O. Lingle; $188.08 to be due Odell Lingle; and the net amount to be due the estate of Frances McDonald from the sale to Odell Lingle, on 7 October, 1929, to be $1,571.37.

His conclusions of law are as follows:

1. The note executed by Frances McDonald to D. C. Lingle, dated 31 March, 1925, secured by mortgage deed of trust to J. A. Lingle, trustee, recorded in Book of Mortgages No. 92, p. 182, is voidable and should be set aside.

2. Tbe estate of Frances McDonald is due D. C. Lingle the reasonable value of said bouses, $2,700, with interest from 15 May, 1925, subject to credits hereinafter shown, this amount to be paid to‘D. 0. Lingle from the proceeds of sale to Odell Lingle set forth in paragraph 9 of these Endings of fact. Hereto attached, marked Exhibit A, is a statement ■of the balance due D. 0. Lingle, showing all charges and credits in detail.

3. D. C. Lingle, mortgagee in possession of said three houses from 1 January, 1926, to 1 September, 1929, should be charged with the reasonable rental value of the same during said period, without compensation for services rendered, and credited with reasonable and necessary disbursements incident to holding and preserving said property.

4. The estate of Frances McDonald is due Odell Lingle $150.00 by reason of the loan set forth in paragraph 10 of these findings of fact, with interest on $150.00 from 14 July, 1925.

The plaintiffs and the defendants filed exceptions, all of which were overruled. Judge Stack approved and confirmed the report, and adjudged :

2. That defendants’ demand for a jury trial be overruled and disallowed, it appearing that the reference was by consent of all parties.

3. That the sale by J. A. Lingle, trustee- for D. O. Lingle, of the three houses and lots on Railroad Avenue to Odell Lingle for the sum of $3,750 be hereby approved and confirmed, and said purchaser is hereby ordered and directed immediately to pay said sum to said trustee, and upon said payment said trustee shall convey said property to said purchaser.

4. That J. A. Lingle, trustee for D. O. Lingle, pay and disburse said sum as follows: He shall pay the sum of $1,990.55 to D. O. Lingle; he shall pay Odell Lingle the sum of $188.08; and he shall pay to V. S. McDonald, Max McDonald, and Yiola Hadley, the heirs of Frances McDonald, the balance of $1,571.37.

5. That the plaintiffs, W. S. McDonald, Max McDonald, and Yiola Hadley have and recover judgment for said last mentioned sum against the prosecution bond heretofore filed by defendants in this action, that is to say that they have and recover of D. O. Lingle, J. A. Lingle, and Odell Lingle, as principals, and M. A. Goodman, and Mrs. M. A. Goodman, as sureties, the sum of $2,500 to be discharged upon payment to said plaintiffs of the aforesaid sum of $1,571.37, together with interest thereon from 7 October, 1929, until paid.

6. That defendants shall pay the costs of these actions to be taxed by the clerk, including $75.00, which is hereby allowed to D. A. Rendle-man for his services as referee therein, and $137.00, which is hereby allowed to Freda Gardner for her services as stenographer, therein. The plaintiff will (pay) one-balf of the referee’s fee, to wit, $75.00. The stenographer allowed $137.00.

The plaintiffs and the defendants excepted to the -judgment and appealed.

Lee Overman Gregory for plaintiffs. '

J. M. Waggoner for defendants.

Plaintiffs’ Appeal.

Adams, J.

The plaintiffs’ first assignment of error is the finding that the actual value of lot B was not more than $1,308.48. The referee’s finding of the value, approved by the judge, has support in the evidence. Neither the referee nor the judge was bound by any of the estimates of the witnesses but each was at liberty to consider, not only statements or opinions of the value, but the situation, description, and condition of the property. As there was evidence in support of the finding we discover no just cause for modifying the judgment by setting-aside the finding.

With respect to the second assignment it may be said that the fees paid the attorneys were presumably for the protection or benefit of the estate of Frances McDonald; and in the absence of specific allegation and proof tending to impeach the transactions we must decline to reverse the finding of the presiding judge in reference thereto. On the plaintiffs’ appeal the judgment is

Affirmed.

Defendants’ Appeal.

Adams, J.

The exceptions taken by the defendants raise the questions (1) whether there is sufficient evidence that Frances McDonald was of unsound mind on 31 March, 1925, and (2) if so whether the defendants had knowledge of her mental incapacity; also (3) whether there is sufficient evidence that D. O. Dingle was her confidential adviser at that time; (4) whether he dealt unfairly with her; (5) whether he should be charged with the reasonable rental value of the houses instead of the rent actually collected; and (6) _whether the judge committed error in signing the judgment. The counsel representing the defendants realizes that if on these questions the evidence is adequate, this Court is bound by the judge’s findings of fact. It is apparent, therefore, that no doubtful or disputed question of law is involved.

The evidence in oiir opinion is sufficient to sustain all the facts found by the referee and approved by the Superior Court. It would be useless to set out a minute review of the testimony or to contrast the various opinions expressed concerning the several questions. Upon the finding that Tingle was negligent in collecting the rents it must be held that he is chargeable with the reasonable rental value of the property. On defendants’ appeal the judgment is

Affirmed.