Alexander v. Virginia-Carolina Joint Stock Land Bank, 201 N.C. 449 (1931)

Oct. 7, 1931 · Supreme Court of North Carolina

201 N.C. 449

Wm. T. ALEXANDER and His Wife, ETHEL P. ALEXANDER, v. VIRGINIA-CAROLINA JOINT STOCK LAND BANK and SOUTHERN TRUST COMPANY, Trustee.

(Filed 7 October, 1931.)

1. Evidence J d — Parol evidence is admissible to show mutual mistake in an action for reformation of instrument.

In an action to reform a deed of trust or mortgage on real property, parol evidence is competent to sustain tbe allegations of tlie complaint that an additional tract of land was included in tbe description of tbe land in tbe instrument by tbe mutual mistake of tbe parties, tbis being an exception to tbe ordinary rule that evidence of tbis character is not admissible to vary tbe terms of a written instrument.

2. Judgments L b — Held: mortgagor was not barred by decree of foi*e-closure from bringing suit for reformation of description in mortgage.

Where in an action to foreclose a deed of trust tbe description in tbe complaint and in the prayer for relief is ambiguous, tbe decree of foreclosure will not estop tbe trustor or mortgagor as a matter of law from bringing an action to reform the description in tbe deed of trust on tbe ground that through tbe mutual mistake of tbe parties more land was included within tbe description than had been intended or agreed upon, and in tbis ease it further appears that tbe trustee was not made a party to tbe suit for foreclosure.

3. Mortgages H e — Trustee is necessary party in suit for foreclosure.

The legal title to lands conveyed by mortgage or deed of trust remains in tbe mortgagee or trustee until tbe lands have been sold and conveyed by him under power of sale or under a decree of court, and in an action to foreclose a mortgage or deed of trust the mortgagee or trustee is an indispensable party.

Appeal by defendants from Moore, Special Judge, at June Special Term, 1931, of "Washington.

No error.

This action was begun on 24 February, 1929. It was tried on tbe issue raised by tbe pleadings at June Special Term, 1931, of tbe Superior Court of Washington County.

On tbe allegations of tbe complaint, plaintiffs prayed tbat a deed of trust, dated 1 December, 1924, and executed by plaintiffs, conveying a tract of land containing 1,500 acres more or less, described therein by metes and bounds, to tbe defendant, Southern Trust Company, trustee, to secure their note payable to tbe defendant, Yirginia-Carolina Joint Stock Land Bank, be reformed so as to exclude from tbe description in said deed of trust, a tract of land known as part of tbe Mountain Hill farm, owned by plaintiffs, which was included in said description by tbe mutual mistake of tbe parties.

In their answer, defendants denied tbe allegations of tbe complaint on which plaintiffs pray for relief in this action; in further defense to tbe action, defendants alleged tbat tbe deed of trust from tbe plaintiffs to tbe defendant, Southern Trust Company, trustee, was foreclosed by a judgment and decree rendered in tbe Superior Court of Washington County, on 19 March, 1928, in an action entitled, “Yirginia-Carolina Joint Stock Land Bank v. Wm. T. Alexander and bis wife, Ethel P. Alexander”; and tbat pursuant to said judgment and decree, tbe land described in tbe deed of trust was sold and conveyed to tbe defendant, Yirginia-Carolina Joint Stock Land Bank, by W. A. Worth, commissioner. Defendants alleged tbat plaintiffs are now estopped from maintaining this action by said judgment and decree, which defendants expressly plead as a bar to plaintiff’s recovery in this action.

In their reply to tbe further defense alleged in tbe answer, plaintiffs denied tbat tbe judgment and decree alleged therein is a bar to their recovery in this action; they alleged tbat tbe description of tbe land contained in tbe complaint in tbe action entitled “Yirginia-Carolina Joint Stock Land Bank v. Wm. T. Alexander and bis wife, Ethel P. Alexander,” does not include tbat part of tbe Mountain Hill farm owned by tbe plaintiff, Wm. T. Alexander, which was included in tbe description of tbe land conveyed by tbe deed of trust by tbe mutual mistake of tbe parties to said deed of trust.

Tbe issue submitted to tbe jury was answered as follows:

“Was tbe part of tbe Mountain Hill farm of plaintiffs, being tbe land shown on tbe map offered in evidence to tbe north of tbe red line, in-eluded, in tbe deed of trust from plaintiffs to Southern Trust Company as trustee for tbe Virginia-Carolina Joint Stock Land Bank, dated 1 December, 1924, and recorded in Book 89, at page 22, included in said deed of trust by reason of tbe mutual mistake of tbe parties? Answer: Yes.”

On tbe verdict it was ordered, adjudged and decreed that tbe description in tbe deed of trust from plaintiffs to Southern Trust Company recorded in tbe office of tbe register of deeds of Washington County, in Book 89, at page 22, and in tbe deed from W. A. Worth, commissioner, to tbe Virginia-Carolina Joint Stock Land Bank, recorded in Book 97, at page 389, is incorrect, and includes land belonging to tbe plaintiffs. It was further ordered, considered and decreed that said descriptions be and tbe same were reformed as specifically directed in tbe judgment and decree in this action.

From tbe judgment, both defendants appealed to tbe Supreme Court.

MacLean & Rodman and Zéb Vance Norman for plaintiffs.

Worth & Horner for defendants.

CONNOR, J.

Defendants’ assignments of error on their appeal to this Court, based on their numerous exceptions to tbe admission of evidence offered by tbe plaintiffs at tbe trial of this action, cannot be sustained.

The testimony of tbe plaintiff, Wm. T. Alexander, was competent as evidence tending to show that it was tbe intention of both tbe plaintiffs and tbe defendants that tbe plaintiffs should convey by their deed of-trust to tbe Southern Trust Company, trustee for tbe Virginia-Carolina Joint Stock Land Bank, only tbe Shepherd Farm, and that it was not tbe intention of either party to tbe deed of trust that any part of tbe Mountain Hill Farm, which adjoined tbe Shepherd Farm, should be conveyed thereby.

In Archer v. McClure, 166 N. C., 140, 81 S. E., 1081, it is said: “Tbe doctrine is elementary that parol evidence is not, in general, admissible between tbe parties to vary a written instrument, but it is equally well settled that mistake, fraud, surprise, and accident furnish exceptions to tbe universal principle, and parol evidence, in any case brought within one of tbe exceptions, is admitted to vary tbe writing so far as to make it accord with tbe true intention and agreement of tbe parties. These exceptions rest upon tbe highest motives of policy and expediency, or otherwise an injured party would generally be without remedy.”

In this action, tbe remedy sought by tbe plaintiffs is tbe reformation of tbe deed of trust, so that it will accord with tbe true intention and agreement of tbe parties thereto, with respect to tbe land conveyed by the deed of trust. Plaintiffs allege that in that respect the deed of trust does not accord with the true intention and agreement of the parties, because of their mutual mistake. On this allegation, if established by the proof, plaintiffs are entitled to the equitable remedy of reformation.

There was evidence other than the testimony of the plaintiff, Wm. T. Alexander, tending to establish the essential allegations of the complaint. It appears from the application to the defendant, Yirginia-Carolina Joint Stock Land Bank, which is in writing, and signed by the plaintiff, Wm. T. Alexander, that the loan, if made, was to be secured by a first mortgage on “A tract of land, situate in Scuppernong Township, Washington County, North Carolina, adjoining Lake Phelps, and the lands of A. Q. Walker, A. S. Holmes, the Woodley heirs and others, containing 1,500 acres more or less.” In the complaint filed by the Yirginia-Carolina Joint Stock Land Bank in the action against the plaintiffs herein, for the foreclosure of the deed of trust, the land sought to be sold is described as “a certain tract or parcel of land situated in Scupper-nong Township, Washington County, North Carolina, containing 1,500 acres, more or less, known as the Shepherd Farm, adjoining Lake Phelps, - the lands of A. Gr. Walker, A. S. Holmes, the Woodley heirs and others, a detailed description of said land being set out in the aforesaid deed of trust, which is recorded in the office of the register of deeds of Wash-ton County in Book 89, at p. 22.” It is admitted that the description in the deed of trust includes part of the Mountain Hill Farm.

The judgment and decree relied upon by the defendants in this action, as a bar to plaintiff’s recovery, was rendered in an action entitled, “Yirginia-Carolina Joint Stock Land Bank v. Wm. T. Alexander and his wife, Ethel P. Alexander.” The Southern Trust Company, trustee in the deed of trust, was not a party to that action. In this jurisdiction it is uniformly held that the legal title to land conveyed by a mortgage or deed of trust, to secure the payment of a note or bond, is in the mortgagee or trustee. Weathersbee v. Goodwin, 175 N. C., 234, 95 S. E., 491. In an action to foreclose the mortgage or deed of trust, the mortgagee, or trustee is an indispensable party. 42 C. J., 44, sec. 1557. The legal title remains in the mortgagee or trustee until the land is sold and conveyed by him under the power of sale or by a commissioner under a decree rendered in an action to which he is a party.

Upon the facts of the instant case, whether the absence of the trustee as a party to the action to foreclose the deed of trust rendered the decree of foreclosure void, or was a mere irregularity, the judgment and decree in the action entitled, “Yirginia-Carolina Joint Stock Land Bank v. Wm. T. Alexander and his wife, Ethel P. Alexander,” does not as a matter of law bar the plaintiffs’ recovery in this action. The description in the complaint in said action of the land which plaintiff therein prayed should be sold was at least ambiguous. Ward v. Gay, 137 N. C., 397, 49 S. E., 884.

Defendants excepted to the refusal of the court to allow their motion at the close of all the evidence for judgment dismissing the action as of nonsuit. They also excepted to the refusal of the court to instruct the jury that if they believed all the evidence and found the facts to be as testified, they should answer the issue “No.” Assignments of error based on these exceptions cannot be sustained. The evidence was properly submitted to the jury under a charge to which there was no exception.

We find no error in the trial or in the judgment. It is affirmed.

No error.