Harrelson v. Cox, 207 N.C. 651 (1935)

Jan. 28, 1935 · Supreme Court of North Carolina

207 N.C. 651

W. J. HARRELSON et al. v. E. J. COX et al.

(Filed 28 January, 1935.)

Mortgages F c—

A complaint alleging that a mortgagee in possession by fraud and artifice procured tbe mortgagors to deed bim tbeir equity of redemption is good as against a demurrer unaffected of admissions made by counsel in response to interrogation by tbe court.

Appeal by plaintiffs from Oranmer, J., at April Term, 1934, of BladeN.

Civil action in ejectment, for an accounting, and to remove cloud from title.

Tbe complaint alleges:

1. That on 1 May, 1922, tbe plaintiffs executed to E. J. Cox a mortgage on tbeir eighteen acres of land situate in Bladen County, to secure payment of tbeir certain indebtedness to bim.

2. That on 1 November, 1923, tbe said E. J. Cox, mortgagee, agreed to .take over said lands, and out of tbe crops to pay taxes, dues to tbe Federal Land Bank, etc., and to restore possession of said premises at tbe end of five years free and clear of all encumbrances.

3. That thereafter, on 1 December, 1923, by artifice, fraud, etc., tbe said E. J. Cox forced tbe plaintiffs against tbeir will to execute deed for said premises to himself and wife.

4. That on 5 December, 1925, with intent to cheat and deprive tbe plaintiffs of tbeir equity of redemption in said lands, tbe said E. J. Cox and wife, with full knowledge and ulterior design, attempted to sell tbe same to tbeir codefendant, L. B. Hayes;

Wherefore, plaintiffs pray for relief:

The following judgment was entered: “It appearing to the court upon the reading of the pleadings and admissions of counsel in response to questions by the court that the plaintiff has not pleaded facts sufficient to constitute a cause of action, and that the plaintiff is not entitled to recover of the defendants, or either of them;

“It is now, on motion . . . ordered and adjudged that . . . this action he and the same is hereby dismissed.”

Plaintiffs appeal, assigning errors.

A. M. Moore for plaintiffs.

Hector H. Clark for defendants Cox.

R. J. Hester, Jr., and Oliver Carter, Jr., for defendant Hayes.

Stacy, C. J.

We think there was error in dismissing the action as upon demurrer to the complaint. Where a mortgagee takes from his mortgagor a deed for the mortgaged premises, under circumstances such as here alleged, the transaction is open to investigation, with the burden of fairness upon the mortgagee. Hinton v. West, post, 708; Jones v. Williams, 176 N. C., 245, 96 S. E., 1036; Cole v. Boyd, 175 N. C., 555, 95 S. E., 778; Jones v. Pullen, 115 N. C., 465, 20 S. E., 624. In this jurisdiction the principle is often referred to as the “doctrine of McLeod v. Bullard ” 84 N. C., 516, approved on rehearing, 86 N. C., 210: “Where a mortgagee buys the equity of redemption of his mortgagor, the law presumes fraud, and the burden of proof is upon the mortgagee to show the bona jides of the transaction.”

We are not advised as to what admissions were made by counsel in response to the court’s interrogatories, but the complaint would seem to be good as against a demurrer. Dix-Downing v. White, 206 N. C., 567, 174 S. E., 451.

Reversed.