Hinton v. West, 210 N.C. 712 (1936)

Nov. 25, 1936 · Supreme Court of North Carolina

210 N.C. 712

GIDEON HINTON and His Wife, MARY HARRIS HINTON, v. PAUL C. WEST and SAUL WEST.

(Filed 25 November, 1936.)

Betterments A c — Mortgagee in possession under deed from mortgagor held entitled to betterments under facts of this case.

In an action between the parties it was determined that the relation between plaintiff and defendant was in effect that of mortgagor and mortgagee, although the form of the instrument executed by plaintiff was a deed of trust, and under tlie presumption raised by tbe relationship a deed in fee thereafter executed by plaintiff! to defendant was set aside, and judgment rendered for defendant for the amount of the debt constituting a lien against the land. After the execution of the deed and prior to the institution of action defendant went into possession and made improvements on the land, and this proceeding was instituted to recover the value of such improvements against plaintiff. Held: In the action setting aside the deed in fee no actual fraud was proven against defendant, but the deed was set aside under the presumption raised by the relationship between the parties, and defendant is entitled to recover against the plaintiff the value of the improvements under the doctrine that he who seeks equity must do equity.

Appeal by plaintiffs from Barnhill, J., at June-July Special Term, 1936, of Waee.

Affirmed.

Tbis is an action for tbe cancellation of a deed dated 20 January, 1932, and recorded in tbe office of tbe register of deeds of Wake County, in Book 614, at page 487, by wbicb tbe plaintiffs conveyed to tbe defendant Saul West tbe land described in tbe complaint, wbicb bad theretofore been conveyed by tbe plaintiffs to tbe defendant Paul C. West by a deed of trust dated 15 November, 1930, and recorded in tbe office of tbe register of deeds of Wake County, in Book 599, at page 323, to secure tbe payment of tbeir note to tbe defendant Saul West for tbe sum of $1,020. Tbe said note was due and payable on 15 November, 1931. It bas not been paid or satisfied.

Tbe action was begun in tbe Superior Court of Wake County on 16 January, 1934, and was tried at March Term, 1936, of said court on issues raised by tbe pleadings. These issues were answered as follows:

“1. Was there existing on 20 January, 1932, a fiduciary relation between tbe defendant Paul O. West and tbe plaintiffs, as alleged? Answer : Wes.’

“2. If so, in procuring tbe deed for tbe property in controversy, was tbe said Paul C. West acting in behalf of himself and tbe defendant Saul West, as alleged? Answer: Wes.’

“3. Was tbe transaction between tbe plaintiffs and Paul C. West, resulting in tbe execution by tbe plaintiffs of tbe deed dated 20 January, 1932, conveying tbe property described in tbe complaint, open, fair, bona ;fide, free from oppression, and made for a fair consideration ? Answer: No.’

“4. Was tbe execution of said deed procured by actual fraud and coercion, as alleged? Answer: No.’

“5. Have tbe plaintiffs, by tbeir conduct, ratified said transaction, so that they are now estopped to assert title to said land? Answer: No.’ ”

On tbe verdict, it was ordered and decreed by tbe court that tbe deed from tbe plaintiffs to tbe defendant Saul West, dated 20 January, 1932, be and tbe same was canceled, and that tbe plaintiff G-ideon Hinton is now tbe owner in fee of tbe land described in tbe complaint, subject to tbe deed of trust from bim and bis wife to tbe defendant Paul C. West, dated 15 November, 1930, and duly recorded in tbe office of tbe register of deeds of Wake County.

On admissions in tbe pleadings, it was ordered, considered, and adjudged by tbe court that tbe defendant Saul West recover of tbe plaintiffs tbe sum of $1,020, witb interest from 15 November, 1931, and tbe sum of $96.06, tbe amount paid by said defendant as taxes on tbe land described in tbe complaint.

It was further ordered, considered, and decreed that tbe judgment rendered herein is and shall be a lien on tbe land described in tbe complaint as of 15 November, 1930.

It was further ordered that tbe questions, as to whether tbe defendants are entitled to recover in this action any sum for improvements made by them on tbe land described in tbe complaint prior to tbe commencement of this action, and if so, what sum, be and tbe same were reserved for future determination.

There was no exception to or appeal from said judgment.

Tbe action was beard at June-July Special Term, 1936, of tbe Superior Court of Wake County on tbe petition of tbe defendants for an allowance for improvements made by them, prior to tbe commencement of tbe action, and subsequent to tbe date of tbe deed from plaintiffs to ,tbe defendant Saul West, and tbe answer of tbe plaintiffs to said petition. It was admitted in tbe answer that defendants bad made improvements as alleged in tbe petition; it was denied that said improvements were made by tbe defendants while in possession of tbe land under color of title.

At tbe bearing, a trial by jury was waived. It was agreed that tbe court should bear tbe evidence and personally inspect tbe property in controversy, and render judgment on tbe facts found by it from all tbe evidence, and from its inspection of tbe property.

Accordingly, tbe court found tbe facts pertinent to tbe controversy between tbe parties to tbe action witb respect to tbe improvements made by tbe defendants on tbe land described in tbe complaint, which are substantially as follows:

1. On 20 January, 1932, tbe defendant Saul West was tbe bolder of a note for tbe sum of $1,020, which was executed by tbe plaintiffs and payable to bis order. This note was dated 15 November, 1930, and was secured by a deed of trust of even date witb tbe note, which was executed by tbe plaintiffs to tbe defendant Paul C. West. Tbe note was due and payable on 15 November, 1931. Tbe plaintiffs bad defaulted in its payment.

2. After tbe plaintiffs bad defaulted in tbe payment of said note, tbe defendant Pañi O. West, as trustee, at tbe request of tbe defendant Saul West, tbe bolder of said note, advertised tbe land conveyed by tbe deed of trust for sale under tbe power of sale contained therein. Prior to tbe date of tbe sale, tbe plaintiffs and tbe defendants entered into an agreement by wbicb tbe plaintiffs executed a deed dated 20 'January, 1932, by wbicb tbey conveyed tbe land described in tbe deed of trust to tbe defendant Saul West, in fee, and thereafter, on 30 January, 1932, tbe defendant Saul West reconveyed six acres of said land to tbe plaintiffs. Tbe note held by tbe defendant Saul West was marked “paid and satisfied,” and tbe deed of trust was canceled on tbe records in tbe office of tbe register of deeds of Wake County. Pursuant to said agreement, tbe plaintiffs remained in possession of said land for two years from and after tbe date of their deed to tbe defendant Saul West, to wit: 20 January, 1932, paying no rent therefor to tbe defendants, or either of them.

3. While tbe plaintiffs were in possession of tbe land under their agreement with tbe defendants, and prior to tbe commencement of this action, tbe defendant Saul West caused to be constructed on said land permanent improvements, wbicb have enhanced tbe value of tbe land in tbe sum of $380. Tbe plaintiff Gideon Hinton, by bis labor, aided in tbe construction of said improvements, and received compensation for bis labor from tbe defendant Saul West. He made no objection to tbe construction of said improvements because at tbe time tbey were constructed be recognized tbe title of tbe defendant Saul West, under tbe deed to him from tbe plaintiffs, as valid in all respects.

4. On tbe verdict of tbe jury at tbe trial of this action, it has been adjudged and decreed that tbe deed under wbicb tbe defendant Saul West claimed title to said land at tbe time tbe improvements thereon were constructed, be and tbe same has been canceled, and that tbe deed of trust by wbicb tbe note held by tbe defendant Saul West is secured is in legal effect a mortgage.

On tbe foregoing facts it was ordered, considered, and adjudged by tbe court that tbe defendant Saul West is entitled to an allowance for tbe improvements made by him on tbe land described in tbe complaint, and that be recover of tbe plaintiffs on account of said improvements tbe sum of $380.00, with interest from 21 March, 1936, and tbe costs of tbe bearing of bis petition.

Tbe plaintiffs excepted to tbe judgment and appealed to tbe Supreme Court, assigning tbe judgment as error.

W. G. Lassiter, J ohn H. Anderson, Jr., and Willis Smith for plaintiffs.

Glem B. Holding and Little & Wilson for defendants.

Connor, J.

On a former appeal in this action a judgment as of nonsuit dismissing the action was reversed. It was held that there was sufficient evidence at the trial to support the allegations of the complaint which constitute plaintiffs’ cause of action for the cancellation of the deed from the plaintiffs to the defendant Saul West, and that from this evidence a presumption arose that the transaction which resulted in the execution of the deed was not fair and free from oppression. The burden to rebut this presumption was on the defendants. McLeod v. Bullard, 84 N. C., 515. The action was remanded to the Superior Court of Wake County for trial upon the issues raised by the pleadings. Hinton v. West, 207 N. C., 708, 178 S. E., 556.

A subsequent trial was had, which resulted in a judgment for the plaintiffs. There was no exception to or appeal from this judgment. This appeal is from the judgment that the defendant Saul West recover of the plaintiffs for improvements made by him on the land after the execution of the deed and prior to the commencement of the action. The only exception is to the judgment. There was no exception to the findings of fact made by the court, on which the judgment was rendered.

The judgment is supported by Wilson v. Fisher, 148 N. C., 536, 62 S. E., 622. In that case it is said: “While it is the general rule that a mortgagee in possession is not entitled to pay for improvements, we are of opinion that as plaintiffs in this action are asking equitable relief, after so many years, they should account in diminution of rents for such enhancement in value of the property as may be found by reason of permanent improvements put therein by the defendant. There should be a reference to state an account between the parties upon the principle indicated in this opinion.”

Hall v. Lewis, 118 N. C., 509, 24 S. E., 209; Southerland v. Merritt, 120 N. C., 318, 26 S. E., 814; and Hallyburton v. Slagle, 132 N. C., 957, 44 S. E., 659, are distinguishable from the instant case. In this case the jury has found that the execution of the deed which has been canceled by the court was not procured by the actual fraud of the defendants. The deed was canceled because the defendants failed to rebut the presumption which arose solely because of the relationship of the parties that the transaction which resulted in the execution of the deed was not fair and free from oppression.

On the facts found by the court, the judgment is in accord with the principle that he who seeks equity must do equity. The judgment is

Affirmed.