Wolfe v. North Carolina Joint Stock Land Bank, 219 N.C. 313 (1941)

March 19, 1941 · Supreme Court of North Carolina
219 N.C. 313


(Filed 19 March, 1941.)

1. Trusts § lb: Mortgages § 40—

To create a parol trust there must be an agreement amounting to an undertaking to act as agent for another in the purchase of land, constituting a covenant to stand seized to the use or benefit of such other, but a mere parol agreement to convey land to another raises no trust in the latter’s favor and comes within the provisions of the statute of frauds.

2. Same: Estoppel § 6d — Person signing lease as tenant and thus recognizing title of landlord held estopped to assert parol trust as against landlord.

Plaintiff alleged that the cestui que trust in the deed of trust executed by plaintiff on the locus in quo, agreed to purchase at the foreclosure sale for plaintiff’s benefit and to reconvey to plaintiff upon certain terms. During conversations with officers of the defendant relative to repurchasing the property plaintiff occupied same as tenant. Defendant consistently refused to convey the property upon the terms that plaintiff alleged it had agreed so to do. Thereafter ejectment proceedings were instituted and plaintiff made no defense therein that he was the equitable owner, and the ejectment action was compromised by agreement under which plaintiff paid the rent and entered into a new rental agreement prepared by plaintiff’s attorney in which it was stipulated that plaintiff claimed no interest in the land other than as tenant. Held,: Plaintiff’s conduct was inconsistent with the existence or continuation of his asserted equitable interest in the land and estops him from asserting the alleged parol trust.

8. Cancellation of Instruments § 2 — Evidence held insufficient to show that execution of instrument was procured by fraud.

Plaintiff instituted this action to establish an alleged parol trust. Defendant asserted as an estoppel a lease agreement executed by plaintiff in which it was stipulated that plaintiff’s only interest in the land was that of a tenant. Plaintiff attacked the lease on the ground that its execution *314was procured by fraud. Tbe evidence tended to show that tbe lease agreement was prepared by plaintiff’s attorney, that be bad opportunity to read it or to have it read to him, and the only representation relied upon was the statement of defendant’s agent that tbe lease agreement was a “plain rental contract.” Held: Plaintiff is not entitled to avoid tbe legal effect of tbe instrument upon mere proof that the agent of defendant informed him that it was a lease agreement.

4. Same: Mortgages § 40—

After foreclosure and tbe purchase of tbe property by tbe eestui there is no presumption of fraud arising from the relationship between the parties which would vitiate the execution by the former trustor of a lease agreement.

5. Estoppel § 11c—

Where plaintiff’s own evidence establishes the execution by him of a lease agreement estopping him from asserting an alleged parol trust in the lands, and plaintiff’s evidence of fraud in procuring his execution of the lease is wholly insufficient, defendant’s motion for judgment as of nonsuit should have been sustained.

Appeal by defendant from Carr, J., at October Term, 1940, of WatNE.


Civil action to establish a parol trust in land.

In 1925, tbe plaintiff, W. E. Wolfe (tbe plaintiff, Ida Wolfe, being joined as wife of tbe real plaintiff), subdivided bis tract of land containing 111 acres into three separate parcels and procured three several loans from tbe defendant in tbe total sum of $6,400.00. Each loan was secured by a deed of trust. In 1934, tbe plaintiff having defaulted in tbe payment of four semiannual installments and in tbe payment- of tbe 1932 and 1933 taxes, in addition to certain insurance premiums, bis land was advertised under tbe deeds of trust and sold on 17 March, 1934. At tbe sale, plaintiff being present, tbe defendant became tbe purchaser of each tract and foreclosure deeds were executed accordingly.

Tbe plaintiff offered evidence tending to show that in February, 1934, prior to tbe foreclosure sale, tbe vice-president of tbe defendant company suggested that plaintiff apply to tbe Federal Land Bank for a loan and stated that tbe defendant would have tbe trustee sell tbe land and that at tbe sale tbe bank would bid it off and “be was to let me have it back at what I could borrow from tbe Federal Land Bank.”

Tbe plaintiff made application to tbe Federal Land Bank and procured a commitment in tbe sum of $3,200.00. He so advised tbe defendant and offered to pay tbe proceeds of such loan for a reconveyance of bis land. Tbe defendant refused to accept tbe same. Plaintiff then procured a commitment from tbe Federal Land Bank in tbe sum of $3,500.00. Tbe defendant likewise declined to accept this amount. He was fully advised in August, 1934, that tbe defendant declined to accept *315tbe amount of tbe commitment from tbe Land Bank. “Mr. Smith said be wasn’t going to do it and I couldn’t make bim do it.”

During tbe negotiations for tbe repurchase or redemption of tbe land plaintiff and bis attorney consulted with tbe general counsel of tbe defendant and also with tbe treasurer. Tbe agent of tbe Land Bank, accompanied by plaintiff, also conferred with officers of tbe defendant. In each instance defendant declined to accept tbe amount of tbe commitment and to make conveyance.

In tbe spring of 1934, plaintiff leased tbe premises in controversy from tbe defendant agreeing to pay $225.00 rent therefor. It does not appear whether this contract was made before or after tbe foreclosure. On 17 November, 1934, counsel for plaintiff, at bis instance, wrote tbe defendant as follows:

“My information is that in tbe above matter your bank foreclosed this property some time ago and now bolds title to tbe same.

“Mr. Wolfe is very desirous of obtaining from Federal Land Bank of Columbia a loan with which to re-purcbase this land. I have been negotiating with tbe Federal Land Bank in regard to this matter since June of this year and have not been able to get as much money as is necessary to complete this loan, however, am hopeful that I can get a loan that will be sufficient to enable bim to re-purcbase this property. To do this, however, it is necessary that I have a statement from your bank as to tbe exact amount you will accept for this land provided Mr. Wolfe can re-purcbase tbe same. I would greatly appreciate your furnishing me with such a letter, giving me tbe maximum time in which to accept your offer and at tbe same time make your offer as low as you possibly can so that be can work out a proposition with tbe Federal Land Bank.”

Thereafter, tbe plaintiff having defaulted in tbe payment of rent, defendant instituted a summary proceeding in ejectment. In this proceeding plaintiff was represented by counsel and tbe parties entered into an agreement of compromise settlement under tbe terms of which tbe plaintiff paid bis rent and tbe defendant agreed to and did enter into a rental agreement for 1935. This contract of rental was prepared by counsel for tbe plaintiff and contained tbe following stipulation:

“It is further understood and agreed between tbe parties that tbe said party of tbe first part is seized of tbe legal title to tbe lands described in this contract and that tbe said party of tbe second part (plaintiff) has no interest in tbe farm except for tbe term and duration of this lease.”

On 28 September, 1935, plaintiff’s counsel, at bis instance, again wrote defendant, in part, as follows: “Will you please let me know immediately tbe price of this farm, together with your best terms; that is, cash payment and purchase money mortgage securing tbe balance. I would *316appreciate tbis information immediately as Mr. Wolfe is about to obtain assistance to regain tbis farm and it is necessary tbat I have tbe figures at once.”

In tbe fall of 1935 plaintiff instituted an action to establish a parol trust agreement entered into between tbe defendant and plaintiff prior to tbe foreclosure sale. Judgment of voluntary nonsuit was entered at tbe March Term, 1937, and plaintiff brought tbis action 1 January, 1938, alleging substantially tbe same cause of action.

Tbe defendant filed answer denying any parol agreement or contract to reconvey and alleged tbe acts and conduct of tbe plaintiff, including tbe rental agreements, as an estoppel. Plaintiff replied thereto alleging tbat tbe rental contract entered into in 1935, if executed by him (which was not admitted), was procured by tbe fraud and misrepresentations of tbe defendant.

When tbe cause came on to be tried issues were submitted to and answered by tbe jury as follows:

“1. Did tbe North Carolina Joint Stock Land Bank, prior to tbe foreclosure on March 17, 1934, agree with tbe plaintiffs tbat it would buy tbe lands at tbe foreclosure sale and bold title to tbe same to tbe use and benefit of tbe plaintiffs, as alleged in tbe pleadings of tbe plaintiffs ?

“Answer: ‘Yes.’

“2. If so, were tbe plaintiffs ready, willing and able to perform their part of tbe contract according to its terms within a reasonable time and as agreed, as alleged by tbe plaintiffs’ pleadings ?

“Answer: ‘Yes.’

“3. Was tbe contract of rental entered into between tbe plaintiffs and tbe defendant dated January 18, 1935, obtained by fraud of tbe defendant?

“Answer: ‘Yes.’”

Prom judgment on tbe verdict defendant appealed.

J. Faison Thomson and Scott B. Berkeley for plaintiffs, appellees.

D. H. Bland and J. S. Patterson for defendant, appellant.

BabNhill, J.

To create a parol trust there must be an agreement amounting to an undertaking to act as agent in tbe purchase and constituting a covenant to stand seized to tbe use or benefit of another.

“Tbe jurisdiction to enforce tbe performance of trusts arises where property has been accepted by one person on terms of using or bolding it for tbe benefit of another.” Reynolds v. Morton, 205 N. C., 491, 171 S. E., 781; Shelton v. Shelton, 58 N. C., 292; Riggs v. Swann, 59 N. C., 118; Lefkowitz v. Silver, 182 N. C., 339, 109 S. E., 56; Lutz v. Hoyle, 167 N. C., 632, 83 S. E., 749; Wilson v. Jones, 176 N. C., 205, 97 S. E., *31718; Boone v. Lee, 175 N. C., 383, 95 S. E., 659; Weaver v. Norman, 193 N. C., 254, 136 S. E., 612; Mulholland v. York, 82 N. C., 510; Rush v. McPherson, 176 N. C., 562, 97 S. E., 613, and cases cited; Avery v. Stewart, 136 N. C., 426, 68 L. R. A., 776.

“A mere parol agreement to convey land to another raises no trust in the latter’s favor and comes within the provisions of the statute of frauds.” Avery v. Stewart, supra; Campbell v. Campbell, 55 N. C., 364.

The theme of the conversation with the vice-president of the defendant related by the plaintiff is that the bank would buy the property at the sale and would reconvey to the plaintiff for the amount procured from the Federal Land Bank. There is, however, other evidence from witnesses for the plaintiff which tends more nearly to establish a parol trust agreement. In any event, the defendant in its brief does not challenge the sufficiency of the evidence for this purpose.

On its motion to nonsuit defendant rests its case upon its plea of estoppel. This plea must be sustained.

Plaintiff, after the sale, in company with a representative of the Land Bank, and later accompanied by his counsel, had conversations with officers of the defendant relative to repurchasing the property. At that time he occupied it as tenant under a rental agreement. Nothing was said in respect to an alleged agreement to reconvey or to purchase for the use and benefit of the plaintiff. At plaintiff’s instance his counsel corresponded with the defendant, beginning shortly after the sale. In none of these letters is reference made to any such contract. The plaintiff was merely seeking to repurchase his land and to obtain the best possible price. When ejectment proceedings were instituted in 1934 he made no defense that he was the equitable owner of the property. On the contrary, he paid the rent and entered into a new agreement of rental, stipulating in the contract that he claimed no interest in the land other than as tenant. This conduct of the plaintiff is wholly inconsistent with and in negation of any claim of beneficial interest. At the time he entered into the .rental contract for the year 1935 he well knew that defendant had consistently refused to reconvey the property upon the terms plaintiff alleges it had agreed so to do. In the ejectment proceedings it asserted title in itself and claimed the right of possession. With this knowledge and in settlement of the ejectment action he paid the 1934 rent and executed a lease for the premises. Under the decisions of this Court he is now, by his conduct, estopped to assert equitable title to the land. Hare v. Weil, 213 N. C., 484, 196 S. E., 869; Council v. Land Bank, 213 N. C., 329, 196 S. E., 483; Bank v. Hardy, 211 N. C., 459, 190 S. E., 730; Minton v. Lumber Co., 210 N. C., 422, 187 S. E., 568; Bunn v. Holliday, 209 N. C., 351, 183 S. E., 278; Shuford v. Bank, 207 N. C., 428, 177 S. E., 408.

*318Speaking directly to the subject, Winborne, J., in Hare v. Weil, supra, says: “Tbe language of this agreement is clear and explicit. A reading of it manifests the clear intention of the plaintiffs to recognize the defendants as the landlord, and assume for themselves the role of tenants . . . The execution of this agreement is conduct positive, unequivocal and inconsistent with the claim of title under the alleged parol agreement. It is not in harmony with the existence or continuation of the trust, and manifests conclusively an intention not to rely thereon.”

Here, however, plaintiff seeks to avoid the effect of his 1935 lease agreement on the grounds of fraud. The fraud relied upon is neither sufficiently pleaded nor proven. While he testified that “they (the agent of the bank), just asked me to sign my name, said it was a plain rental contract,” the fact remains that the lease agreement was prepared by plaintiff’s counsel who was present when it was executed. He had full opportunity to read it or to have it read to him by his counsel. It was “a plain rental contract” and the clause in which he stipulated that he claimed no interest in the land was just above his signature. He cannot now avoid the legal effect thereof upon mere proof that the agent of the defendant informed him that it was a lease agreement.

The relationship of the parties was not such as to raise a presumption of fraud. The record discloses that at no time from the foreclosure until plaintiff instituted his action in the fall of 1935 was any mention made of an alleged parol trust agreement. The plaintiff had made repeated efforts to ascertain the terms on which defendant would reconvey and the defendant had consistently and repeatedly declined to sell for the sums offered. If there existed any parol trust agreement plaintiff well knew that defendant was claiming ownership in its own right. The parties were dealing at arms length.

There being no proof of fraud, the effect of the plea of estoppel, on the evidence offered by the plaintiff, was properly presented by the motion for judgment as of nonsuit. Harrison v. R. R., 194 N. C., 656, 140 S. E., 598; Hare v. Weil, supra.

The motion for judgment as of nonsuit should have been sustained.