Morrison v. McLeod, 22 N.C. 221, 2 Dev. & Bat. Eq. 221 (1839)

June 1839 · Supreme Court of North Carolina

22 N.C. 221, 2 Dev. & Bat. Eq. 221

JOHN MORRISON et. al. Adm’rs. of BENJAMIN PERSON, v. NIEL McLEOD. NIEL McLEOD v. JOHN MORRISON et al. Adm’rs. of BENJAMIN PERSON.

If one, in whom a drunken man confides, takes advantage of that confidence and obtains from him an absolute conveyance for land, at an undervalue, with a special engagement for a re-sale and re-conveyance, upon hard and unreasonable terms-, the contract will be set aside, and a re-conveyance decreed, upon the re-payment of the amount really due from the vendor to the vendee.

"Where an absolute conveyance was made of land worth $3,000, for the expressed consideration of $2,000 then paid, but in fact only $500 was paid in cash, and the vendee’s note given for the payment of the balance in four annual instalments without interest, and at the same time the vendee executed to the vendor an instrument in the form of a bond in the penal sum of $500 only, for the re-conveyance of the land upon the payment by the vendor to the vendee of the said sum of $2,000, with interest thereon from the date, at any time with three years; and that the former and his family might retain possession during the three years of so much of said land as might be necessary for them to cultivate; and just before the expiration of the three years, the parties executed auother instrument in relation to said land, in which it was agreed, among other things, that the vendor might remain in possession one year longer, and that during that period, both parties, by mutual consent, would be permitted to sell said land; and if it should not'be sold before th.e end of that time, “ then one of the parties should sell his interest in said land to the other:” It was held, that the conveyance) though absolute in form, was intended by theparties to be but a security for the re-payment of money advanced, or to be advanced by the ven-dee to the vendor; and that the latter, upon the re-payment of the sum really due from him to the former, should be permitted to redeem the land.

John Morrison and Colin A. Munroe and wife, as the administrators of Benjamin Person, deceased, in March, 1S32, filed their bill of complaint against Neil McLeod, setting forth that the latter had obtained a judgment against them for $1,000, principal money, besides interest, on bonds of their intestate; that they had obtained judgments against said McLeod for six or seven hundred dollars, and were-then prosecuting a suit against him, in which they expected to obtain a judgment; alleging that-it had been agreed between said McLeod and themselves, that they should mutually forbear from issuing executions on their respective judgments, until the pending; suit should be decided; and that, when it should be decided, the parties should set on their respective judgments a£ainst each other> ari(i °nly the balance then remaining due on either side should be collected; complaining that McLeod, in violation of this agreement, had sued out execution on his 07 judgment; charging that the said McLeod was in embarrassed circumstances, and that if he should be permitted to collect his judgment, it was very doubtful whether the plaintiffs would be able to collect theirs; and praying for an injunction and for general relief. Upon the filing of this bill, an injunction was ordered as prayed for. The defendant, in September, 1832, answered the bill, and therein denied that he had ever made the agreement charged against him in the bill; and further set forth, that some time in the year 1823, he executed to the late Benjamin Person a deed for the conveyance of a tract of land, for the consideration of $2,000, and the said Person gave him a bond to operate as a defeazance, on fé-payment of the purchase money; a copy of which bond was annexed and referred to in the answer; that in truth the consideration was not paid at all, but the said Person gave the defendant his two notes for $500 each, being the same which the defendant had prosecuted to judgment, and two others of $250 each, and promised to let the defendant have the balance of $500 in sums as he should need it; that the said Benjamin afterwards prevailed on the defendant to surrender the twro notes of $250 each, On a vague allegation that the ac-Coimts and claims, wdrich he had against the defendant, were more than sufficient to extinguish these, besides paying the $500, for which no note had been taken; that the defendant bliudíy confided in Pefsdn’s representations and in his'promises that defendant should be credited for the amount of these' notes, and that, at a convenient time, a full settlementshould be made of all their dealings. The defendant further stated, that he never could get Person to come to this settlement; and that, with a view to coerce it, he instituted his action against Person on the two $500 notes; which action, after Person’s death, was carried on against his administrators; averred that the claims upon which the administrators of Person had sued him, all of which claims, at the time, of rendering the swer, were reduced to judgments, were in truth discharged by the surrender of the two $250 notes, or covered by the promise of Person to advance $500, as the same might be wanted; alleged besides, that in conscience the land conveyed was but a security for the amount, whatever it might be, which Person had actually advanced to him; that nevertheless, Person had taken possession of the land in 1827, as absolutely his, and had held the same ever since, making large profits thereon; that the said land was worth $3,000 or $4,000, and declared the defendant’s purpose to file a bill to redeem the land and to have a full settlement.

In August, 1833, McLeod filed his cross-bill against the administrators of Person, to which the heirs at law of Person were also made defendants. Therein it was charged, that on the 14th of May, 1823, the complainant was seized of a tract of land situate in the county of Moore, worth upwards of $3,000; that he had theretofore been in the habit, whenever he visited the village of Carthage, the county town of said county, of taking up his residence with Benjamin Person, who kept a tavern there; that the complainant had an unfortunate propensity for drinking to excess, which was greatly strengthened by the facilities thrown in the way of its indulgence by the said Benjamin; that the complainant’s intellect had become enfeebled by age and drunkenness, and his confidence in the said Benjamin, who was a keen, shrewd man, had become almost unlimited; that he owed Person an account; that he wanted money to meet some exigency and to pay off sundry small debts to different persons, and applied to the said Benjamin therefor, who expressed a perfect readi-. ness to make any advances needed, if the payment of his acr count, and the re-payment of the money to be advanced were secured by a mortgage on the said tract of land; that the complainant yielded his assent to whatever arrangements his supposed friend should think right for that purpose; and that, accordingly, certain instruments in writing, were, on the day aforesaid, executed between .them, which had been devised by the said Benjamin, under the pretence of carrying that purpose into execution; but as complainant believed, with the design of cheating him out of the land. The instruments thus executed, were a deed of bargain and sale from the complainant to the said Person, whereby, in consid-erat*on ofthesumof $2000therein acknowledged lo have been paid, by t.he said Person, the complainant conveyed the tract aforesaid to the said Benjamin, in fee simple. There was also an instrument of the same date, executed by Person, in the nature of a defeazance, whereby it was testified, that on re-payment of the said sum, with interest, at any time within three years thereafter, by the complainant, to the said Person, the land should be re-conveyed. It was charged, that in fact, and notwithstanding the declaration in the deed'; no money whatever was actually paid to the complainant at the time, or ever afterwards; but it was understood, that he was to have a credit of five hundred dollars with Person, on account of what complainant then owed him, or might owe by reason of advances of money to or for the complainant; and Person executed four notes to the complainant, two for $500, and two for $250 each. The complainant further charged, that some time thereafter, Person prevailed on him to surrender the two latter notes, on an allegation that he had paid moneys for the complainant, to such an amount, as would, when added to his account, extinguish the said notes; andón a promise, to have the matters between them, fairly stated in his books, and to furnish the complainant with a full account — that said account was repeatedly demanded of Person in his life-time, but always evaded or refused; and aver^ red that in consequence of these refusals the complainant brought the suit upon, the two $500 notes, in order to bring about a fair settlement. The prayer of the cross bill was, that an account might be taken of whatever advances had been made by the said Person for the complainant, and of whatever the complainant truly owed him on account, and of the rents and profits of, and waste committed upon, the said land since it came into the possession of Person; and that, upon paying whatever balance should be ascertained, the complainant might be let in to redeem, and for further relief. The defendant, Morrison, put in a separate answer, wherein the execution of the conveyance of the I4th of May, 1823, and of the bond called the defeazance, was admitted.; and wherein he stated that on that day the defendant, who had been several years acting as clerk to Person, was called into his store to witness certain writings, and that the complainant, Person, and Dr. R. B. Mclver were present; that the defendant was then informed by Person, or complainant, or both, (at all events both were present.) that Person had bought the complainant’s plantation, and was to give $2,000 therefor; that $500 were to be immediately placed to the credit of complainant, for the purpose of discharging his account with Person, and satisfying advances to be made by Person in discharging debts due from complainant to third persons; and the residue of the price was to be secured by four notes, payable in different years, two for $500, and two $250 each —that defendant and Dr. Mclver thereupon witnessed the execution of the deed, of the four notes aforesaid, and also another writing, which was then and there handed by Person to the complainant; but the nature, object and contents whereof were not stated, and were utterly unknown to the defendant; that at the time, he heard no intimation of the 'transfer being in any way conditional, of entertained any suspicion but that the sale was absolute; although, on seeing the instrument filed by the complainant as a defeazance, he is satisfied that this is the paper, the contents and nature whereof were unknown to him when he attested it, which was delivered by Person to complainant. The defendant further stated, that he had no distinct recollection of the complainant’s condition at that time, as to his being drunk or sober, but said that defendant, when at Carthage, “ was fond strong drink, and generally much influenced by spirits, although not in a situation to disable him from transacting business, or to be called drunk in the general acceptation the term.” The defendant further said, that from the books of his intestate it appeared, that in November, 1822, there was a balance due from complainant of $150, which was then closed by a note; that in June, 1823, the defendant was credited in account with $500, “ the first payment for land;” that on the 21st of March. 1825, he was further credited with $250; and that, among his intestate’s papers, he found thg £[rst of his intestate’s notes for $250, with a receipt of pay-thereon, signed by the complainant as of that day; that it further appeared from’ the books, that after this credit of $250, there was a balance still due from complainant of $356:55, which balance was closed by his note: and that her found among his intestate’s papers, after his death, the other $250 note, with a memorandum in his intestate’s handwriting, that the same was paid in October, 1826. The answer further stated that the complainant sued Person in his life-time, upon the two notes of $500, and after Person’s death prosecuted the said suit to judgment against his administrator; and that they had sued him and obtained judgments upon the complainant’s two notes of $150 and $356:55, before mentioned; had also sued him upon his open account, as appearing upon the books of their iutestate, since the last settlement of 21st March, 1825, for upwards'of $500; but by reason of defect of proof, -they thereupon recovered but $305:49 cts — also had sued him on a note of complainant assigned to their intestate by Duffee, upon which they recovered $168:49 cents — and had brought several warrants against him before magistrates, out of doors, and obtained judgments' in all for $50 or $60, principal money, besides interest. The two notes of $250, referred to, were exhibited with the answer. The defendant insisted that the instrument relied upon as a defeazance, was “ literally” but a bond to reconvey, upon certain conditions; and that the complainant’s only remedy was by a suit thereon, in case he had complied with the conditions — that the complainant was not an illiterate man, and “had been a man of business,” and, as defendant believed, knew the meaning of the terms used in the instrument; and furthermore, that in the spring of 1827, the complainant voluntarily gave up the possession of the land to Person, removed to Montgomery,, where he purchased another residence, and solicited Person to pay the bonds which he had given to Duffee upon that purchase.

The answer of Monroe and wife referred to that of Morrison, and, stating their belief of its truth, adopted it as their own. The heirs of Person, who were infants, answered by their guardian, and submitted their rights to the protection of the Court. Replication was filed to these answers, and the cause and cross cause were brought to a hearing upon the Pr00fs-

Winston and Badger for the plaintiffs.

W. H. Haywood and Mendenhall for the defendants.

Gaston, Judge,

having stated the pleadings as above,proceeded as follows: The controversy between these parties, depends mainly on the matter put in issue, byjhe pleadings on the cross-bill. In regard to this, though many depositions have been taken, the only material facts established by them for the present purpose, are, that the complainant in the cross-bill was much addicted to intoxication; that he very often'visited Carthage, habitually every Court, and when there, lodged with Person, and was generally drunk. The witnesses differ as to the effect produced on him by drunkenness, some expressing an opinion that he could not be cheated when' drunk, and one Mr. Dowd declaring that in his judgment, it rendered him exceedingly stupid, and an easy prey to a shrewd man, in whom he reposed confidence. Person was a man attentive to business, intelligent and exact, and possessed the confidence of McLeod and the community in general. The tract in question was well worth $3,000. The complainant was a man disposed to run in debt, and to evade the payment of his debts by disingenuous means.

To these facts are to be added the very material facts disclosed by the exhibits. It is to be regretted that these have not been as full on either side as they might have been rendered. We could have wished to see the two $500 notes that were reduced to judgments, and also a copy from the books of the deceased of the complainant’s entire account therein. We are satisfied that they have not been withheld to prevent the ascertainment of truth; nor do we draw any unfavourable inference, because of their not having been produced. They would have shed light, however, on parts of the transaction, over which hangs some obscurity.

From the exhibits, it is to be collected, that Person executed to McLeod, in May, 1823, as the consideration in part of the alleged purchase of the land in dispute, four notes, payable according to the defendant Morrison’s representation, jn four different years, that is, as we understand him, in 1824, 1825, 1826 and 1827. Two of these notes are produced, each for $250, one of which became due in May, 1825, and ^le ot^ler iQ May, 1827 — and we are left to infer, and so take the fact to be, for the present, that the two notes of $500 eac^> severally became due in 1824 and 1826; although, from the statement in the answer of McLeod to Morrison’s bill, iQ September, 1832, wherein he claimed to be due thereon for principal and interest, the sum of $1,320, we suspect that neither became due earlier than 1826. The only other part of the consideration was a credit of $500, to be allowed to McLeod in account. The most favourable representation for those who set up the transaction as an absolute purchase, then, is, that the land was bought for $500 cash, and $1,500 to be paid in four annual alternate instalments of $500 and $250, without interest^ — that is, for about the sum of $1,800 cash. But, accompanying the conveyance, and executed with it, is the instrument called by the defendants, a bond for a re-conveyance, but alleged by the plaintiff, to have been executed, or at least represented as a defeazance. It is one of an extraordinary character. It is a bond from Person to McLeod, in the penal sum of $500 only — and after reciting that the latter hath, on that day, conveyed the land in question to the former, in consideration of the sum of $2,000, to the latter in hand paid, “but to be re-conveyed, on condition that he shall, at or before the expiration of three years from the date, pay to Person the aforesaid sum of $2,000, with interest from the date,” it declares, that in case McLeod shall fail to comply with the conditions above mentioned, at the time above prescribed, the obligation shall be void; but, in case of a compliance by him, or his lawful representatives, and the said Person, or his heirs, executors, and administrators, shall then refuse to re-convey, that the obligation shall be in full force — and it further provides, that McLeod and his present family, shall be permitted to retain possession of so much of the land as may be necessary for them to cultivate, “during the aforesaid term of three years, given for the re-payment of the purchase money.”

Subjoined to this instrument, is another, in the following words: “ agreement between Neill McLeod, Esq., and iamin Person, the said Neill is, within some short time, to % ,. : . . . ’ deliver to the said Benjamin, tins instrument of writing, and three notes or bonds which he holds against the said Benjamin, two of them for $500 each, and the other for $250, making in all $1,250; at which time the said parties are to enter into the following agreement, respecting the within described land, viz: the said Neill is to remain in possession, until the 1st of June, 1827, on paying fhe interest of the purchase money to the said Benjamin; during which time, both parties, by mutual agreement, will be permitted to sell said land; and the profits arising therefrom, after paying to the said Benjamin the purchase money, with interest, agreeably to contract, to be equally divided between the said Neill and Benjamin; and in case such sale shall not have been effected, at the expiration of the time above mentioned, then one of the parties shall sell his interest in said land to the other, he offering the highest price to be the purchaser, on complying with the true spirit and meaning of the contract to be entered into,” dated May the 12th, 1826. In October, 1826, Person gets a surrender of the note for $250 — but, under what circumstances, does not appear, and in the summer of 1827, takes possession of the land.

It seems to us, that the complainant in the cross-bill, is entitled to the relief he asks for. Either the contract between the parties was for an absolute conveyance of the land, and a special engagement for a re-conveyance, as defendants insist, is literally testified by the instruments — or, it was for' a conditional conveyance of the land, to compel the payment of money due, and the re-payment of money to be advanced. If the former, the contract must be set aside, as one uncon-scientiously extorted from a drunken and confiding man, upon his paying what may be justly due; and so, he is entitled to redeem. If the latter, then in its nature, it is but a security for a debt and loan, and therefore he is entitled to redeem.

Viewed, in the first light, the contract bears Unequivocal marks of having been obtained by imposition. The land was unquestionably worth $3,000, and it is bought at the nominal price of $2,000. Not a cent of money is actually advanced, but a credit is to be allowed McLeod in the tavern and store of $500 — and the remaining1 $1,500 of the price is to be paid in instalments, one of which, at least, is not to become due until four years after the transaction. It is a de-dared condition of the sale, that the vendor may re-purchase, by returning the $2,000 with interest from the date, within,., three years — that is to say, by. returning the price, with interest, before he is entitled to receive the price. And, if he shall faithfully execute this condition on his part, and restore the so called purchase money, and interest, within the three years, and Person choose to keep the land and money so restored, he may do so on paying $500. If this was really the bargain made by Person, with his old drunken friend, it is not surprising, that he was desirous to conceal it even from his own clerk.

We are not bound, however, to take this view of the transaction,.and charity should induce, while justice will permit us, to regard it as in truth, batan awkward attempt to pledge the land, as security 'for what was due, and the money to be advanced. For this purpose, a conveyance was made of the legal title to Person, the creditor and intended lender, and, McLeod the debtor, and borrower, received an instrument, stating the conditions of that conveyance. Witnesses were called upon to notice the true amount of the present debt, and the extent of the future advances contemplated and secured by Person’s notes, in consideration whereof, the conveyance was made; but the conditions of that cenveyance were not disclosed to them, but intended to be declared in the instrument given to the party, to claim the benefit of them. Whatever appearauces the transaction might wear before the witnesses — and however Person might desire, in order to save him the trouble or expense of a foreclosure, that its full character should not be known to them, he might have supposed this paper reasonably sufficient to.sh'ew McLeod’s right to redeem; and in case that right were not exercised, or if it were abandoned, that the surrender of the paper would be all that was necessary to make the conveyance indefeasible. He would thus, indeed, have the staff very much in his own hands; but, notwithstanding, he might intend to render or allow to McLeod what upon the whole he should deem just. The agreement of the 12th of May, 1826, although certainly not free from obscurity, and, in one particular, not intelligible, furnishes strong evidence that the deed of conveyance was not intended to be absolute, but designed' as a security. The three years allowed for redemption, were on the eve of expiration. But $760 of the moneys, whether due on account or contemplated to be advanced, had been received. The re-payment of this sum was not convenient, and another plan for securing it to Person was to be adopted. The notes for the remaining $1,250 were to be returned, and no further advances made. .McLeod was to reside on the land another year, paying interest on what had been advanced; and, during-that year, the land was to be sold, and the money advanced (still, indeed, called the purchase money,) was to be restored. The stipulation therein in regard to the equal division of the profits of the sale, is indeed wholly unintelligible; but there is a distinct recognition, notwithstanding all that had passed between the parties, that nevertheless, each •yet “ had his interest in the land,” which might be the subject of a sale, either from one to the other, or by both to third persons.

Regarding the conveyance of the land as having been rpade to secure to Person what was then due, or might thereafter become due to him, from McLeod, we do not find any such advised surrender or abandonment of the right of redemption arising thereon, as to justify us in rejecting his claim to redeem.

It will be declared, therefore, that the complainant in the cross-bill has a right to redeem the land in question, upon paying what may be found justly due from him to the estate of Benjamin Person; and, to ascertain that amount, there must be a reference to take an account of all debts contracted with the said Benjamin by the said complainant, and all moneys advanced to or for him by the said Benjamin, for the securing of which the conveyance was made; and also an account of the rents and profits received from the said land, and of the waste, if any thereon Committed, by the said Benjamin, his administrators and heirs, saving to him and them all just allowances; and for the more effectually taking of these accounts, the commissioner is to be empowered to receive testi-m'ony by depositions or examine witnesses, and also to examine the parties on interrogatories, and to compel the production of books and other documents.

Per Curiam. Decree accordingly.