Whitfield v. Cates, 59 N.C. 136, 6 Jones Eq. 136 (1860)

Dec. 1860 · Supreme Court of North Carolina

59 N.C. 136, 6 Jones Eq. 136

R. M. WHITFIELD AND WIFE AND OTHERS against JAMES H. CATES.

Where there is no allegation of fraud, imposition, oppression, or mistake, the Court will not set up a parol agreement, and declare an absolute deed to be a mere security for money advanced.

Where a valuable consideration has been paid by the person, to whom an absolute deed for slaves is made, the allegation of a parol trust in favor of a third party, forms no exception to the rule inj courts of equity, in respect to declaring such a deed a mere security for money loaned.

Although a plaintiff may fail as to the principal equity he seeks to establish, he may fall back on a secondary equity, provided it is not inconsistent with the principal equity, and the allegations, in the bill, are sufficient to raise it.

(The cases of Shelton v. Shelton, 5 Jones’ Eq. 292, and Biggs v. Swann, ante, 118, commented on and distinguished from this case.)

Cause removed from the Court of Equity of Person county.

The bill is filed by E. M. Whitfield and his wife, Susan, and his children, alleging that the said E. M. Whitfield was improvident, and being desirous to provide for his wife and children, the said other plain tiffs, he made a conveyance, dated March, 1840, of seven slaves, (naming them) being all the slaves he owned, for the consideration, expressed in said conveyance, of $750, that said conveyance was made upon the express understanding and agreement, that the defendant was to hold the slaves for the benefit of, and in special trust and confidence for, the wife and children of the said E. M. Whitfield, and that they were to have the privilege of redeeming the same at any time, by paying him whatever amount he might advance of the $750 with interest; that the defendant paid, at the time, $330, in cash, and gave up a note he held on the said E. M. Whitfield for $70, mating in all $400, and executed a bond for $350, the balance of the $750 ; that some some short time thereafter, in the absence of the plaintiff, E. M. Whitfield, the defendant prevailed on his wife, the plaintiff, Susan, to give him up the bond for $350, alleging as a reason for her so doing, the improvidence of her husband ; that he being a relation and a professed friend, she had entire confidence that he would deal fairly with the plaintiffs, in respect to the said bond; that the said slaves were worth at least $1300 at the time; and that the said amount of $400, was all that defendant has ever paid towards said slaves; that the defendant did not take possession of the slaves at first, but a short time after the contract he came for them, and under a pre-tence, set up by him, that it was necessary, to keep off creditors, for him to take possession of the property, and believ-mg in the sincerity of his purposes, the plaintiffs consented for him to take the slaves into his possession, except one, which remained in the possession of the plaintiffs; that af-terwards, he sent them all back to plaintiffs, who kept possession of them for six or seven years ; that some eight or ten years ago, under the like delusive promises and assurances, he again got possession of the slaves, except the same one, which had formerly remained with them ; that by the same kind of delusive statements and professions of kindness and affection, he lulled the suspicions of the plaintiffs, and did, from time to time, put them off when they called upon him to redeliver the slaves to them, and otherwise perform the trust he had undertaken in behalf of the wife and children ; that about a year before the filing of the bill, the defendant had the said conveyance registered, and has since then set up claim to the absolute right to tire slaves. The bill, among other interrogatories, calls on the defendant to answer, as to the said bond, for $350, whether the same has ever been paid to plaintiffs, or either of them, or to any one else ? and if so, when ? and where ? and to whom ?

The prayer is, that the defendant may be declared a trustee in behalf of the wife and children, and that an account may be taken of the amounts paid and of the hires of the said slaves, and for general relief.

To this bill, the defendant demurred. There was a joinder in demurrer, and the cause set down for argument, and sent to this Court.

Reach and Fowle, for the plaintiffs.

Graham, for the defendant.

PeaesoN, C. J.

The principal equity, which the bill seeks to enforce, is the ordinary case of converting a deed, absolute-on its face, into a security for money, by parol proof of an. agreement to that effect.

There is no allegation of fraud, imposition, oppression or mistake, which is necessary, in order to bring the case within, the application of that doctrine, as has been decided over and over again by this Court.

On the argument it was insisted, that this case differs from the ordinary one, for here the bargainee, upon repayment of the money, wain whose favor a trust was declared, and Shelton v. Shelton, 5 Jones’ Eq. 292 ; Biggs v. Swann, ante 118, were relied on. The position, that this is the case of parol evidence to establish a declaration of trust as distinguished from a condition, is not tenable, and the cases cited, have no application. The defendant paid a part of the purchase-money and secured the balance by note. This raised a use for him, and when the legal estate passed, the two united so as to give him the estate, both legal and equitable, and by the force and effect of the deed, he became the owner, to all intents and purposes. The purpose of the parol evidence' is to show an agreement, by which his estate was to close, and he was to hold in trust for the wife and children of the bar-gainor on repayment of the purchase-money; which is neither more nor less than a condition, by which his principal estate is to be defeated: in other words, a deed, absolute on its face, and vesting in the bargainee an absolute estate, is to be converted into a security for money, and upon his estate being defeated, he is directed to convey to the wife and children of the bargainor, instead of the bargainor himself, which is a distinction without a difference, for, in either case, an absolute estate is defeated by parol evidence. In Shelton v. Shelton, a grand-mother paid the purchase-money, and instead of taking the title herself, directed the title to be made to A, and by parol, made a declaration of the trust in favor of her grandchildren. By force and effect of the deed, A acquired only the legal estate, and a trust would have resulted to the grandmother, by reason of her having paid the price, so the effect of the parol declaration was simply to (direct the trust from herself and give it to the grand-children.

In Riggs v. Swann, a father had mortgaged two slaves. The mortgagee agrees to take one of the slaves, absolutely, in satisfaction of the debt, and reconvey the other. The father directs the title to be made to A, and by parol, makes a declaration of the trust, to wit, A is to hold in trust until the hire pays off a debt due him, and then, in trust for two of the children of the mortgagor. A had paid nothing for the slave, and but for the declaration, would have held the legal title, in trust, for the father. So, the effect of the declaration was simply to divest the trust from himself and give it to the two children, after a debt was paid.

In these cases, the person to whom the deed was made, never had the use or equitable estate, and the effect of the deed was simply to pass to him the legal title. But in our case, the defendant, by force of the deed, acquired absolutely, both the legal and equitable estate, and the attempt is, by parol evidence, to defeat his estate. “ Note the diversity.”

Although the plaintiffs have failed to establish their principal equity, there is a secondary equity disclosed by the bill. It is alleged that the defendant induced the wife of the plaintiff to give up to him the note for $350, which he had given to secure the balance of the purchase-money, without paying any thing for it, and under the delusive assurance, that it was best for her do so, because of the improvidence of the husband. So, the defendant holds the note thus fraudulently procured to be surrendered to him, and has never paid the amount due thereon. The demurrer admits these allegations and the fraud charged. It follows that it cannot be sustained in respect to this note, and being bad as to part of the bill, it is bad as to all, according' to a well-settled rule of this Court.

It is also well settled, that although a plaintiff may fail as to the principal equity, which he seeks to establish, he may fall, back on a secondary equity, provided it is not inconsistent with the principal equity, and the allegations, in the bill, are sufficient to raise it. It is certainly not inconsistent with the main purpose of the bill for the plaintiffs, failing in that, to insist that the defendant should, at the least, pay the full price, which he agreed to give, and not avail himself of a fraud in procuring the surrender of the note, which he had executed, as security, for a part of it, and the allegations are made with sufficient certainty.

Per Curiam,, ’ Demurrer over-ruled.