Opinion
(December Term, 1855.)
To convert a purchaser who takes a deed absolute on its face into a trustee for another, and to convert the conveyance into a mere security for money loaned or advanced, it must be alleged and proved that the clause of redemption was omitted by reason of ignorance, mistake, fraud or undue advantage, and the intention must be established by facts dehors the deed of conveyance, which are inconsistent with an absolute conveyance.
CAUSE removed from the Court of Equity of Duplin County.
Reid for plaintiff.
W. A. Wright, W. B. Wright and Husted for defendants.
The plaintiff, in 1839, was seized in fee of a tract of land lying in the county of Duplin, containing about 460 acres. An execution was issued on a judgment against the plaintiff, and the land was sold by the sheriff to the defendant Buckner L. Hill, for the price of $200. Hill afterwards sold it to the defendant Smith for $300, and he to the defendant Herring for $500.
The plaintiff alleges that shortly before the sale of this property, he went to the defendant Hill and "desired him to bid off the land, pay off the entire sum claimed by the execution, and hold it until the plaintiff could redeem the same." As a further inducement, he proposed to the defendant Hill, that he, plaintiff, would secure to him, out of the land, a certain debt which a brother of plaintiff owed him (Hill) of about $50. These terms, he says, were agreed to by (257) the said Hill. He says that the land was worth $1000 or $1200, and that it was knocked off to Hill on the first bid, no one bidding against him, because it was understood that he was acting as the friend of the plaintiff. He further alleges, that Hill took a deed from the sheriff for the land, but that plaintiff, in pursuance of the contract to redeem, remained in possession of it for one year after the sale, when he, Hill, sold it, at plaintiff's request, to the defendant Geo. Smith, who agreed to take it, the more effectually to befriend plaintiff than was convenient for the defendant Hill to do, as he wanted his money. He says it was expressly agreed that Smith should hold the title to the land till plaintiff could find a purchaser, and he was then to take back his principal and interest and let it go to such purchaser; that in violation of his agreement, he (Smith) shortly thereafter sold the land to the defendant Herring; but neither Hill, nor Smith, in the deeds which they made, would warrant the title of the premises. He alleges that both Smith and Herring had knowledge of the trust under which Hill purchased and held the land for the plaintiff, and that Herring had knowledge of the trust on which the land was transferred to Smith. The prayer is for a re-conveyance and an account; also for general relief.
The defendants severally answered the bill, and each denied that he purchased the land in question upon any such trust as is set up by the plaintiff. The defendant Hill, in his answer, admits that the request was made by the plaintiff for him to buy the land and let plaintiff redeem, and as an inducement for him to do so, he did propose, that on redeeming the same, he would pay a certain debt of $50, which he, plaintiff, had undertaken before that time to pay for one Dennis Glisson, (plaintiff's brother) out of certain dues which he had to collect for his brother; but he denies that he acceded to any such propositions. He says his main object in making the purchase was to save the debt of $50; that after the sale, on being importuned by plaintiff, he told him if he could get a purchaser to take the land off his hands, he would re-convey and let him have all that might be raised over the amount paid by him for the land, and the fifty dollars due on (258) account of Dennis Glisson; and further to favor him, he agreed that he might remain on the land for an indefinite length of time. He did let him remain in possession for a year after the sale, but being pressed for the money by the plaintiff in the execution, (who had taken his note), and learning from the defendant Smith, that he was about to lose by the plaintiff, and was anxious to save himself out of the land, he let him have the land at $300. He says that Glisson was cognizant of this transfer, and consented to it under the hope, as he said, that Smith would give him a chance; but he is not aware of any contract or agreement of Smith to let plaintiff have the land back on any terms. Herring, in his answer sets forth, that these defendants were sued in the Court of Equity of Duplin County, by one Enoch Cobb, a creditor of the plaintiff, who charged in his bill that this land had been fraudulently obtained by defendant Hill, to hinder and delay the creditors of Glisson, and to hold it so that he might have the benefit of it; also, that the defendants Smith and himself, (Herring,) were parties defendant in the same; who were charged to have purchased with notice. The plaintiff in this suit was also a party defendant in that, and in his answer admitted and confessed that he had made the fraudulent conveyance as charged. He also stated, that after keeping the land in question for about twelve months, claiming and using it as his own, he surrendered the possession to Cobb, whose tenant kept it until he was turned out by some legal proceeding instituted by the defendant Herring. The cause was taken to the Supreme Court, and there it was decided that the plaintiff Cobb had not sustained his bill with proof, and it was accordingly dismissed. The full record of that suit is filed as an exhibit. On this showing, it is submitted by defendant Herring, Whether a plaintiff, who thus stands convicted of fraud upon his own admission, can be heard to set up the same conveyance as a trust?
There was replication to the answer and proofs; exhibits were also filed; and the cause being set down for hearing, was sent (259) to this Court for trial.
We have had occasion to say in several cases recently, that in order to correct a deed which is absolute on its face, and to convert it into security for a debt, it must be alleged, and proved, that the clause of redemption was omitted by reason of ignorance, mistake, fraud or undue advantage; and the intention must be established, by proof not merely of declaration, but of facts dehores the deed, inconsistent with the idea of an absolute purchase. Sowell v. Barrett, 45 N.C. 50; Brown v. Carson, Ibid 272; 54 N.C. 184; Briggs v. Morris, Ibid 193; Lamb v. Pigford, Ibid 195; Taylor v. Taylor, Ibid. 246.
The only circumstances besides the declarations of the defendants, relied upon in this case, are, the fact that the plaintiff remained in possession for some time after the purchase, and the inadequacy of the price paid by the defendants. The latter cannot of itself avail much, (see Brown v. Carson, ut supra); but in connection with the possession retained by the plaintiff, it might have great effect, were not the testimony met by proof on the other side which entirely destroys its force. Among the exhibits filed in the cause, on the part of the defendants, is the transcript of the record of a suit in Equity, in which one Enoch Cobb was plaintiff, and the present complainant and defendants were defendants. In his bill, Cobb charged that the dealings between the present plaintiff and the defendant Hill, and subsequently between these two and the other defendants, were secret transactions entered into for the purpose of defrauding the creditors of the present plaintiff, of whom he, Cobb, was one. The present plaintiff, in his answer to that bill, admitted the truth of the charge, and stated that after keeping the land in question for about twelve months, claiming and (260) using it as his own, he surrendered the possession to Cobb, whose tenant kept it until he was turned out by some legal proceeding instituted by the defendant Herring. Such an admission is entirely inconsistent with, and disproves, the case sought to be established by the testimony in this cause. The omission to insert the clause of redemption, according to the present plaintiff's own acknowledgment made under oath, was not by reason of ignorance, mistake, fraud, or any undue advantage taken of him, but was by design to defraud his creditors. He himself repudiated the possession as held under the defendants Hill and Smith, by attorning to Cobb, and surrendering the possession to him.
The bill must be dismissed; but without costs, as the plaintiff was allowed to sue in forma pauperis.
Per curiam.
Decree accordingly.