Opinion
(February Term, 1895).
Practice — Issues — Assets of Decedent — Resulting Trust — Lien for Money Advanced to Pay for Land — Discharge of Trust — Subrogation.
1. This Court will not consider the objection that there was no evidence, or not sufficient evidence, to submit certain issues to the jury, unless the point was raised before such issues were submitted.
2. The real or personal assets of a deceased person cannot be applied to the payment of his debts, where there is no lien, except by or through his personal representative.
3. Where land is bought with the money of one person and is conveyed to another, the latter is a trustee for the lender to the extent of the money so paid, without any express agreement to that effect.
4. Where H. held land in trust, first to pay a debt for money advanced for its purchase, and then for the benefit of another, the creditor has an equitable lien thereon until the debt is paid, and this is not destroyed by his surrendering the note of H., representing such debt for the notes of the resulting cestui que trust and others given in settlement of the original debt.
5. Where land is held in trust for the payment of a debt, a third person, who is compelled by law to pay it, is subrogated to the rights of the creditor, and may collect the amount so paid from the land.
ACTION heard before Shuford, J., at April Term, 1893, of FRANKLIN.
There was judgment for the plaintiff and defendants appealed. (186) The facts appear in the opinion of Associate Justice Furches.
C. M. Cooke for plaintiff.
N. Y. Gulley for defendant.
It appears that Richard Holden, Sr., father of the plaintiff and of the feme defendant, was the owner of a considerable body of land, but was in debt, upon which judgments have been recovered against him for more than $1,600, and in March, 1872, the sheriff of Franklin County sold said land under execution, then in his hands issuing on the judgments. At the sale these lands were bid off by Richard Holden, Jr., at the price of $1,629.00, an amount sufficient to satisfy the judgments. Young Holden did not have the money to make this purchase, but bid them off under an arrangement made between himself, his father Richard Holden, Sr., and F. L. B. Harris. Harris was to furnish the money to pay for the land, and Richard Holden, Jr., gave his note to Harris for the same, and was to take a deed for the land and hold it, first in trust to pay Harris back his money, and then in trust for his father, Richard Holden, Sr. This was all done, and the Holdens, it seems, commenced to pay Harris his money. But in 1874, and before Harris had been paid in full, Richard Holden, Jr., died, the legal title of the land still being in him. That not long after the death of Richard Holden, Jr., his father, Richard Holden, Sr., commenced an action against his widow and heirs at law in the Superior Court of Franklin County, alleging the facts above stated and demanding a judgment declaring the defendants (the widow and heirs at law of Richard Holden, Jr.) trustees of said land and that they be required to convey to him. And the court so adjudged, and under the decree of the court the legal title to the land was made to Richard Holden, Sr. Harris was (187) not a party to this action and not bound by the judgment therein, nor the conveyance made thereunder. That after this, in may, 1888, the debt to Harris then being reduced to $409.38, Harris surrenders the note given him in 1872 by Richard Holden, Jr.; and Richard Holden, Sr., Bryant M. Holden, F. C. Holden and T. B. Holden execute their note to the said F. L. D. Harris for the amount still remaining due on the note of Richard Holden, Jr., (B. M. Holden, F. C. Holden and T. C. Holden, being sons of Richard Holden, Sr.). That after this last note was given, there was paid on it the sum of $182.50 and some time after this the said Richard Holden, Sr., died, leaving the remainder of the Harris debt unpaid. At the time of the execution of this last note to Harris, Richard Holden, Sr., was still the legal owner of 450 acres of the land originally bought by Richard Holden, Jr., which he divided into three lots and executed separate deeds therefor, conveying one of the said lots to the plaintiff T. B. Holden, one lot to F. C. Holden and the other lot to his daughter, Dora C. Strickland, then the wife of Frank Green, and the consideration expressed in all these deeds is natural love and affection. But the plaintiff alleges that there was another consideration for all these deeds in addition to that of natural love and affection; and that was that the grantees should each pay one-third of the Harris debt, then unpaid, and that the deeds were executed with this understanding, and that the defendant Dora took her lot under this agreement, which plaintiff says was a parol trust. He then alleges that after the death of his father, Richard Holden, Sr., Harris brought a suit in the Superior Court of Franklin County on the note given him by Richard Holden, Sr., and B. M. Holden, F. C. Holden and himself, in which he set up the trust of 1872 when the land was purchased by Richard Holden, Jr. That in this action Harris recovered judgment on his note, and had the trust of 1872 declared, and decree and order (188) to sell said land to satisfy his judgment. That plaintiff was one of the signers of said note and a defendant in said action, and, as Harris was proceeding to sell his land under said judgment and to prevent his lands from being sold, he paid off and satisfied the Harris judgment, and now asks that the lot conveyed to the defendant Dora be subjected to the payment of one-third of the amount he paid said Harris.
Defendants in their answer admit that the land was bought by Richard Holden, Jr., as alleged; that Harris furnished the money and that said Richard took an absolute deed for the land, but in trust, first to pay Harris back the purchase money, and then in trust for his father Richard Holden, Sr., and that Richard, Sr., is dead and that Harris brought suit and recovered judgment as alleged. But they say that the defendants were not parties to this action and not bound by the judgment, and they deny that the defendant Dora agreed to pay anything on the Harris debt, or that she took her lot under any parol trust from her father. But on the contrary she took it free from any trust whatever and is now the absolute owner thereof, free from any claim of the plaintiff thereon, and denies the plaintiff's right to recover.
The court submitted the following issues to the jury:
1. Did Richard Holden leave any personal property applicable to the debt of F. L. B. Harris? Answer: No.
2. If so, what was the value? Answer: None.
3. What was the proportion in value of the tract conveyed to defendant Dora to the whole tract of 450 acres as conveyed? Answer: One-third.
4. Did Richard Holden at the time of his conveyance of the land to defendant Dora Strickland retain sufficient property to pay his (189) debts and available for that purpose? Answer: No.
5. Did Richard Holden, Sr., convey the land to defendant Dora in trust to pay its proportion of the Harris debt as alleged in the complaint? Answer: Yes.
6. Did Harris abandon his original trust on the land before the conveyance of the land to the feme defendant? Answer: No.
The case on appeal appears to set out the whole evidence. F. C. Holden, a witness for plaintiff, among other things testified under objection of defendants, as follows: "I have settled my part of the Harris debt with my brother T. B. Holden. I paid him in land to the amount of $150. There was no money passed. When my father divided up the land he told me and T. B. Holden and Frank Green, who was then my sister's husband, that the Harris debt had not been paid; that he wished to divide his land, and we must help him pay that debt. He said he would do what he could, but if he could not pay it all we would have to pay the balance. This was the day the land was being run out for division. Mine was run out before that time. Frank Green was my sister's husband and was there to see how the lines were run. My sister was not there. I went home after the land was surveyed and was not present when the deeds were written;" and defendants excepted. This is the only exception presented by the record, and the evidence above quoted and objected to seems to be all the evidence as to a parol trust, as between Richard Holden, Sr., and the defendant Dora, except the testimony of W. R. Martin, in which he says: "I went over there to take probate of some deeds, and Richard Holden, Sr., in the course of a conversation said something about he had divided up his lands and his children would have to pay the Harris debt."
We do not think this evidence competent or sufficient to (190) authorize the court to submit the fourth issue to the jury, and if the defendants had asked the court so to instruct the jury, we would have sustained their prayer. But as no such prayer was made, we cannot consider this question as to whether there was any evidence, or any such evidence as should have been submitted to the jury. S. v. Kiger, 115 N.C. 746. And we prefer to put our opinion upon facts admitted or not disputed rather than upon the exception to evidence which seems to have been immaterial and to have proved so little, if anything.
It is contended that the judgment below should be sustained upon the doctrine of contribution, and Badger v. Daniel, 79 N.C. 372, is cited as authority for this position. But we do not think so. Nor do we think Badger v. Daniel supports this position. In that case the personal representative of Joyner, the debtor, as well as his devisees were made parties to the action. This being so — that is, the estate of Joyner being represented — the matter of contribution was worked out. But our case differs from Badger v. Daniel in several important and, we think, essential respects. The first is, as we have stated, in that case the personal representative of the debtor's estate was a party, and in this case the personal representative is not a party. And we think it a well settled rule in this State that no assets of a deceased person can be applied to the payment of debts (where there is no lien) except by or through the personal representative, whether lands or personal effects. Tuck v. Walker, 106 N.C. 285; Mauney v. Holmes, 87 N.C. 428; Murchison v. Williams, 71 N.C. 135. Another distinction is that in Badger v. Daniel, the lands there subjected to the payment of the debts of the testator were willed to the defendants, other than the executor, and under the law they were subject to the payment of debts; while in this case the lands of the defendant were not willed to her by the debtor, but were conveyed to her by deed during the lifetime of the debtor, and (191) were not like the lands devised in Badger v. Daniel, subject to the payment of any debt due by Richard Holden, Sr., at the time of his death, unless the conveyance was made in fraud of such debt. They are not void as contended, but only voidable under the statute of 13th Elizabeth, if conveyed in fraud of creditors. And this under our law can only be determined by or through the personal representative. Murchison v. Williams and Tuck v. Walker, supra.
But it is admitted that Richard Holden, Jr., bought the land and that Harris' money paid for it, and that Holden took a deed for the same under the express agreement to hold it in trust, first to repay Harris the purchase money, and then in trust for his father, Richard Holden, Sr.
The fact that the land was bought and paid for with the money of Harris constituted Holden a trustee for Harris' benefit to the extent of the money paid, without the express agreement that he was to hold it in trust for Harris. York v. Landis, 65 N.C. 535; Stallings v. Lane, 88 N.C. 214. And the equitable estate would have been in Harris by operation of law. But in this case there was not only the trust the law created, but there was an express trust that Richard Holden, Jr., should hold it, first to pay Harris' debt and then for his father. This being so, the equitable estate in said land was in Harris until his debt was paid. Shelton v. Shelton, 58 N.C. 292; Shields v. Whitaker, 82 N.C. 516. And the fact that he surrendered the note given him by Richard Holden, Jr., and took the note of Richard Holden, Sr., and his three sons B. M. Holden, F. C. Holden and T. B. Holden, did not discharge the trust to him. Hyman v. Devereux, 63 N.C. 624; Ijames v. Gaither, 93 N.C. 358. But it did change the evidence of debt, and give him other additional security therefor. Before this note was executed, neither (192) was Richard Holden, Sr., B. M. Holden, T. B. Holden or F. C. Holden bound to Harris for the debt. But after that, they were all bound for the debt, and he might collect it out of either of them if it became necessary to do so. And though the case does not say so in so many words, we think sufficient appears to show that this new note was given by Richard Holden, Sr., as principal, and his sons, as sureties. This being so, Richard, Sr., and then the lands were bound for this debt first; the sureties to the note were only bound as sureties, both to Richard, Sr., and to the land, which had already been dedicated to the payment of this debt. In other words, B. M. Holden, F. C. Holden and T. B. Holden were sureties to both Richard Holden, Sr., and also to the land. And Richard Holden, Sr., and the land were both principal debtors as to these sureties. And this being so, it would seem that as T. B. Holden had paid the debt of his principal, he would have the right to be reimbursed out of the principal — the land. York v. Landis, supra; Nelson v. Williams, 22 N.C. 118; Bank v. Jenkins, 64 N.C. 719; Matthews v. Joyce, 85 N.C. 258.
But there is another view presented by the facts in this case, which seems to us to sustain the plaintiff's right to recover as against the defendants, and that is, the whole of the 450 acres of land was dedicated to the payment of the Harris debt. He had the right to collect one-third of his debt out of the lot given to defendant Dora. And when the plaintiff was compelled by judgment to pay Harris, he was subrogated to the rights of Harris. Bell v. Jasper, 37 N.C. 597; Fox v. Alexander, 36 N.C. 340; Harris v. Harrison, 78 N.C. 202; Heron v. Marshall, 42 Am. Dec., 447, and note; Ins. Co. v. Middleport, 124 U.S. 534. This being so, it seems to us the judgment below should be sustained.
Affirmed.