Clark v. Laurel Park Estates, Inc.

• Decision Date: 13 February 1929
• Docket Number: 560.
• Parties: CLARK et al. v. LAUREL PARK ESTATES, Inc., et al.
• Court: North Carolina Supreme Court

146 S.E. 584

196 N.C. 624

CLARK et al. v. LAUREL PARK ESTATES, Inc., et al.

No. 560.

Supreme Court of North Carolina

February 13, 1929

Appeal from Superior Court, Buncombe County; H. Hoyle Sink, Special Judge.

Action by Jessie D. Cates Clark and husband against the Laurel Park Estates, Inc., the Central Bank & Trust Company, trustee, and another. From a judgment for plaintiffs, the Central Bank & Trust Company, trustee, appeals. No error.

In action by purchaser to rescind land contract and cancel notes, question whether purchasers were induced to execute notes by fraudulent representations of vendor held for jury.

This is an action brought (1) against defendant Laurel Park Estates Inc., for actionable fraud and rescission for judgment for the money paid it, $1,250 purchase price and $112.50 interest, by plaintiff Jessie D. Cates Clark; (2) against Central Bank & Trust Company, trustee, that held certain negotiable notes involved in the transaction be canceled. The controversy was over the purchase of a lot from Laurel Park Estates, Inc., for $5,000 on June 28, 1926. The sum of $1,250 was paid in cash, and three notes of $1,250 each, due in 12 18, and 24 months, given for the balance.

The Central Bank & Trust Company, trustee, denied any knowledge of fraud, and set up the defense: "(2) That said Laurel Park Estates, Inc., duly indorsed, transferred, and delivered to the defendant Central Bank & Trust Company, as trustee for value, and before maturity, the said three notes, and the said defendant Central Bank & Trust Company, as trustee, is now the bona fide holder of said notes. (3) That, in recognition of the validity of said three notes, and of the fact that the same were held by said Central Bank & Trust Company, as trustee, plaintiffs, on December 29, 1926, paid to defendant Central Bank & Trust Company the semiannual interest which was due and payable on said three notes on December 28, 1926. (4) That plaintiffs failed and refused to pay the semiannual interest which became due and payable on said three notes on June 28, 1927, and also failed and refused to pay the said note which became due and payable on June 28, 1927, and defendant Central Bank & Trust Company, as trustee, has therefore, pursuant to the terms of said notes declared the full amount of the principal and interest of all of said notes due and payable, and thereby plaintiffs became indebted to the said defendant Central Bank & Trust Company as trustee, in the sum of $3,750, with interest thereon from December 28, 1926, no part of which has been paid, and all of which is now justly due and owing," and demands judgment against plaintiffs for the amount and interest.

Defendant Central Bank & Trust Company, trustee, contended that said three notes executed by the plaintiffs were delivered to it immediately after they were executed by plaintiffs, in consideration of Central Bank & Trust Company, as trustee, executing and delivering a release deed, releasing the lot purchased by plaintiffs from the lien of two deeds of trust securing indebtedness aggregating in principal amount $700,000, and that it held said notes as trustee as security for the payment of said bonds and notes secured by said deed of trust aggregating in principal amount $700,000. The defendant Laurel Park Estates, Inc., filed no answer.

Jessie D. Cates Clark and her husband, John M. Clark, live in Maryville, Tenn. Two sales agents of the Laurel Park Estates, Inc., in June, 1926, had plaintiffs to visit Asheville. They came in a public taxi, and their expenses were paid by the agents. They were met at Kenilworth Inn by another agent. John M. Clark testified, in part: "He entertained us, stayed with us, took us to places of amusement. Afterwards he took us back to the hotel and we were assigned rooms. Next morning he came and guided us out to Stradley Mountain and showed us the Stradley Mountain property. While we were out there they gathered the parties together and on top of the mountain had a lecture delivered by another agent. This agent said this property was being developed and that he had been all over the world and that this was the most beautiful spot he had ever seen for a development. He then described what the developments were to be, the paving of the streets, putting in water, lights, telephones, sewers, building of a hotel, building of a golf course, a clubhouse, schoolhouse, and certain portions were to have business properties on them. The business section was down near the roadway leading past the property. Electric lights, golf course, and hotel were promised. He said the hotel was under contract and would be there by the first of the year following. It was to cost a million dollars or more. He said the money for these improvements was in the Central Bank & Trust Company, of Asheville. While we were on the mountain they had a band concert and this lecture and a luncheon. Several announcements were made from a megaphone down below from their little office, saying 'Sold.' This was done several times. The date of this was June 17th and 18th. The agent that met us at Kenilworth Inn attended us first, then turned us over to Harry W. Hoff, General Director of Sales. I saw him on the ground and talked to him. *** He was director of sale for Laurel Park Estates, Inc., according to his statement. I saw him direct the sales. He reiterated the claims that the lecturer had stated. He insisted on my wife buying a certain lot, and told of the money that was in the bank to do all these improvements, and insisted on the safety of the investment, but we were not impressed with all this so much until he said 'To be sure that your money is safe, I will guarantee to refund it or resell it at a profit.' I have the original sales contract. I saw him sign it on the back that day. I saw Mr. Harry W. Hoff write on the back of the contract. It was written at the little office on the mountain."

The following was signed by Hoff: "This property is sold with the specific agreement that we will resell same (if requested by the buyer) at a profit, prior to date when next payment comes due, or refund purchase price with interest at 6% and cancel the sale. Harry W. Hoff, Gen. Director Sales, Stradley Mountain Park."

John M. Clark further testified: "This little house where this was written is the same place the megaphone calls came up 'Sold.' Mr. Hoff gave me a plat when we closed the sale. He had the red ink mark put on Lot 7, on the plat, the one we purchased. The name of the hotel that was to be erected on top of the mountain was Lafayette Chateau. *** Mr. Hoff and the other agent that met us at Kenilworth Inn pointed out just where the hotel was to be built on top. The hotel was to be on the crest of the mountain. The lot, No. 7, was in the block below, about three or four hundred feet from the hotel site. With reference to the little house where the megaphone calls came from, about this point (pointing). After we signed the contract to purchase the lot we were brought back to Kenilworth Inn; the taxi was waiting and we left immediately for Maryville. The notes we signed were mailed us from the office of Laurel Park Estates, Inc. Before we left we paid to Mr. Hoff at the office on the ground $1,250, by check. We signed the notes that were sent us by mail because of the contract and because of the representations that were made by the agent. The agents stayed with us all the time we were here, except when we were in our rooms. I wouldn't have signed the notes had it not been for the representations about the hotel and improvements and what they were going to do and the money on deposit to do it with because I wouldn't have thought it would have been value received. This took place in June, 1926. I went out there about last Thursday and I did not find a hotel and paved streets and improvements, but I found conditions very much worse than they were when we were there. Streets that had been graded were washed into gulleys now. The land next to the road is open fields; further on up the mountain there is scrubby pine, and at the top a little cleared place. The fields and forests are in about the same condition as when we were there before. The roads haven't been paved. The music, the lecturer, and pavilion are not there now. The writing that had been handed me came to my wife through the mail some time the latter part of June, 1926, or July.

Plaintiffs introduced in evidence a warranty deed from Laurel Park Estates, Inc., to Mrs. Jessie D. Cates Clark, wife of John M. Clark, of Maryville, state of Tennessee, covering the property purchased by the plaintiff, and recorded in Book 350, at page 64.

Plaintiffs also introduced in evidence a deed of release from the Central Bank & Trust Company, trustee, to Mrs. Jessie D. Cates Clark, releasing the lot purchased by her. The release recites (1) a deed in trust from Stradley Mountains, Inc., dated March 1, 1926, duly registered to Central Bank & Trust Company, trustee, to secure certain indebtedness; (2) on the same date a deed from Stradley Mountains, Inc., certain land including the lot in controversy to defendant Laurel Park Estates, Inc.; (3) on the same date, deed in trust from Laurel Park Estates, Inc., to Central Bank & Trust Company, trustee, certain lands including the lot in controversy duly registered.

While on top of Stradley Mountains, the agent handed plaintiffs a circular which in part is as follows:

"Stradley Mountain Park is marked for success. Its location, accessible and yet removed, is the obvious site for a community of homes. Its appeal is instantaneous and lasting; its beauty inspires a longing for a home in the sunlit slopes. Sunshine is desirable in the selection of one's homesite, but sewerage disposal is more important. A

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