Hodges v. Hodges

• Decision Date: 15 August 1978
• Docket Number: No. 7711SC376,7711SC376
• Parties: George J. HODGES v. Firth Franklin HODGES and wife, Maude E. Hodges.
• Court: North Carolina Court of Appeals

Page 812

246 S.E.2d 812

37 N.C.App. 459

George J. HODGES v. Firth Franklin HODGES and wife, Maude E. Hodges.

No. 7711SC376.

Court of Appeals of North Carolina.

Aug. 15, 1978.

Johnson & Johnson by W. A. Johnson, Lillington, for plaintiff-appellee.

McCoy, Weaver, Wiggins, Cleveland & Raper by Richard M. Wiggins, and Elmo R. Zumwalt, III, Fayetteville, and Mast, Tew, Nall & Moore by George B. Mast, Smithfield, for defendants-appellants.

PARKER, Judge.

At the conclusion of plaintiff's evidence and again at the close of all evidence, defendants moved for a directed verdict pursuant to G.S. 1A-1, Rule 50. These motions were denied, and defendants now assign error to these rulings. By introducing evidence, defendants waived their first motion, Overman v. Products Co., 30 N.C.App. 516, 227 S.E.2d 159 (1976), and their assignment of error directed to the denial of that motion will not be considered on this appeal.

Plaintiff contends that defendants are not entitled on this appeal to rely upon their assignment of error directed to the denial of their second motion, made at the close of all evidence, because in making that motion defendants failed to "state the specific grounds therefor" as required by G.S. 1A-1, Rule 50(a). Plaintiff correctly points out that this requirement is mandatory. Wheeler v. Denton, 9 N.C.App. 167, 175 S.E.2d 769 (1970). " However, the courts need not inflexibly enforce the rule when the grounds for the motion are apparent to the court and the parties." Anderson v. Butler, 284 N.C. 723, 729, 202 S.E.2d 585, 588 (1974). In the present case, when defendants made their first motion for a directed verdict at the conclusion of plaintiff's evidence, they stated that they did so "for the reason that Plaintiff has not made a case sufficient to be submitted to the jury in that Plaintiff's evidence shows conclusively that the transaction alleged does not constitute a mortgage but rather a deed with option to purchase and there was no evidence sufficient to be submitted on the issue of a constructive trust." When defendants again moved for a directed verdict at the close of all of the evidence, it must have been apparent to the court and to the plaintiff that their motion was a renewal of the motion previously made, this time challenging the sufficiency of all of the evidence on the grounds previously stated. Hence, defendants' failure to restate the specific grounds for their motion will not be deemed fatal, and we will review the questions presented by defendants' assignment of error directed to the denial of their motion for directed verdict made at the close of all of the evidence.

At the outset we note that there was no evidence to support plaintiff's claim for relief based on his allegations that a fiduciary relationship existed between him and his brother and that defendants hold title in trust for the benefit of the plaintiff. On the contrary, all of the evidence shows that plaintiff and his brother, both of whom were adult businessmen, dealt with each other at arms length throughout, each seeking to obtain the best bargain which his needs and circumstances would permit. All of the evidence shows that the two brothers had little direct contact, one living in North Carolina and the other in Michigan. The transaction occurred at plaintiff's, rather than at defendants', instance. All instruments involved were prepared by plaintiff's attorney, and plaintiff had ample opportunity to read and understand them before they were signed. There was no evidence of any actual fraud or undue influence by anyone, and the family relationship which existed between plaintiff and his brother by itself raises no presumption of fraud or undue influence. Walters v. Bridgers, 251 N.C. 289, 111 S.E.2d 176 (1959); Cornatzer v. Nicks, 14 N.C.App. 152, 187 S.E.2d 385 (1972). There was no evidence that plaintiff conveyed title to his brother under any express parol trust that it should be held for plaintiff's benefit, nor would such evidence, if presented, have availed to sustain plaintiff's claim, for a grantor may not impose a parol trust for his benefit on land which he conveys by deed purporting to vest absolute title in the grantee. Willetts v. Willetts, 254 N.C. 136, 118 S.E.2d 548 (1961).

Nor was there any evidence to justify a court of equity in imposing a constructive trust in the present case. Describing a constructive trust, Lake, J., speaking for our Supreme Court, said:

A constructive trust is a duty, or relationship, imposed by courts of equity to prevent the unjust enrichment of the holder of title to, or of an interest in, property which such holder acquired through fraud, breach of duty or some other circumstance making it inequitable for him to retain it against the claim of the beneficiary of the constructive trust. . . . (A) constructive trust is a fiction of equity, brought into operation to prevent unjust enrichment through the breach of some duty or other wrongdoing. It is an obligation imposed irrespective of the intent with which such party acquired the property, and in a well-nigh unlimited variety of situations. (Citations omitted.) Nevertheless, there is a common, indispensable element in the many types of situations out of which a constructive trust is deemed to arise. This common element is Some fraud, breach of duty or other wrongdoing by the holder of the property, or by one under whom he claims, the holder, himself, not being a bona fide purchaser for value.

Wilson v. Development Co., 276 N.C. 198, 211-212, 171 S.E.2d 873, 882 (1970). (emphasis added). As above noted, there was no evidence in the case now before us of any actual fraud, breach of duty, or other wrongdoing by the defendants, and the family relationship gave rise to no presumption of any. Therefore, the court erred in failing to grant defendants' motion for a directed verdict as to plaintiff's claim for relief based on his allegations that defendants hold title in trust for his benefit.

We now turn to plaintiff's claim for relief based on his allegations that at the time the deed and contract providing plaintiff an option to repurchase were executed and delivered the relationship of debtor and creditor existed between him and his brother, Firth, and that the deed and contract together were intended to constitute and did constitute a mortgage. Cases involving similar arrangements, but each with its own particular factual background, have many times been before the courts of this and other jurisdictions. See Hardy v. Neville, 261 N.C. 454, 135 S.E.2d 48 (1964); Ricks v. Batchelor, 225 N.C. 8, 33 S.E.2d 68 (1945); Ferguson v. Blanchard, 220 N.C. 1, 16 S.E.2d 414 (1941); O'Briant v. Lee, 214 N.C. 723, 200 S.E. 865 (1939); Watkins v. Williams, 123 N.C. 170, 31 S.E. 388 (1898); King v. Kincey, 36 N.C. 187 (1840); Trust Co. v. Morgan-Schultheiss and Poston v. Morgan-Schultheiss, 33 N.C.App. 406, 235 S.E.2d 693 (1977); Annot., 79 A.L.R. 937 (1932), Supplemented in Annot., 155 A.L.R. 1104 (1945). Long ago, Chief Justice John Marshall, dealing with the distinction between a mortgage and a sale with option to repurchase, said:

To deny the power of two individuals, capable of acting for themselves, to make a contract for the purchase and sale of lands defeasible by the payment of money at a future day, or, in other words, to make a sale with a reservation to the vendor of a right to repurchase the same land at a fixed price and at a specified time, would be to transfer to the Court of Chancery, in a considerable degree, the guardianship of adults as well as of infants. Such contracts are certainly not prohibited either by the letter or the policy of the law. But the policy of the law does prohibit the conversion of a real mortgage into a sale. And as lenders of money are less under the pressure of circumstances which control the perfect and free exercise of the judgment than borrowers, the effort is frequently made by persons of this description to avail themselves of the advantage of this superiority, in order to obtain inequitable advantages. For this reason the leaning of courts has been against them, and doubtful cases have generally been decided to be mortgages. But as a conditional sale, if really intended, is valid, the inquiry in every case must be, whether the contract in the specific case is a security for the repayment of money or an actual sale.

Conway v. Alexander, 11 U.S. (7 Cranch) 218, 236-37, 3 L.Ed. 321, 328 (1812).

Dealing with same problem, Devin, J. (Later C. J.) speaking for our own Supreme Court in Ferguson v. Blanchard, supra, 220 N.C. at 7-8, 16 S.E.2d at 418, said:

It is true that when a debtor conveys land to a creditor by deed absolute in form and at the same time gives a note or otherwise obligates himself to pay the debt, and takes from the grantee and agreement to reconvey upon payment of the debt, the transaction is a mortgage. Robinson v. Willoughby, 65 N.C. 520....