Jefferson Standard Life Ins. Co. v. Guilford County

• Decision Date: 05 June 1946
• Docket Number: 669
• Citation: 38 S.E.2d 519,226 N.C. 441
• Parties: JEFFERSON STANDARD LIFE INS. CO. v. GUILFORD COUNTY.
• Court: North Carolina Supreme Court

38 S.E.2d 519

226 N.C. 441

JEFFERSON STANDARD LIFE INS. CO. v. GUILFORD COUNTY.

No. 669

Supreme Court of North Carolina

June 5, 1946

This case was here on appeal at the Spring Term 1945, of the Court, and the result is reported in 225 N.C 293, 34 S.E.2d 430, 434. The statement of the case in that report covers the essential facts involved in the present appeal, and the full opinion of the Court is so related to the subsequent procedure and the scope of this review that both the statement of the case and the full opinion are referred to as a part of this statement. Matters occurring since the opinion was handed down are further noted.

On the former trial the plaintiff, amongst other demands, sought relief on equitable grounds, asking that it be recompensed or that restitution be made to it with respect to money used by the defendant on an attempted assumption of debt thereafter declared to be void. In reviewing the judgment this Court speaking through Mr. Justice Winborne, said:

'It is apparent from the language of the judgment below that the court, in arriving at the decision made, applied the equitable principle of restitution. However, upon, the face of the factual situation in hand, we are of opinion and hold that plaintiff may not, at this time, invoke the aid of a court of equity for application of that principle, since it appears that plaintiff is not without an adequate remedy at law. Equity will not lend its aid in any case where the party seeking it has a full and complete remedy at law. Town of Zebulon v. Dawson, 216 N.C. 520, 5 S.E.2d 535; In re Estate of Daniel, 225 N.C. 18, 33 S.E.2d 126.'

The remedy at law pointed out by the Court was the enforcement of the C. Clair Conner note and deed of trust securing it as the individual act of Conner. The opinion proceeds '* * * Moreover, the deed, the note and the deed of trust are clear and unambiguous, and there is in neither any expression tending to show agency or from which agency may be inferred. Under such circumstances, so long as the deed, the note and the deed of trust remain as they now are, a trusteeship may not be read into the deed, nor may an agency or the name of another party be read into the note and into the deed of trust.

'See Restatement of the Law of Agency, Section 325, 1 Mechem on Agency, 2d Ed., Section 1405 et seq., particularly Sections 1420 and 1425. Also, Bryson v. Lucas, 84 N.C. 680 37 Am.Rep. 634; Hicks v. Kenan, 139 N.C. 337, 51 S.E. 941; Basnight v. [Southern] Jobbing Co., 148 N.C. 350, 62 S.E. 420.

'Thus, until or unless there be a reformation of the deed, the note and the deed of trust, the legal remedy of foreclosure under the terms of the deed of trust or by civil action would seem to be available to plaintiff.

'And so far as the rights of Guilford County in and to the Bradshaw property are concerned, it holds a deed from C. Clair Conner which is made expressly subject to the deed of trust securing the note which plaintiff holds.'

The Court held that the provision in the deed of Conner to Guilford County, in which the County undertook to assume and pay the indebtedness to plaintiff, secured by the deed of trust, was not enforceable as an express contract, referring to Article VII, Sec. 7, and Article V, Sec. 4, of the Constitution. Article VII, Sec. 7, of the Constitution forbids the creation of debt other than for a necessary purpose without authorization by popular vote; Article V, Sec. 4, prohibits counties from contracting debt during any fiscal year to an amount exceeding two-thirds of the amount by which the outstanding indebtedness of the county shall have been reduced during the preceding fiscal year, without an approving vote of the people. The project had not been declared a necessary purpose; and the debt of Guilford County had not been reduced at all during the preceding fiscal year.

After the opinion and decision in Jefferson Standard Life Insurance Co. v. Guilford County were filed in the lower court, the case was formally reconstituted in so far as became necessary to meet the suggestion of the appellate court respecting the remedy and the defense, and readied for trial. The plaintiff brought in as defendants C. Clair Conner, grantee in the Bradshaw deed and subsequent encumbrancer in the trust deed, and Julian Price, Trustee therein. Appropriate amendments were made to the pleadings, the plaintiff seeking its remedy of foreclosure against Conner under the trust deed, the defendant Guilford County opposing, and seeking to have the Bradshaw deed to Conner, the trust deed of Conner to Price, and the deed of Conner and wife to Guilford County, each reformed in the particulars stated infra. The defendant County sought to reform the Bradshaw deed to Conner by striking out in the premises 'C. Clair Conner, unmarried,' and inserting in lieu thereof, 'to Guilford County, party of the second part'; to have the deed of trust executed to Julian Price and the note purporting to be secured thereby reformed so as to read 'C. Clair Conner, Agent for Guilford County' wherever the signature appears in said deed of trust and note, and thereupon to have the deed of trust and note canceled and annulled; to have the deed of Conner and wife to Guilford County reformed by striking out the clause making it subject to the Jefferson Standard Life Insurance Company debt and deed of trust. The right to reformation in all these respects is grounded upon the allegation of fraud and conspiracy of former members of the County Board of Commissioners, C. Clair Conner and representatives of the plaintiff to cause a debt to be created against Guilford County in violation of the constitutional prohibitions recited and in contravention of public policy. The allegations of fraud are based on the agreement evidenced by resolution of the Board of County Commissioners on November 16, 1936, appearing in full in Jefferson Standard Life Ins. Co. v. Guilford County, supra, on page 297 of 225 N.C., on page 432 of 34 S.E.2d, and upon the acts of the several parties named in pursuance thereof, culminating in the execution of the above instruments, all of which are included in the stipulations of fact in the case now under review.

As on the former trial, the controversy was submitted to the trial judge by consent without the intervention of a jury, on a stipulation of fact as above noted.

Upon the stipulated facts, the appellant asked the court below to find that the whole plan set forth in the stipulation of fact had for its end and purpose the nullification of the statutes and Constitution of North Carolina relative to the incurrence of debt by counties; that it was an attempt to create a debt by Guilford County on property acquired by it for governmental purposes, and that the deed of trust and note executed in connection with it were against public policy, and that the plaintiff seeks the aid of equity in defeating constitutional and statutory provisions, and therefore has no standing in a court of equity; that the erection of the county building in High Point was not a necessary expense within the meaning of the North Carolina Constitution, Article VII, Sec. 7; that at the time the loan was attempted to be made Guilford County was prohibited by the Constitution, Article V, Sec. 4, from incurring any debt. 'That the substance and object of the plan and scheme shown in said Stipulation of Facts, being contrary to public policy, the form of said plan and scheme should be disregarded and the matter treated as it really was, i.e., the purported or attempted loan of money by the plaintiff to Guilford County; and the purchase of the Bradshaw property therewith, the County using moneys from its general funds to contribute thereto; and an attempt by the then Commissioners of Guilford County to execute a note and a deed of trust upon said property, through an agent, C. Clair Conner. ' Further conclusions of law asked for by the defendant County are: 'That the plaintiff is not entitled to recover upon a quantum meruit or implied contract. ' 'That the defendant is not estopped to deny that it owes the alleged debt. ' Defendant then tendered a judgment providing for the reformation of the instruments in the respects requested and denying foreclosure, which the Court declined to render.

At the conclusion of the hearing and argument the trial judge found the facts to be as stipulated, and further that in all the transactions involved the parties thereto had acted in good faith.

Among pertinent conclusions of law are the following:

'The note dated December 1, 1936, in the original amount of $100,000, executed by C. Clair Conner and payable to the order of Jefferson Standard Life Insurance Company is valid, and in all respects a legal, binding and enforceable obligation; that there is now justly due, owing and unpaid, upon said note the sum of $79,674.45 with interest thereon at the rate of 4% per annum, payable semi-annually from and after June 1, 1941; and that the Jefferson Standard Life Insurance Company is the lawful owner and holder of said note.

'The deed of trust dated December 1, 1936, from C. Clair Conner to Julian Price, Trustee, given as security for the payment of the aforesaid note, and recorded in the Office of the Register of Deeds of Guilford County in Book 797, at page 211, is, in all respects, legal and valid, and is a first and prior lien upon the property therein described.

'The defendant, Guilford County is not entitled to have said note and deed of trust, or the deed from Mrs. Sallie Bradshaw to C. Clair Conner, reformed as alleged in said defendant's answer.

'The Board of County Commissioners of Guilford County, in meeting duly assembled on July 23, 1945, having adopted a resolution declaring that the acquisition of the...