Lee v. Pearce

• Decision Date: 31 January 1873
• Citation: 68 N.C. 76
• Court: North Carolina Supreme Court
• Parties: ELIZABETH and WINNIFRED LEE, by their Guardian, and others, TRUSTEES of the BAPTIST CHURCH of Newbern, v. WM. H. PEARCE and wife ELIZABETH.

68 N.C. 76

ELIZABETH and WINNIFRED LEE, by their Guardian, and others, TRUSTEES of the BAPTIST CHURCH of Newbern,

v.WM. H. PEARCE and wife ELIZABETH.

Supreme Court of North Carolina.

January Term, 1873.

The innocence of a party who has profited by a fraud will not entitle him to retain the fruit of another man's misconduct, or exempt him from the duty of restitution.

Our Courts, under our present system, give relief not merely to the extent and in the cases where it was heretofore given by the Courts of Law, but also to the extent, and in the cases where it was heretofore given by Courts of Equity; thus preserving the principles of both systems, the only change being, that the principles are applied and acted on in one Court and by one mode of procedure.

Certain known and definite fiduciary relations, that, for instance, of Trustee and Cestui que trust, Attorney and Client, Guardian and Ward, and General Agent, having the entire management of the business of the principal, are sufficient under our present judiciary system, to raise a presumption of fraud as a matter of law, to be laid down by the Judge as decisive of the issue, unless rebutted. Other presumptions of fraud are matters of fact to be passed upon by a jury.

It is error, for a Judge to charge a jury, that fraud must be proved by the party alleging it, “beyond a reasonable doubt.” The rule being, if the evidence creates in the minds of the jury a belief that the allegation is true, they should so find.

( Williams v. Powell, 1 Ired. Eq. 460; Goldsborough v. Turner, 67 N. C. Rep. 403; Heilig v. Stokes, 63 N. C. Rep. 612, cited and approved.)

CIVIL ACTION tried before Clarke, J., at the Fall Term, 1872, of the Superior Court of CRAVEN county.

The plaintiffs claim certain real property in the town of Newbern, under the will of Mary A. Lindsay, the aunt of the feme plaintiffs, Elizabeth and Winnifred. The will was dated 15th October, 1869, and admitted to probate the 23d April, 1870. Besides the real estate given to her nieces, and to the Trustees of the Baptist Church, of which the testatrix had been a member for a number of years, she bequeathed to the nieces her personal property.

In their complaint the plaintiffs state, that the property in dispute is in possession of the defendants, who claim under a deed purporting to have been made by the testatrix to Elizabeth, the wife of the other defendant, October 1st, 1867. This deed, the plaintiffs allege, is a fraud, and demand judgment, that it be so declared, and that the defendants be compelled by a proper order of the Court to convey to them. To support the allegation of fraud, the complaint alleges that the defendant, Wm. A. Pearce, was the confidential agent of the testatrix, and imposed upon her to sign the deed, when she thought she was signing a will. That he procured the deed to be written by one Wm. G. Bryan, who went to the house of the testatrix with him and witnessed her signing it; that it was a voluntary conveyance, without any consideration, and kept by the defendants for nearly three years before it was registered. And further, that the testatrix (the grantor in the deed) was an ignorant and illiterate woman, nearly sixty years of age, easily imposed upon, and spoke frequently of the writing she had given to Pearce, as her “will;” and asked, when she executed the will of the 15th October, 1869, if it did not revoke (destroy) the one which she had made to him, she at the time being angry with him; that the deed was made to Pearce's wife, for the reason he was in embarrassed circumstances, and soon after went into bankruptcy.

The defendants, in their answer, deny the allegations of fraud and improper dealing in obtaining the deed made to the wife; alleging that the same was so made in consideration of the friendly feelings she entertained towards them, for the many acts of kindness and attention rendered on their part. They further deny the power of the persons named, to take under the will, as Trustees of the Baptist Church, as they are not incorporated; and that Z. Slade, one of the witnesses to the will, and a Trustee of the Church, could not prove the devise, being interested as such trustee.

It appeared from the evidence, that the defendants were frequently at Mrs. Lindsay's, the testatrix, and that Pearce, the husband, acted often as her agent, buying wood, &c. That his place of business was close to her dwelling, easily accessible from his back door. That the testatrix, before she fell out with him, spoke of Pearce as being her friend, and that she preferred him to her relations. After the disagreement, she wanted the witness Slade to write her will, giving her property to the church. This he refused to do, when she informed him she would get C. C. Clark to write it for her. This will, witness and one Amyett witnessed. She, the testatrix, wanted to know if the will would revoke the one made to Pearce; that she always spoke of it as a will, and never as a deed.

Bryan testified, that he wrote the deed for Pearce, that he carried it to Mrs. Lindsay and read it over to her carefully she signed it and he witnessed it. At the time, she said she wanted Pearce to have her property on account of his kindness to her. After leaving her room, the witness perceiving the revenue stamps were not cancelled on the deed, he carried it back to her, and had them cancelled. She again reiterated to witness the obligations she felt under to Pearce, when they were alone. There was no money paid.

The plaintiffs asked his Honor to charge the jury, that if they believed that W. H. Pearce was the confidential agent and manager of the affairs of Mary A. Lindsay at the time the deed was executed, it was void, without other evidence of fraud, and that the jury should find for the plaintiffs. This, the Court declined to do; and instructed the jury that if they were satisfied that Pearce was the confidential adviser and agent of Mrs. Lindsey, that he was like a steward in England, and that he stood in the intimate relation of attorney and client, so that he was implicitly trusted, and looked to for advice and direction, then it was a strong badge of fraud, if he procured a conveyance of property for his own benefit, as in the case of a conveyance to his wife, and with other evidence may justify you in finding fraud; but the proof must be clear and satisfactory.

Verdict for the defendants. Plaintiffs moved for judgment non obstante veridicto. Motion refused. Plaintiffs again moved for a new trial. Motion overruled. Judgment for costs, and appeal.

Green, for appellants .

Justice and Haughton, contra .

PEARSON, C. J.

“The innocence of a party who has profited by a fraud will not entitle him to retain the fruit of another man's misconduct, or exempt him from the duty of restitution.” Adams Eq. 176. So the case may be relieved from complication, by the fact that the deed is made to Mrs. Pearce, and may be treated as if it had been made to Pearce, to whom the fraud is imputed.

The provision in our present constitution, by which the distinction between actions at law and suits in equity, is abolished, and the subsequent legislation effects only the mode of procedure, and leaves the principles of law and equity intact. The courts as now constituted, give relief, not merely to the extent and in the cases where it was heretofore given by the courts of law, but also to the extent and in the cases where it was heretofore given by courts of equity; in other words the principles of both systems are preserved, the only change being, that these principles are applied and acted on in one court and in one mode of procedure. For illustration, under the old system, if there was fraud in the factum, i. e., when one paper is substituted in the place of another, or when the party executes a paper through actual fear of death, or great bodily harm, the instrument is void, never was the deed of the party, and is treated in a court of law as a nullity. This was the extent to which courts of law, by reason of their peremptory judgments and regard for deeds, gave relief.

But courts of equity can mould and shape decrees so as to meet out exact justice between the parties, and regard deeds merely as a high species of evidence, and for these reasons give relief beyond the point at which courts of law stopped. So when there was no fraud in the factum, and no physical duress, a court of equity would take the case in hand and give fitting relief if the execution of the deed be procured by fraud or moral duress; if a bond, by having it cancelled; if a conveyance by a decree, treating the deed as having passed the legal title, and converting the party into a trustee, who is ordered to re-convey upon such terms as conscience requires. Under the present system, the same court gives relief in all of these cases, and the judgment is framed to suit the case. C. C. P. 216, “a judgment is the final determination of the rights of the parties in an action.” The equities of the parties being involved in this final determination, as well as their legal rights, it follows that the Court must now give such judgment as will determine these equities and legal rights, in such manner as has heretofore been according to the course of the courts respectively; for example, a cestui que trust conveys to his trustee at an inadequate price; the decree would have been, that the trustee re-convey on repayment, subject to an account for the profits. The judgment now is, that the plaintiff recover the land and damages and have a re-conveyance on repayment of the price received, whether a consideration has been paid or the conveyance be a mere act of bounty. Owing to our registration laws, the judgment for land should direct a reconveyance to make the title appear on the Register's books.

As ancillary to the jurisdiction, to avoid deeds obtained by fraud, undue influence or moral duress, courts of equity established the doctrine that in certain...