McLeod v. Bullard

• Decision Date: 28 February 1882
• Citation: 86 N.C. 210
• Court: North Carolina Supreme Court
• Parties: JAMES MCLEOD v. C. W. BULLARD and others.

86 N.C. 210

JAMES MCLEOD

v.C. W. BULLARD and others.

Supreme Court of North Carolina.

February Term, 1882.

PETITION to rehear filed by defendants and heard at February Term, 1882, of THE SUPREME COURT.

The facts are fully stated in same case, 84 N. C., 515.

Messrs. Shaw, McNeill, and Hinsdale & Devereux, for plaintiff .

Messrs. Burwell & Walker, for defendants .

SMITH, C. J.

At the trial of this cause in the superior court, the jury were charged that while ordinarily he who alleges fraud in a transaction must prove it, yet, when the relation of mortgagor and mortgagee exists, and while it exists, the former conveys his equity of redemption in the land to the latter, the burden of proof is shifted from the mortgagor to the mortgagee, and the presumption of law will arise that the conveyance is fraudulent, but the presumption may be rebutted by showing that the consideration of the deed was fair and adequate, and no fraud actually practiced. This ruling approved on the former hearing, we are now asked to review and reverse, as erroneous in law.

The substance of the instruction is, that between such parties, something more is required than the mere production of the deed and proof of execution, to repel the inference that the conveyance or release of the equitable estate of the mortgagor, was not fairly obtained, and to give it validity and operation.

The argument has been full and exhaustive, and numerous cases cited, examined and criticised, to show that a mortgagee is not included in the class of trustees to whose dealings with their cestuis que trust the presumption is applied, and especially when the power of sale is not conveyed in the mortgage deed. The benefit of this distinction between mortgages with and without a power of sale cannot be made available to the defendants, whatever of force it may possess, since the deed is not an exhibit, nor its provisions set out in the record so that we can see whether it belongs to the one or the other class, and it is a well settled rule, that one who alleges error must show in what it consists, and hence the plaintiff should make it appear that no such power was vested in the mortgagee and the decision heretofore rendered was predicated upon the idea that the mortgage did not contain a power of sale, and nothing now appears to controvert that fact. We know that the prevalent practice is to insert such a provision in a mortgage, as in other conveyances to trustees to secure debts, and more especially in such as are intended to secure future advances, in order that the coerced repayment may be prompt and inexpensive, and upon such an instrument, in the absence of evidence to the contrary, we must assume the instruction to have been predicated; and if such was not the character of the mortgage, it was the duty of the appellant to make the fact appear.

The discussion has been confined to the abstract proposition, announced in the charge to the jury as a rule of law, and without regard to the facts of the case then depending. But a proposition of law, laid down in terms too comprehensive, or without its necessary limitations, if appropriate to the case and not calculated to mislead, cannot for that reason be assigned for error, because it could not be prejudicial to the complaining party. It is necessary therefore to consider the aspect of the case and the antecedent relations of the parties, as they were presented by the evidence when the instruction was given.

The essential allegations of the complaint are set out in the report of the case, (84 N. C. 515) and need not be repeated. The findings of the jury upon the issues outside of that to which the instruction is pertinent, in a condensed form, may be thus stated:

The debt due to McKeithan, the money to pay which had been furnished by the plaintiff, was used in obtaining an assignment of it, and with the plaintiff's consent, to the end that the land might be sold under execution and bid in for the plaintiff, and this was a mutual agreement between them. At the sale the defendant suppressed competing bids by representing to those present that he was buying for the plaintiff, and becoming the purchaser at a price far below its value, which is estimated by the jury at $3.000, took the sheriff's deed conveying the title to himself. The allegations made by the plaintiff in regard to the agreement for the purchase of the property at the sheriff's sale, and any equity set up in that behalf, are expressly denied. The deed conveying the defendant's equity of redemption, or as expressed in the language of the mortgagor in the instrument, “all my legal and equitable interest in and to a certain tract of land,” describing it, without mention of the antecedent mortgage, or the equity arising out of the parol contract in regard to the sale under execution, recites as its consideration the discharge of a debt of no specified amount and the sum of $400 then paid. It was furthermore charged and denied that this release of January 3rd, 1873, had been procured by the defendant's misrepresentation that it was a bond for the arbitration of their unsettled matters, and from the plaintiff when so drunk that he did not understand what he was doing or the consequences of his act.

These then were the relations between the parties, when the jury were directed to require some evidence beyond that furnished by the deed itself, that its consideration was fair and adequate, and that there was no fraud practiced in procuring its execution. Surely if the presumption from a supposed undue influence exercised, can arise in any case and call for explanation, it does arise out of the fiduciary relations subsisting between these parties.

But considered as an abstract proposition disconnected with the special attending circumstances, we do not hesitate to affirm its correctness in its application to dealings between the parties...