Morehead v. Harris, 605
| Decision Date | 10 July 1964 |
| Docket Number | No. 605,605 |
| Parties | Sylvia Harris MOREHEAD, John Wesley Harris, Wayman Harris, and Wiley Harris, Jr., Plaintiffs, v. Daisy HARRIS, Mary Louise Price, now Mary Louise Price Boquist and her husband, Richard E. Boquist, Helen Moore Price, now Helen Moore Price Hooper, and her husband, Phillip M. Hooper, Defendants, and Cora Jane Lea, Executrix of Daisy Harris Estate, Cora Jane Lea (Cora E. Lea), Lettie Ora Walker (Ora Lea Walker), Widow, Florence Lea Fuller and her husband, Samuel Fuller, Effie Lea Shipes and her husband, Amos Snipes, Bessie Lea Hayes and her husband, James Hayes, Georgia Lea Lynn, Banks Lea and his wife, Atlanta G. Lea, Mabry Lea and his wife, Eunice H. Lea, Maebelle Vincent Wagstaff and her husband, Hubert Wagstaff, Edna Harris Garrett and her husband, Murphy Garrett, and the following nieces and nephews of the defendant, Daisy Harris, deceased, Wilma Walker, Nellie Walker, Elizabeth Walker, Eugene Walker, Hillary Walker, Grady Brooks Walker, Vivian Corbett, Walter Elmer Corbett, Priscilla Corbett, Luther Corbett, Willie Lea Vincent, Ada Vincent, Jeneva Vincent, Louise Vincent, Nessie Vincent, Donald Vincent, Demaster Vincent, Beatty or Baddie Vincent, and all other heirs at law of Daisy Harris, deceased, and all spuses, guardians, adopted parents, executors, administrators and representatives and all other persons who are or may be interested as heirs, devisees, grantees, assignees, lienors, grantors, trustees, firms, corporations, who may be interested in the subject of this action, all of whose names and places of residence are unknown to the plaintiffs, Additional Defendants. |
| Court | North Carolina Supreme Court |
Shuping & Shuping, Greensboro, for plaintiffs.
Paschal & McNeely, Greensboro, for defendants Edna Harris Garrett and Murphy Garrett.
Hoyle, Boone, Dees & Johnson, Greensboro, for defendants Boquist and Hooper.
Herbin, Conoly & Forsyth, Greensboro, for additional defendants.
Defendants' assignments of error bring into focus four crucial rulings of the court below.
(1). The trial judge instructed the jury that Daisy Harris could not acquire the real estate of her late husband, Wiley Harris, at the foreclosure sale by Thomas C. Hoyle trustee, to the exclusion of plaintiffs, the heirs at law of Wiley Harris, and 'any title that she acquired by * * * purchase at said sale, she held as trustee for herself as widow and the plaintiffs as heirs at law.'
At the time Daisy Harris purchased at the foreclosure sale she was the qualified and acting administratrix of the estate of Wiley Harris, and as his widow was entitled to dower in his real estate. No dower had been or was ever allotted.
An administrator acts in a fiduciary capacity in the control, custody and disposition of the property and assets of the estate and he cannot, through divided personality, become a purchaser at his own sale to his own profit and the detriment of those for whom he is trustee. Patuxent Development Co. v. Bearden, 227 N.C. 124, 41 S.E.2d 85. A trustee or other fiduciary cannot purchase at his own sale. There is a conflict of interest between administrator and purchaser--it is the duty of the former to get the best price possible, and it is the interest of the latter to obtain the property as cheaply as possible. Froneberger v. Lewis, 79 N.C. 426. If an administrator purchases at his own sale, the sale is not absolutely void, but is voidable at the suit of the heir or heirs irrespective of actual fraud. The burden is upon the administrator to overcome the equity of the heirs. Davis v. Jenkins, 236 N.C. 283, 72 S.E.2d 673. If the administrator fails to carry that burden, the sale will be declared void, not because of the presence of fraud, but because of the danger of fraud. Froneberger v. Lewis, supra.
If the sale is affirmatively sanctioned and ratified by the heirs or beneficiaries, it will be declared valid. Gurganus v. McLawhorn, 212 N.C. 397, 193 S.E. 844; Froneberger v. Lewis, supra. If property is sold at a judicial sale made pursuant to an action to foreclose a mortgage, in which action all interested persons are parties, the fiduciary may purchase with leave of court and obtain a good title if full value is paid and the transaction is free of fraud. Bolton v. Harrison, 250 N.C. 290, 108 S.E.2d 666.
There is a class of cases which form an exception to the rule that a fiduciary may not purchase property at his own sale. Whenever the administrator, trustee or other fiduciary has a personal interest in the trust property, then he must, of course, have the right to protect that interest, and if to bid for and buy the property be necessary to protect it, he will be allowed to do it for that purpose. Froneberger v. Lewis, supra. A mortgagee may buy to protect his debt. Jones v. Pullen, 115 N.C. 465, 20 S.E. 624. So may the creditor in a deed of trust. Monroe v. Fuchtler, 121 N.C. 101, 28 S.E. 63. A widower may purchase to protect his curtesy right. Wilson v. Vreeland, 176 N.C. 504, 97 S.E. 427. And a widow may purchase to protect her dower. Winchester v. Winchester, 178 N.C. 483, 101 S.E. 25. But as against heirs or beneficiaries the rights of the fiduciary under the purchase extends only to the protection of the interest for which the purchase was made.
A fiduciary may bid and take property to himself as trustee for the benefit of the estate to prevent loss to the estate. A trustee who acquires an outstanding title is considered in equity as having acquired it for the benefit of the cestui que trust. Pearson v. Pearson, 227 N.C. 31, 40 S.E.2d 477.
Daisy Harris did not bid at her own sale. The sale was made by the trustee named in the deed of trust. But the rule which prohibits a fiduciary from purchasing at his own sale applies where the sale is brought about by another. Pearson v. Pearson, supra.
If a life tenant purchases the property at a sale to satisfy an encumbrance, he cannot hold such property to his exclusive benefit, but will be deemed to have made the purchase for the benefit of himself and the remainderman or reversioner. If the life tenant pays more than his proportionate share, he simply becomes a creditor of the estate for that amount. Creech v. Wilder, 212 N.C. 162, 193 S.E. 281. Dower is a life estate. If the doweress, life tenant, purchases at a sale to satisfy an encumbrance, she cannot hold the property to her exclusive benefit, but will be deemed to have purchased for the benefit of herself and the remaindermen. Farabow v. Perry, 223 N.C. 21, 25 S.E.2d 173.
Defendants do not plead an estoppel, and do not allege or offer evidence tending to prove sanction or ratification of the sale on the part of plaintiffs.
The court's peremptory instruction that Daisy Harris, as between her and the plaintiffs, took the property under the foreclosure deed for the protection of her dower and for the benefit of plaintiffs, is proper under the facts disclosed in the record.
The cases cited by defendants in support of their contention that the foreclosure deed vested in Daisy Harris a fee simple title are distinguishable. Wilson v. Vreeland, supra, was an action for breach of covenant of warranty instituted by one claiming title under the widower-purchaser; the latter's relationship and liability to the heirs is not involved. Winchester v. Winchester, supra, involves a suit by a junior mortgagee to set aside a sale at which the widow was purchaser. In Jessup v. Nixon, 186 N.C. 100, 118 S.E. 908, the heirs sought to have voided the sale at which the widow purchased to protect her dower; they did not seek to have a trust declared. Privette v. Morgan, 227 N.C. 264, 41 S.E.2d 845, was an action to set aside for fraud a special proceeding under which the widow purchased.
(2). The court below ruled in effect that Daisy Harris' possession of the subject property was not adverse to plaintiffs, and no issue of adverse possession on her part was submitted to the jury. Defendants plead adverse possession for seven years under color of title, G.S. § 1-38, and adverse possession for twenty years, G.S. § 1-40.
The deed from Hoyle, trustee, to Daisy Harris is color of title. Farabow v. Perry, supra. Her conveyance to Grace Construction Company in fee and her devise of parcel No. 2 to her sisters in fee make clear that she claimed the locus in quo as her own individual property. It is undisputed that she was in the actual and exclusive possession of parcel No. 2 from the death of her husband in 1933 to 1956--twenty-three years.
There is no evidence that Daisy Harris was in possession of, made use of, or exercised any dominion over parcel No. 1. When one enters into possession under colorable title which describes the land by definite lines and boundaries, his possession is extended, by operation of law, to the outer boundaries of his deed. Vance v. Guy, 223 N.C. 409, 27 S.E.2d 117. But where two or more adjoining tracts of land are conveyed in one, or separate, deeds by separate and distinct descriptions, the actual possession by grantee of one of the tracts for seven years is not constructively extended to the other tract or tracts so as to ripen title thereto by adverse possession. John L. Roper Lumber Co. v. Richmond Cedar Works, 168 N.C. 344, 84 S.E. 523; Loftin v. Cobb, 46 N.C. 406; Carson v. Mills, 18 N.C. 546. The facts in this case do not justify any inference that Daisy Harris was in the adverse possession of parcel No. 1 or any part thereof.
But she was in the actual possession of parcel No. 2. The question to be determined is whether this possession was adverse to plaintiffs. If the possession was not adverse, her occupancy for more than twenty years did not perfect title in her. Furthermore, a deed, which is color of title, does not draw to the grantee-occupant of the land described therein the protection of the statute of limitations where the requisites of adverse possession are not present. Farabow v. Perry, supra.
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