Small v. Dorsett
| Decision Date | 12 January 1944 |
| Docket Number | 743. |
| Citation | 28 S.E.2d 514,223 N.C. 754 |
| Parties | SMALL v. DORSETT. |
| Court | North Carolina Supreme Court |
This is a civil action instituted on 21 October 1942, to recover damages arising out of fraud alleged to have been perpetrated by the defendant upon the plaintiff.
The plaintiff's evidence tends to show that in the year 1929 the plaintiff received $7,000 from a life insurance policy held by her late husband; that the plaintiff lived in Germantown, North Carolina, and the defendant lived at Spencer, North Carolina; that the plaintiff and defendant had been friends and neighbors in the years gone by in Spencer that in June, 1929, the plaintiff wrote defendant that she had the money and wished to invest it, and asked the defendant's opinion as to depositing it in the Bank of Stokes; that the defendant replied to plaintiff's letter by offering to invest the money for her in paper 'as good as gold', paper then held by the bank in Spencer in which the defendant was employed; that as a result of defendant's letter the plaintiff went to Spencer to see the defendant and in the bank in Spencer discussed the loaning of the money with the defendant, and was told by the defendant that if he was allowed to invest the money 'he would put it where it was as good as gold'; that the plaintiff returned to her home in Germantown and there received a letter from the defendant under date of 11 June 1929, enclosing check on the Wachovia Bank & Trust Company where the plaintiff had the money deposited, made out for $6,915 with the statement: ; that the plaintiff signed the check and mailed it to the defendant; that the defendant cashed the check and with the funds derived therefrom purchased two notes from the Bank of Spencer, one for $1,500 from one Meinus, and one for a balance of $5,415 from one John L. Nix and wife, both notes secured by real estate mortgages on real estate in Salisbury North Carolina; that the principal and interest on the Meinus note was collected in due course, and is not involved in this litigation; that $5,415, the balance realized on the check, was invested in the purchase of the Nix note; that the Nix note was dated December 2, 1924, due six months after date, and was therefore more than four years past due at the time of its sale to the plaintiff; that the Nix note was originally for $6,000, but had been reduced by partial payment thereon, and was secured by deed of trust in which the defendant was trustee, and was held by the Bank of Spencer; that the note had been given for the balance of $6,800 of purchase money for a house and lot in Salisbury sold to Nix and wife by the defendant; that the drawers of the note, the Nixes, began paying $80 per month on the note, but such payments had dropped to $36 per month prior to the time defendant invested the plaintiff's money in the note; that the depression of 1929 was at its depth and the officers of the bank, including the defendant, had been instructed to cleark the bank of all real estate loans, including the Nix note, prior to the time the sale of this note was made to the plaintiff.
The evidence tends further to show that notwithstanding the situation surrounding this note, the defendant represented to the plaintiff that the note was oneof the best investments in which to put her money, and that it 'was as good as gold', and she could get her money out of it any time she wished, as the real estate securing the note would always be there unless destroyed by a cyclone or an earthquake, and that the defendant represented to the plaintiff that Nix and his wife, the makers of the note, were financially responsible and that the value of the real estate securing the note was greater than the amount of the note, and that real estate was an advisable investment at that time, and further that the defendant agreed to look after the property, see that the taxes and insurance were kept paid, and generally to handle the investment in an efficient manner, all of which he neglected and failed to do; that from 1929 until the property was sold for taxes in 1942, the defendant continued to represent to the plaintiff that the investment was a good and safe one, and on one occasion when the Nixes failed to mkae any payments the defendant told plaintiff that this was due to the fact that the Nixes had been sick, which statement was false and known by the defendant to have been false; that on one occasion when plaintiff asked for her money the defendant advised her that the Nixes could obtain an HOLC loan for the major portion of the amount due on the note and pay to her such amount, and execute to her a second mortgage for the balance due her, which second mortgage would be perfectly good, and that this representation was false; that about 1933 the Nixes informed the defendant they could not pay for the property, and the defendant insisted that they stay on in it and pay what they could as rent, and the Nixes stayed on under these circumstances for nine years, and the defendant never communicated this circumstances to the plaintiff; also during this period from 1929 to 1942, at various times the Nixes made certain payments on the note to the defendant which the defendant failed to account for to the plaintiff, the then owner of the note, and on one occasion when the plaintiff made urgent demands for payment of the note, in part or in whole, the defendant paid to the plaintiff the sum of $388, which he had withheld from payments made to him by the Nixes, to make it appear that they had paid this total amount on the note at one time, thereby giving the appearance of ability of the Nixes to make such payment upon demand, which ability they never possessed; that such actions on the part of the defendant in withholding many smaller payments and then paying at one time a larger payment and representing that such larger sum had just been paid upon demand were taken to allay any suspicion on the part of the plaintiff and to forestall any investigation that the plaintiff might otherwise have made; that no repairs were made on the house on the real estate securing the Nix note, and the termites almost destroyed it; that no taxes were paid on the house and lot after 1931, and in 1937 suits were instituted by Rowan County and the City of Salisbury to sell the property on account of nonpayment of taxes, and, although summons in the tax suits were served on the defendant as trustee in the deed of trust on the real estate, he did not advise the plaintiff of such actions until after the property was sold for taxes in 1942.
The evidence further tends to show that in April, 1942, the plaintiff learned for the first time the true facts with respect to the representations made to her by the defendant, and proceeded to redeem the property from the purchaser at the tax sale and to pay off the tax judgments; that the plaintiff realized $1,998.39 from the sale of the house and lot, net to her; that there was due on the principal of the note and the accrued interest at that time the sum of $6,680.82; that the loss to the plaintiff was $4,382.43, and this suit was instituted by her for that amount.
The evidence tends not only to show that the plaintiff and defendant were erstwhile neighbors in Spencer, but they were friends of many years standing, that the plaintiff was a woman 65 years of age with no business experience, and very limited education, while the defendant was a man of long business experience, being a banker, investor and real estate dealer for many years.
It is the contention of the defendant that he did not make false and fraudulent representations to the plaintiff; that even if it should be found to the contrary, the plaintiff had made discovery of all the facts and circumstances, alleged as constituting the fraud, more than three years next preceding the institution of this action, and he pleads the three year statute of limitations (C.S. § 441(9) in bar of the plaintiff's recovery; and that the plaintiff has ratified the acts of the defendant and is thereby estopped to prosecute this action.
When the plaintiff had introduced her evidence and rested her case, the defendant lodged a motion for judgment as in case of nonsuit (C.S. § 567), which motion was allowed, and from judgment predicated on such ruling, the plaintiff appealed, assigning errors.
Fred S. Hutchins and H. Bryce Parker, both of Winston-Salem, for plaintiff, appellant.
G. T. Carswell and Joe W. Ervin, both of Charlotte, W. P. Sandridge and J. Erle McMichael, both of Winston-Salem, for defendant, appellee.
The first question which arises on this appeal is: Was there sufficient evidence of fraud to sruvive the demurrer thereto? The answer to this question is in the affirmative.
The evidence is to the effect that the defendant, a banker of experience and a friend of the plaintiff, a woman of no business experience, in response to her request of him for advice as to depositing her money in a certain bank, replied that he could invest her money for her so she would...
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