Teachey v. Gurley
| Decision Date | 19 October 1938 |
| Docket Number | 244. |
| Citation | 199 S.E. 83,214 N.C. 288 |
| Parties | TEACHEY et al. v. GURLEY et al. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Wayne County; G. V. Cowper, Special Judge.
Action by Naomi Teachey and husband and others against W. G. Gurley and wife and others, and W. G. Gurley and another, as executors of the estate of Mary Gurley, deceased, to vacate a mortgage foreclosure sale and enforce a contract entered into by the mortgagee to purchase the land at the sale and reconvey. Judgment for defendants, and plaintiffs appeal.
Affirmed.
A cause of action against mortgagee for breach of express trust arising from agreement to purchase mortgaged property at foreclosure sale and reconvey to widow of mortgagor for distribution among her children was barred by the three-year statute of limitations, where not asserted until commencement of action approximately six years after mortgagee's disavowal of trust and conveyance of property to part of children and grandchildren of widow. C.S. § 441, subd. 1.
A cause of action against a mortgagee for breach of express trust arising from agreement to purchase mortgaged property at foreclosure sale and reconvey to widow of mortgagor for distribution among her children was barred by laches, where not asserted by children of widow until six years after mortgagee's disavowal of trust and until after death of widow, during which time one of children and her husband lived on property as tenants and all of children were in position to know that grantees to whom mortgagee had conveyed property were making improvements on property, had conveyed part of it, and were undertaking to pay off mortgage debt.
This is a civil action instituted by plaintiffs, heirs-at-law of W M. Gurley, against the mortgagees of W. M. Gurley and certain other of his heirs-at-law, in which the plaintiffs seek to vacate and annul a foreclosure sale under a mortgage on the lands of the deceased and to enforce a contract alleged to have been entered into by the mortgagee to purchase the land at the sale and reconvey.
W. M Gurley died testate, having devised all of his land to his widow, Mary Gurley, for life, with remainder, subject to the life estate, to his children and certain grandchildren. All of said children and grandchildren are parties plaintiff except W. G. Gurley, Annie Gurley, John Henry Gurley, David Gurley and Joseph Isaac Gurley, who are parties defendant.
At the time of his death W. M. Gurley was seized and possessed of more than 400 acres of land, consisting of a number of tracts. At that time he was indebted to the defendants B. G Thompson and Sons in an amount in excess of $24,000. There was an outstanding mortgage to B. G. Thompson & Sons securing $24,000, and an outstanding trust deed to John W. Thompson, trustee, securing $7,000. Part of the land was unencumbered. The widow, Mary Gurley, was surety upon some of the outstanding notes.
The mortgage and the trust deed were foreclosed and Wm. B. Thompson became the purchaser. There was a proceeding to sell the unencumbered land to make assets, under which a commissioner was appointed to make sale and this land was likewise purchased by Wm. B. Thompson. Shortly thereafter Wm. B. Thompson, at the direction of B. G. Thompson, conveyed all of said land by warranty deed to the defendants Gurley.
The grantees in said deed in turn conveyed said property to secure the amount due the defendants B. G. Thompson and Sons, it having been agreed that the land was to be conveyed to said grantees in consideration of their assumption and agreement to pay the amount due B. G. Thompson & Sons by the estate of W. M. Gurley. In purchasing said land at said sales Wm. B. Thompson acted as the agent of B. G. Thompson. All of these conveyances were made in the Spring of 1931, the last one to the defendants Gurley being dated 29 April, 1931. Mary Gurley died in 1937, having left a will, in which she devised her property to her living children and to the children of such of her children as predeceased her per stirpes.
At the conclusion of all the evidence on motion of defendants the action was dismissed as of involuntary nonsuit. The plaintiffs, other than the husbands of the feme plaintiffs, who had theretofore taken a voluntary nonsuit, excepted and appealed.
J. Faison Thomson, of Goldsboro, and Walter T. Britt, of Turkey, for appellants.
Royall, Gosney & Smith, of Goldsboro, and Howard E. Manning, of Chapel Hill, for appellees.
The only exceptive assignment of error which requires consideration on this appeal is the one which challenges the correctness of the judgment of nonsuit entered on motion of the defendants at the conclusion of all the evidence.
Plaintiffs offered a number of witnesses who testified as to the alleged contract made by B. G. Thompson. Each in almost identical language testified that "he was going to sell the land as he promised he would do; he was going to bid it in at the lowest figure, and was going to deed it back to her (Mary Gurley) as he told her he would do, and let her divide it among each and all of the children." No witness for the plaintiff testified that the defendant B. G. Thompson agreed to convey the property to any person other than Mary Gurley. All testified that this was to be done so that she could divide it among each and all of her children. In that connection it is also alleged in the complaint that the property was to be bid in by B. G. Thompson and he was to hold the title to the same in trust for Mary Gurley and that Mary Gurley was thereupon to execute a mortgage or deed of trust to secure the amount due B. G. Thompson by the estate of W. M. Gurley, which deed of trust was to embrace all the lands sold by B. G. Thompson and J. B. Thompson, mortgagee, by John W. Thompson, trustee, and by Mary Gurley under the order of Court.
It is unnecessary to decide whether this evidence tends to establish an express trust by contract in favor of Mary Gurley or merely amounts to a contract to purchase and reconvey. We may assume for the purposes of this decision that considered in the light most favorable to the plaintiffs it tends to show an express trust.
Shortly after the sales were had the defendant B. G. Thompson told Mrs. Gurley in the presence of the witness Parks that he was not going to let her have the land back as he had promised her to do. Likewise, within a few days after the sales, on 29 April, 1931, Thompson actually conveyed the property to the defendants Gurley in direct violation of the alleged agreement.
It appears, therefore, from plaintiffs' evidence that the agreement to reconvey, which was in effect an agreement by Thompson to purchase as trustee for Mary Gurley, was breached in April, 1931, to the knowledge of the cestui que trust. Mary Gurley died in February, 1937. She lived almost six years after the known breach of the contract creating the trust relationship without taking any action. Is plaintiffs' cause of action barred by the statute of limitations-that is, does the three year statute or the ten year statute apply? Counsel seem to agree that this is the determinative question on this appeal.
Any seeming conflict or confusion in our decisions in applying the statute of limitations to trusts (commented on by counsel) arises only when the decisions are considered without reference to the several types of existing trusts, of which there are three: First, express trusts, which are created by contract, express or implied; second, resulting trusts, which arise when a person becomes invested with the title to real property under circumstances which in equity obligate him to hold the title and to exercise his ownership for the benefit of another. Under such circumstances equity creates a trust in favor of such other person commensurate with his interest in the subject matter. A trust of this sort does not arise from or depend on any agreement between the parties. It results from the fact that one man's money has been invested in land and the conveyance taken in the name of another. It is a mere creature of equity. And third, constructive trusts, which are such as are raised by equity in respect to property which has been acquired by fraud, or where though acquired originally without fraud, it is against equity that it should be retained by him who holds it. This type of trust likewise arises purely by construction of equity independently of any contract or of any actual or presumed intention of the parties to create a trust and is generally thrust on the trustee for the purpose of working out the remedy. The relief in such cases is predicated on fraud and not on trust. Equity declares the trust in order that it may lay its hands on the thing and wrest it from the possession of the wrongdoer.
Strictly speaking, resulting trusts and constructive trusts are not trusts, but equity imposes a trust relation because morality justice, conscience and fair dealing demand that the relation be established. In neither does the relation of trustee and...
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