Wadford v. Gillette

• Citation: 137 S.E. 314
• Decision Date: 23 March 1927
• Docket Number: (No. 55.)
• Court: United States State Supreme Court of North Carolina
• Parties: WADFORD. v. GILLETTE et al.

(193 N.C. 413)

137 S.E. 314

WADFORD.

v.GILLETTE et al.

(No. 55.)

Supreme Court of North Carolina.

March 23, 1927.

Appeal from Superior Court, Nash County; Barnhill, Judge.

Action by A. D. Wadford, guardian of Rachael Frances Baker, against W. P. Gillette, trustee, and others. Judgment for plaintiff, and defendants appeal. Reversed.

The action was instituted by A. D. Wad-ford, guardian of Rachael Frances Baker, against W. P. Gillette, trustee in the deed of trust, which was the subject of controversy, and James T. Gillette, payee in the note in controversy, and State Bank of Portsmouth, Va., the holder of said note.

The cause was by consent of counsel referred to H. G. Connor, as referee, to find the facts and state the conclusions of law. After hearing the evidence and argument of counsel, the referee made his report. The findings of fact by the referee are voluminous, but are clear and succinct, presenting every phase of the controversy, and for that reason the entire report is set out in full and is as follows:

"(1) That prior to January 1, 1921, Rachael Frances Baker, the wife of J. W. Baker, was the owner in fee simple and in the possession of a certain tract of land lying and being in Nash county, N. C, North Whitakers township, and being lot No. 3 of. the J. D. Wadford farm, the said Rachael Frances Baker having inherited said farm from her father, D. J. Wadford, the said Rachael Frances Baker having married John W. Baker, and on said date was living upon said farm with her husband.

"(2) That prior to January 1, 1921, P. Roy Ricks owned and was in the possession of a certain tract of land in Southampton county, Va.. Drewryville magisterial district, containing 217 1/4 acres, more or less.

"(3) That on January 1, 1921, the following liens existed as valid, subsisting liens against the 217^]A acres of land in Southampton county, Va., owned by P. Roy Ricks, in the following order:

"(a) An indebtedness due the Federal Land Bank of Baltimore, Md., of $3,800, dated June 5, 1919, recorded in the office of the clerk of the circuit court of Southampton county, Va., in Mortgage Book 19, p. 256.

"(b) A deed of trust securing an indebtedness to James T. Gillette, guardian, of $6,000, dated June 9, 1919, and recorded in Deed of Trust Book No. 19, p. 253.

"(c) A deed of trust securing an indebtedness of J. H. Leigh for $1,200, dated June 9, 1919, and recorded in Deed of Trust Book No. 19, p. 253.

"(4) That James T. Gillette, guardian, had as additional security for the $6,000 above mentioned a mortgage or deed of trust upon two other tracts of land in said state, county, and magisterial district, being lots Nos. 8 and 9 of the C. P. Grizzard home place, containing 87 and 74 acres, respectively, the said mortgage or deed of trust having been given by D. C. Ricks and was duly recorded, the said D. C. Kicks being a brother of P. Roy Ricks.

"(5) That certain negotiations had been between Joshua Leigh and P. Roy Ricks, resulting in the giving of an option by P. Roy Ricks to the said Leigh for the said 217 1/4 acres of land.

"(6) That some time during the year 1920, J. W. Baker, the husband of Rachael Frances Baker, went to Southampton county, Va., and took from Joshua Leigh an option upon the Ricks place, upon the following terms: He paid $500 at the time of the taking of the option, was to pay $4,500 additional, making $5,000 in all, by December 1, 1920, and was to assume the indebtedness of $11,000 upon the place.

"(7) This option was closed in the office of J. T. Gillette, who was an attorney, the $500 was paid and went into the hands of J. T. Gillette, who credited the same upon the interest due him, as guardian, on the $6,000 note which he held against P. Roy Ricks.

"(8) That in the fall of 1920. John W. Baker failed to take up the option and pay the $4,500, and forfeited the $500 previously paid.

"(9) Upon the failure of John W. Baker to take up the option, Joshua Leigh had no further interest in the matter.

"(10) When J. T. Gillette ascertained that John W. Baker had failed to take up the option, he came to North Carolina to see and did see John W. Baker and his wife, this visit being made at the instance of P. Roy Ricks and D. C. Ricks.

"(11) In consequence of this visit, J. T. Gillette arranged with the First National Bank of Portsmouth, Va., for a loan of $3,500, for John W. Baker, which was to he arranged as follows: John W. Baker and wife, Rachael Frances Baker, were to give a deed of trust upon Mrs. Baker's land in North Carolina, securing a note of $3,500, J. T. Gillette was to indorse this note as collateral to his note to the bank.

"(12) The price of the land was abated to $15,000. By the arrangement above set out, $4,000 was to be paid in cash, made up by the $3,500 loan and the $500 which had been previously paid, and John W. Baker was to assume the mortgage indebtedness on the P. Roy Ricks land in Southampton county, Va.

"(13) In consequence of these negotiations, J. T. Gillette came to the home of John W. Baker and his wife and prepared a deed of trust to W. P. Gillette, Jr., securing a note for $3,750, payable to James T. Gillette. John W. Baker and his wife, Rachael Frances Baker, signed the deed of trust and the note. J. T. Gillette returned to Virgina, and in about ten days the deed of trust and note were sent him, the probate having been taken by T. E. Powell, a justice of the peace of Nash county, now dead; the deed of trust was on the 21st day of January, 1921, recorded in Book 219, page 317, in the office of the register of deeds of Nash county. The note was taken for $3,750; $3,500 to be used in the purchase of the Ricks land, and $250was Gillette's fee for negotiating and financing the deal.

"(14) Pursuant to arrangements which had been made, James T. Gillette indorsed the $3,750 note of Rachael Frances Baker and her husband, John W. Baker, attached it to his note of $3,500, and sent it to Portsmouth, Va., and the defendant State Bank of Portsmouth discounted Gillette's note for $3,500 and came into the possession of the $3,750 Baker note only a few days after the note was given, and long prior to its due date.

"(15) The proceeds of the $3,500 note given by James T. Gillette, with the $3,750 note as collateral thereto, was used by him as a payment upon the $6,000 note held by him as guardian.

"(16) Thereupon P. Roy Ricks and wife executed and delivered unto John W. Baker and wife, Rachael Frances Baker, a deed of conveyance, conveying unto them as "joint owners" the 217 1/4 acres of land in Southampton county, Va., subject to the three incumbrances or liens hereinbefore set out in finding of fact No. 3, amounting to $11,000, the said deed was duly recorded in Deed Book 68, p. 540, in the clerk's office of the circuit court of Southampton county, Va.; and John W. Baker and wife. Rachael Frances Baker, moved from North Carolina to Virginia and upon said lands, and lived there for several years.

"(17) James T. Gillette had agreed with D. C. Ricks and P. Roy Ricks that, upon the payment of the sum of $4,000, lots Nos. 8 and 9 of the C. P. Grizzard home place, which had been mortgaged to secure his note as guardian for $6,000, would be released, and thereupon, on the 30th day of April, 1921, James T. Gillette, as trustee and as guardian, executed and delivered unto D. C. Ricks a deed of release, by which lots Nos. 8 and 9 of the C. P. Grizzard home place were released from the deed of trust securing the $6,000 note, the said release having been duly recorded in Release Deed Book No. 1, p. 524.

"(18) There is no evidence as to whether or not John W. Baker and wife, Rachael Frances Baker, were cognizant of or knew anything about the agreement between James T. Gillette and D. C. Ricks as to the release by Gillette of lots Nos. 8 and 9 of the Grizzard farm, and the referee therefore is unable to find as a fact that John W. Baker and Rachael Frances Baker were cognizant of the agreement to and the subsequent release of these two tracts of land, and the referee finds that Rachael Frances Baker was not cognizant of the agreement.

"(19) There is no evidence as to the value of lots Nos. 8 and 9 of the Grizzard home place; the referee therefore is unable to find what these two tracts of land were worth at the time of the execution of the release above mentioned.

"(20) John W. Baker defaulted in the payment of the interest and taxes upon the lands in Southampton county, Va., and James T. Gillette, in order to protect himself, was compelled to pay the interest and taxes as they accrued, with the exception of $268.72, which was paid to him by John W. Baker.

"(21) James T. Gillette was compelled to and did pay to the sheriff of Nash county $182.75 on February 8, 1924. being the taxes upon the Baker land in Nash county.

"(22) Baker having defaulted, the lands in Southampton county, Va., were finally sold by the Federal Land Bank of Baltimore, and bid in by one Peter Thomas for $7,000, Thomas now being in possession thereof. The evidence is that this purchase has not yet been consummated.

"(23) That on the day that Rachael Frances Baker executed the note of $3,750 and the deed of trust to W. P. Gillette, Jr., securing the same, and for some time prior thereto, she was mentally incapable of entering into a contract so as to bind her separate estate.

"(24) That neither James T. Gillette nor W. P. Gillette, Jr., knew of the mental incapacity of Rachael Frances Baker on the date that she executed the note and mortgage.

"(25) That the State Bank of Portsmouth, Va., had no knowledge of the want of capacity of Rachael Frances Baker at the time she executed the note of $3,750 and the deed of trust securing the same; that it took the said note as collateral to the $3,500 note of James T. Gillette in the following circumstances:

"(1) The instrument was complete and regular upon its face.

"(2) The bank became the holder of it before it was overdue and without notice of previous dishonor.

"(3) The bank took it for good...