Opinion
(June Term, 1841.)
In ascertaining whether a deed given by A to B for a tract of land was intended to be a full and absolute conveyance of all A's interest, or only as a security for money advanced by B to A, a great disproportion between the value of the land and the sum paid for it is strong evidence that the deed was given as a security merely.
When a party seeks to exempt himself from an equitable lien on land which he has purchased, on the ground that he was a purchaser without notice, he must show that he not only received a deed for the land but that he also paid the purchase money before he had notice of the lien or trust.
THIS was a suit transmitted from the Court of Equity of GUILFORD, at Fall Term, 1840, to the Supreme Court, by consent of parties. The pleadings and proofs in the cause are fully set forth in the opinion delivered in this Court. (370)
Mendenhall for the plaintiff.
J. T. Morehead for the defendant.
The bill in this case was filed, returnable to March Term, 1829, of Guilford Court of Equity, by Harman Howlett against John Thompson, Pleasant Bevil and James Johnston, but at the appearance term the name of James Johnston as a defendant was permitted to be stricken out. All the original parties have died pending the suit, and as revived it is a suit between the heirs of Howlett, plaintiffs, and the executor of Thompson and the heirs of Bevil, defendants. The bill charges in substance that James Johnston, as the agent of the executors of Col. Robert Lindsay, had, in November, 1818, with the view merely of securing to the payment of certain judgments of the said executors against Harman Howlett, amounting with principal, interest and costs to the sum of $101, bid of at the price at execution sale a tract of land of the said Howlett containing 200 acres, and of far greater value, under an engagement to permit the said Howlett to redeem the said land by refunding the purchase-money and interest; that in December, 1818, or January, 1819, Johnston called on Howlett to refund the money, and that the latter, to enable him to comply with this demand, was induced to enter into a contract with the defendant Thompson, according to which the latter lent him the sum of $100 at an annual interest of $12.50, with a stipulation that Thompson would receive payment of the interest in labor, and that to secure the repayment of the sum lent, with the interest above, said Thompson should get an assignment of Johnston's purchase of or title in the land; that this contract was communicated to Johnston by both the parties and carried into execution; the $100 were advanced by Thompson upon the agreed terms, and Johnston relinquished to Thompson his interest in the land under the purchase at execution sale upon an express understanding that Thompson should hold the title in the (371) land, which land was then fully worth $500, as a security for the repayment with 12 1-2 per cent interest on the money lent. The bill charges that for some time Howlett paid the interest so stipulated, but Thompson, nevertheless, having procured the legal title to the land, brought an action of ejectment against him, and having obtained a judgment in said action came with the sheriff, armed with a writ of possession, to turn him out of doors, at a time when his wife was confined to her bed; and then and there, under the said writ and by threats of turning the said Howlett out of doors, extorted from him a bond or note for the sum of $15 as rent for said land for a year, which bond the bill alleges that Howlett has paid. The bill further charges that Thompson seemed for a time satisfied in having thus extorted from Howlett this acknowledgment of tenancy, and demanded no further rent nor received any further interest, but recently sold and conveyed the said land to the defendant Pleasant Bevil, who it is charged had full notice of all the matters in the bill; and they, the said Thompson and Bevil, have instituted and action of ejectment against Howlett to dispossess him, and obtained judgment therein at the February Term, 1829, of Guilford County Court. It sets forth that he is ready and willing to pay whatever is justly due from him of principal and interest upon the money lent, and prays that execution on the judgment in ejectment may be enjoined, that an account may be taken of what is justly due upon the said loan, and that on payment thereof he may be permitted to redeem, and for general relief. The answer of the defendant Thompson states that, having understood that James Johnston, who had purchased the land of Howlett at execution sale, was willing to part with the same to any person who would advance the amount bid for it, he made application to Johnston and thereupon entered into a contract with him whereby he agreed to pay to said Johnston the sum aforesaid, and Johnston agreed to convey to him the land, and that this contract was fully carried into execution. The answer denies that he made any contract whatever with Howlett for advancing the money at 12 1-2 per cent interest and holding the land as a security, or that he purchased the land at the instance or for the (372) benefit of Howlett, but avers that he purchased absolutely for himself. The answer denies that Howlett has paid Thompson 12 1-2 per cent interest or anything by way of interest on the money falsely charged in the bill to have been advanced; admits that Howlett has occasionally worked for him, but says that he also furnished Howlett with many articles at different times, and believes that upon this running account there is a balance of $20 or $30 due Thompson. The answer admits that at November Term 1821, he instituted an action of ejectment against Howlett, and at November Term, 1822, obtained Judgment, and says that he did not sue out the writ of execution until 28 January, 1823; that he then went with the deputy sheriff to have the same executed, when Howlett proposed to rent the land for a year, and this proposition being accepted he gave Thompson his note under seal for the sum of $15, payable on 28 December then next ensuing, for the rent of the land the said Howlett then lived on; but the answer denies that the said note was paid or that Thompson ever obtained any subsequent rent for the land, and says that although he considers Howlett as having continued his tenant at the same annual rent, and justly owing the same, he has forborne to press him therefor because of his inability to pay it. The answer says that Thompson at last sold the land to Bevil at $400, and gave Howlett notice to quit and deliver up possession to Bevil; that this was not done, and Bevil thereupon instituted an action to gain the possession. The answer of Bevil sets forth that on 14 October, 1826, while Howlett was in possession of the land, as was believed by Bevil, as the tenant of Thompson, the said Bevil bought the land of Thompson at the price of $400, half of which he paid a short time thereafter and the other half, which was payable at twelve months, remains yet unpaid. This defendant denies that at the time of his purchase he had any knowledge of Howlett's pretended equity or claim in or to the land; declares that at the time of the purchase Thompson assured him that Howlett would give up the possession at New Year's day, and that the title was good, and says that (373) afterwards (but does not state whether before or after payment of half the purchase-money) Howlett laid claim to the land and wrote many letters to him concerning the same which he refused to receive, believing Howlett's object was to take some advantage of him. This defendant admits that he brought the action of ejectment on the separate demises of Thompson and himself, and insists that there is no injustice in availing himself of the judgment therein rendered to obtain the possession of his land.
Upon the coming in of these answers the injunction to restrain the issuing of the habere facias possessionem, which had been granted on the filing of the bill, was dissolved with costs. To the answers of the defendants there is a general replication.
Notwithstanding the explicit denial by Thompson of the agreement alleged in the bill, we feel ourselves bound by the proofs to declare that agreement established. The testimony of James Johnston to that point is very distinct and positive. He declares that after he had purchased Howlett's land at execution sale in November, 1818, he agreed with Howlett to give up the land if the latter would pay the money bid therefor before Johnston was called on for it by the sheriff; that this was not done, and about the Christmas following he went in company with a surveyor to survey the land, when Howlett supplicated for further indulgence, and represented that Thompson was about to lend him the money to pay for the land; that witness told Howlett if Thompson would agree to let him have the land upon easy terms the witness would, notwithstanding some trouble and expense already incurred, let Thompson have it for $110; that a day was appointed for the three to meet, and they accordingly did meet on 7 January, 1819, when the following arrangement was made: The witness was to receive $110, of which $100 was paid down by Thompson, $5 by Howlett and the remaining five promised to be paid by Howlett in a few days, the witness to transfer the title to Thompson and Howlett to repay the $100 so advanced by Thompson in cash with interest thereon at the rate of 12 1-2 per cent per annum, the interest payable in labor on 1 April next, and receive a conveyance (374) of his land. Upon this distinctly understood agreement the witness shortly thereafter made the conveyance to Thompson, and declares that he never would have permitted Thompson or any other person to have the land at that price but for the purpose of befriending Howlett. This testimony is confirmed by that of other witnesses and by the circumstances of the case.
William Hutchinson deposes that about a week before the April Term of Guilford County Court succeeding this transaction he heard Thompson say either "that he had let Howlett have a hundred dollars to redeem his land from Johnston," or "that he had paid one hundred dollars to Johnston for Howlett's land"; that Howlett was to repay the money at the court, but he expected it would not be done, but that it would answer if repaid by the next succeeding court; and that at the same time he stated either that he had a deed or was to have a deed for the land, to hold until the money should be repaid him.
Mary Bevil deposes that she has often heard Thompson say that he had lent Howlett $100 to redeem his land, and that she has heard him tell Howlett if he would pay fifty dollars he (Thompson) would wait for the residue until Howlett could make it.
In addition to this testimony the vast disproportion between the value of the land and the price alleged to have been paid for it by Thompson is a very important consideration. There is, indeed, no precise testimony as to its value, but we must take it to have been worth at least the sum for which it was sold to Bevil. Now, independently of Johnston's express declaration on oath, it cannot for a moment be supposed that he would have conveyed the land to Thompson at one-forth of its value had he not regarded Thompson as taking the title but as a security for the money advanced for Howlett. Towards the latter he felt himself under the obligations of humanity and honor to show indulgence, but Thompson had no claims on him for a sacrifice of interest. It appears, also, from an exhibit filed by the defendant that after making the pretended absolute purchase on 7 January, 1819, Thompson took no step whatever to assert a title to the land until more than two years thereafter, during all which time Howlett continued to occupy and (375) enjoy it. On 17 October, 1821, he sued out a declaration in ejectment on the several demises of Johnston and himself, which demises are laid as of 12 December, 1820; and having obtained judgment at November Term, 1822, sued out a writ of possession. Armfield, the deputy sheriff whom he accompanied when going to execute this writ, has been examined for the defendants and proves that at the time the note for the year's rent was given Howlett's wife was lying sick, and Howlett was apprised before the note was given that they had come to put him out of doors. And from that day Howlett was permitted to enjoy the land without paying any rent or securing the payment of any rent, notwithstanding the belief of Thompson that he was unable to pay, until after the land was sold to Bevil.
It is exceedingly difficult to reconcile this conduct with that of the undisputed legal and equitable proprietor of the land; but it is reconcilable with that of one who, while he believed he had contrived to secure the title to himself, was conscious that this had been done at the expense of fair claims on the part of the occupant.
One deposition has been taken for the purpose of proving notice in Bevil previous to his purchase. But we deem it unnecessary to examine into the effect of this testimony or into the credit of the witness. There is no proof whatever of the payment of the purchase-money, or of any part of it, by Bevil; and even of that part which alone his answer alleges to have been paid the answer does not aver the payment to have been made before the notice, which he admits that he obtained of Howlett's claim shortly after the purchase.
The plaintiffs are entitled to have an account taken of the amount of money which may be due to the executor of Thompson for the principal and lawful interest of the $100 advanced for their ancestor on 7 January, 1819, deducting the payments made thereon, if any, whether as payments of interest or principal; and to be let in to redeem the land as having been in effect mortgaged for the repayment thereof. There should also (376) be an account of the costs incurred in the two suits at law by the parties respectively, showing by whom the same have been paid or who remain liable for the payment thereof; and there must also be an account of the rents and profits received by any of the parties defendant since the dissolution of the injunction.
PER CURIAM. Ordered accordingly.
Cited: Blackwell v. Overby, 41 N.C. 45; Durant v. Crowell, 97 N.C. 373; Porter v. White, 128 N.C. 44.