Court Opinion

ID: 6695177
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:48:01.150334+00
Date Added: 2024-06-11T16:01:12.759023
License: Public Domain

BeowN, J.
The plaintiffs and the defendant R. M. Tuttle were tenants in common of five tracts of land in Transylvania County, containing some 3,200 acres. R. M. Tuttle owned an interest of one twénty-seventh and was the general agent of his cotenants, his brothers and other near relatives, in the management and control of the land. 'In April, 1901, R. M. Tuttle- caused a special proceeding to be commenced in the Superior Court of Transylvania County for the purpose of *487selling said lands for partition, to which bis cotenants were made copetitioners and parties of record. A decree of sale was duly entered, and E. M. Tuttle was appointed commissioner to make tbe sale. On 7 August, 1901, the lands were sold, and bid off by Welch Galloway, Esq., for the sum of $2,100, and, upon recommendation of the commissioner, the sale was confirmed. On 10 September, 1901, said Galloway assigned his bid to E. H. and S. L. Tuttle, sons of E. M. Tut-tle, who, in turn, transferred the bid to O. E. and L. E. Oor-pening, to whom the commissioner, E. M. Tuttle, executed a deed,-in consideration of $2,100 purchase money, on 22 December, 1902. On 22 February, 1906, the plaintiffs commenced this action to set aside said special proceeding and the sale and deed made in pursuance thereof, upon the ground of fraud, and to convert the defendants Oorpening into trustees for their benefit.
1. On the trial the defendants tendered certain issues and duly excepted to those submitted. We think the issues submitted fully present every phase of the controversy. The exact form of the issues is immaterial, if, under them, each party has an opportunity to present evidence of the facts relied upon. The issues submitted in this case arise upon the pleadings and intelligibly present to the jury the contentions of the parties. Shoe Co. v. Hughes, 122 N. C., 296. The true test is, Did the issues afford the parties opportunity to introduce all pertinent evidence and apply it fairly ? Black v. Black, 110 N. C., 398; Pretzfelder v. Insurance Co., 123 N. C., 164. Measured by that test, the issues are sufficient. The form of the first issue rendered it unnecessary to submit the separate issue tendered by the defendants Oorpening, as to whether they were bona fide purchasers for value, and without notice of the alleged fraud. Under the first issue his Honor submitted that contention clearly to the jury, when he charged them that, “If the bid was assigned to the Oorpenings in good faith *488on tbeir part, and they had no notice of the fact of the bid being by Galloway for K. M. Tuttle, then their title is good.”
The theory upon which the plaintiffs rest their case against the Corpenings, as embodied in that issue, is that they were participants in a legal fraud, perpetrated upon his cotenants, these plaintiffs, by E. M. Tuttle. Failing to establish that, they would not be entitled to recover.
It is not necessary, in order to set aside the deed and decrees of sale herein impeached, that the Corpenings should be convicted of a crime, or of a dishonorable transaction, as such terms are commonly understood. E. M. Tuttle occupied a fiduciary relation to his cotenants, both as their general agent in the control and management of the land and, also, as a commissioner appointed by the court to make sale of it. It is elementary that he could not lawfully purchase at his own sale, nor procure anyone else to do it for him. Tie could not lawfully 'speculate in the land for his own benefit, nor do any other act detrimental to the interest of those whom he had undertaken to serve. ITis duty was to make the land bring the best price obtainable, and to act for plaintiffs and advance their interests. 'If the Corpenings, knowing the relation which Tuttle, as commissioner in the special proceeding, bore to the parties thereto, aided and abetted him in purchasing the land for himself and his sons, and for their joint benefit, with a view to speculate in it on joint account, they would be particeps criminis in a legal wrong, however ignorant they may have been of the unlawful character of such transactions. If such facts are true, they could not possibly be classed as “innocent purchasers,” under any known definition of the term. They would be guilty, at least, of constructive fraud, such as the law infers from certain circumstances, regardless of actual dishonesty of purpose. In aiding and abetting the commissioner trustee in committing such fraud upon his fiduciaries, they could not occupy any better position than the commissioner himself.
*489Tbat brings ns, naturally, to tbe consideration of tbe sufficiency of tbe evidence, a point raised by tbe motion to nonsuit, and argued witb mncb earnestness by tbe learned counsel for defendants.
Tbe nature of fraud is sucb tbat it can seldom be established by direct or positive proof. In tbe nature of things, resort must be bad to the evidence of circumstances. It is now well settled tbat sucb evidence will support the finding of fraud, if it is sufficient to reasonably satisfy tbe mind of tbe Judge or jury, as tbe case may be. Rea v. Missouri, 17 Wallace, 532; Reed v. Noxon, 48 Ill., 323; Sears v. Shafer, 6 N. Y., 268.
As to the evidence against tbe defendant E. M. Tuttle, there can hardly be a serious controversy as to its sufficiency. It is most plenary. It tends to prove tbat be was tbe trusted agent of bis cotenants, in charge of these lands and fully acquainted witb their character and value, and tbat, taking advantage of bis position, be formed the design to acquire these lands for bis own benefit, at much less than their real value; tbat, without consrdting some of tbe owners, be caused tbe special proceeding to sell for partition to be instituted, and tbat be kept them in ignorance of tbe pending sale. ILe bad himself appointed commissioner, although a party to the proceeding, so tbat be could control tbe sale and easily secure its confirmation, if desirable in bis own interest to do so. He procured Galloway (who in this matter appears to be innocent of any wrongful purpose) to bid off tbe land for bis (Tuttle’s) benefit, and be negotiated tbe transfer of tbe bid, through bis two sons, to tbe Corpenings, in order tbat be and bis sons might take advantage of a “good thing” and share in tbe profits, and, as a part thereof, be and bis sons received a lot of machinery and tbe surrender of a thousand-dollar note due by tbe father. Tbe evidence offered by plaintiffs tends, we think, to establish sucb facts.
*490AVhile the evidence competent as against the Oorpenings is not of the same probative force as that against Tuttle, it is fully sufficient to have warranted his Honor in submitting the question to the jury as to their wrongful complicity with Tut-tle, the commissioner. There is evidence tending to prove that they are nearly related by marriage, and that the two sons of R. M. Tuttle are the nephews of the Oorpenings. That they knew of the fiduciary relation which R. M. Tuttle occupied towards plaintiffs can scarcely be denied, for they took their title deed from him as commissioner and paid him the sum for which the land was bid off. There are facts and circumstances in evidence from which a jury might well infer that Galloway had bid off the land for R. M. Tuttle’s benefit and at his request, and that the Oorpenings must have been aware of it. From these facts and circumstances, a more important inference is warranted, to the effect that an understanding existed between the Oorpenings and their two nephews, looking to a division of profits, in which they and their father were to share. There is evidence tending to prove that, on account of this venture, the Tuttles received from the Oorpenings a lot of machinery and the note of R. M. Tuttle, which he owed, for $1,000. Declarations of one of the Oorpenings to ML IT. Tuttle tend to show that R. ME. Tuttle was believed by them to be guilty of some breach of trust in this matter, which might necessitate his leaving for Canada. The Oorpenings employed to represent them the same attorney who bid off the land for Tuttle; and, in addition, there is some evidence of the withholding of certain deeds belonging to plaintiffs, and necessary to their chain of title, with a view to shutting off suit, indicating a purpose, if possible, to prevent investigation. There is evidence tending to prove that $2,100 is a very inadequate price for the land; that there is some 3,200 acres of it, worth, in the estimate of some witnesses, from six to fifteen thousand dollars, and that the Oorpenings were acquainted with its true value.
*491There was much evidence submitted by defendants in rebuttal and tending to prove that the' Oorpenings acted in good faith in the purchase of the land.
The charge of his Honor appears to us to have put the issues before the jury fairly and clearly, and, while it may not be entirely free from error, it is of such a character as is evidently harmless, and does not constitute reversible error, so as to warrant us in granting a new trial upon the first issue.
In charging that the burden of proof was on the plaintiffs to satisfy the jury by a preponderance of the evidence, the Judge committed no error. This is not an action to convert the defendants into trustees because they purchased the legal title in trust for plaintiffs, or to correct a mistake in a deed, or like the cases where the law requires much more than a preponderance of evidence. The plaintiffs seek to set aside the sale, deed and decrees, upon the ground that they are fraudulent and were made at the instance of E. M. Tuttle, the commissioner, with purpose and intent to defraud plaintiffs of their property. “It is not, however, necessary, in order to establish the fraud, that direct, affirmative or positive proof of fraud be given. In matters that regard the conduct of men, the certainty of mathematical demonstration cannot be expected or required. Like much of human knowledge on all subjects, fraud may be inferred from facts that are established.” Kerr on Fraud and Mistake, p. 384. The distinction between that class of cases wherein clear, cogent and convincing proof is required and that class where a preponderance of the evidence is sufficient is clearly drawn in the learned opinion of Mr. Justice Avery in Harding v. Long, 103 N. C., 1. The Encyclopedia states that, according to the overwhelming weight of authority, fraud need not be established beyond a reasonable doubt, but that “a preponderance of the evidence, as in any other civil case, is sufficient, provided the proof is clear and strong enough to preponderate over the general presumption that men are honest and do not *492ordinarily commit frauds, and reasonable enough to satisfy the understanding and conscience of the Judge or jury.” If it does, then it is sufficient, both at law and in equity.
2. The remedy of the plaintiffs is the one they have pursued, and not by motion in the cause, as contended by defendants. The Corpenings are no parties to the special proceeding, and, if they were, the proper method to impeach judicial proceedings for fraud is by a civil action, and not by motion. Peterson v. Vann, 83 N. C., 118; McLaurin v. McLaurin, 106 N. C., 334.
3. His Honor charged the jury that, “If the said Corpen-ings took as trustees, the statute of limitations would not bar the plaintiffs from bringing action until ten years after the rendition of said decree in said special proceeding.” In this we think his Honor mistook the character of the action and the relation of the Corpenings to the plaintiffs. There was never any contractual relation between them, and the Corpen-ings have never voluntarily assumed any relation of trust or confidence towards plaintiffs. The legal title has never vested in them by the voluntary act of the plaintiffs, but solely in consequence of the defendant commissioner’s own wrongful and tortious acts. They are trustees ex maleficio, not ex con-tractu. The legal title which vested in the Corpenings by virtue of the sale, deed and decree of confirmation has been destroyed and made void, ab initio•, by the finding of the jury and the decree of the court. Consequently, there is no legal title to attach a trust to, because, unless'this action is barred by the statute, all those proceedings are void and the title never vested. The case therein differs materially from that class of Gases where a trustee or mortgagee, holding the legal title, buys at his own sale, has the title conveyed through another to himself, and takes possession. In such cases the legal title has never been out of him and he has continued to hold it in trust during his occupancy, and a mortgagor or *493cesíui que trust may bring bim to account witbin ten years. Bruner v. Threadgill, 88 N. C., 366; Jones v. Pullen, 115 N. C., 471.
Tbe gravamen of tbe complaint is tbat tbe' sale, decree and tbe deed were made by reason of a fraudulent agreement to deprive tbe plaintiffs of tbeir property, and are, therefore, void. It follows tbat tbe action must be instituted witbin three years after actual discovery of tbe fraud by plaintiffs. Eevisal, sec. 395, subsec. 9; Day v. Day, 84 N. C., 408. This section originally applied to cases of fraud, cognizable only in a court of equity under tbe former system, which would embrace this case. By amendment, tbe scope of tbe section has been extended to all cases of fraud cognizable at law or in equity. Tbe statute only runs against those not under disability, and as to those only from tbe date of tbe discovery of tbe fraud.
Tbe fact tbat tbe commissioner made a deed to tbe Corpen-ings on 22 December, 1902, if registered, would not even put tbe plaintiffs upon inquiry, much less fix them with notice tbat a fraud bad been committed, as there is no evidence of tbat upon tbe face of tbe deed. Tbe statute having been pleaded, tbe plaintiffs should reply, setting out, by way of avoidance, the time when they aver tbe fraud was discovered, tbe burden being upon them to prove the facts necessary to repel tbe statute. Stubbs v. Motz, 113 N. C., p. 458. Tbe plaintiffs will be allowed to file such replication, to tbe end tbat proper issues may be submitted to tbe jury bearing upon tbe plea of tbe statute of limitations.
4. Tbe verdict in this case was rendered on Sunday morning, in open court, and recorded. By consent of counsel, tbe court continued tbe motion for judgment, to be beard at Ashe-ville on 14 September, 1906, when an.d where judgment was signed. Defendants excepted. There is no merit in tbe exception. Tbe rendition of tbe verdict on Sunday was valid. Rodman v. Robinson, 134 N. C., 507.
*494We have examined with care all tbe other assignments of error not herein commented on, and think that they are without merit.
As the two issues are distinct and not at all connected, we award a new trial on the one issue which relates to the statute of limitations.
Let the costs of this Court be equally divided between the plaintiffs and defendants.
Partial New Trial.