Court Opinion

ID: 6693864
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:44:22.139717+00
Date Added: 2024-06-11T16:01:10.443873
License: Public Domain

Fukohbs, J.,
dissenting: On the 16th of October, 1879, the defendant, Alspaugh, as administrator of Norwood, sold the real estate in controversy at the price of $235, at which sale the plaintiffs allege that one Tise bid off the property for the defendant. Alspaugh. This property was a vacant lot in the city of Winston at the time of the sale. And it is alleged and not denied that Alspaugh took charge *370of the property, claiming it as his own, and soon after the sale erected thereon a brick store house, and that he continued to use, rent and control the property as his own until the 8th day of January, 1894; that on the 16th day of January,'1881, the defendant, Hine, loaned the defendant, Alspaugh, $1,200 — using the exact language of the defendant, ITine, in his testimony, “I loaned that money; I did not pay him anything.” And he further says, “Al-spaugh gave note for $1,200, all I advanced to him that day.” He also says he never paid the $235 purchase money and supposes Alspaugh did, and that he supposes the matter was understood by the defendant, Alspaugh, and Tise. Hine further says in his testimony: 4‘The first debt was contracted January 16, 1881, for $1,200 for money borrowed, for which he (Alspaugh) gave me his note. He made me a deed to the post office lot, and I agreed verbally to convey it back to him when he paid this debt. The next debt was contracted February 18, 1890, for $2,000 for borrowed money.” And at this date he gave Alspaugh a bond to reconvey the property to him upon his paying the two notes, amounting to $3,200. That Al-spaugh aferwards borrowed other money of him, and he had no security for any of it except the deed dated on the 16th of January, 1881. Hine further testifies that on the 8th day of January, 1884, he and Alspaugh had a settlement, when it was ascertained that Alspaugh owed him for borrowed money and for debts he paid for Alspaugh on that day, where he was bound as surety, the sum of $6,000; that it was then agreed that he should hold the deed of 1881 and become the absolute owner of the property, and that at that time he surrendered to Alspaugh the notes he held against him and Alspaugh agreed to surrender to him the bond for title, but this was not actually delivered to the witness until a short time before the trial, *371that he charged iaterest on the debts he held against A1-spáugh, until the time of this settlement in January, 1894, and Alspaugh received the rents for the property to that time, and that he has been controlling, improving and receiving the rents since that date; that this deed of the 16th of January, 1881, was registered in August, 1893.
This, to my mind, so clearly makes this deed from Al-spaugh to Hiñe a mortgage, without a clause of defeasance, that it would seem almost unnecessary to cite authorities to show that it is. But as it is not admitted that it is a mortgage, indeed, as it is contended that it is not a mortgage, I will cite some of the authorities which, I think, sustain my position that it is a mortgage.
Where it is shown that the conveyance is a security for debt, and that was the real object of the conveyance, it is a mortgage. Bispham, Section 154.
If the conveyance is to secure a debt, it is a mortgage, whether it is absolute in form or has a clause of defeasance. 3 Pomeroy Eq. Jur., Section 1192, note 1.
An absolute deed is a mortgage if it is a security for debt. 3 Pomeroy, supra, Section 13 96.
The true test as to whether it is a mortgage, is, whether it was given as a security for debt. “Once a mortgage, always a mortgage.'’ Pomeroy, supra, Section 1193. At the time of making a mortgage, the mortgagor cannot waive his right to redeem. Bispham, Section 153. ‘ ‘Once a mortgage, always a mortgage.'’ Ana if once a mortgage, the parties cannot, by any stipulation between them, “no matter how explicit,’’ change it from a mortgage to an absolute conveyance. Pomeroy, Section 1194.
An absolute deed made as a security for money is, iu effect, a mortgage, and cannot be registered, and is void as to creditors. Gulley v. Macy, 84 N. C., 434; Gregory v. Perkins, 15 N. C., 50.
*372An absolute deed intended as a security for debt, or an indemnity for a liability, cannot afterwards be changed into an absolute conveyance. And as it is a mortgage, without a clause of defeasance, or a security for debt, it cannot be registered and is void as to creditors. Holcombe v. Ray, 23 N. C , 340.
And the mortgagor and mortgagee, or grantor and grantee (if you choose to call them so), cannot afterwards, by any agreement between them, change this deed into an absolute conveyance. They may agree that the grantee shall surrender his debts in full payment and satisfaction of the fee simple interest, and this will not change the estate into an absolute estate. And though the deed be redelivered, still the transaction will be fraudulent and void as to the creditors of the grantor at the time or before this agreement took place, by which the grantee agreed to surrender his debts and hold the deed as an absolute conveyance. Halcombe v. Ray, supra. Indeed, every phase of the case now under consideration is discussed and decided by this strong, clear, ringing opinion of Chief Justice Ruffin. And before passing upon the case now before the court we should read and consider well the opinion in Halcombe v. Ray.
The intelligent Judge who .tried this case below called this conveyance, from the defendant, Alspaugh, to the defendant, Hiñe, a “mortgage” and treated it as such, although he held that the plaintiffs were not entitled to recover. "When it gets here and is considered under the light of authorities which the court below probably did not have at hand, it is found that it cannot be sustained if it is called a mortgage. And, therefore, it is sought to sustain this transaction between Alspaugh and Hine by calling it a trust. But whether you call it a mortgage or a trust, the facts and the transaction are the same. It is still a secu-*373ritzy for debt, as said in Gulley v. Macey, supra, and as is said in every authority I have consulted during this investigation. And the diligence of counsel have furnished us none to the contrary. But suppose you call it a trust, it is a trust for the security of a debt. And how this can benefit the defendants I confess my inability to see. Trusts for the security of debts stand precisely on the same footing as mortgages — both are void as to creditors until they are registered. Code,■ Section 1254. And an absolute deed, with a secret or verbal trust for the benefit of the grantor, can no more be registered than a mortgage without a clause of defeasance, Womble v. Battle, 38 N. C., 182; Blevins v. Barker, 75 N. C., 436. But this is too plain to require argument or authority. The mortgage without the defeasance cannot be registered, because it does not show the whole transaction; in other words, it does not tell the truth. The absolute deed, with a secret or verbal trust, is incapable of being registered for the same reason; it does not tell the truth. And the deed from Alspaugh to Hines did not tell the truth. Besides, its not having a clause of defeasance, it is said it was made in consideration of §235, paid by Iline, which is not true. The defendants are endeávoring to escape the force and conclusiveness of the authorities cited by calling this deed, from Alspaugh to Hiñe, a parol trust, and to work out a defence under the doctrine enunciated in Shelton v. Shelton, 58 N. C., 292; Riggs v. Swan, 59 N. C., 118, and chat line of authorities.
The doctrine stated in these cases is not disputed, but it has no application here. The doctrine of these cases is that where A buys land and has the deed made to B, with a parol trust in favor of 0, this is good; for the reason that such conveyances are not within the Statute of Frauds and no creditors are interested. And so is this deed, from *374Alspaugh to. Hine, good as between the parties, but not good as against the creditors of Alspaugh. Nor can it be made good by registration, for the reason that it cannot be registered. And as Lord Coke w ould say, ‘ ‘herein lies the diversity” between this case and Shelton v. Shelton,.supra, and that line of cases, and brings it within the doctrine enunciated in Holcombe v. Ray, Gregory v. Perkins, Gulley v. Macey and that line of authorities.
The defendants also attempt to distinguish this case from Halcombe v. Ray, Gregory v. Perkins and Gulley v. Macey, upon the ground that Alspaugh did not have the legal title, which they say was in the heirs of Norwood. Bat if he did not have the legal title, he had bought it through Tise and had paid for it in 1880, as his report shows. And this gave him an equitable estate in the lot, and no one is interested in the legal title but Norwood’s heirs, and they are not complaining. Indeed, it must be supposed that they have ratified the sale made, and the purchase money paid seventeen or eighteen years ago, and no complaint made by them until now. This deed put the legal title in Hine, even as against Norwood’s heirs. Highsmith v. Whitehurst, at this term. But if Alspaugh only had the equitable title, he had the right to mortgage this. Bank v. Clapp, 76 N. C., 482: White v. Jones, 88 N. C., 166.
But there is another reason why the defendants cannot avail themselves of this plea, even if it could do them any good, and I do not think it could. And that is this: They are estopped to do so. The defendant, Alspaugh, cannot do so. He cannot defeat the claims of creditors, upon the ground that he is not the legal owner of the property. In fact he makes no such defence. He does not even file an answer. Hine cannot do so, as he holds under Alspaugh and agreed to reconvey to him upon Alspaugh’s paying *375him the money he had loaned him. It would be singularly strange if both Alspaugh and Hine, or either of them, should be in a better condition than they would be if Al-spaugh had owned the absolute, undisputed, legal and equitable estate in this lot. I cannot give my assent to such a proposition.
The plaintiffs put in evidence the report of Alspaugh, showing that Tise was the purchaser of the lot at the price of §235, and Alspaugh’s settlement of the Norwood estate showing that Alspaugh had charged himself with this sale and had settled for the same. And the undisputed evidence was that all the debts of the plaintiffs were made before the 8th of January, 1894, the alleged date of settlement, these debts having been made in 1891, 1892 and 1893. This being so, they were brought within the rule laid down in Holcombe v. Ray, and the plaintiffs were entitled to have the deed from Alspaugh to Hine, dated January 16, 1881, declared void as to their debts. Upon the allegations in the complaint and the admissions in the answer, the evidence of the defendant, Hine, and the undisputed evidence as to the date of the plaintiff’s debts, it was the duty of the Judge to charge the jury that, if they believed the evidence, they should find the first, third and fourth issues in the affirmative.
Faibcloth, C. J., did not sit on the hearing of this case.