Court Opinion

ID: 6695252
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:48:24.118999+00
Date Added: 2024-06-11T16:01:12.933839
License: Public Domain

Hoke, J.,
after stating the case: The alleged deed recites a valuable consideration paid by defendant Sam Gaylord, the grantee in the deed; contains a habendum, “to have and to hold the said tracts of land, free and clear of all privileges and appurtenances thereunto belonging, to the said Sam M. Gaylord *226and bis heirs in fee simple, forever,” and also the covenants, “that the grantor is seized of the premises in fee simple and hath the right to convey the same; that they are free from all encumbrances, and that the grantor will warrant and defend the title to the same against the lawful claim of all persons,” etc.; and the authorities are to the effect that in a deed of this character, giving on the face clear indication that an absolute estate was intended to pass, either by the recital of a valuable consideration paid or by an express covenant to warrant and defend the title, no trust would be implied or result in favor of the grantor by reason of the circumstance that no consideration was in fact paid. Dickenson v. Dickenson, 6 N. C., 279; Squire v. Harder, 1 Paige Chan., 494; Hogan v. Jaques, 19 N. J. Eq., 123; Lovett v. Taylor, 54 N. J. Eq., 311; Jackson v. Cleveland, 15 Mich., 94. And while the opinion in Dickenson v. Dicken-son, supra, has been so far modified in Barbee v. Barbee, 108 N. C., 581, as to permit proof that in fact no consideration was paid or that the same was different from the recital, this modification was on a question not presented here, and in no way affects the principle that in a written deed purporting to pass to the grantee an absolute title the recital therein of a valuable consideration paid will prevent an implied or resulting trust in favor of the grantor arising from the lack of consideration. Thus Shepherd, J., for the Court, delivering the opinion in Barbee v. Barbee, 108 N. C., at p. 584, after saying that while the trend of our State decisions heretofore had favored the position that the recital in a deed of a valuable consideration paid should be held to be an estoppel for all purposes, yet “The overwhelming weight of American authority is in favor of treating the recital as only prima facie evidence of payment as in the case of a receipt, the only effect of the consideration clause being to estop the grantor from alleging that the deed was executed without consideration in order to prevent a resulting trust.”
This doctrine of a trust or use resulting to a grantor when there was no consideration paid was a rule of the common law incident chiefly to conveyances of feoffment, and never obtained when there was a contrary declaration made by the grantor at *227the time of the conveyance, either oral or written, and in the rare instances where the doctrine is applicable to written instruments it is neve^ allowed to prevail when there is a contrary intent clearly expressed in a written deed. Thus, in Jackson v. Cleveland, supra, Campbell, J., said: “Accordingly, either the mention of a consideration, although nominal, or the declaration of uses will prevent a resulting trust and confirm the title in the feoffee. A court of chancery has never ventured against the expressed will of the donor appearing on the face of the deed to take the use from the donee and give it back to the donor. In other words, uses annexed to a perfect gift, however gratuitous, were enforced.”
And Walton, the Chancellor, in Squires v. Harder, supra, said: “No resulting trust can be raised or effectuated to the express terms of a conveyance and in fav.or of a grantor. In this case the complainants have given an absolute conveyairce, with warranty; they are therefore estopped from alleging that a part of the consideration was received in their own money.”
Nor do we think it permissible upon the evidence that the plaintiffs should engraft a parol trust on a deed of the kind presented here by express declaration or agreement. The seventh section of the English Statute of. Frauds, forbidding “the creation of parol trusts or confidences of lands, tenements or heredit-aments, unless manifested and proved by some writing,” not being in force with us, and no statute of equivalent import having been enacted, these parol trusts have a recognized place in our jurisprudence and have been sanctioned and upheld in numerous and well-considered decisions. Avery v. Stewart, 136 N. C., 436; Sykes v. Boone, 132 N. C., 199; Shelton v. Shelton, 58 N. C., 292; Strong v. Glasgow, 6 N. C., 289. Upon the creation of these estates, however, our-authorities seem to havei declared or established the limitation that except in cases of fraud, mistake or undue influence, a parol trust, to arise by reason of the contract or agreement of the parties thereto, will not be set up or engrafted in favor of the grantor upon a written deed conveying to the grantee the absolute title, and giving clear indication on the face of the instrument that such 'a title was intended to pass. Dickenson v. Dickenson, supra; Bonham v. *228Craig, 80 N. C., 224; Jackson v. Cleveland, supra, reported also in 90 Amer. Dec., 226, with, a full and learned note on this phase of the doctrine; Dean v. Dean, 6 Conn., 285; Cain v. Cox, 23 West Va., 594, 605; Dyer v. Dyer, White and Tudor Leading Oases in Equity (Yol. 1, part 1), pp. 314, 344, 354, 355, 356, etc.
In this last reference will be found a comprehensive and very satisfactory treatment of this question in the notes by the American editor, in which the writer refers to the North Carolina decisions as establishing the proposition stated, and, among other things pertinent to the inquiry, says: “The second head (that presented here, when the deed purports to be for a full and valuable consideration but is in fact gratuitous) is also capable of subdivision. The trust may be set up between the original parties or in favor of a third person. In the former instance the objection is twofold, under the provisions of the Statute of Frauds, and that the evidence contradicts a writing under a seal. See Porter v. Mayfield, 9 Harris, 264. The trust cannot be alleged consistently with the deed, because it is impossible to believe that the grantee gave a full and valuable consideration forthe privilege of holding the land for the use of the grantor. / A deed may be regarded in two aspects: In one it is'the means by which the title is conveyed; in the other, a memorandum of the terms and conditions of the transfer. If a man deliberately executes a sealed instrument, reciting that he has transferred the right of ownership for value received, he should not be permitted to put the grantee to the proof of that which has been established with the 'Utmost solemnity known to the law. I This is the more true because such a disguise is generally” adopted for some sinister purpose, to defraud creditors or deprive'a wife of dower. See Murphy v. Hubert, 4 Harris, 50. If there be any instance to the contrary, it is better that the grantee should suffer for his folly in putting the transaction in a form contrary to the truth than that the stability of titles should be endangered by rendering it impossible to frame a conveyance that shall be secure from attack. Leman v. Whetlet, 4 Russell, 323; Porter v. Mayfield, 9 Harris, 264, post; Hogan v. Jaques, 4 C. E. Green, 123. If it be proved that the deed *229was misdrawn through aeeideut or fraud, or that it was procured through undue influence (Legenfelter v. Richey, 8 P. F. Smith, 485), a trust may arise dehors the instrument; but this depends on other principles.”
The law was so held in Bogett v. Hildreth, 103 Mass., 484, where Wells, J., used the following language in delivering judgment : “As to the share of Lucinda, conveyed by her to Sophro-nia, without consideration, and upon an agreement to reconvey or hold it for the benefit of Lucinda, no valid trust arises from that transaction. Walker v. Locke, 5 Cushing, 90. A voluntary deed is valid between the parties as a gift, and does not raise any trust in favor of the grantor. It is otherwise with a feoffment, and perhaps in other conveyances, wherever there is no declaration of the uses or the consideration is open to inquiry in determining the effect of the deed between the parties and their privies. Cruise Dig. (Greenleaf Ed.), title 11, ch. 4, p. 16, and title 32, ch. 2, p. 38. In this Commonwealth the consideration is not open to such inquiry. Supposing the deed in question to have been in the common form, the recital of a consideration and the declaration of the use to the grantee and her heirs in the habendum, are both conclusive between the parties and exclude any resulting trust to the grantor. Squire v. Harder, 1 Paige, 494; Hill on Trustees, 112; 2 Story’s Eq., p. 1197; Philbroke v. Delano, 29 Maine, 410; Farrington v. Barr, 36 N. H., 86; Graves v. Graves, 9 Foster, 129.” See Haigh v. Reye, 4 L. R., Ch. Appeals, 473.
It was held in like manner in Wilkinson v. Wilkinson, 17 N. C., 378, that the recital of a valuable consideration is conclusive on the parties and those claiming under them, unless it is shown to have been introduced by mistake or fraud. Gaston, J., said: “The plaintiffs here allege that the defendant caused this consideration of value to be untruly inserted in the deed, either without the knowledge of the grantor or by availing himself of the misconception of the grantor, that it was a necessary form to give the instrument validity. The parol evidence is admissible to support this charge; for if it be made out, then the instrument must be considered as if it had truly been what the contracting parties intended it to be. But it is admissible for this purpose only.”
*230Tbe main current of decision is in tbis direction and establishes that a trust cannot be fastened on an absolute deed by evidence that the grantee paid no consideration or that he agreed to take and hold 'the premises from the grantor. Hutchinson v. Tindall, 2 Green., ch. 357; Robson v. Harwell, 6 Ga., 589; Squire v. Harder, 1 Paige, 494; Rathbun v. Rathbun, 6 Barb., 98; Philbroke v. Delano, 29 Me., 410; Graves v. Graves, 9 Foster, 129; Leman v. Whetley, 4 Russell, 423. In Squire v. Harder the complainants sought to establish a resulting trust in land which they had conveyed with warranty, and were held to be estopped from showing that the grantee had. only a life interest in the purchase money and that upon her death it would have belonged to them.
Thus it will be seen that, while in North Carolina, the seventh section of the English Statute of Frauds not having been enacted here, parol trusts will be upheld in given instances in favor of third persons, as in Shelton v. Shelton, supra, or even creditors of the grantor, as in Shields v. Whitaker, 82 N. C., 516, such trusts will not be permitted or established here by reason- of cotemporaneous parol contracts and agreements between the parties when the same are in direct conflict with the expressed stipulations of the written deed and the entire purport of the instrument. In such case and to that extent the doctrine of parol trusts is subordinated to another well-recognized principle of law, that when parties have formally and explicitly expressed their entire contract, in writing, the same shall not be contradicted or changed by ccStemporaneous stipulations and agreements resting in parol. This position is well brought out and supported in the two decisions cited here: Dickenson v. Dickenson, supra, and Strong v. Glasgow, supra. In Dickenson v. Dickenson it was held: “Where an absolute deed is made, parol evidence is not admissible to prove that the deed was made under any special trust (for the grantor), and that a valuable consideration was not paid.” And, a few pages further on, in Strong v. Glasgow, a parol trust was engrafted or enforced where A. bought the property of B. at a sheriff’s sale and took a conveyance of same under agreement with B. to hold the prop-*231ertj for bim. “For,’’.said tbe Court, “tbe complainants, not being parties to tbe deed, were at liberty to establish tbe original contract.”
Tbe same position is very well expressed by Green, J., in Cain v. Cox, supra: “In tbis state of facts, wbat was tbe operation of tbis deed of 1854, whereby Rezin Cain conveyed tbis tract of land to bis sisters upon a parol trust for bis own use? In Troll v. Garter, 15 W. Va., 578, tbis Court decided: ‘If land be conveyed0 by a deed of bargain and sale for a merely nominal consideration, tbe courts of equity will not receive parol evidence to prove that tbe grantee agreed to bold tbe land for tbe grantor’s use, as tbe deed in such a case must have been made for tbe express purpose of divesting tbe grantor of bis title and vesting tbe same in tbe grantee. Such parol evidence, if admitted, would defeat tbe very purpose for wbieb tbe deed was made, and must be regarded as contradicting tbe deed, and tbe general rule of evidence requires in such case the rejection of parol evidence.’ ”
And in Adams’ Equity, 28, it is said: “Tbe declaration of trust by' tbe parties is not, independently of tbe Statute of Frauds, required to be made or evidenced in any particular way. And, therefore, previously to that statute, a trust, whether of real or personal property, might be declared either by deed, by writing not under seal or by word of mouth, subject, however, to the ordinary rule of law, that if an instrument in writing existed it could not be explained or contradicted by parol evidence.”
There are decisions to tbe contrary in other jurisdictions, and no doubt like expressions in some of our own cases. Thus, in Hall v. Livingston, 3 Del. Chan., 348, tbe chancellor, in a learned and elaborate opinion, contended that a parol trust could be set up against tbe grantee in a deed absolute on its face and without any allegation in tbe bill that tbe alleged trust was omitted by fraud or mistake. In tbis case it will be noted that in tbe first instance tbe trust declared was in favor of certain creditors of tbe grantor by lien and otherwise, and tbe decision might be reconciled on tbe principle that when there has been a severance of tbe legal and equitable estate by a valid *232agreement and a trust declared for a specific purpose the remainder of the interest not required for the purpose indicated usually results to the grantor. Bond v. Moore, 90 N. C., 239.
There are also decisions to the effect that when there is a contract or agreement to hold in trust for the grantor or other parties to the deed, and in direct contravention of the written provisions the refusal to carry out the oral agreement would of itself constitute such a fraud that a trust could be engrafted in the deed ex malificio. Some of the cases so hold in England, though the Statute of Frauds, forbidding oral trusts, prevails in that country. This position, however, is clearly untenable in-those .cases where the agreement itself cannot be established by competent testimony. The better-reonsidered authorities are to the effect that there can be no actionable fraud arising from breach of an agreement, without more, when the law forbids that the agreement should be set up or established. Wills v. Robertson, 121 Iowa, 381; note to Jachson v. Cleveland, supra, 90 Amer. Dec., 266.
And we are of opinion that the doctrine as it obtains with us, and as heretofore stated, making,' as it does, for the stability of titles which rest so largely on written instruments, and well supported by authority, should prevail, and, applied to the facts presented here, would forbid, that a trust should be declared or established in plaintiffs’ favor in case the deed from Eben-ezer to Sam Gaylord had been fully executed. "While we hold the opinion as indicated, and have expressed the views of the Court thereon at some length, because of the importance of the question, and of the suggestions that the claim of plaintiffs could in any event be sustained under the doctrine of parol trusts, we do not approve the ruling of the trial judge in dismissing the case as on judgment of nonsuit; for on the allegations and evidence we are further of opinion that an issue is presented as to whether the deed from Ebenezer to Sam Gaylord was. in fact ever delivered. It is a familiar principle that the question of the delivery of a deed or other written instrument is very largely dependent on the intent of the parties at the time and is not at all conclusively established by the manual or physical passing of the deed from the grantor to the grantee. As said by this Court *233in Waters v. Annuity Co., 144 N. C., 670, “Tbe fact tbat a policy in a given case bas been turned over to tbe insured is not. conclusive in tbe question of delivery. Tbis matter of delivery is very largely one of intent, and tbe physical act of turning' over a policy is open to explanation by parol evidence.” And tbe authorities are uniformly to tbe effect tbat, in order to be a valid delivery, tbe deed must pass from the possession and control of tbe grantor to tbat of tbe grantee, or to some one for tbe grantee’s use and benefit, with tbe intent at tbe time tbat 'the title should pass or tbe instrument become effective as a conveyance. And tbis requirement tbat tbe intent to pass tbe title shall exist at. tbe time, as applied to the facts presented here, is in no way affected by tbe doctrine very generally recognized, tbat a deed cannot be delivered to a grantee by way of escrow, for, before a written instrument can become an escrow, tbe same incident must exist, “tbat tbe same should pass from tbe control and possession of tbe grantor with tbe intent at tbe time tbat it should become effective on tbe happening of a given event.” Thus, in James v. Vanderhayden, 1 Paige, 385, it was held, tbat “When a bond, mortgage or deed was delivered to a .third person, to be kept by him during tbe pleasure of tbe parties, and subject to their further order, tbe papers in question were not escrows, and' tbat tbe third person was a mere depository.” Tbis doctrine of escrows, therefore, as stated, in no way affects tbe question, and in tbe case before us, if tbe instrument having been prepared and signed was then banded over by Eben-ezer to Sam Gaylord, not with tbe intent tbat tbe title should pass, but with tbe intent tbat Sam Gaylord should bold tbe same as a depository or subject to tbe control and call of Ebenezer, there was no delivery, and tbe title to tbe property descended to tbe plaintiffs, tbe children and heirs at law of Ebenezer, subject to tbe dower of bis widow.
Tbe views we have expressed will be found to accord with well-considered decisions in tbis and other jurisdictions; notably, Fortune v. Hunt, 149 N. C., 358; Tarlton v. Griggs, 131 N. C., 216; Roe v. Lovick, 43 N. C., 88; Wilson v. Wilson, 158 Ill., 567; Porter v. Woodhouse, 59 Conn., 568. In Tarlton v. Griggs, supra, Cook, J., delivering tbe opinion of tbe Court, *234said: “There must be an intention of tbe grantor to pass tbe deed from bis possession and beyond bis control, and be must actually do so witb tbe intent tbat it shall be taken by tbe grantee or by some one for him. Both tbe intent and act are ■necessary to a valid delivery. Whether such existed is a question of fact to be found by tbe jury. Floyd v. Taylor, 34 N. C., 47. But if tbe grantor did not intend to pass tbe deed beyond bis possession and control, so tbat be would have no right to recall it, and did not do so, then there would be no delivery in law, tbe facts of which must likewise be found by tbe jury.” And, further, in tbe same opinion, quoting witb approval from tbe opinion of Roe v. Lovick, supra: “But when tbe grantor parts witb tbe possession of tbe deed, showing an intention tbat it should not then become a deed, but delivered merely as a depository and subject to' tbe future control and disposition of tbe maker, then tbe delivery would be incomplete and no title would pass.”
And in Porter v. Woodhouse, supra, Andrews, C. J., said: “Tbe delivery of a deed implies a parting witb the possession and a surrender of authority over it by tbe grantor at tbe time, either absolutely or conditionally; absolutely, if tbe effect of tbe deed is to be immediate and tbe title to pass or tbe estate of tbe grantee to commence at once; but conditionally, if tbe operation of tbe deed is to be postponed or made dependent on tbe happening of some subsequent event. A conditional delivery is and can only be made by placing the deed in tbe bands of a third person, to be kept by him until tbe happening of tbe event upon tbe happening of which tbe deed is to be delivered over by tbe third person to tbe grantee. But it is an essential characteristic and an indispensable feature of its delivery, whether absolute or conditional, tbat there must be a parting witb tbe possession of tbe deed and witb all power and control over it by tbe grantor for tbe benefit of tbe grantee at the time of delivery. Prestman v. Baker, 30 Wis., 644. Tbe delivery of a deed is as essential to tbe passing of tbe title to tbe land described in it as is tbe signing of it or tbe acknowledgment. It is tbe final act, without which all other formalities are ineffectual. To constitute a delivery tbe grantor-must part witb tbe legal pos*235session of the deed and of all right to retain it. The present and future dominion over the deed must pass from the grantor.”
Nor is the objection available that there is evidence tending to show that it was the purpose and motive of Ebenezer in this transaction to put his property in such a position that his then wife could not successfully establish a claim upon the property in case of expected litigation between them. It is an undoubted principle that a court will not lend itself to establish a right growing out of a fraudulent transaction, a wholesome principle that has found expression in the maxim, ex malificio non oritur contractus; but this principle only applies when it becomes necessary to invoke the aid of the court to establish or assert the right arising by reason of such a transaction, and does not obtain when the right otherwise exists. See York v. Merritt, 80 N. C.,285. If there was no delivery of the deed in question, the title never passed from Ebenezer, and the plaintiffs, his children, whether as devisees or heirs at law, can assert their claim by reason of the title that was originally his. It may be well to note that while the testimony touching the transaction could not have been admitted to establish a' right or claim, as stated, when otherwise relevant it may still be received on the question of delivery.
From what has been said, it follows that the order of nonsuit will be set aside, and the 'cause will be submitted to the jury on some determinative issue involving the question as to whether the deed under which defendant claims was turned over to him with intent that the title should pass, or was the same to be held by defendant as a depository and subject to the control and call of Ebenezer, the grantor.
Reversed.