Leroy v. Pasquotank & North River Steamboat Co.

80 S.E. 984, 165 N.C. 109, 1914 N.C. LEXIS 229

• Court: Supreme Court of North Carolina
• Decided: February 25, 1914
• Status: Published

Opinion

Walkee, J.,

after stating tbe case: Tbe jury having found, under proper instructions from tbe court, that plaintiff constructed tbe Newbern wbarf and himself paid for tbe same, and that tbe LeRoy Steamboat Company, or its predecessor, did. not pay for it, this being tbe main question in dispute, it follows that tbe LeRoy Steamboat Company was in possession under license or permission of plaintiff, and as defendant claims under tbe said steamboat company, it is not in a position to dispute tbe plaintiff’s right to tbe property, unless its other defenses are good and valid in law, for it cannot deny plaintiff’s title, under such circumstances, as mediately through .its assignor it acquired tbe. possession from him. Tbe principle applies to leases, licenses, contracts of purchase, or any other transaction by which possession of property is acquired from another upon an acknowledgment, express or implied, that be is tbe owner, and tbe title cannot be disputed until tbe possession so obtained is fully surrendered, it being a rule founded on a principle of honesty, which does not allow possession to be retained in violation of that faith on which it was acquired or continued, as said by Justice Dillard in Farmer v. Pickens, 83 N. C., 549. Tbe doctrine is well supported by that case and tbe following: Hartzog v. Hubbard, 19 N. C., 241; Love v. Edmonston, 23 N. C., 152; Springs v. Schenck, 99 N. C., 551; Stewart v. Keener, 131 N. C., 486, and Campbell v. Everhart, 139 N. C., 503, where the principle is fully discussed and the authorities collated. The rule applies as well to the assignee or undertenant of the person who has thus acquired the possession of the property, and to the same extent, as it does to his assignor. Stewart v. Keener, supra, and Campbell v. Everhart, supra, and cases cited on this point.

There are other reasons for holding the plaintiff to be entitled to the possession of the wharf, unless he has been estopped or his right barred, as alleged by the defendant. This is said to have been done in two ways:

First. That plaintiff’s conduct in connection with the suit of the LeRoy Steamboat Company against the Farmers and Merchants North Carolina Line makes him constructively a party thereto, and estops him to deny the title of the LeRoy Steam-, boat Company. It is true that a judgment is an estoppel upon parties and privies; but to constitute a judgment an estoppel, there must be an identity of the parties as well as of the sub- • ject-matte'r; that is, it is necessary that the parties, as between whom the judgment is claimed to be an estoppel,-should have been parties to the action in which it is rendered, or else be in privity with the parties in such former action, and, as a general rule, it is conclusive only between them. 23 Cyc., 1237; 24 A. and E. Enc. of Law (2 Ed.), 724; Armfield v. Moore, 44 N. C., 157; Owens v. Alexander, 78 N. C., 1; Wood v. Sugg, 91 N. C., 93; Dickens v. Long, 109 N. C., 165. Every estoppel must be reciprocal, that is, it must bind both parties, since a stranger can neither take advantage of an estoppel nor be bound by it. Co. Lit., 352 a; Taylor Ev., 586; Peebles v. Pate, 90 N. C., 348; Allred v. Smith, 135 N. C., 443. The bar, therefore, must be mutual to the parties in the later action.

Under this definition of an estoppel of record and the scope of its operation upon parties and privies with respect to the subject-matter in litigation, there is no reason for holding the plaintiff bound by the judgment in the suit between him and the other company. This Court said in Falls v. Gamble, 66 N. C., 455: “No estoppel.of record is created against one not a party to the record,.even though he had instigated the tres pass on account of- which, the action was brought, aided in the defense of the action, employed counsel, introduced his deeds in evidence, and paid the costs, and though he and the present defendant claimed by deeds under the present trespasser.” Speaking of this principle, now asserted by the defendánt, Chief Justice Pearson, in Falls v. Gamble, thus examines and repudiates it: “The defendant says, true, Falls is not a privy of record, but he instigated Orpe to commit the trespass, aided in the defense of the action, employed counsel and paid the costs, and Orpe read the title deed of Falls in evidence on the trial. ' Take all this to be so: how can these matters dehors constitute him a party or a privy so as to work an estoppel of record? If this be so, Falls would lose his title,'not by record or by deed, but by parol evidence, a thing never before heard of except in one case, Kennersly v. Orpe, 2 Douglass, 517, on which case Lord Fllenborough comments in this wise in Outram v. Moorewood, 3 East, 366: £As to the case of Kennersly v. Orpe, it is extraordinary that it ever should for a moment have been supposed that there could be an estoppel in such a case.’ ” He also adds that “Falls was not a party to the action, althoiigh -conducting it outside, could not be recognized by the court, and had no right of appeal.” But we need not invoke the authority of that' case, although it has been often cited by this Court, seemingly with approval.

The plaintiff did nothing which, in law, should bind him as a party to the-record in that case, and certainly nothing that prejudiced the defendant by the verdict and judgment rendered. Besides, as to this defendant, it was inter alios acta. The controversy was with the Merchants and Farmers North Carolina Line, and not with it; nor was it a party or privy to the suit, or in any degree bound by the judgment therein.

Under the principle that estoppels must be mutual.and bind only parties and privies-, and that one who is not bound by an estoppel cannot take advantage of it, the conclusion is inevitable that defendant cannot rely upon the record in that case, nor upon the conduct of the' plaintiff as working an estoppel against him.

¥e find it stated in Starkie on Ev., 332, that “When parties are not the same, one who would not have been prejudiced by the verdict cannot afterwards make use of it, for between him and a party to such verdict the matter is res nova, although the title turn upon the same j>oint.” But the titles relied on in the two cases do not turn upon the same point, and for this reason the rule, as stated by Mr. Starkie, is most strongly against the defendant. The Farmers and Merchants North Carolina Line, is not a party to this suit, nor does the defendant claim under it. Considered, therefore, from any standpoint of the law, this ¿dea of estoppel has nothing to rest upon. Allred v. Smith, supra, and cases cited therein.

But defendant contends, lastly, that the plaintiff is equitably estopped to set up any title to the wharf, as against it, whether the LeRoy Steamboat Company itself had title thereto or not, because it alleges that plaintiff, by verifying the complaint and filing an affidavit in the case between the LeRoy Steamboat Company and the Farmers and Merchants Noyth' Carolina Line, alleging ownership of the wharf in the LeRoy Company, deceived it and caused it to buy the property 'from said LeRoy Company. But plaintiff testified’ that this was done by inadvertence, if the allegation is equivalent to'an admission by him that the LeRoy Company owned the wharf, and that he did not intend to mislead any one. The jury have found, under correct instructions from the court, presenting the question to them fully and fairly, that defendant was not misled by anything that plaintiff is alleged to have done. But the argument against defendant’s contention goes far beyond this finding of the jury.

We doubt seriously if the conduct of plaintiff in respect to that suit, it being res inter alios acta, is, in law, such matter as was calculated to mislead the defendant, under the admitted circumstances, so as to bind plaintiff by an equitable estoppel. Boddie v. Bond, 154 N. C., 359. There is no sufficient evidence that he actually intended to mislead the defendant; and, again, when he discovered the nature of his former statement respecting the ownership of the wharf, which he says was drawn by counsel and inadvertently verified by him, he filed an affidavit correcting it, and alleging therein that be, and not the LeRoy Company, was the owner of the wharf; and this was notice to the defendant, as much so as the other papers in that cause. It was not necessary that the LeRoy Company should have had the entire interest or estate in the wharf in order to recover against the defendant in that case for using it without its consent. . It was quite sufficient that it had the actual possession and the right thereto under J. H. LeRoy, as it was an action to vin-'dieate such right and to enjoin the defendant from unlawfully using the wharf.

But the jury have found, as we have said, that defendant was not misled to its prejudice, and this finding completely destroys the defense, now set up, of an equitable estoppel. This we decided in Boddie v. Bond, 154 N. C., 359. This case is very much like that one in its general features, so far as the plea of an equitable estoppel is concerned. In the Boddie case we held:

“1. A party claiming title to lands only by reason of an •equitable estoppel of the other party to the action, arising from his alleged acts and conduct respecting a line between adjoining lands, must show that the acts and conduct relied on have misled and caused him loss or damage.

“2. A party seeking in his action to estop another by his acts and conduct from claiming certain lands, must show that he had been misled and prejudiced in some way; otherwise, the acts and conduct relied on would not appear to cause him loss or damage.”

What is more to the point, the Court said in the opinion: “The plaintiff made no assertion or statement of fact which has misled the defendant. She has simply conveyed a part of her land to Mrs. Miles and fixed the northern line or boundary as set out in her deed, without having any transaction or communication with the defendant. It is, therefore, nothing but just that she should be allowed to stand upon her right and assert her real title to the disputed land. The reference in the deed to the ‘northern line’ as having been agreed upon by the interested parties must be restricted in its operation to her and Mrs. Miles2 — the only parties to the deed — and its effect, as to the de fendant, is not extended beyond that produced by the other description in the deed. It works no estoppel and cannot be treated as a ratification. There is no room in this case for the contention that it amounts to either of these, so as tó give the defendant any right to the land which he did not" have before.”

Bispham (5 Ed.), sec. 282, says of this kind of estoppel: “Equitable estoppel, or estoppel by conduct, has its foundation in the necessity of compelling the observance of good faith; because a man cannot be prevented by his conduct from asserting a previous right, unless the assertion would be an act of bad faith towards a person who had subsequently acquired the right. It is the presence of this bad faith, either' in the intention of the party or by reason of the result which would be produced if he were permitted to deny the truth of his statement, that distinguishes this species of estoppel from estoppel at common law.”

There should be no estoppel in equity, or any principles of equity, unless the person who asks relief from the rigor of the law is a purchaser, in the large and liberal sense of that term, which includes all who have givén value, or changed their position for the worse, in reliance on the act or declaration of the other party, without knowledge or notice that the coñduct or statement was not what it .was represented to be. A party who has not been deceived or misled to his prejudice cannot be said, in any just or reasonable sense, to have been defrauded. Herman on Estoppel, sec. 197.

The essential elements of an equitable estoppel applicable to our case are: (1) .There must be conduct — acts, language, or silence' — 'amounting ■ to a representation or a concealment of material facts. (2) These facts must be known to the party . estopped at the time of his said conduct, or, at least, the circumstances must be such that knowledge of them is riecessarily imputed to him. (3) The truth concerning these facts must be unknown to the other party claiming the benefit of the estoppel, at the time when such conduct was done, and at the time when it was acted upon by him. (4) The conduct must be done with the, intention, or at least with the expectation, that it will be acted upon by the other party; or under suck circumstances that it is both natural and probable that it will be so' acted upon. There are several species in which it is simply impossible to ascribe any intention or even expectation to the party estopped, that his conduct will be acted upon by the ope who afterwards claims the benefit of the estoppel. (5) The conduct must be relied upon by the other party, and, thus relying, he’ must be led to act upon it. (6) He must, in fact, act upon it in such a manner as to change his position for the worse; in other words, he must so act that he would suffer a loss if he were compelled to surrender or forego or alter what he has done by reason of the first party being permitted to repudiate his conduct and to assert rights inconsistent with it. 16 Cyc., 726; 2 Pomeroy’s Eq. Jur., 805.

These, perhaps, embrace all of the constituent elements; but those thus stated may be subject to some explanation in special cases, as, for instance, that a man may be presumed to intend that which is the natural and probable consequence or effect of what he says or does. But even as they are stated most favorably for the defendant, its case is not brought within their operation. The jury have found that it had notice, or that it did not rely upon the statement, if it had any knowledge of it, or that it was not prejudiced thereby, if it did; and we think the verdict was fully' warranted' by the evidence, if there be any tending to show that defendant acted upon the allegéd representation or was misled to its prejudice thereby, when it purchased from the LeRoy Company.

What was said by this Court in Holmes v. Crowell, 73 N. C., 613, is worthy of mention, as being quite pertinent to the facts of this case:

“In order to create an estoppel in pais, it must appear:

“1. That the party knew of his title.

“2. That the other or second party did not know, and relied upon the representations so. made by the first party.

“3. That the second party was deceived; and some add-a fourth element, that the first party intended to mislead him; but it is not necessary to decide it in this case (said the Court), as all the other requirements are wanting.”

And so we say in our case, it is not necessary to set precise limits to tbe doctrine, as two, at least, of the essentials are lacking. The defendant had notice from the affidavit filed two years before he bought, as to the true ownership, and should not have been misled, and, as the jury say, was not misled; and, besides, the defendant in this case was not a party to that suit.

We have been referred by the learned counsel of defendant to Sample v. Lumber Co., 150 N. C., 161, for the principle that where both parties claim from the same source of title, neither will be permitted to deny the validity of the title so derived, and the priority of title then determines the ownership as between the parties, unless he who has the later deed can show a superior outstanding title and connect himself with it. This is a rule adopted by the courts for convenience, and is binding upon the parties, and it would apply here if the jury had found that the LeRoy Steamboat Company owned the wharf, and the plaintiff claimed under it; but they found that it was built and paid for by plaintiff, and the LeRoy Steamboat Company was in possession under him; so that the case is more like McCoy v. Lumber Co., 149 N. C., 1, cited and approved in Sample v. Lumber Co., supra, which held that when one acquired possession, or a limited interest in real property, from another, he cannot keep the possession and dispute his title. This is but the same in substance as the rule we have already stated and applied.

Counsel cited us to Pomeroy’s Eq. Jur. (Ed. of 1882), sees. 803, 804, 805, and 806, for the law as to equitable estoppels. We have recited substantially all that is there stated by Dr. Pome-roy on the question. It is true that actual or intentional fraud is not a requisite element of an equitable estoppel, but there is nothing in this case upon which fraud can be imputed to plaintiff, even implied or constructive fraud, nor do we think the defendant was justified in relying upon plaintiff’s conduct, under the circumstances as disclosed, if it really contained any fraudulent element. It was not intended or expected that defendant would be misled. Mason v. Williams, 66 N. C., 564, also cited by defendant, has no bearing on the matter, as the conduct of the party, as shown in that case, was directly misleading to the other party, who bought the property in his presence and hearing, supposing that he was not the owner, and his silence, when he was called upon to assert his claim, if he had one, was calculated to deceive and did induce the purchase, so that it' was imputedly fraudulent, if not intentionally so. lie lost his property under the maxim that “A man who does not speak when he ought, shall not be heard when he desires to speak.” ( Qui facet consentiré videtur.)

If defendant would otherwise have had the right to rely upon plaintiff’s conduct, the latter spoke and divulged his right to the wharf before the defendant bought. Nor is Bigelow on Estop-pel, pp. 147, 148, also cited, any more in point for the position that plaintiff is bound by his conduct as constructively a party of record. It refers to cases where the party whose 'conduct is alleged to have that legal effect is liable over to one who is a party and has been duly notified or vouched to come in and defend, as he is bound by some former undertaking to do, as in the instance of a covenant of warranty. Jones v. Balsley, 154 N. C., 61.

"We have considered the case somewhat at length, because each position was asserted on the one side and contested on the other with unusual zeal and ability by counsel, who have submitted to us well prepared and exhaustive briefs upon the disputed questions.

If there was any error in the other rulings, it was not material in the view we' take of the case, and certainly not sufficient to justify a reversal. But we do not concede that there was any error, but, on the contrary, our conclusion is that the legal merits of the case are with the plaintiff, and the verdict and judgment are in accordance^ with the facts -as disclosed by the evidence.

No error.