Ray v. . Patterson

87 S.E. 212, 170 N.C. 226, 1915 N.C. LEXIS 376

• Court: Supreme Court of North Carolina
• Decided: December 1, 1915
• Status: Published

Opinion

WalkeR, J.,

after stating the case: We need not consider the many exceptions in the record, as we are of the opinion that the charge of the court upon the first issue, which is set out above, is erroneous. The plaintiffs sought to convert a deed absolute on its face into a mortgage, or, in other words, to correct the deed in that respect. In such cases the rule is thoroughly settled that the evidence must be clear, strong and convincing to warrant a verdict in favor of the party seeking to correct the deed. Ely v. Early, 94 N. C., 1; Harding v. Long, 103 N. C., 1; Cobb v. Edwards, 117 N. C., 253; Avery v. Stewart, 136 N. C., 426; Lehew v. Hewett, 138 N. C., 6; King v. Hobbs, 139 N. C., 171; White v. Carroll, 147 N. C., 330; Gray v. Jenkins, 151 N. C., 80; McWhirter v. McWhirter, 155 N. C., 145; Glenn v. Glenn, 169 N. C., 729. The subject is fully discussed, and tbe reasons for tbe rule stated, in Lamb v. Perry, 169 N. C., 436. Where tbe object of tbe action is to set aside a deed on tbe ground of fraud' tbe rule is different and only a preponderance of evidence is required, as will appear from tbe foregoing authorities, and Perry v. Insurance Co., 137 N. C., 402. Equity will reform a written contract or other instrument inter vivos where, through mutual mistake of tbe parties, or tbe mistake of one of them, induced by tbe fraud or inequitable conduct of tbe other, it does not, as written, truly express their agreement. Eaton Equity, sec. 618; Warehouse Co. v. Ozment, 132 N. C., 839.

It was said in Robinson v. Willoughby, 65 N. C., 520 : “A mortgage is a conveyance by. a debtor to his creditor, or to some one in trust for him, as a security for tbe debt. Whatever is substantially this is held to be a mortgage in a court of equity, and tbe debtor has a right to redeem. Coote Mort., 22; Fisher Mort., 68. It is immaterial whether the contract be in one writing or in several (Mason v. Hearne, 45 N. C., 88), and it is also immaterial (as between the parties) whether the agreement for redemption be in writing or oral; and such agreement may be implied from the attending circumstances. Of these principles, and of the circumstances which will cause a deed absolute on its face to be construed as a mortgage, numerous illustrations may be found in the treatises above cited, and in our own Reports.”

There is ample evidence shown in this record to ‘sustain the allegation of the plaintiffs that the deed executed by them to defendants, and described in the case, was intended as a mortgage or as security for the money advanced by them in the transaction, and even if, to our minds, it may appear to be clear, strong and convincing, we are not at liberty to say so, nor could the trial judge so state to the jury, as it is for the jury alone to say whether it is of that character. Lehew v. Hewett, supra. The judge is at the limit of his right when he submits the evidence to the jury with the caution that, in order to entitle the plaintiff to a verdict, it must be clear, strong and convincing, but if the jury so find it to be, then it becomes their duty to return a verdict accordingly. The law favors the position of a mortgagor, so that it has grown into a maxim that once a mortgage always a mortgage. If a transaction be a mortgage in substance, the most solemn engagement to the contrary, made at the time, cannot deprive the debtor of his right to redeem, such a ease being, on grounds of equity, an exception to the maxim "Modus- et conventio vincunt legem.” Nor can a mortgagor, by any agreement at the time of the execution .of the mortgage, that he shall lose his right to redeem if the money be not paid by a certain day, debar himself of such right, for in such a contract time will not be regarded as of its essence. Robinson v. Willoughby, supra; Mason v. Hearne, supra. If, therefore, the jury found from the facts and attendant circumstances tbat tbis deed, while absolute in form, was really intended as a mortgage, tbe plaintiffs will have the right to redeem the land as much so as if it had in form been a mortgage, for in such matters equity does not regard so much the form as it does the substance.

It may be that in giving the instruction as to the quantum of evidence required in order to justify a verdict for the plaintiff, the learned judge was misled by the form of the first issue, but we think the issue was proper in form, and tbat the substance of the inquiry embraced by it is, whether the deed was intended to be a mortgage or security for the money advanced, and this, of course, would require a correction of the deed, if the jury so find, in order to express the true intention of the parties, and, therefore, the rule as to the quantum of proof applies.

The plaintiffs contended that the verdict as to the remaining issues entitled them to judgment, but we do not think so. There is not quite enough found by the jury to permit a decree either setting aside the deed or declaring it to be only a security for the debt. There is evidence which is sufficient, in law, to justify such findings, but we cannot found a judgment of the court upon mere evidence. It must rest upon facts found by a jury or in some other method allowed by statute. Plaintiffs mainly relied upon the answers to the last two issues, which they contend establish the relation of mortgagor and mortgagee, together with the fact that the price given for the land was grossly inadequate. But we cannot think that mortgages which were acquired after the treaty, preceding the execution of the deed, had been fully made, the mortgages being held by other parties at the time of the treaty, established the relation of mortgagor and mortgagee of a kind to bring the case within the principle of McLeod v. Bullard, 84 N. C., 515 (s. c., 86 N. C., 210), and that class of cases, which declare that such “a relation is always a circumstance which creates suspicion and aids in the proof of an allegation of oppression and undue advantage, when there is gross inadequacy of price and other circumstances tending to show fraud.” McLeod v. Bullard, 86 N. C., 213, 214; Chapman v. Mull, 42 N. C., 292. The agreement between the parties, whether it be as contended by the plaintiffs or by the defendants, contemplated that defendants should take up the debts and mortgages, either for the purpose of being canceled or surrendered, if the transaction was a sale, or of being held by them until the plaintiffs had redeemed, according to their version of the treaty. But this does not prevent the retention of possession by the plaintiffs after the execution of the deed (if not satisfactorily explained), the nonpayment of rent, the failure of defendants to cancel or surrender the notes, the inadequacy of price, and any other relevant fact or circumstance from being considered by the jury in passing upon the principal question, whether the deed was intended as a mortgage, or whether the real agreement was that the defendants should advance the necessary amount of money and take up the debts and mortgages, with tbe understanding that the deed should stand as a security for the same, with the ultimate right of redemption in the plaintiffs.

But with the verdict now before us, and an error in- the charge as to the first issue, we cannot extend the relief which the plaintiffs seek. It may be regrettable that a third trial should be had, but we are constrained by the law to grant it.

New trial.