Monroe Bros. v. Fuchtler & Kern , 121 N.C. 101 ( 1897 )

In 1890 the defendants, Fuchtler Kern, and their wives, conveyed the land in controversy to Julius Slocumb in trust, to secure the payment of a debt to H. Weil Bros., and a debt to Sol. Weil, amounting in all to about $1,000. This trust deed contained the usual powers of sale, and was filed for registration and registered in 1890, though it was not indexed in the individual names of the grantors or grantee, and there was no alphabetical index of the same ever made. In 1893 the plaintiff recovered a judgment against the makers of said deed in trust for $421.91, which was docketed in Wayne County. After this judgment was docketed in Wayne County, where the land lies, the trustees sold under the power contained in said deed, and S. Weil, one of the cestui que trust in the deed, became the purchaser at the price of $1,000, and said land was alleged to be worth $2,000.

The trustee named in the deed was a clerk of H. Weil Bros., but said sale was conducted in accordance with the powers and provisions contained in the deed, and was fair and honest.

No money was actually paid at the sale, as the property did not bring enough to pay the debts secured. And the parties to whom the money was going credited the amount of the bid on their debts, and the (103) trustee made the purchaser a deed for the property so sold. Easton v. Bank, 127 U.S. 532.

This action is brought by the judgment creditor to set aside the deed from the trustee to S. Weil and to have a resale of the property, the trust debts to be first paid out of the proceeds, and the residue, or a sufficient amount thereof, applied to the payment of plaintiff's debt.

The parties agreed upon the facts in this case, which we have in substance stated above. Upon the facts agreed, the court gave judgment for defendants, and the plaintiff appealed, and claims that he was entitled to judgment upon two grounds:

First. That as the trustee, Slocumb, was a clerk for the firm of H. Weil Bros., this constituted a fiduciary relation between the makers of the deed and S. Weil, a member of the firm of H. Weil Bros. and the purchaser at the trust sale.

Second. That the price paid, $1,000, for property worth $2,000 was so grossly inadequate as to shock the moral sense of honest men and cause them to exclaim that "He got the property for nothing."

The plaintiff, in discussing the first ground (fiduciary relations), treated the deed of trust as a mortgage, and the sale by the trustee as a sale by a mortgagee, where he bought at his own sale, and cited Gibson v.Barbour, 100 N.C. 192, as authority for this position. But the case cited does not support the contention of the plaintiff. That case has reference to a sale by a trustee where the trustee became the purchaser, and would have been in point if Slocumb had become the purchaser in this case, and not S. Weil.

It is a mistake when the plaintiff thinks that because Slocumb was a clerk in the store of H. Weil Bros. this fact created a fiduciary relation between the makers of this deed of trust and the parties whose debts were secured therein. Clark v. Trust Co., 100 U.S. 149. If this had been a mortgage to S. Weil, the doctrine enunciated in Hall v. Lewis, 118 (104) N.C. 509; Atkins v. Crumpler, ib., 532, and again in s. c., 120 N.C. 308, would apply, and a presumption of fraud would rest on the purchaser that he would have to explain and make good. But the relations of a trustee to the parties whose debts are secured are very different from those of a mortgagee. He is the agent of both the maker of the deed and the cestui que trust. He is to execute the trust, and all that is required of him is that he shall do this faithfully and honestly. Hintonv. Pritchard, 120 N.C. 1. The cestui que trust has a right to buy at the trust sale. Hinton v. Pritchard, supra; Smith v. Black, 115 U.S. 308;Easton v. Bank, supra.

It is admitted by the plaintiff in the case agreed that "This sale was conducted in accordance with the provisions of the trust deed, and was fairand honest." We must therefore hold that the plaintiff has failed to show that he is entitled to have the deed to Weil set aside and a resale ordered, upon the first ground assigned.

The second ground is that the great inadequacy of the price paid, $1,000, for a $2,000 house and lot, of itself, entitles the plaintiff to the relief demanded — admitting the honesty and good faith of the trustee, Slocumb, in making the sale. And for this positions he citesFullenwider v. Roberts, 20 N.C. 420; Worthy v. Caddell, 76 N.C. 82, andTrust Co. v. Forbes, 120 N.C. 355.

Fullenwider v. Roberts was an action of ejectment, under the old practice — no equity in it, but was a question of law, under 27 Elizabeth. In that case one Falls had sold his land for $500, upon such long time and for such inadequacy in price that it was contended by the plaintiff that it was fraudulent; that the plaintiffs afterwards purchased the same land for $50 and brought suit against those in possession, under the former sale, for possession, who defended upon the ground that the plaintiff was not a bona fide purchaser for value, under 27 Elizabeth. It was shown that the land was worth $25,000 and that $50 (105) was only one-five-hundredth part of its value. Upon this state of facts the court held that the price paid was so small, compared with the value of the land, that it amounted to no consideration, and the plaintiff was not protected by 27 Elizabeth. In delivering the opinion in that case, JudgeRuffin uses the language quoted by the plaintiff, that "Where the price given or pretended to be given, that everybody who knows the estate will exclaim at once, ``Why, he got the land for nothing,' the law would be false to itself if it did not say, sternly and without qualification, to such a person that he had not entitled himself to the grace and protection of the statute." But this language was not invoked by that great judge in aid of any equity jurisdiction, as contended for by the plaintiff in this case; nor are the facts of this case anything like the facts in that case.

The case of Worthy v. Caddell, 76 N.C. 82, was an application to sell land for assets by the administrator of one Morris, commenced before the Clerk of the Superior Court of Moore County, in which fraud was alleged, as provided by statute. So it was purely a legal question, arising under 13 Elizabeth, the action being for the benefit of creditors. And the learned Chief Justice who delivered the opinion of the Court in that case put the opinion of the Court upon the principle announced in Fullenwider v.Roberts, 20 N.C. 420. There were no principles of equity involved in that case.

The principles announced in Trust Co. v. Forbes, 120 N.C. 355, so far as they have any bearing, sustain the contention of the defendant in the case. Smith v. Black and Easton v. Bank, supra. We do not say but what the facts in this case create suspicion of fraud upon our minds.

But we cannot give plaintiff the relief demanded, because we may (106) suspect that there has been something wrong — fraud — in this transaction on the part of the defendants.

After a careful investigation of the whole matter, we find no error, and the judgment is affirmed.

Affirmed.

Cited: Davis v. Keen, 142 N.C. 504; Alston v. Connell, 145 N.C. 3;Hayes v. Pace, 162 N.C. 292.