Smith v. Smith , 261 N.C. 278 ( 1964 )

134 S.E.2d 331 (1964) 261 N.C. 278

Frederick D. SMITH
v.
Rubie L. SMITH.

No. 536.

Supreme Court of North Carolina.

January 31, 1964.

L. Austin Stevens and Wiley Narron, Smithfield, for plaintiff.

Samuel S. Mitchell, Raleigh, for defendant.

DENNY, Chief Justice.

The plaintiff alleges in his complaint that in addition to the fraudulent acts and conduct of the defendant in procuring the execution of the deed in question, she breached the fiduciary relationship that existed between the plaintiff and the defendant at the time. On the other hand, the defendant contends the transaction was a purely personal one, wholly unrelated to the administration of the estate of Almon F. Smith, father of the plaintiff.

In the case of Cole v. Stokes, 113 N.C. 270, 18 S.E. 321, Shepherd, C. J., said: "It is well settled that an executor or administrator, in dealing with the estate, and with those who are interested therein, is regarded as a trustee, and as such is subject to that principle which raises a presumption of fraud against him when he undertakes to purchase the trust property from his cestui que trust. In respect to purchases of trust property, real or personal, directly or indirectly, from himself, whether privately or at auction, the law considers them invalid; and, says Pearson, J., in Brothers v. Brothers [42 N.C. 150], even if the trustee ``gives a fair price, the cestui que trust has his election to treat the sale as a nullity;' and this, ``not because there is, but because there may be, fraud.'" Hayes v. Pace, 162 N.C. 288, 78 S.E. 290; Lockridge v. Smith, 206 N.C. 174, 173 S.E. 36; Harris v. Hilliard, 221 N.C. 329, 20 S.E.2d 278.

In our opinion, the plaintiff's evidence was sufficient to take the case to the jury, and the defendant's assignment of error to the failure of the court below to allow her motion for judgment as of nonsuit at the close of all the evidence, is not sustained. Garris v. Scott, 246 N.C. 568, 99 S.E.2d 750; Carland v. Allison, 221 N.C. 120, 19 S.E.2d 245.

The defendant assigns as error the exclusion of evidence to the effect that she paid taxes from 1954 through 1961 on four houses plaintiff inherited from his mother, and, further, excluding evidence of the repairs made on the home in controversy prior to the death of her husband.

The excluded evidence is to the effect that the four houses on which the defendant testified she paid taxes from 1954 through 1961 were owned by plaintiff's mother at the time of her death, but that Almon F. Smith, defendant's husband, collected the rents and profits from these houses after the death of plaintiff's mother until his own death in 1961.

There is no evidence that the defendant has made any repairs on the property involved or paid any taxes on the plaintiff's property since the death of her husband, Almon F. Smith.

A life tenant is liable for the taxes on property from which he receives the income. Miller v. Marriner, 187 N.C. 449, 121 S.E. 770; Jeffreys v. Hocutt, 195 N.C. 339, 142 S.E. 226; G.S. § 105-410.

The payment of these taxes for the period involved was the obligation of Almon F. Smith or his estate. There is no evidence on this record tending to show that the plaintiff is obligated to pay for any expenditure made by the defendant in making repairs or improvements on the property of her husband prior to his death.

This assignment of error is overruled.

It is the general rule that where a plaintiff seeks to set aside and cancel a deed on the ground that it was procured by fraud, the plaintiff will be required to refund the consideration paid in connection therewith, pursuant to the application of the maxim: "He who seeks equity must do equity." York v. Cole, 254 N.C. 224, 118 S.E.2d 419; Costen v. McDowell, 107 N.C. 546, 12 S.E. 432.

The plaintiff alleges in his complaint that he tendered the return of the consideration paid in connection with the transaction and requested the reconveyance of his one-half interest in the premises involved. Evidence to this effect was offered in the trial below but excluded on objection of the defendant. Plaintiff did not testify as to the amount he received as consideration in connection with the execution of the deed.

It is difficult to understand why counsel for the parties did not insist upon the submission of an issue as to the amount of the consideration involved. The evidence with respect thereto was vague and conflicting in the trial below. Instead, counsel for the parties agreed that only one issue was to be submitted to the jury: "Did the defendant procure the execution by the plaintiff of the deed dated April 28, 1962, by fraud, as alleged in the complaint?" This issue was answered in the affirmative. Consequently, no question is raised on this appeal with respect to the failure of the court to have the amount of consideration ascertained in the trial below.

All the remaining assignments of error are overruled. However, the judgment setting aside the deed dated 28 April 1962 will be upheld without prejudice to the right of the defendant to bring an action for the refund of whatever consideration defendant paid the plaintiff in connection with the execution of the aforesaid deed, unless the plaintiff voluntarily refunds such consideration. Cf. Carland v. Allison, supra.

No error.