Lawrence v. Heavner ( 1950 )

61 S.E.2d 697 (1950) 232 N.C. 557

LAWRENCE
v.
HEAVNER.

No. 320.

Supreme Court of North Carolina.

November 1, 1950.

George D. Hovey, Hickory, for plaintiff, appellant.

R. H. Shuford, Hickory, and Russell W. Whitener, Newton, for defendant, appellee.

ERVIN, Justice.

If plaintiff and defendant had actually been married, they would have taken title to the property as tenants by the entireties in conformity with the manifest intention of the parties to the deed. Winchester-Simmons Co. v. Cutler, 199 N.C. 709, 155 S.E. 611. But since they were not in fact husband and wife, the conveyance to them made them tenants in common. Texido v. Merical, 132 Misc. 764, 230 N.Y.S. 605. Nothing else appearing, the interests of plaintiff and defendant in the property are equal, and plaintiff is entitled to have the defendant account to her for one-half of the net rents received by him from third persons. Roberts v. Roberts, 55 N.C. 128; Jolly v. Bryan, 86 N.C. 457.

It seems advisable to note at this point that no factual foundation exists for any contention that a resulting trust was raised in favor of the defendant in respect to the interest vested in the plaintiff by the conveyance, even if the defendant paid the entire purchase price for the property. Resulting trusts are established by equity for the purpose of carrying out the presumed intention of the parties. Avery v. Stewart, 136 N.C. 426, 48 S.E. 775, 68 L.R.A. 776. This being true, a resulting trust does not arise where a purchaser pays the purchase price of property and takes the title to it in the name of another unless it can be reasonably presumed from the attending circumstances that the parties intend to create the trust at the time of the acquisition of the property. 65 C.J., Trusts, § 141. No such presumption can be indulged in the instant case. Both the pleadings and the testimony reveal that the parties actually intended that no trust should result.

When all is said, the answer alleges only one thing sufficient to defeat the plaintiff's cause of action on the present record, and that is the defendant's demand for the correction of the deed on which plaintiff's cause of action is based. Equity has jurisdiction to reform a deed for mutual mistake, or for mistake on one side and fraud on the other. Cobb v. Cobb, 211 N.C. 146, 189 S.E. 479; America Potato Co. v. Jeanette Bros. Co., 174 N.C. 236, 93 S.E. 795; Allen v. Roanoke R., 171 N.C. 339, 88 S.E. 492. The equitable right to reformation may be invoked by a defendant by way of defense or counterclaim in an action based on the deed. Cuthbertson v. Morgan, 149 N.C. 72, 62 S.E. 744; Manufacturing Co. v. Cloer, 140 N.C. 128, 52 S.E. 305; McLamb v. McPhail, 126 N.C. 218, 35 S.E. 426.

The defendant does not seek to correct the deed for mutual mistake. He alleges with particularity in his counterclaim, however, that the name of the plaintiff was erroneously inserted in the deed as a co-grantee at his instance because of a mistake on his part superinduced by fraud on her part. He prays the court to reform the deed by striking out the name of the plaintiff as co-grantee. Burleson v. Stewart, 180 N.C. 584, 105 S.E. 182. The defendant will be entitled to the relief he seeks if he establishes the truth of his counterclaim by clear, strong, and convincing evidence. Hubbard & Co. v. Horne, 203 N.C. 205, 165 S.E. 347; Burton v. Life & Casualty Insurance Company, 198 N.C. 498, 152 S.E. 396.

The court erred, however, in granting the defendant such relief on the answers of the jury to the first and second issues, for the very simple reason that the issues submitted, with the responses of the jury thereto, are not sufficient to support the judgment and dispose of the matters in controversy. McKenzie v. McKenzie, 153 N.C. 242, 69 S.E. 134.

The suggestion of the defendant that the decree of the court can be sustained as a default judgment because the plaintiff did not reply to the counterclaim lacks validity. The answer containing the counterclaim was not served on the plaintiff or her attorney of record, and for this reason the counterclaim must "be deemed to be denied as fully as if the plaintiff * * * had filed an answer or reply denying the same." G.S. § 1-140; Miller v. Grimsley, 220 N.C. 514, 17 S.E.2d 642; Williams-Fulghum Lumber Co. v. Welch, 197 N.C. 249, 148 S.E. 250.

For the reasons given, the verdict and judgment are vacated, and the plaintiff is awarded a

New trial.