Wilson v. Western North Carolina Land Co. , 77 N.C. 445 ( 1877 )

The plaintiffs are J. W. Wilson, G. N. Folk, J. C. Tate, H. F. Bond, W. D. Sprague, and E. M. Davis.

The defendants are the Western North Carolina Land Company and J. G. Ralston, its president.

The plaintiffs alleged that on 5 March, 1869, C. A. Cilley entered a large body of vacant land in Caldwell County, known as the Wilson Creek lands, and that he afterwards, for valuable consideration, sold to E. M. Davis, of Philadelphia, his interest in such entries. No grants were taken out upon these entries, and the same lapsed. On 8 January, 1872, said Cilley made other entries of the same land in the name of George N. Folk, for the purpose of carrying out his contract with Davis. On 4 July, 1874, the plaintiff Junius C. Tate entered the same lands in his own name. Thereafter, Tate assigned his interest in the entries to the plaintiffs Henry F. Bond and William D. Sprague. A controversy having arisen between Davis and Bond Sprague, a compromise was made whereby grants were to be taken out and the title to the lands held by a trustee, who was to sell the lands and divide the proceeds of sale between Davis and Bond Sprague. This compromise was approved by said Folk, who agreed in writing to its stipulations. On 10 March, 1872, E. T. Mockridge procured entries of certain lands in said Caldwell County to be made in the name of said Folk, which lands adjoined the lands entered as aforesaid. On 16 February, 1874, the defendant (447) company, consisting of said Mockridge and others, was incorporated by the General Assembly, and the defendant Ralston became president thereof. On 12 June, 1873, said William D. Sprague made entries of the lands entered by said Mockridge on 10 March, 1872.

That on 25 October, 1874, W. W. Flemming, as agent and attorney for defendant company, without the knowledge or consent of the plaintiffs, or any of them, procured the entry-taker of said county to give him warrants directing the county surveyor to lay off and survey for said Folk the lands covered by said entries, and placed the same in the hands of said county surveyor. That by a combination between the surveyor, Flemming, and Mockridge, the lands were surveyed secretly and without the knowledge of plaintiffs. That said survey was finished on 27 December, 1874, the surveyor adopting, in order to have the same completed by 31 December, certain surveys theretofore made by him at the instance of plaintiffs. That while said survey was in progress the plaintiff Folk gave to said Flemming, as agent, a paper-writing authorizing him to take out in his name grants from the State for any lands in Caldwell County, but that said Folk only intended that such authority should apply to the lands entered on 10 March, 1872, and not to the Wilson Creek lands, and that the defendants were aware of such intention. That on 16 December, 1874, the defendant company, by presenting said paper-writing to the Secretary of State, and upon payment of the necessary fees and charges, obtained grants for the lands in said Caldwell County, including the Wilson Creek lands, and placed the same in the hands of the register of Caldwell County for registration.

That prior to 31 December, 1874, a civil action had been commenced in Caldwell Superior Court by said Tate against said Davis, Mockridge, (448) and Folk, in which a restraining order had been granted, enjoining said Folk from conveying the Wilson Creek lands to either Davis or Mockridge. On 30 December, 1874, said Flemming handed to said Folk for his signature a quitclaim deed to said Ralston, as president of defendant company, of a large quantity of lands in Caldwell County, reciting a consideration of $8,000, and only describing the land by the numbers of the grants conveying the same to said Folk. That said deed was without consideration. That said Folk carried the deed to his house, had it copied, omitting the consideration, signed it, and placed it in an envelope directed to Mockridge, and was about to send it to the postoffice when Mockridge called at his house. That folk thereupon called his attention to the aforesaid restraining order, but stated that in his opinion the order was in operative, as it seemed based upon the belief that he intended to convey the Wilson Creek lands; that Mockridge did not undeceive said Folk, but strengthened the impression that the deed did not cover the Wilson Creek lands, and Folk executed and delivered the same to him; that said Folk remained in ignorance of the fact that the quitclaim deed covered the Wilson Creek lands until 7 January, 1875, when he became aware of it from information received of the number of grants in his name in the register's hands; and that he thereupon conveyed the said Wilson Creek lands to the plaintiff James W. Wilson, in order that the compromise between Davis and Bond Sprague might be carried into effect.

Plaintiffs asked that the deed obtained from Folk by Mockridge might be canceled, and for such other relief as they might be entitled to.

The defendants answered, denying the material portions of the complaint.

It was admitted that the defendants had no notice of the equities of the plaintiffs.

(449) The following are the issues submitted to the jury and the findings thereon:

1. Did C. A. Cilley make the entries in the spring of 1869, for his own use and benefit, as stated in the complaint? Answer: "Yes."

2. Were they afterwards sold by him to E. M. Davis under the contract, as stated in the complaint? Answer: "Yes."

3. Were they afterwards entered by said Cilley, 8 January, 1872, in the name of G. N. Folk, to enable said Cilley to carry out said contract with Davis, as stated in the complaint? Answer: "Yes."

4. Were the lands described in said complaint as entered by said Cilley, 5 March, 1869, and afterwards entered in the name of said Folk, 8 January, 1872, ever entered by E. T. Mockridge, or by any one else for his use and benefit? Answer: "No."

5. Did said Folk assign and transfer said entries to E. M. Davis, as stated in the complaint? Answer: "Yes."

6. Did said Folk, at the time he conveyed to J. G. Ralston, president, believe that he was conveying such entries only as were made by said Mockridge in the name of said Folk? Answer: "Yes."

7. Did the said Mockridge, at the time he received the deed from said Folk, know that it embraced entries which were not made for his use and benefit? Answer: "No."

8. At the time said Mockridge received said deed from said Folk was there an injunction issued restraining said Folk from conveying and said Mockridge from receiving a conveyance of said lands? Answer: "Yes."

9. Did said Mockridge represent to said Folk that the deed only embraced lands which had been entered for his use, and to which he was entitled? Answer: "No."

10. Did he represent to said Folk that the said injunction did not extend to the lands embraced in said deed? Answer: "No."

11. Was the deed made by said Folk to said Mockridge, 16 (450) June, 1874, only intended to convey the entries made in said Folk's name for Mockridge? Answer: "Yes."

12. Were the lands entered on 8 January, 1872, in the name of G. N. Folk, entered for the benefit of E. T. Mockridge or for the benefit of E. M. Davis? Answer: "For Davis."

13. Did E. T. Mockridge pay to the entry-taker of Caldwell County his fees for the entries made on 8 January, 1872, in the name of G. N. Folk? Answer: "No."

14. Did E. M. Davis pay to the entry-taker of Caldwell County his fees for the entries made on 8 January, 1872, in the name of G. N. Folk? Answer: "Yes."

15. Has E. M. Davis, or any one of the other plaintiffs, ever paid to the State of North Carolina any money for the lands included in the entries of 8 January, 1872? Answer: "No."

16. On 4 January, 1875, the date of the execution of the deed from said Folk to said Mockridge, did said Mockridge insist that the lands described as the Wilson Creek lands, which were entered 8 January, 1872, were the lands which he claimed? Answer: "No."

17. Did Folk represent to said Mockridge that the injunction did not extend to the lands embraced in the deed? Answer: "Yes."

18. Was the deed executed by Folk to Mockridge on 16 June, 1874, conveying the entries of all the lands by him in Caldwell County, procured by fraud? Answer: "No."

19. Was the deed executed by Folk to the Western North Carolina Land Company on 4 January, 1875, conveying the lands mentioned and described as the Wilson Creek lands, procured by fraud? Answer: "No."

His Honor gave judgment against the plaintiffs for costs, from which they appealed. The plaintiffs base their claim to relief upon two propositions: first, that the defendants procured the execution of the deed from Mr. Folk by fraud; and, second, that it was executed by mutual mistake of facts between the parties to it. They allege that the defendants, by the concealment of facts within their knowledge and by misrepresentation, induced Folk to execute a deed to one body of land, when he supposed, and was fraudulently induced to believe, that he was conveying another and distinct one. They also allege that if there was no fraud in the inducement to the execution of the deed, there was such a mutual mistake of fact in respect to the land conveyed and that intended to be conveyed as will entitle them to the relief they seek.

Without stopping to comment on the inconsistency of the two allegations, one of fraud on the part of the defendant and the other of mutual mistake of the parties, which rebuts the idea of fraud, it is enough to say that the charge of fraud in procuring the execution of the deed is expressly denied in the answer and negatived by the finding of the jury, who, upon issues submitted to them for their verdict, declare that neither the deed of 16 June, 1874, by which Mr. Folk assigned the entries of the land to Mockridge, nor the deed of 4 January, 1875, by which he conveyed the land itself to the defendant, was procured by fraud.

The question of fraud being thus out of the way, the plaintiffs' right to relief must turn upon the single question whether the impeached conveyance was executed in such a mutual mistake of facts in respect (452) to the body of land intended to be conveyed as a court of equity will take cognizance of. The general rule in this class of cases is that an act done or contract made under a mistake or ignorance of a material fact is voidable and relievable in equity. But the general rule has many qualifications. For instance, the material fact must be such as the complaining party could not by reasonable diligence obtain a knowledge of when he was put upon inquiry; for if by such reasonable diligence he could have obtained knowledge of the fact, equity will not relieve him, since that would encourage culpable negligence. So where the means of knowledge are alike open to both parties, and where each is is presumed to exercise his own judgment in regard to extrinsic matters, equity will not relieve. Nor, again, will equity interpose where the facts are equally known to both parties, or where each has equal and adequate means of information, or the facts are doubtful from their own nature, if the party has acted in good faith. It is upon this ground that if A., knowing that there is a mine in the land of B., of which he knows that B. is ignorant, should buy the land without disclosing the fact to B., for a price in which the mine was not taken into consideration, B. would not be entitled to relief from the contract, because A. as the buyer is not obliged from the nature of the contract to make the discovery.

There must always be shown either the mistake of both parties, or the mistake of one with the fraudulent concealment of the other, to justify a court of equity in reforming a contract. Wright v. Goff, 22 Beavan, 207; 26 Beavan, 454; 1 Story Eq., secs. 146-53; Crowder v. Langdon,38 N.C. 476. In order to set aside such a transaction, it is essential, not only that an advantage should be taken, but there must be some obligation in the party to make the discovery; not an obligation in point of morals only, but of legal duty; the policy of equity being to afford relief to the vigilant and put all parties upon the exercise of the most searching diligence. This is peculiarly so in cases of written (453) agreements — a solemn deed, as in this case. The whole sense of the parties is presumed to be comprised in such an instrument, and it is against the policy of the law to allow parol evidence to add to or vary it, as a general rule. But if the proofs are doubtful and unsatisfactory, and the mistake is not made entirely plain, relief will be withheld, upon the ground that the written paper must be treated as the full and correct expression of the intent until the contrary is established beyond reasonable controversy. 1 Bro. Ch. R., 338, 341; Woolam v. Hearn, 7 Ves., 217; Davis v. Symonds, 1 Cox, 404; 1 Story Eq., sec. 153.

In this case it is the vendor who seeks to avoid his own deed upon the ground of mistake. We have already seen that he must clearly show either a mistake of both parties or the mistake of one with the fraudulent concealment of the other, to justify the interposition of a court of equity. Now, it is expressly denied by the defendants that there was any mistake on their part as to the lands they purchased. In fact, the complaint does not allege a mistake on their part; so far from it, the plaintiffs charge that the defendants made no mistake, but knowingly purchased the Wilson Creek lands, purposely concealing that fact from the plaintiffs by pretending that the deed taken by them was for the Yadkin lands. All question of a mutuality of mistake is thus effectively disposed of, as we have before shown there was no question of fraud on the part of Mockridge, the vendee. There was no mistake and no fraud on the part of the purchaser. But the jury have found by their verdict that Mr. Folk, the vendor, did convey to the defendants the Wilson Creek lands, when he intended to convey and supposed he had conveyed the Yadkin River lands. That was his mistake. But it is not every mistake of a vendor, however, material or however fully established by proof, (454) that will evoke the interference of the court of equity. There must be some concealment or other ingredient in the nature of fraud on the part on the purchaser. Here none is found.

Relief is given only to the vigilant, and not to the negligent, or those who, being put upon inquiry and having equal or superior means of information, have chosen to omit all inquiry which would have enabled them to avoid, obviate, or correct mistakes. Who is in fault here? Mr. Folk didnot own the Yadkin River lands, and both he and Mockridge knew it; he did not convey these lands. He did own the Wilson Creek lands, and both he and Mockridge knew that; he did convey these lands. Had he conveyed the lands to which he had no title, it would have been evidence of mistake; but as he conveyed only those he could lawfully convey, the reasonable presumption from that fact is the other way. The entries of those lands were made in his name, and he by deed assigned them to the defendants in June, 1874. Six months later — in January, 1875 — and after grants had been taken out in his name on these entries, he, by another deed, conveyed the lands themselves to the parties to whom he had previously assigned the entries. Now, it is this vendor who complains and asks for equity in the face of his solemn deed. That he executed the deed in mistake is found by the jury; but a mistake cannot afford a foundation for relief where there has been such unquestionable negligence, without the violation of every principle governing that jurisdiction. The plaintiffs are therefore not entitled to relief on the ground of fraud or mistake.

But it is alleged that the defendants purchased with and are affected by notice of the prior rights and equities of the plaintiffs, and upon that question their case is this: In 1869 Mr. Cilley, in pursuance of the law (Bat. Rev., ch. 41) making all vacant and unapproved lands belonging to the State subject to entry and grant by any citiben of the State, made entries of the lands in dispute, and, in 1870, assigned his (455) entries to one Davis, a citizen of Pennsylvania, contracting to take out grants for the lands and convey to him. These entries were allowed to lapse, and, in 1872, Cilley reentered the same lands in the name of G. N. Folk, but for the purpose of carrying out his contract with Davis.

In July, 1874, Junius C. Tate made entries covering the same lands, which entries he assigned to Sprague Bond. Thereupon a dispute arose between Davis, claiming under the Folk entries, and Sprague Bond, claiming under the Tate entries; neither party having perfected their entries by taking out grants from the State. This dispute was compromised between the parties by the agreement that the grants were to be taken out under the Tate entries in the name of a trustee, by whom the lands were to be sold and the proceeds equally divided between Davis and Sprague Boyd. This compromise was approved and indorsed by Mr. Folk, who had assigned his entries to Davis.

In October, 1874, Mr. Flemming, as the agent of the defendants, procured warrants of survey from the entry-taker and had the Wilson Creek lands surveyed in the name of Mr. Folk. Pending this survey, Folk gave Flemming a paper-writing authorizing him to take out and obtain in his name grants from the State for any lands entered in his name in the county of Caldwell. Accordingly, in December, 1874, Flemming presented this power of attorney to the Secretary of State at Raleigh, and obtained from the State grants in the name of Folk for all the lands in controversy by paying the price of the lands and the fees. Afterwards, on 4 January, 1875, by a deed duly executed by himself and wife, Folk conveyed the lands thus granted to Mockridge for the Western North Carolina Land Company, of which Flemming was the agent and attorney.

Upon this state of facts it is clear that the grants from the State conveyed the legal title of the Wilson Creek lands to Mr. Folk, and it is equally clear that his deed conveyed the legal title to the defendants. Is that title encumbered by any equity in favor of the (456) plaintiffs? Certainly not; for the defendants, in their answer, deny any notice of the several transactions between the other parties in respect of the entries and transfers of them from one to the other, and there is no proof or finding by the jury that the defendants had any such notice. According to the case, they had no knowledge and no reason to believe that these lands were originally entered by Cilley for Davis, or afterwards by Tate for Sprague Bond, or that Folk had assigned his entries for their benefit. The entries under which the plaintiffs seek relief were in the name of Folk, and the grants were issued to him. Flemming and Mockridge knew him alone in their negotiations for the purchase of the land, as he along was known on the books of the entry-taker, and did not impart to the defendants any knowledge of his relations with the plaintiffs in respect to these lands.

Where a vendor contracts to sell land to one person, and afterwards sells the same lands to another, who purchases without notice, the latter acquires a good title. Taylor v. Kelly, 56 N.C. 240. Even where both parties are equally entitled to consideration, equity does not aid either, but leaves the matter to depend upon the legal title. Thus, where a bonafide purchaser for a valuable consideration and without notice has acquired the legal title, a court of equity will not interfere to deprive him of his legal advantage. Crump v. Black, 41 N.C. 321; King v. Trice, 38 N.C. 568.

Whatever remedy the plaintiffs may have against Folk, in respect to these defendants they cannot be in a better position than a purchaser who has a bond for title from the vendor and afterwards for value sells and conveys to another without notice. But had these plaintiffs even an equity which they could enforce against Folk? An entry of land only creates an equity entitling the party to a grant where the purchase money is paid to the State within the time prescribed by statute, (457) which is on or before 31 December the second year after the entry. Rev. Code, ch. 42, sec. 8; Plemmons v. Fore, 37 N.C. 312. Folk's entries of 1872, therefore, lapsed on 31 December, 1873, and with this lapse expired the plaintiff's equity, unless the entries were kept alive by statutes extending the time for taking out grants. There may be such statutes, but we have not examined, because the question does not affect the rights of the defendants in this action; it only affects the rights of Folk and the other plaintiffs as between themselves.

Again, it appears in the pleadings, and is not denied, that Davis, for whom the entries of 1872 were made, and under which the plaintiffs claim, was not a citizen of the State, and had expressed no intention to become a citizen and resident when the entries were made for him. As to him, the lands were not subject to entry, and all entries in his name and for his benefit were void. Rev. Code, ch. 42, sec. 1; Bat. Rev., ch. 41, sec. 1; Laws 1869-70, ch. 19. Had grants been issued to Davis pursuant to such entries, they would have been voidable at the suit of the State; but he having entries only which were void as to himself, was not entitled to grants from the State, and the other plaintiffs claiming under these entries with notice can have no better standing in his Court.

But it is said in reply that the defendants claim under the same entries as the plaintiffs do, and that their title is therefore equally defective. Admitting that to be so, the defective title of the defendants cannot aid that of the plaintiffs. Claiming under void entries and nothing more, the plaintiffs are in no condition to impeach a defective or voidable title of the defendants. But the defendants have more than these entries; they have the grants from the State, and also a deed which conveys the legal title, which is good until avoided by the State for cause, or by a party having a better title or superior equity. Because a grant is taken out upon an entry which has lapsed by the efflux (458) of time, it does not follow that it is void. On the contrary, it is valid. Horton v. Cook, 54 N.C. 270. So if a grant is issued upon an entry which is void because of the noncitizenship of the enterer (as Davis here), the grant itself is nevertheless valid, and passes the title, if the grantee is a person capable of taking and holding by the laws of the State.

The defendant, the Western North Carolina Land Company, was made a corporation by an act of the Legislature ratified 16 February, 1874, and is empowered by the act to take and hold lands. As the grants were issued and the deed was executed to or for the benefit of this corporation on 4 January, 1875, the corporation was at that time as capable of taking and holding lands as any citizen of the State.

We have put no stress upon the Tate entries of July, 1874, because the plaintiffs, on 9 January, 1875, but subsequent to the execution of the deed to the defendants, obtained a deed from Mr. Folk for the same lands before conveyed by him to the defendants, and now claim the lands by virtue of the grants issued to Mr. Folk on his entries of 1872; and this action is framed upon the idea that if the defendans' [defendants'] deed can be avoided, the plaintiffs can hold the lands under this subsequent deed. The rights, if any, acquired under the Tate entries have not been, and cannot be, properly insisted on in this action. It will be sufficient to say, however, that the same principles of equity apply to the Tate entries as to the Cilley and Davis entries, to wit, that as the defendants are purchasers for value and without notice, their title is not affected by these entries.

The last position of the plaintiffs is that the deed to the defendants is void because at the time of its execution by Mr. Folk he had been enjoined by a restraining order, at the suit of Tate and others against Folk and others, from conveying the Wilson Creek lands to the defendants or others. In this view the case is this: That Mr. Folk, the (459) principal defendant in that action, is the plaintiff in this, and now claims that although he conveyed the lands in the teeth of the restraining order, he can insist that his own voluntary deed is void. Disobedience to the restraining order of the court is a matter between him and the court, but he himself is estopped from invalidating his own deed for that cause. If at the time of the execution of the deed to the defendants they were entitled to the conveyance under their previous contract of purchase, and by reason of having paid the purchase money to the State and taken out grants in the name of Mr. Folk, but in fact for themselves, the conveyance was rightful, and being also without notice of the restraining order, was not affected by it. Such an effect must be given to the conveyance under which the defendants claim.

PER CURIAM. No error.

Cited: Day v. Day, 94 N.C. 412; Stump v. Long, ib., 620; McMinn v.Patton, 92 N.C. 375; Ely v. Early, 94 N.C. 8; Anderson v. Rainey,100 N.C. 338; Harding v. Long, 103 N.C. 7; Gilchrist v. Middleton,107 N.C. 678; Moody v. Johnson, 112 N.C. 830; Johnson v. Lumber Co.,144 N.C. 720; Sykes v. Insurance Co., 148 N.C. 20; Barker v. Denton,150 N.C. 725; Culbreth v. Hall, 159 N.C. 591; Torrey v. McFadden,165 N.C. 240; Riley v. Carter, ib., 336; Cedar Works v. Lumber Co.,168 N.C. 394.

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