Foster v. Campbell

^* Corpus Juris-Cyc. References: Mortgages, 41CJ, p. 1011, n. 12; p. 1027, n. 94; p. 1029, n. 21. This is a suit in equity for an accounting and the cancellation of certain conveyances of eighty acres of land claimed by the appellants, Lena Logwood Foster and her minor children. The bill seeks relief upon several different theories, but we shall notice only one, because the decision of that point will settle the case, and the other questions need not be passed upon. The decisive question is whether or not the sale of the land under the mortgage should be set aside because the price paid was grossly inadequate, amounting to fraud, which vitiated the sale.

We will state briefly enough of the facts for an understanding of the decision:

The appellants, Lena Logwood Foster and her minor children were ignorant, uneducated negroes, who inherited the land in question from William Logwood, the first husband of Lena, who died in 1902. Lena then married Foster, and she and her husband and minor children continued to occupy the land up until this suit was filed.

The deceased, William Logwood, his wife, Lena, and the children went upon the land in 1899, cleared it and improved it. In the same year William Logwood and his wife, Lena, executed a deed of trust to secure a note for the sum of four hundred dollars in favor of the Middlesex Banking Company of Connecticut. After the death of William Logwood, the Middlesex Banking Company transferred the mortgage to W.H. Wildberger, and one Willis M. Lee was substituted as trustee in the place of Cameron in the deed of trust.

In 1907 the appellants were informed that the said Wildberger had advertised the land for sale under the mortgage, to satisfy the four hundred dollars mortgage indebtedness, whereupon appellants went to W.S. Campbell, now deceased, and whose administrator is one of the appellees herein, and requested the said Campbell to pay the indebtedness for them and prevent the sale under the deed of trust. Campbell was an experienced business man. Appellants had been trading with Campbell. He had been their merchant and financial friend for many years, and promised complainants that he would pay the mortgage indebtedness for them. He told them to go home and go to work, and leave the matter to him; that he would protect their interest in the property by paying the mortgage for them.

Appellants, relying upon the assurance of Campbell, went home and about their work, and continued to trade with Campbell, and to rely upon him for many years thereafter, believing all the time, as they were informed by Campbell at different times, that the mortgage on their place had been settled by Campbell, and that they were paying him the amount that he had paid out in settlement of the mortgage. Appellants, four of whom are minors, being ignorant and confiding in their natures, thus relied upon and trusted Campbell to see that their property was not foreclosed under the mortgage.

In 1907, the trustee in the deed of trust sold and conveyed the land in question to the said W.S. Campbell for the sum of seven hundred seven dollars, and a trustee's deed was executed to Campbell. The undisputed proof in the record is that the land was worth more than four thousand dollars at the time it was sold under the deed of trust. The appellants, not knowing that the land had been sold, continued their business relations with the said Campbell, and continued to live on the land and cultivate it, believing that Campbell had paid the mortgage for them, as he had often told them he had done.

The appellants traded with and sold their crops to Campbell each year, and purchased merchandise from him, and a short statement was rendered by Campbell to appellants each year showing the status of the account between them. The appellants, according to the record, thought that Campbell was collecting from them the amount he had paid out in settlement of the mortgage, and they knew that he was paying the taxes on the land and charging their annual account therewith. The appellants asked the said Campbell for a settlement in 1920, but this was refused, and appellants finally found out that the land had been sold under the mortgage, and that Campbell had bought it in at the sale, and that he pretended to be the owner of the land. Campbell died in 1921.

Campbell had never claimed the land nor demanded possession of it before this time, but had always led complainants to believe, according to the record, that the mortgage indebtedness had been paid off by him, and that appellants still owed him a balance on the amount so paid.

The appellants offered proof, which was practically undisputed, that they had been deceived and defrauded by the said Campbell in the sale and purchase of the land, as mentioned hereinbefore. It was shown without contradiction, that seven hundred seven dollars was a grossly inadequate price for the land, which was at the time worth more than four thousand dollars. Appellants tendered seven hundred seven dollars in the trial court to pay the amount that Campbell had paid the trustee under the mortgage sale, and offered to pay any other sum the court might find to be due.

In the year 1920 the said Campbell executed a deed of trust to the Planters' Bank of Clarksdale, and in 1923 this deed of trust was foreclosed, and the Yazoo-Delta Mortgage Company, one of the appellees herein, was the purchaser at the sale. After the execution of the mortgage to the Planters' Bank, the said W.S. Campbell died, and this suit is against his administratrix and others, to cancel and set aside the deed obtained by Campbell under the foreclosure sale of the deed of trust made to Middlesex Banking Company, and the cancellation of all subsequent conveyances.

The defendants answering, denied all of the allegations of fraud and other allegations of the bill, but averred that all the transactions were in good faith, and that the several instruments of conveyance were valid; denied that appellants were entitled to an accounting, or to any relief prayed for, and asked for cross-relief confirming title to the said land in the Yazoo-Delta Mortgage Company, which was granted by the court, from which this appeal is prosecuted.

We have carefully reviewed the testimony in the record, and we think the lower court erred in refusing the relief prayed for by the complainants below. The testimony showing the fiduciary relations between Campbell and the appellants for many years is practically undisputed. The land in question was unquestionably worth more than four thousand dollars at the time it was sold for seven hundred seven dollars to Campbell under the Middlesex Banking Company's deed of trust.

There is some indirect and circumstantial evidence which tended to show that Campbell had not deceived these ignorant and confiding negroes with reference to protecting them against a sale under the mortgage for four hundred dollars but the substantial proof in the case shows overwhelmingly that these negroes traded with Campbell for many years; that they trusted him, and believed that he had protected them against the foreclosure of the four hundred dollars mortgage. We may say at this juncture that we do not pass upon the question of whether there was a resulting trust in favor of appellants under these circumstances, because it is unnecessary to do so. But we do say, in the language of this court in Elmslie v. Mayor (Miss.), 35 So. 201, that:

"Joined to the gross inadequacy of consideration there are so many circumstances indicating surprise, unfairness, and undue advantage taken of appellant that a court of conscience should not permit this sale to stand."

We are therefore of the opinion that the grossly inadequate purchase price bid by Campbell at the sale under the Middlesex Banking Company's deed of trust invalidates the sale as fraudulent in law, and that it should be canceled.

Of course the amount paid out by Campbell in the purchase of the land at the sale should be refunded by the appellants, and an accounting should be had between the parties to ascertain thestatus of the account between them. Herring v. Sutton,86 Miss. 283, 38 So. 235; Martin v. Swofford, 59 Miss. 328; Hesdorffer v. Welsh, 127 Miss. 261, 90 So. 3.

Actual occupation of the land by appellants was notice to all subsequent purchasers.

The decree of the court below is reversed, and the cause remanded for further proceedings as directed herein.

Reversed and remanded.