Scott Poultry Company v. Bryan Oil Company

157 S.E.2d 693 (1967) 272 N.C. 16

SCOTT POULTRY COMPANY
v.
BRYAN OIL COMPANY.

No. 357.

Supreme Court of North Carolina.

November 22, 1967.

Turner & Harrison, Kinston, for plaintiff.

Dees, Dees, Smith & Powell and Smith & Everett, Goldsboro, for defendant.

BRANCH, Justice.

Initially, we must decide whether this is an action to remove cloud upon title or a suit in ejectment, in order to determine the defenses available to defendant.

In the case of Hayes v. Ricard, 244 N.C. 313, 93 S.E.2d 540, the plaintiffs alleged that they were the owners of the land in controversy; that defendant claimed under a void conveyance and was in wrongful possession. Plaintiffs asked to be declared the owners, the conveyance to defendant be canceled, and that defendant be ousted. The defendant denied plaintiffs' claim of ownership and alleged title in himself. The Court, deciding that this was an action in ejectment, stated:

"* * * The nature of the action is not determined by what either party calls it, but by the issues arising on the pleadings and by the relief sought.

* * * * * *

"``* * * [b]ut where, as here, the defendants are in actual possession and plaintiffs seek to recover possession, the action is in essence in ejectment.'"

In the instant case the pleadings make out a cause of action in ejectment.

Plaintiff appealed from the lower court's judgment allowing several pleas in bar upon a hearing held before trial on the merits of plaintiff's cause of action.

Ordinarily, it is for the trial judge, in the exercise of his discretion, to determine whether in the circumstances of a particular case a plea in bar is to be disposed of prior to trial on the merits of plaintiff's alleged cause of action. McAuley v. Sloan, 173 N.C. 80, 91 S.E. 701; DeLoache v. DeLoache, 189 N.C. 394, 127 S.E. 419; Bright v. Hood, Com'r of Banks, 214 N.C. 410, 199 S.E. 630, 119 A.L.R. 820. The record does not show whether the pleas in bar were heard by the court by agreement or in the exercise of the court's discretion.

The effect of a plea in bar is to destroy plaintiff's action.

In Industrial Lithographic Co. v. Mills, 222 N.C. 516, 23 S.E.2d 913, this Court stated:

"``What constitutes a plea in bar has been considered and accurately defined by this court in Murchison Nat. Bank v. Evans, 191 N.C. 535, 538, 132 S.E. 563, 564, as follows: "In a legal sense it is a plea or peremptory exception of a defendant, sufficient to destroy the plaintiff's action * * * a special plea constituting a sufficient answer to an action at law, and so called because it barred— i. e., prevented—the plaintiff from further prosecuting it with effect, and, if established by proof, defeated and destroyed the action altogether." * * *'"

This Court has held estoppel, laches and statutes of limitations (including sole seizin by reason of twenty years adverse possession to be pleas in bar. Solon Lodge No. 9, etc. v. Ionic Lodge, 245 N.C. 281, 95 S.E.2d 921; Duckworth v. Duckworth, 144 N.C. 620, 57 S.E. 396.

Defendant pleaded G.S. § 1-52 (three-year statute) and G.S. § 1-56 (ten-year statute) in bar of any recovery by plaintiff. These statutes are not applicable to the present action in ejectment. The ten-year statute applies only to cases "not otherwise limited," and as to actions for recovery of real estate there are two statutes, G.S. § 1-38 and G.S. § 1-40, which are expressly applicable. Williams v. Scott, 122 N.C. 545, 29 S.E. 877. G.S. § 1-52 relates to recovery of real estate only where property is sold for the nonpayment of taxes within three years after the execution of a sheriff's deed, G.S. § 1-52(10), and is therefore not applicable. It is also evident that twenty years have not elapsed since defendant went into possession of the premises, and therefore G.S. § 1-40 does not apply.

The remaining statute of limitation as to real property is G.S. § 1-38, which provides:

"When a person or those under whom he claims is and has been in possession of any real property, under known and visible lines and boundaries and under color of title, for seven years, no entry shall be made or action sustained against such possessor by a person having any right or title to the same, except during the seven years next after his right or title has descended or accrued, who in default of suing within that time shall be excluded from any claim thereafter made; and such possession, so held, is a perpetual bar against all persons not under disability; Provided, that commissioner's deeds in judicial sales and trustee's deeds under foreclosure shall also constitute color of title."

A deed obtained from the purchase of land at a mortgage foreclosure sale constitutes color of title, even though the foreclosure sale was defective or void. Corbett v. Corbett, 249 N.C. 585, 107 S.E. 2d 165.

In connection with this plea in bar, the court found as a fact:

"6. E. W. Graves, Sr., was in continuous and uninterrupted possession of the subject property from the time the property was conveyed to him on October 19, 1950, until he conveyed it to Bryan Oil Company on November 9, 1965, his possession of subject property being under claim of ownership and under known and visible lines and boundaries and extending over all of the land up to the boundaries of the premises. He listed and paid taxes on the property during those years. He leased the premises during several years and collected all rents accruing therefrom."

However, the court concluded:

"5. The defendant's plea of title by adverse possession under G.S. 1-38 raises an issue of fact which may not be heard by the court as a plea in bar but must be tried by a jury."

Appellant contends that there can be no adverse possession since Graves, an officer of the corporation which executed the foreclosed deed of trust, became the purchaser of the foreclosed property.

There is nothing to prevent a stockholder or director from lending money and taking a lien on corporate property for security where no unfair advantage is taken. Eno Investment Co. v. Protective Chemicals Laboratory, 233 N.C. 294, 63 S.E.2d 637. It logically follows that he has the right to purchase at judicial or other public sale in order to protect his interest. 19 Am.Jur.2d, Corporations, Sec. 1316, p. 723.

There was plenary evidence introduced at the hearing by defendant before Judge Clark to support the above finding of fact. Generally, when pleaded, G.S. § 1-38 is a proper plea in bar to an action in ejectment.

The record does not reveal that jury trial was waived. Therefore we must decide whether the court sitting without a jury could properly enter judgment under a plea in bar pursuant to G.S. § 1-38 and the remaining pleas in bar not hereinabove discussed.

"Ordinarily, the bar of the statute of limitations is a mixed question of law and fact. But where the bar is properly pleaded and all the facts with reference thereto are admitted, the question of limitations becomes a matter of law." Mobley v. Broome, 248 N.C. 54, 102 S.E.2d 407; Currin v. Currin, 219 N.C. 815, 15 S.E.2d 279; Ewbank v. Lyman, 170 N.C. 505, 87 S.E. 348. See also Perry v. Southern Surety Co., 190 N.C. 284, 129 S.E. 721.

In the case of Sparks v. Sparks, 232 N.C. 492, 61 S.E.2d 356, the complaint alleged that plaintiff owned certain land in fee simple; that he was in actual possession of the land; that defendants wrongfully claimed some interest in the land adverse to plaintiff; that he was entitled to judgment establishing his absolute ownership of the land and removing any adverse claim of the defendants as a cloud on his title. The answer conceded that plaintiff held title to a one-third undivided interest and averred that defendants were the fee simple owners of the other two-thirds undivided interest. When the cause came on for trial by jury and plaintiffs and defendants undertook to support their respective allegations by testimony, the court announced the adoption of certain issues, and although the parties had not waived trial by jury, the court proceeded to answer the issues in favor of the plaintiff. The defendants appealed. In setting aside the judgment of the lower court and ordering a new trial, this Court said:

"The Constitution of North Carolina guarantees to every litigant the ``sacred and inviolable' right to demand a trial by jury of the issues of fact arising ``in all controversies respecting property,' and he cannot be deprived of this right except by his own consent. N.C.Const., Art. I, Sec. 19. The Code of Civil Procedure provides that issues of fact must be tried by a jury, unless a trial by jury is waived or a reference ordered. G.S. § 1-172.

"The defendants did not waive their constitutional and statutory right to have the issues of fact joined on the pleadings in this case tried by a jury. N.C.Const., Art. IV, Sec. 13; G.S. § 1-184. This being true, the presiding judge had no authority to answer the issues, and to enter judgment in favor of the plaintiff upon his answers to the issues."

The defendant's pleas in bar of estoppel, res judicata and laches are affirmative defenses, and the burden of proof is on the defendant. Peek v. Wachovia Bank & Trust Co., 242 N.C. 1, 86 S.E.2d 745; Gaither Corp. v. Skinner, 241 N.C. 532, 85 S.E.2d 909.

No conclusions of law in favor of defendant can be reached unless shown by plaintiff's evidence or established by the jury or unless all the facts relevant thereto are admitted. Solon Lodge No. 9, etc. v. Ionic Lodge, supra; Mobley v. Broome, supra. Here, all the facts relative to the issues raised by the pleadings are not admitted by the parties, nor does plaintiff's evidence establish the facts so that the evidence admits of only one conclusion as to the pleas in bar. Thus the court was without authority to enter judgment on the pleas in bar. Absent waiver of jury trial, the court should have submitted the proper issues to the jury for decision.

Ordinarily equitable defenses such as estoppel and laches are not recognized as pleas tenable in a court of law, the court being governed by the statute of limitations. Whether this rule has been strictly followed we need not inquire, since this cause must be remanded for other reasons.

The judgment entered by the court below is vacated and this cause is remanded for disposition in accord with this opinion.

Error and remanded.