Pendergrass v. Massengill

152 S.E.2d 657 (1967) 269 N.C. 364

Frank PENDERGRASS (Widower) and Ruth Pendergrass (Single)
v.
E. S. MASSENGILL and wife, Margaret T. Massengill, Home Savings & Loan Association, Samuel F. Gantt, Trustee, Ralph B. Massengill, Conservator, and Ralph B. Massengill, Guardian of E. S. Massengill.

No. 768.

Supreme Court of North Carolina.

February 3, 1967.

Blackwell M. Brogden, Durham, for plaintiffs appellants.

Claude V. Jones, Durham, for Home Savings & Loan Ass'n.

C. Horton Poe, Jr., Durham, for Margaret T. Massengill.

LAKE, Justice.

The plaintiffs' assignments of error Nos. 3, 4 and 5, relating to certain exceptions to the admission and exclusion of evidence, are deemed abandoned, the brief filed by the plaintiffs containing no argument or citation of authority in support of these exceptions or any other reference thereto. Rule 28 of the Rules of Practice in the Supreme Court.

Assignment of error #6 relates to the admission of testimony by Mrs. Massengill. Upon questions proper in form, she was permitted, over objection, to state that the original purchase price agreed upon between Mr. Pendergrass on the one hand and the Massengills on the other was $16,000, of which the Massengills paid "down" $2,000, and that the house on Lot 15 had been completed when they moved into it. There was no error in the admission of this testimony. On cross examination, Mrs. Massengill testified that she had no personal knowledge of the amount of the down payment except for a payment of $100 when they went to look at the house and what her husband had told her. The plaintiffs did not move to strike the former testimony as a result of this admission on cross examination. In any event, the testimony that the house was completed when the Massengills moved in could not be prejudicial to the plaintiffs and there is ample evidence in the record, apart from the testimony by Mrs. Massengill, to support the court's finding that the Massengills, at the time of the original transaction, paid Mr. Pendergrass $2,000, in addition to the $8,500 borrowed from Home Savings & Loan Association. It not appearing that the trial judge rested his finding upon this testimony by Mrs. Massengill, it will be presumed that he disregarded it. State Farm Mutual Automobile Insurance Co. v. Shaffer, 250 N.C. 45, 108 S.E.2d 49; Bizzell v. Bizzell, 247 N.C. 590, 605, 101 S.E.2d 668. There is no merit in assignment of error #6.

Assignment of error #1 relates to 11 exceptions to findings of fact made by the trial court and set forth in its judgment. We have carefully considered each of these exceptions. Each fact so found is amply supported by the evidence, the allegations of the plaintiffs' own complaint or reasonable and proper inferences and computations based thereon. Many of the findings are in the exact wording of the testimony of Mr. Pendergrass and his witness, Mr. Spears. The parties having waived trial by jury, the findings of fact, supported as they are by evidence, are binding upon this Court on appeal. Young v. State Farm Mutual Auto. Insurance Co., 267 N.C. 339, 148 S.E.2d 226; Great American Insurance Co. v. Holiday Motors of High Point, Inc., 264 N.C. 444, 142 S.E.2d 13; Johnson v. Johnson, 262 N.C. 39, 136 S.E.2d 230; Gasperson v. Rice, 240 N.C. 660, 83 S.E.2d 665. There is no merit in assignment of error #1, or any portion thereof.

Assignment of error #2 relates to the conclusions of law drawn by the trial court and to the provisions of its judgment entered thereon.

The record discloses no breach of contract, misrepresentation or other wrongdoing by, or any unjust enrichment of Home Savings & Loan Association. It made a loan to the Massengills, the entire proceeds of which were paid over to Mr. Pendergrass. It took from the Massengills a deed of trust upon a lot conveyed to them by him. When he discovered that he had conveyed the wrong lot by mistake, the Association twice acquiesced in plans conceived by his then attorney for the correction of his error. At the request of his then attorney, it caused the deed of trust securing the note held by it to be foreclosed, default having then occurred in the payments upon such note. At the foreclosure sale it placed a bid, as it had been requested by his attorney to do, for the full amount required to discharge the note secured by the deed of trust. It was Mr. Pendergrass, not the Association, who prevented the complete execution of his attorney's plan for the correction of his mistake. There is nothing to indicate that the Association would not have reconveyed Lot 13, as it had agreed with his attorney to do, if he had permitted it to become the purchaser at the foreclosure sale. No doubt, he bid at the sale due to fear that otherwise he would lose the investment made by him in constructing the new house on Lot 13 after his discovery of his original mistake. Be that as it may, the record shows no action by the Association except such as it was requested to take by the plaintiffs' then attorney. Upon Mr. Pendergrass' election to buy Lot 13 at the foreclosure sale, the Association did nothing other than to receive from the trustee that portion of the proceeds of the sale to which it was entitled under the provisions of the deed of trust. The title to Lot 13 now reposes exactly where both plaintiffs wanted it. Any payment by them to bring about that result was due to their voluntary action without any inducement by the Association.

The plaintiffs brought this action to recover legal title to Lot 15 free from any claim of the Association. They have done so. The record does not indicate that the Association has ever had or claimed any right, title or interest in or lien upon Lot 15. There is nothing in the record to indicate that the Association instigated, brought about, advised, or knew about the registration by the plaintiffs' then attorney of the deed conveying Lot 15 to the Massengills.

The plaintiffs have neither alleged nor proved any right of action against Home Savings & Loan Association. There was, therefore, no error in the dismissal of the action as to it and the judgment for the recovery by it of its costs.

The defendant Samuel F. Gantt is neither alleged in the complaint nor shown by the evidence to have had any connection whatever with any of these matters except that he prepared the original conveyances and examined the title to Lot 13 for the Massengills and Home Savings & Loan Association, he was trustee in the second deed of trust given upon Lot 13 to secure Mr. Pendergrass, and he advised Mrs. Massengill concerning the foreclosure. The deed of trust to him as trustee was wiped out by the foreclosure of the first deed of trust, as a result of which Mr. Pendergrass reacquired Lot 13. There is no suggestion that Mr. Gantt knew of, or was responsible for, the original mistake in conveying Lot 13 instead of Lot 15. It is not alleged in the complaint, or otherwise suggested in the record, that Mr. Gantt has ever claimed any right, title or interest in or lien upon Lot 15. The plaintiffs having neither alleged nor proved any right of action against Samuel F. Gantt, there was no error in the dismissal of the action as to him or in the judgment that he recover his costs.

The court having adjudged that the deed conveying Lot 15 to the Massengills is void and having ordered it cancelled upon the record, the plaintiffs have recovered legal title to Lot 15, which is the subject of this lawsuit. The only question remaining is whether the trial court erred in decreeing that the plaintiffs' title thereto be subject to an equitable lien in favor of the Massengills to the amount of $4,431.01.

With reference to the amount of this lien, so imposed, there is ample evidence, apart from the testimony of Mrs. Massengill, that the purchase price of the house and lot agreed upon originally between Mr. Pendergrass and the Massengills was $16,000. He alleged in his complaint that it was "approximately $16,000." The revenue stamps attached to the deed from him to them are consistent with such price, and are in excess of what would have been required had it been $15,000, as he testified. It is undisputed that, contemporaneously with the conveyance to them, the Massengills executed to Home Savings & Loan Association a first deed of trust and a note for $8,500, the full proceeds of which were paid to Mr. Pendergrass, and executed and delivered to him their note for $5,500 secured by a second deed of trust. The difference between these two deeds of trust and the agreed purchase price, so established, is $2,000, which the court found as the "down payment" made by the Massengills to Mr. Pendergrass. His own testimony is that the Massengills paid to him on the note secured by the second deed of trust $1,750, including $500 on account of interest. The evidence is undisputed that after they moved into the house on Lot 15, believing they were the owners of it, the Massengills borrowed an additional $3,000 which they expended in improvements upon the house and lot. There is nothing in the record to indicate that these improvements did not increase the value of Lot 15 and the house thereon by that amount. Presumably, the note given by the Massengills for this loan was secured by a third deed of trust on Lot 13, which has been wiped out by the foreclosure sale at which Mr. Pendergrass, through his nominee, acquired title to Lot 13. However, the liability of the Massengills upon their note would not be wiped out thereby. In computing the equitable lien decreed by him, the trial judge allowed only the amount of $681.01 actually repaid by the Massengills on this improvement loan. Obviously, the plaintiffs have not been prejudiced by this computation of the increase in the value of Lot 15, and the house thereon, by these actions of the Massengills.

The plaintiffs now have the legal title to all of the land they owned before the original transaction got under way. There is no legal encumbrance, related to these transactions, upon either lot. To recover Lot 13 the plaintiffs paid out at the foreclosure sale $8,022.92 (exclusive of $100 which presumably was paid over to Mr. Pendergrass on his note secured by the second deed of trust).

The Massengills now own neither lot. They have paid to Mr. Pendergrass on account of these transactions $2,000 as "down payment," $8,500 borrowed from Home Savings & Loan Association, and $1,750 on their note given to him, a total of $12,250 in cash. In addition, they have benefited Lot 15, now restored to the plaintiffs, by an amount which the trial court conservatively computed at $681.01. Thus, the curtain falls upon the drama with the plaintiffs owning all of the land and having received a total of $4,908.09 in cash and improvements upon their property, in excess of the amount paid out by them to regain Lot 13. The equitable lien fastened upon their property by the judgment was for only $4,431.01. Clearly, the plaintiffs have not been prejudiced by the trial court's calculation of the amount of the lien, if the lien is otherwise proper.

In Beacon Homes, Inc. v. Holt, 266 N.C. 467, 146 S.E.2d 434, we held that one who in good faith, and as the result of a reasonable mistake of fact, builds an improvement upon the land of another, may recover from the landowner the amount by which the value of the land has been so increased if the landowner retains the improvement. The case for recovery is even stronger where, as here, the mistake was the result of a misdescription in a deed from the landowner to the improver.

In United States Fidelity & Guaranty Co. v. Reagan, 256 N.C. 1, 122 S.E.2d 774, Parker, J., now C. J., speaking for the Court, said:

"It is a thoroughly well established general rule that money paid to another under the influence of a mistake of fact, that is, on the mistaken belief of the existence of a specific fact material to the transaction, which would entitle the other to the money, which would not have been paid if it had been known to the payor that the fact was otherwise, may be recovered, provided the payment has not caused such a change in the position of the payee that it would be unjust to require a refund."

In Tomlinson v. Bennett, 145 N.C. 279, 59 S.E. 37, Connor, J., speaking for the Court, said:

"The law will imply a promise to repay money received, when there is a total failure of the consideration upon which it was paid. It would be against good conscience and equity to retain it."

To the same effect, see: Allgood v. Wilmington Sav. & Trust Co., 242 N.C. 506, 88 S.E.2d 825; Sparrow v. John Morrell & Co., 215 N.C. 452, 2 S.E.2d 365; Morgan v. Spruill, 214 N.C. 255, 199 S.E. 17; Pool v. Allen, 29 N.C. 120.

Here, by reason of the mutual mistake of the parties in the description of the land intended to be conveyed to the Massengills, there was a total failure of the consideration for which they paid Mr. Pendergrass the above sums of money. Consequently, they had a cause of action, founded upon equity and good conscience, for the recovery of the payments so made to him, against which he was entitled to set off the sum paid by him to recover Lot 13 (less the $100 thereof which came back to him as holder of the note secured by the second deed of trust), which payment extinguished the note given by the Massengills to Home Savings & Loan Association.

The plaintiffs, having invoked the equity powers of the superior court to remove a cloud upon their title to Lot 15, may be required by the court to do equity. For that purpose, the court was authorized to fasten an equitable lien upon Mr. Pendergrass' interest in Lot 15 to secure the payment by him to the Massengills of that which in equity and good conscience he should pay back to them. 53 C.J.S. Liens § 4; 33 Am.Jur., Liens, §§ 18 and 21; 27 Am.Jur., Improvements, § 30.

Although Miss Ruth Pendergrass did not receive any of the payments made by the Massengills and it is not shown that the value of that portion of Lot 15, which reverts to her upon the cancellation of the deed, was benefited by the improvements made by the Massengills, she has been a participant in the plans and negotiations for the correction of the original mistake in the deed given by her father to the Massengills. Throughout these negotiations, she has consented to treat all of Lot 15 as if it were owned entirely by Mr. Pendergrass and to the conveying of it to the Massengills so as to correct his original mistake. The record shows clearly that, but for these negotiations so participated in and consented to by Miss Ruth Pendergrass, there would have been no default by Mrs. Massengill in the payment of the note secured by the first deed of trust on Lot 13. Because of such default Mr. Pendergrass has reacquired title to Lot 13 and the house he built thereon after discovering the mistake in the original deed to the Massengills. Miss Ruth Pendergrass is, therefore, estopped to assert that the portion of Lot 15 owned by her should not, for the purpose of the equitable lien, be treated as if it were owned by her father.

The Massengills entered into possession of Lot 15 and the house thereon in good faith, believing that they were the owners thereof. They have instituted no action to rescind their contract or to cancel any conveyance. But for Mr. Pendergrass' departure from the plan evolved by his then attorney, the confusion originating in the mistake in his deed to the Massengills would have been removed and the original contract carried out with only such modification as was made necessary by the disappearance of E. S. Massengill. Mrs. Massengill moved out of the house as soon as practicable after the plaintiffs made it clear that they did not intend to carry out the plan, which she had been requested by their then attorney to follow, and which she had followed. The plaintiffs, having brought about the collapse of that plan, are not in a position to assert that in equity and good conscience the Massengills should now be held liable for the rental value of Lot 15, and the house thereon, during their occupancy thereof. There was, therefore, no error in the failure of the court to subtract such rental from the amount of the equitable lien fastened by the judgment upon Lot 15 in favor of the Massengills.

Affirmed.