Evalyn Carson PERKINS
v.
Sidney E. PERKINS.
No. 243.
Supreme Court of North Carolina.
November 19, 1958.*666 Clayton & London, Charlotte, for plaintiff.
Peter H. Gerns, Charlotte, for defendant.
DENNY, Justice.
We shall first consider the plaintiff's appeal.
The plaintiff assigns as error the overruling of her demurrer ore tenus to the defendant's first further answer and defense by way of counterclaim or crossaction.
The plaintiff is relying on two grounds for reversal of the ruling on her demurrer ore tenus.
It is conceded that the deed from Thomas P. Perkins and wife to the plaintiff is a fee simple deed on its face. It further appears from the defendant's evidence that Thomas P. Perkins held the absolute fee simple title to the property involved in this controversy at the time he and his wife executed the deed dated 17 August 1950, conveying the property to the plaintiff.
It is well settled in this jurisdiction that a deed absolute on its face cannot be converted into a mortgage without allegation and proof that the clause of redemption was omitted by reason of ignorance, mistake, fraud, or undue advantage. Streator v. Jones, 5 N.C. 449; Bonham v. Craig, 80 N.C. 224; Egerton v. Jones, 102 N.C. 278, 9 S.E. 2; Norris v. McLam, 104 N.C. 159, 10 S.E. 140; Sprague v. Bond, 115 N.C. 530, 20 S.E. 709; Newton v. Clark, 174 N.C. 393, 93 S.E. 951; Williamson v. Rabon, 177 N.C. 302, 98 S.E. 830; Newbern v. Newbern, 178 N.C. 3, 100 S.E. 77; Chilton v. Smith, 180 N.C. 472, 105 S.E. 1; Davenport v. Phelps, 215 N.C. 326, 1 S.E.2d 824, 825.
In the last cited case, Stacy, C. J., speaking for the Court pointed out that Pearson, J., in delivering the opinion in Sowell v. Barrett, 45 N.C. 50, said:
"Since the case of Streator v. Jones, [10 N.C. 423], there has been a uniform current of decisions, by which these two principles are established in reference to bills which seek to correct a deed, absolute on its face, into a mortgage or security for a debt:
"1. It must be alleged, and of course, proven, that the clause of redemption was omitted by reason of ignorance, mistake, fraud or undue advantage;
"2. The intention must be established, not merely by proof of declarations, but by proof of facts and circumstances, dehors the deed, inconsistent with the idea of an absolute purchase. Otherwise, title evidenced by solemn deeds would be, at all times, exposed to the `slippery memory of witnesses.'"
Moreover, in order to correct a deed absolute on its face into a mortgage, it must not only be alleged and proven that the clause of redemption was omitted by reason of ignorance, mistake, fraud or undue advantage, the quantum of proof in such case must be clear, strong and convincing. Davenport v. Phelps, supra; Ray v. Patterson, 170 N.C. 226, 87 S.E. 212.
The second ground upon which the plaintiff argues that her demurrer should have been sustained is bottomed on the ground that the defendant was not a party to the deed under which the plaintiff holds the title, and, therefore, he has no legal or equitable right to have the deed reformed. We think this position is also well taken.
It is said in Sills v. Ford, 171 N.C. 733, 88 S.E. 636, 638, "`A court of chancery *667 cannot (for example) change an agreement between A. and B. into one between A. and C.' Bispham's Pr. of Equity, § 468. * * * The authorities are uniform in holding that the relief by reformation of a written instrument will be granted to the original parties thereto, and to those claiming under or through them in privity. Eaton on Equity, p. 621; 24 Am. and Eng.Enc. (2d Ed.), p. 655, and note 87, and Adams v. Baker, 24 Nev. 162, 51 p. 252, in which case it was held: `In all cases of mistake in written instruments, courts of equity will interfere only as between the original parties, or those claiming under them in privity, such as personal representatives, heirs, devisees, legatees, assignees, voluntary grantees or judgment creditors, or purchasers from them, with notice of the facts. Story's Equity Jurisprudence, § 165."
We hold that no privity exists between the plaintiff and the defendant under the facts revealed on the record before us. Hege v. Sellers, 241 N.C. 240, 84 S.E.2d 892; Sills v. Ford, supra; Moore v. Moore, 151 N.C. 555, 66 S.E. 598. However, if privity did exist between the plaintiff and the defendant, Thomas P. Perkins and wife would not be necessary parties since they conveyed their entire interest in the property to the plaintiff. Sills v. Ford, supra; Moore v. Moore, supra.
In view of the absence of any allegation in the defendant's pleadings to the effect that the clause of redemption was omitted by ignorance, mistake, fraud or undue advantage, together with the fact that the defendant was not a party to the instrument he seeks to reform, or in privity with the plaintiff in relation thereto, the demurrer ore tenus should have been sustained, and we so hold.
The plaintiff assigns as error the overruling of her demurrer ore tenus to the defendant's second further answer and defense by way of counterclaim or crossaction. The only allegation in this crossaction upon which the defendant bottoms his right to establish a parol trust in his favor is as follows: "That plaintiff agreed with the defendant to hold the said property in trust for him, and to reconvey the same under the agreement, that the said property was purchased wholly and completely from the funds of this defendant, and before he married the plaintiff, that the conditions of the trust have been satisfied * * *."
This allegation is not sufficient to warrant the submission of an issue pursuant thereto for the purpose of establishing a parol trust. If the defendant had alleged that the deed was made to plaintiff with the understanding and agreement that she would hold the property in trust for him and would convey the same to him upon the payment of a certain sum or sums of money to her, or upon the performance of some specific act or acts upon which the agreement was predicated, and had further alleged that he had complied with the conditions upon which the agreement was based, he would have stated a cause of action. He does allege that the conditions of the trust have been satisfied. What conditions? These he does not specify or disclose. The payment of the original purchase price by the defendant for the property in litigation before he married the plaintiff, is nothing more than the recital of a fact which is neither pertinent to nor challenged by the plaintiff in this action.
It is essential in a case like this for the pleader to allege the facts and circumstances that led up to and created the trust relationship. Rhodes v. Jones, 232 N.C. 547, 61 S.E.2d 725.
"It is well settled that the averments as to set-off or counterclaim must be definite and certain. Vague, general, and indefinite allegations are not sufficient. The counterclaim is substantially the allegation of a cause of action on the part of the defendant against the plaintiff, and it ought to be set forth with * * * precision and certainty." American Nat. Bank of Richmond, Va., v. Hill, 169 N.C. 235, 85 S.E. 209, 210; American Nat. Bank of *668 Richmond Va., v. Northcutt, 169 N.C. 219, 85 S.E. 210; G.S. § 1-135.
In Smith v. McGregor, 96 N.C. 101, 1 S.E. 695, 699, it is likewise said: "A counter-claim should be alleged with clearness and precision; its nature, and the consideration supporting it, when, how, and where it arose, should be stated with reasonable certainty. This the statute requires; and, moreover, it is necessary to just and intelligent procedure. The counter-claim is substantially the allegation of a cause of action on the part of the defendant against the plaintiffs, and it ought to be set forth with the same precision as if alleged in the complaint."
Moreover, the defendant alleges in paragraph two of this cross-action that the plaintiff paid no consideration whatsoever for said property when the same was purchased by the defendant; that she has no financial interest in the property and that he is entitled to have the court find that there is a resulting trust in his favor in the event the court should find that the deed to the plaintiff was not a mortgage.
In Carlisle v. Carlisle, 225 N.C. 462, 35 S.E.2d 418, 420, the husband had caused certain land to be conveyed from a third party to his wife, who would hold title to the land, which land was to be used for a campsite, for the joint benefit of herself and the plaintiff, her husband, until a corporation could be formed and the property conveyed thereto. No corporation was formed, and the plaintiff and defendant separated. We held: "The plaintiff and defendant being man and wife, the fact that the plaintiff paid the purchase price and caused title to be taken in his wife's name does not create a resulting trust in his favor for a one-half undivided interest in the land which he now claims; but, on the contrary, where a husband pays the purchase money for land and has the deed made to his wife, the law presumes he intended it to be a gift to the wife. (Citations omitted.) This presumption, however, is one of fact and is rebuttable. * * * A married woman is under no legal handicap which would prevent her from entering into an oral agreement with her husband to hold title to real estate for his benefit or for their joint benefit. Ritchie v. White, 225 N.C. 450, 35 S.E.2d 414. And to rebut the presumption of a gift to the wife, and to establish a parol trust in his favor, no greater degree of proof is required than is required to establish a parol trust under any other circumstances. To rebut the presumption of a gift to the wife, and to establish a parol trust, the evidence must be clear, strong, cogent, and convincing." Bass v. Bass, 229 N.C. 171, 48 S.E.2d 48.
In our opinion, the allegations in this cross-action are insufficient to withstand the demurrer ore tenus, and the exception to the ruling below is sustained.
It would seem that the question of consideration and whether or not the defendant made a gift of this property to the plaintiff are not pertinent matters, unless the defendant can establish a parol trust in his favor and rebut the presumption of a gift to the plaintiff. These are matters determinable in an action to establish a parol trust. We hold that the third and fourth purported cross-actions do not state or constitute causes of action. Therefore, the demurrer ore tenus as to them should have been sustained, and the ruling thereon in the court below is reversed.
Defendant's Appeal
The defendant assigns as error the refusal of the court below to permit him to amend his pleadings after verdict so as to allege that the clause of redemption in the deed from Thomas P. Perkins and wife to the plaintiff was omitted by reason of ignorance or mutual mistake.
The court properly refused to allow this amendment. The defendant's evidence is insufficient to support such an allegation if it had been allowed.
There is some evidence tending to show that the deed was given to the plaintiff at *669 the request of the defendant without any request on her part and was to be held by her as security for certain indebtedness owed by the defendant to the plaintiff. Even so, the defendant's evidence tends to show the conveyance was made in accord with his request. He testified, "I agreed to have this property conveyed to the plaintiff until I could pay her back and so that she would be protected in the event of my death, so that if I should die while this property was in her name, she would be able to take it. I did this for her own protection, so that in the event of my death my adopted daughter would not be able to contest any of plaintiff's right and to save her trouble. I left the deed recorded in her name even though I held a deed from her to the property. It is normal for any man who wants to leave his wife property at his death to protect her from anyone else coming in and making a claim to it."
The defendant further assigns as error the ruling of the court below, as a matter of law, that the deed from the plaintiff to her husband, the defendant, during coverture, without complying with the statutory provisions of G.S. § 52-12, is null and void. The ruling of the court below is in accord with the decisions of this Court and will be upheld. Davis v. Vaughn, 243 N.C. 486, 91 S.E.2d 165; Honeycutt v. Citizens National Bank in Gastonia, 242 N.C. 734, 89 S.E.2d 598.
The defendant assigns as error the admission of evidence in the trial below, offered by the plaintiff, to establish certain indebtedness as being due from the defendant to the plaintiff when her pleadings contain no allegations setting forth either the amount or details as to such indebtedness. In fact, as we interpret the complaint in this action, the plaintiff seeks only to remove the recorded deed from her to the defendant as a cloud upon her title to the property described in said deed. This assignment of error will be sustained.
In light of the conclusions we have reached on both appeals, the judgment entered below is hereby set aside and the cause is remanded to the end that judgment be entered setting aside the deed dated 18 September 1951 from the plaintiff to the defendant and which is recorded in the office of the Register of Deeds of Mecklenburg County, in Book 1889, page 20, and removing the same as a cloud on plaintiff's title to the property described therein.
However, if the defendant desires to pursue his efforts to establish a parol trust in connection with the conveyance of the property involved from Thomas P. Perkins and wife to the plaintiff, he must do so upon appropriate pleadings in this or in a separate action. Likewise, if the defendant is indebted to the plaintiff in any amount, by reason of the matters and things growing out of this controversy, then the plaintiff should accurately and concisely allege her cause of action in that respect.
Error and remanded.
PARKER, J., not sitting.