Strange v. Sink , 27 N.C. App. 113 ( 1975 )

218 S.E.2d 196 (1975) 27 N.C. App. 113

Nellie M. Smith STRANGE
v.
Jean Barrier SINK.

No. 7519SC343.

Court of Appeals of North Carolina.

October 1, 1975. Discretionary Review Denied December 2, 1975.

Hartsell, Hartsell & Mills, P. A. by W. Erwin Spainhour, Concord, for plaintiff appellee.

Williams, Willeford, Boger & Grady by John Hugh Williams, Concord, for defendant appellant.

Discretionary Review Denied by Supreme Court December 2, 1975.

CLARK, Judge.

Defendant contends that this case falls within the Gaylord rule that "a parol trust in favor of a grantor may not be engrafted on a warranty deed in the absence of fraud, mistake or undue influence." This proscription in Gaylord v. Gaylord, 150 N.C. 222, 63 S.E. 1028 (1909) has been approved and applied in many subsequent cases.

On the other hand, plaintiff contends that she was the beneficial owner under a resulting trust which arose by operation of law and that legal title held by defendant as trustee should be transferred to plaintiff.

The principal function of a deed is to evidence the transfer of a particular interest in land, and a parol trust in favor of the grantor would change the nature of a deed absolute, would violate the parol evidence rule, and may not be shown. 2 Stansbury, N.C. Evidence 2d, § 255 (Brandis rev. 1973). However, a parol trust in favor of a third person, is generally not within either the parol evidence rule or statute of frauds. Wells v. Dickens, 274 N.C. 203, 162 S.E.2d 552 (1968); Hoffman v. Mozeley, 247 N.C. 121, 100 S.E.2d 243 (1957); Creech v. Creech, 222 N.C. 656, 24 S.E.2d 642 (1943); Britt v. Allen, 21 N.C.App. 497, 204 S.E.2d 903 (1974).

A resulting trust arises where a person makes or causes to be made a disposition of property under circumstances which raise an inference that he does not intend that the person taking or holding the property should have the beneficial interest therein and the beneficial interest is not otherwise effectively disposed of. Resulting trusts are established by equity for the purpose of carrying out the presumed intention of the parties. In addition to general definitions, resulting trusts are frequently defined by specific circumstances which have been found to give rise to them. One such situation rests upon the general rule that in the absence of circumstances indicating a contrary intent, where the purchase price is paid with the money of one person and the title is taken in the name of another, for whom he is under no duty to provide, a trust in favor of the payor arises by operation of law and attaches to the subject of the purchase. Creech v. Creech, supra; Willetts v. Willetts, 254 N.C. 136, 118 S.E.2d 548 (1961).

The resulting trust is created by operation of law and arises from the character of the transaction and not necessarily from a declaration of intention. Thus, the fact that the payor of the purchase money has previously obtained the consent of the other person to the placing of the title in his name does not prevent the creation of a resulting trust; he simply consents to an obligation imposed by the law. Randle v. Grady, 224 N.C. 651, 32 S.E.2d 20 (1944).

In this case the plaintiff and her husband were tenants by the entirety. Having agreed to separate and to divorce, they executed a separation agreement, which included a provision that plaintiff become the owner of the entirety property, the homeplace, and that her husband receive certain personal property including the payment of $1,000.00 by plaintiff. Neither owned a separate estate or interest in the entirety property. They joined as grantors in the deed to defendant and her husband on the advice of counsel for the obvious purpose of effecting, by means of the proposed deed to the plaintiff, the transfer of the entirety property to her as agreed. Under these circumstances, the well-established Gaylord rule, that a parol trust in favor of a grantor cannot be engrafted onto a warranty deed absolute on its face, has no application to this case because it ignores the well-established nature of tenancy by the entirety, which was recognized as early as the Fourteenth Century and by the Supreme Court of North Carolina as early as 1837. Motley v. Whitemore, 19 N.C. 537 (1837); Woolard v. Smith, 244 N.C. 489, 94 S.E.2d 466 (1956).

Tenancy by the entirety is sui generis, and arises from the singularity of relationship between husband and wife. As between them there is but one owner and that is neither the one nor the other, but both together, in their peculiar relationship to each other, constituting the proprietorship of the whole and every part and parcel thereof. Johnson v. Leavitt, 188 N.C. 682, 125 S.E. 490 (1924). It is on the doctrine of Unity of Person that estates by the entireties, with right of survivorship, rest; the husband and wife, though twain, are regarded as one; neither has a separate estate or interest. Freeman v. Belfer, 173 N.C. 581, 92 S.E. 486 (1917); Moore v. Trust Co., 178 N.C. 118, 100 S.E. 269 (1919); Bank v. Hall, 201 N.C. 787, 161 S.E. 484 (1931).

We find that the grantor was the entirety entity which conveyed the entirety property to trustees, defendant and her husband, for the benefit of a third party, the plaintiff, and that, therefore, this case comes within the traditional resulting trust situation where the consideration is paid by one but title is taken in the name of another, who by law holds title in trust for the payor.

Though on appeal the defendant emphasizes her claim that as a matter of law the trial court erred in not directing a verdict, she also seeks a new trial for error in the jury instructions. After defining resulting trust the court concluded as follows:

"Also, as in this case, ladies and gentlemen, a resulting trust arises when a person conveys property to another with intention at the time of the conveyance or before the conveyance that that person will reconvey the property after special conditions have been met."

The defendant contends that the words "as in this case" constitute an expression of opinion and invades the province of the jury. This contention has obvious merit when considered alone, but considering the charge as a whole, we find instructions, which preceded the alleged error, that Plaintiff alleges a resulting trust and seeks to establish a resulting trust. Following the alleged error, the court, in its final mandate, places the proper burden on the plaintiff to satisfy the jury by clear, strong and convincing evidence of all the material, factual allegations in her complaint. Considering the charge as a whole, we find lapsus linguae on the part of the trial judge, who in applying the law to the evidence obviously intended to inform the jury only that the case involved a resulting trust, and that the jury clearly understood from the charge that the plaintiff had the burden of proving the trust. Therefore, the error was not prejudicial and does not warrant a new trial.

In his brief, counsel for defendant candidly concedes that, "there are certain equities in favor of plaintiff." The testimony of the plaintiff relative to the trust agreement was supported by the testimony of the defendant's former husband and by the written separation agreement. Admittedly, plaintiff was in continuous possession of the subject property. Clearly this with other evidence was sufficient to deny defendant's motion for directed verdict and to support the jury verdict.

No error.

MORRIS and VAUGHN, JJ., concur.