Olcott v. Bynum
Annotate this Case
84 U.S. 44 (1872)
U.S. Supreme Court
Olcott v. Bynum, 84 U.S. 17 Wall. 44 44 (1872)
Olcott v. Bynum
84 U.S. (17 Wall.) 44
Under the statutes of North Carolina regulating the conveyance of real estate in that state, no copy of a registered copy of a deed can be read in evidence in place of the original, even if it be proved that the original is lost.
A resulting trust of land does not arise in favor of one of two joint purchasers unless his part is some definite portion of the whole, and what money he pays is paid for some aliquot part of the property, as a fourth, third, or a moiety. Nor can it arise in any case for more than the
money actually paid. Thus, if B. buy land worth $25,000, and with A.'s money pay $5,000 and give his own bond and mortgage for the balance, no trust results for more than the $5,000 at best.
A resulting trust cannot be created toy advances or funds furnished after the time when the purchase is made.
There not being in North Carolina any statutory provision relating to express trusts, "manifested and proved," similar to the provision in the seventh section of the statute of frauds, such trusts in that state stand as at common law.
A deed of trust with power of sale (a deed, therefore, in the nature of a mortgage) provided that money should be paid in three equal installments, and that in default of payment of anyone "that may grow due thereon," all the mortgaged premises might be sold and a deed of the premises made to the purchaser, and that it should be lawful for the trustee "out of the money arising from such sale to retain the principal and interest which shall then be due," rendering the overplus to the mortgagor. Held (the property being incapable of advantageous sale in parts), that when one installment fell due, the trustee had a right to dell, and though there wets a surplus above what was necessary to pay the installment due, yet that the trustee might reserve the whole and apply it to the residue of the mortgage debt.
A sale of a large and valuable property under a deed of trust in the nature of a mortgage, held under the proofs to have been properly made in a body, and for cash alone, and on the premises themselves, though they were in a remote part of Virginia.
In the year 1854, the High Shoals Manufacturing Company owning 14,873 acres of land in the counties of Lincoln, Gaston, and Cleveland, in North Carolina, having upon it two water powers, abounding in iron ore and other minerals, and having erected thereon two iron works, forges, furnaces, machinery, and other fixtures for the manufacture of iron, sold the same, in a body, to one Groot, who paid $75,000 therefor; $25,000 in cash and a mortgage of $50,000 to two persons, Bynum and Grier, trustees for the High Shoals Company. This mortgage not being paid, Bynum and Grier, on the 1st of January, 1859, foreclosed it by a public sale of the property in a body; one Hovey presenting himself as the purchaser. As a matter of fact, however, Hovey was only "a man of straw," the real purchasers being one Olcott and a certain Stephenson. There had been an agreement previous
to this sale that the purchase money (which proved to be $48,500) should be paid:
Money down . . . . . . . . . $ 8,500
Balance, mortgage. . . . . . 40,000
And it was so paid.
The money down was paid by Olcott and Stephenson,
and thus made up cash . . . . . . . . . . . . . . . . $6,800
Certain dividends due Stephenson (equivalent to
cash) assigned. . . . . . . . . . . . . . . . . . . . 1,700
A deed was accordingly made to Hovey January 1, 1859, and on the same day, Hovey gave a deed of trust with power of sale, or deed in the nature of a mortgage, for the balance, which was to be paid:
1860, January 1 . . . . . . . . . . . $13,333.33
1860, July 1. . . . . . . . . . . . . 13,333.33
1861, January 1 . . . . . . . . . . . 13,333.34
All with interest from January 1, 1859.
The deed of trust which was accompanied by a penal bond, provided,
"That if default shall be made in the payment of the said sum of money, or the interest that may grow due thereon, or of any part thereof, that then, and upon failure of the grantor to pay the first or any subsequent installment, as hereinbefore specified, it shall be lawful for the trustee to enter upon all and singular the premises hereby granted and to sell and dispose of the same and all benefit and equity of redemption &c., and to make and deliver to the purchaser or purchasers thereof a good and sufficient deed for the same, in fee simple, and out of the money arising from such sale to retain the principal and interest which shall then be due on the said bond or obligation, together with the costs and charges of advertising and sale of the same premises, rendering the overplus of the purchase money, if any there shall be, unto the said Hovey &c.; which sale so to be made shall forever be a perpetual bar, both in law and equity, against the said Hovey, his heirs and assigns, and all other persons claiming the premises, or any part thereof, by, from, or under him, them, or either of them. "
A few days after the conclusion of these arrangements -- that is to say on the 8th of January, 1859 -- Hovey, as he testified in a deposition found in the record and as Olcott himself also testified, conveyed the premises to Olcott and Stephenson by deed in due form. But no such deed was now to be found, nor any registry of it. It was proved to have been lost, and a certified copy from the proper office was produced of a copy which had been registered there.
On the 18th of December, 1867, Stephenson released all his interest to Olcott, by deed in due form, of whose existence there was no question. Default in the first payment secured by the mortgage being made, the mortgagees, on the 31st of January, advertised the property for sale on the 8th day of March, 1860. Upon hearing of the advertisement of sale, Stephenson and Olcott wrote to Bynum, the acting trustee, as follows:
"NEW YORK, February 25, 1860"
"DEAR SIR: You will recollect that when the High Shoal property changed hands in January, 1859, we stated to you that our aim would be to pay off the entire amount of the mortgage before the expiration of the year. To bring about a result so desirable to all parties interested, we have taken the position with our friends, in organizing a new company, that a less sum than the whole amount required to satisfy the mortgage would not answer our purpose. This, we have felt assured, was the true policy for us to pursue, and the only ground we could take and do justice to them and realize what we had encouraged you to expect. We are now, we think, on the eve of accomplishing our aim, having already a large part of the required sum offered to us, but as we may not be prepared with the whole amount on the day fixed by you in the advertisement, we beg to ask the postponement of the day of the sale for a short time under the conviction that we shall be able to meet your wishes and our own at a very early day, and much in advance of the average time named in the mortgage. We should like to have the time of payment put off to the 1st May, but if that is longer than you think ought to be granted, we must be satisfied with a shorter date."
"Although, by the strict letter of the contract, you have the
right to require us to fulfill its conditions punctually, yet in view of the large amount already paid to the stockholders of the company which you represent and the still larger sum expended upon the property, we hope it will not be deemed necessary to compel us to sacrifice these large disbursements at a time when the delay of a few weeks will enable us to protect them and cannot jeopard or in any way prejudice the rights of those you represent."
"Recollecting and appreciating the good feeling evinced towards us by the stockholders of the old company during our long struggle with outside claimants, we dare venture to hope for the continuance of their indulgence for the brief period asked for to enable us to bring this our determined effort to cancel the entire debt to a successful issue."
"Believing that your good wishes are with us and that you will, as far as you can consistently with your obligations to others, grant our request,"
"We are, very respectfully, yours &c.,"
"E. S. STEPHENSON"
"TO W. P. BYNUM, ESQ. &c."
The sale was accordingly postponed, and on the 19th of March, 1860, the property was again advertised as about to be publicly sold "at the High Shoals, Gaston County, N.C.," on the 28th of April, it being announced that "the sale will be positive and for cash."
This and the further history of the matter was thus given in the testimony of Bynum himself:
"I postoponed the sale to the 28th of April in compliance with the request of Messrs. Stephenson and T. Olcott, having business elsewhere on the 1st May. Mr. Olcott was informed of this postponement both by letter from myself and from Thomas Darling, the agent upon the premises, and I was informed by the said agent that the arrangement was satisfactory to all the parties. On the 28th April, the property was duly exposed to public sale by me and Grier, as mortgagees, when and where (on the premises at the High Shoals), William Sloan, as the agent of the High Shoals Manufacturing Company, being the creditors, became the highest bidder and purchaser, at the sum of $43,200 the estimated debt and interest due on the mortgage. I am not
aware that there was any opposition bid or that he made more than one bid. At the time of the sale, the creditor company were anxious to realize that debt without purchasing in the property. I and others accordingly made every reasonable effort, both before and at the sale, to induce the mortgagees to pay, or third parties to buy the property, and in fact I did induce several capitalists from Charlotte to attend the sale with the view of buying. But on surveying the property, they concluded to run the same to $35,000 and no more. At the time of sale, and during the entire bidding, both Hovey, the mortgagor, and Darling, the agent of the New York company, were personally present and assenting thereto, well knowing that Sloan was bidding in behalf of the creditors, the old High Shoals Company. I expressly deny that Sloan was the agent of the mortgagees or employed by them to bid off the property, but known that he was directed by the High Shoals Company to bid for them to the amount of their debt and no more. I was, before said sale, informed, both by Hovey and Darling that the purchasers had failed and were unable to meet the payments, and they acknowledged the necessity of the sale and acquiesced in it, as representing the New York company. After the sale, the same day, or shortly thereafter, the penal bond of Hovey for $80,000 was credited with amount of said bid by Sloan, and the bond itself was cancelled in satisfaction of said debt."
"Mr. Olcott came to North Carolina and visited this property in the year 1860, and after said sale, and in repeated conversations with me, and with a full knowledge of said sale and all the circumstances connected with it, acknowledged the validity of the sale and the full and complete title of the purchasers at it. In the summer of 1860, he, on two occasions, visited me with the view of procuring a lease on a portion of said property for gold mining purposes and the further view of purchasing the entire property if his mining project proved successful. In fact he did procure from me a mining lease (to himself and one Muir) on a part of the property, which was in writing and for the period of six months from that time, subject to be revoked at any time on the sale of the property. And I am informed that he did make explorations &c., but finally abandoned his lease and left the state in April, 1861, or thereabouts. In March, 1862, by the direction of the High Shoals Manufacturing Company, I contracted to sell the property to R. & J. L. Bridgers
for the sum of $65,000; $30,000 of said sum was to be paid in North Carolina bank bills, and the said sum was accordingly paid in miscellaneous bills of the various banks of the state, then considerably depreciated. The balance, being $35,000, was to be paid in specie or equivalent, in three and four years, with interest. The interest for two years has been paid on said debt and the balance is still due and unpaid. When the Messrs. Bridgers bought in March, 1862, they immediately took possession, and worked the property until their sale to Admiral Wilkes, in 1865, when the said Wilkes entered into possession, and has ever since occupied and worked the same."
After the sale of April 28, 1860, no deed was ever executed by Bynum and Grier to Sloan until June 12, 1860.
In this state of things Olcott, on the 22d of April, 1868, filed a bill in the court below, against Bynum and Grier (the trustees), Sloan, Bridgers, and Wilkes, setting out:
The purchase by Hovey for him, Olcott, and the Stephenson already mentioned, an express trust.
That the sale was not an execution of the powers of the mortgage deed, but an attempt irregularly to foreclose the mortgage by a mere agreement between Bynum and Grier, and Sloan, without any regard to the interest of the plaintiff and Stephenson, and was void against them.
That the exposure to sale of said property in solido, at public auction, for cash, on the premises, in a remote and unfrequented neighborhood, when there was due not more than $14,500 of the mortgage debt, was highly injurious to the mortgagors, and gave an assurance to the mortgagees of a foreclosure at an amount not greater than their debt.
That the property was easily susceptible of division, and that a fraction thereof would have brought the amount due at the time of sale, such amount being within the compass of the means of bidders; that the property was situated far in the interior of the country, where capital did not abound, where there were divers iron manufactories on a small scale, embracing investments of from $2,000 to $10,000, but that there was no ground for expecting a purchaser of the whole property at a cash sale, unless it were the mortgagees or
their trustees, and that the result was a sacrifice of the property at such price as they chose to bid; that but a single bid was made, and that by the defendant, Sloan; that upon this, the property was knocked down, but no money was paid and no deed executed, and soon thereafter the said trustees, the vendors, took possession in their character as such.
That the effect of this course of proceeding, unless relieved against by this Court, would be to deprive the plaintiff of a property which had already been sold for $75,000 and was then worth more than that sum to satisfy a balance of $40,000, of which only one-third was then due.
That on account of the threatening aspect of affairs in the Southern country, resulting in war, neither the plaintiff nor Stephenson visited North Carolina again until since the close of the war, after the announcement by the Chief Justice of this Court that the federal courts were again in the exercise of their full jurisdiction in that state.
That the purchasers, Messrs. Bridgers, in the first instance and Charles Wilkes in the second, had notice of the equities of the plaintiff in the premises.
Answers having been put in, testimony was taken.
Bynum testified that he had an interest as a stockholder in the old High Shoals Company of $1,200; that the property in question was the most valuable property in that vicinity;
"that in the section of country where this property is situated he had never known property of the value of $40,000 or upwards set up at auction sale, in the lump for cash, but this."
"That the question whether the property could best be sold in separate parcels with advantage to any of the parties concerned was fully discussed by the stockholders of the original company before the sale, and it was deemed by them totally impracticable, as they could not by such a course obtain money enough to pay off the debt."
"If the sale had been on credit, it might have been more advantageous to have offered the property in parcels, but that, selling for cash, it was better to sell in bulk."
He testified further that he was bidding only for the High Shoals
Company, not for Bynum and Grier, and that after the sale of the 28th of April, 1860, Olcott proposed to him to join in a new purchase of the property.
White, who had been acquainted with the property for thirty years, testified that in his opinion, "the property could not be divided without destroying its value as an iron property."
It was further testified by Bynum that during the six years in which the property was held by Groot and by Olcott and Stephenson, several thousand dollars' worth of timber was destroyed and several thousand dollars' worth of ore was dug, and that the mills, machinery, dwellings, buildings, and fences were suffered to go to decay, to the great loss of the property.
"That before the sale to Groot, the company was leasing the property for $5,000 per annum, but when they took possession again, under the sale of the 28th of April, 1860, the property was so injured and out of repair that he was unable to lease the manufacturing and valuable part of the same, and was able to rent only the tillable lands for a very small sum, to-wit, about $500."
Witnesses of the other side, however, testified that much money had been laid out by Hovey and Stephenson on the property.
The court below dismissed the bill, holding that under the statutes of North Carolina, the copy of the copy of the unregistered deed from Hovey to Olcott and Stephenson, was not evidence, and therefore that Olcott had failed to show any connection with the property in question.
It may be well here to state that a statute of North Carolina [Footnote 1] enacts that:
"No conveyance for land shall be good and available in law, unless the same shall be proved and registered in the county where the lands lie."
And that an act of 1846 [Footnote 2] allows to be read in evidence "the registry or duly certified copy of the record of any deed" duly registered.
And finally, that the seventh section of the Statute of Frauds is not in force in the state named. The section thus enacts:
"All declarations or creations of trusts or confidences of any lands, tenements or hereditaments, shall be manifested and proved by some writing signed by the party who is by law enabled to declare such trust . . . or else they shall be utterly void and of no effect. "
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