Stanley v. Cox

117 S.E.2d 826 (1961)

253 N.C. 620

Harry R. STANLEY and wife, Mae K. Stanley, v. Merle D. COX.

No. 597.

Supreme Court of North Carolina.

January 20, 1961.

*832 Adam Younce, Greensboro, for plaintiffs, appellants.

Smith, Moore, Smith, Schell & Hunter by Charles E. Melvin, Jr., Greensboro, for defendant, appellee.

PARKER, Justice.

Plaintiffs state in their brief, "the validity of defendant's claim of lien is governed by the state of the law in 1951, and involves the validity of the court's decree as a consent judgment for a lien to secure alimony in the divorce action of that year. G.S. 50-11. * * * In 1951 a consent judgment for alimony entered in an action for divorce a vinculo was unenforceable as a decree of court."

Ruffin, C. J., said for the Court in Rogers v. Vines, 28 N.C. 293: "Now, `alimony' in its legal sense may be defined to be that proportion of the husband's estate which is judicially allowed and allotted to a wife for her subsistence and livelihood during the period of their separation." This has been quoted with approval in Hester v. Hester, 239 N.C. 97, 79 S.E.2d 248, and in Taylor v. Taylor, 93 N.C. 418.

The divorce judgment recites, "by consent of the plaintiff, it is further ordered and decreed that the plaintiff shall pay to the defendant each, every and all the payments specified in the aforesaid agreement dated January 19, 1951." The agreement referred to in the divorce judgment is an executed separation agreement and property settlement, and is not alimony or a contract for alimony. For a discussion of the clear distinction between the provisions and considerations for a property settlement and those for alimony see 17A Am.Jur., Divorce and Separation, § 883 et seq. In the absence of a provision in the executed separation agreement and property settlement here to the contrary, it is not avoided or nullified by the subsequent divorce of the parties. Jenkins v. Jenkins, 225 N.C. 681, 36 S.E.2d 233, and cases cited; 42 C.J.S. Husband and Wife § 602, p. 188. See Jones v. Lewis, 243 N.C. 259, 90 S.E.2d 547, to the effect that an executed property settlement is not affected by a mere reconciliation and resumption of cohabitation.

Plaintiffs state further on in their brief, "plaintiffs do not attack the validity of the judgment as an approval of the contract for alimony. They attack only the lien of the judgment and seek to remove it as a cloud on title." Plaintiffs contend that the lien *833 upon the estate and property of plaintiff to make the payments to Merle D. Cox set forth in the separation agreement and property settlement cannot be enforced as a contract for the reason that Merle D. Cox did not consent to the lien of the judgment, and they so allege.

The judgment recites, "by consent of the plaintiff * * * it is further ordered and adjudged that said payments shall be and remain a lien upon the estate and property of the plaintiff." There appears on the face of the judgment the following: "Plaintiff consents to the last paragraph of the foregoing decree: Harry R. Stanley, Norman A. Boren, Attorneys for the Plaintiff."

It seems settled beyond question that liens can be created by agreement. 33 Am.Jur., Liens, p. 421. Generally, a lien can be created only by the owner, or by some person authorized by him. 33 Am. Jur., Liens, p. 423.

This Court said in Winborne v. Guy, 222 N.C. 128, 22 S.E.2d 220, 222: "The doctrine may be stated in its most general form, that every express executory agreement in writing, whereby the contracting party sufficiently indicates an intention to make some particular property, real or personal, or fund, therein described or identified, a security for a debt or other obligation, * * *, creates an equitable lien upon the property so indicated, which is enforceable against the property in the hands not only of the original contractor, but of his heirs, administrators, executors, voluntary assignees and purchasers or encumbrancers with notice. * * * Where there is an intention coupled with a power to create a charge on property, equity will enforce such charge against all except those having a superior claim. Such liens are simply a right of a special nature over the thing which constitutes a charge or encumbrance upon the thing itself." The first sentence quoted also appears in Godwin v. Murchison Nat. Bank, 145 N.C. 320, 59 S.E. 154, 17 L.R.A.,N.S., 935, and is taken from what now appears in Pomeroy's Equity Jurisprudence, 5th Ed., Vol. 4, p. 696, and also in earlier editions of Pomeroy. This language of Pomeroy has been approved by the Supreme Court of the United States in Walker v. Brown, 165 U.S. 654, 17 S. Ct. 453, 41 L. Ed. 865, and in United States v. Butterworth-Judson Corp., 267 U.S. 387, 45 S. Ct. 338, 69 L. Ed. 672. The doctrine clearly indicates an application of the maxim, equity regards as done that which ought to be done.

"In equity, any agreement in writing, however informal, made by the owner of land, upon a valid consideration, by which an intention is shown that the land shall be security for the payment of money by him, creates an equitable lien upon the land." Tiffany, Real Property, 3rd Ed., Vol. 5, § 1563, p. 659.

"The form or particular nature of the agreement which shall create a lien is not very material, for equity looks at the final intent and purpose rather than at the form; and if the intent appear to give, or to charge, or to pledge property, real or personal, as a security for an obligation, and the property is so described that the principal things intended to be given or charged can be sufficiently identified, the lien follows. Among the kinds of agreement from which liens have been held to arise, the following are some important examples: Executory agreements which do not convey or transfer any legal estate in the property, but which stipulate that the property shall be security, or which pledge it, for the performance of an obligation." Pomeroy's Equity Jurisprudence, 5th Ed., Vol. 4, § 1237, pp. 702-703.

This is said in 33 Am.Jur., Liens, p. 428: "An equitable lien on particular property, real or personal, enforceable against the owner, his heirs, personal representatives, or transferees, except bona fide purchasers for value, may be created by an express agreement by such owner that such property shall stand or be held as security for the payment of a specified debt or other obligation."

*834 A good example of an equitable lien is found in Walker v. Brown, supra [165 U.S. 654, 17 S. Ct. 456]. In that case, one T. E. Brown addressed to Walker & Co. a letter advising them that a loan of bonds, to the face value of $15,000, previously made by him to one Lloyd, for the use of the latter's firm, was "with the understanding that any indebtedness that they may be owing you at any time, shall be paid before the return to me of these bonds, or the value thereof, and that these bonds or the value thereof are at the risk of the business of Lloyd & Co., so far as any claim you may have against said Lloyd & Co. is concerned." Upon the faith of this letter Walker & Co. made sales to Lloyd & Co., and the latter firm subsequently failed. Shortly after the letter was written, and before the failure, Brown induced Lloyd & Co. to return to him the bonds, which he thereupon settled upon his wife. On a bill filed by Walker & Co., the Supreme Court of the United States held that the letter gave them an equitable lien on the bonds which could be asserted as against Brown's wife, who was a mere volunteer.

Webster, New International Dictionary, 2nd Ed., defines the word consent: "4. Law. Capable, deliberate, and voluntary assent or agreement to, or concurrence in, some act or purpose, implying physical and mental power and free action." Black's Law Dictionary, 4th Ed., defines the term consent: "A concurrence of wills. Voluntarily yielding the will to the proposition of another; acquiescence or compliance therewith."

The divorce judgment recites that the lien was created by consent of the plaintiff, and his consent is shown by the signature of his attorneys to the judgment. Considering the consent part of the divorce judgment to ascertain the intent of the parties, it seems manifest that the consent of plaintiff to the provision creating a lien to secure the payments specified in the separation agreement and property settlement between him and his wife was a concurrence of wills and agreement and contract between him and Merle D. Cox. Certainly, it was not an agreement or contract with anyone else. This Court said in Coppersmith & Sons v. Aetna Ins. Co., 222 N.C. 14, 21 S.E.2d 838, 840: "The signing of a written contract is not necessarily essential to its validity." The fact that Merle D. Cox by herself or by her attorney did not sign the consent part of the divorce judgment does not affect its validity as a consent part of the judgment. LaLonde v. Hubbard, 202 N.C. 771, 164 S.E. 359.

A consent judgment is the contract of the parties entered upon the records with the approval and sanction of a court of competent jurisdiction. In re Will of Pendergrass, 251 N.C. 737, 112 S.E.2d 562. It depends for its validity upon the consent of both parties, without which it is void. Ledford v. Ledford, 229 N.C. 373, 49 S.E.2d 794.

The attorneys for plaintiff, one of whom is a plaintiff in the instant case, having signed the consent part of the divorce judgment creating the lien plaintiffs assail, are presumed to have acted in good faith, and to have had the necessary authority from their client, and not to have betrayed his confidence or to have sacrificed his rights. Gardiner v. May, 172 N.C. 192, 89 S.E. 955. No lack of authority on their part is averred in plaintiffs' complaint. The consent of Merle D. Cox to the divorce part of the divorce judgment creating the lien in effect is alleged in the complaint as follows: "Merle D. Cox claims that the terms of the divorce judgment, as recorded * * *, creates a lien on plaintiffs' onefourth undivided interest in the land and that such lien is security for the payment of alimony provided for her in said divorce decree and the separation agreement attached hereto."

The consent part of the divorce judgment creating the lien was not predicated upon the pleadings in the divorce action, but the court had jurisdiction and the parties had power to consent, which they did. That makes the consent part of *835 the judgment creating the lien conclusive and enforceable. Keen v. Parker, 217 N.C. 378, 8 S.E.2d 209.

It is true that the complaint alleges, Merle D. Cox did not give her consent to the divorce judgment, either in person or by her attorney. However, the divorce decree is alleged in the complaint, and the court will look to its provisions rather than the general allegations in the complaint or the conclusions of the pleader to ascertain as to whether the consent part of the divorce judgment is a consent judgment. Yeager v. Dobbins, 252 N.C. 824, 114 S.E.2d 820.

There is no merit in plaintiffs' contention that the mutual covenants in Article 13 of the separation agreement, copied verbatim in the statement of facts above, operate to discharge plaintiffs' land from the lien created by consent of the parties in the divorce judgment, for the reason, inter alia, that the new contract and agreement set forth in the divorce decree creating such lien by consent was entered into after the separation agreement was executed, and before rights of third parties had intervened. It is manifest that this was the clear intention of the parties. "A contract may be discharged by the substitution of a new contract, and this results: * * *; (3) where new terms are agreed upon, in which case a new contract is formed, consisting of the new terms and of the terms of the old contract which are consistent with them." Redding v. Vogt, 140 N.C. 562, 53 S.E. 337, 338, 6 Ann.Cas. 312.

The consent part of the divorce judgment creating the lien assailed shows a specific intention to create such lien, a description and identification of the property of plaintiff intended to be charged so it can be identified, which property is distinctly appropriated or dedicated to or as security for the payment of the amounts specified in the separation agreement and property settlement entered into by and between Truitt V. Cox and Merle D. Cox, his wife, and a valid consideration. The property sold by Truitt V. Cox to plaintiffs had been acquired by him three days before the trial of the divorce action and the rendition of the judgment therein. Whether the lien provided for by consent in the divorce judgment covers property subsequently acquired by Truitt V. Cox is not before us for decision, and upon that we express no opinion.

In brief, the allegations of the complaint affirmatively show the existence of a valid equitable lien in favor of Merle D. Cox upon the property plaintiffs purchased with notice from Truitt V. Cox, and such lien is not a cloud upon their title.

Plaintiffs allege that Merle D. Cox claims that by the terms of Article 7 of the separation agreement she acquired from Truitt V. Cox, who was then the owner of a one-half undivided interest in the land, the right of sole possession and occupancy of his one-half interest so long as she lives and that such claim is superior to their title and constitutes a cloud upon their title. In their brief plaintiffs state: "Plaintiffs make no contention that the separation agreement is unenforceable as a contract." Plaintiffs state further in their brief: they "do not seek relief in the complaint for possession of the premises. They seek only to quiet her adverse claims while she is in possession."

Plaintiffs' contention is: "(A) Articles 7 and 8 of the agreement create a tenancy at will, terminable at the pleasure of the defendant. (B) And Article 13 of the agreement confers upon the landlord a power to terminate the tenancy by a sale of the premises." Plaintiffs further contend: "It is a contract by one tenant in common with another for the use and occupancy of the other's one-half undivided interest in the land. The relationship of landlord and tenant is created. The defendant is the tenant and Truitt V. Cox is the landlord."

The separation agreement and property settlement, Article 7, provides that *836 Merle D. Cox "shall have the right to sole possession and occupancy of the home and garage apartment on the High Point Road so long as she lives, except as provided below." Such an agreement between tenants in common is valid and enforceable and binding on them, their heirs, personal representatives, and assigns with notice. Harper v. Rivenbark, 165 N.C. 180, 80 S.E. 1057; 86 C.J.S. Tenancy in Common § 25, p. 384, and § 71; Powell on Real Property, 1960 Cumulative Supplement, Vol. 4, p. 603.

The provisions of the instrument set forth in Article 7 after the words "except as provided below" to the effect that if Merle D. Cox enters a nursing home or changes her place of residence, she shall have the option of either retaining possession of the property and receiving the rentals therefrom, or of surrendering possession of it to Truitt V. Cox for rental by him or his agent, and if she does surrender such possession Truitt V. Cox shall pay her $250 a month so long as he retains possession of the property and receives the rents, and that Merle D. Cox can repossess the property and receive the rentals and then Truitt V. Cox shall pay her only $100 a month if she lives on the premises and $50 a month if she does not live on the premises but collects the rent, and the provisions of Article 8 of the agreement do not, in our opinion, make her right to the sole possession and occupancy of the High Point Road property so long as she lives uncertain and indefinite, do not create an estate merely terminable at her will, and do not create as between them the relationship of landlord and tenant. See Stancel v. Calvert, 60 N.C. 104. Considering Articles 7 and 8 of the separation agreement and property settlement, it is our opinion that it was the clear intent of the parties that Merle D. Cox should have the rights specifically set forth in those Articles so long as she lives, and that such intent is expressed in the instrument in plain and unmistakable words. The cases relied on by plaintiffs are distinguishable.

The separation agreement and property settlement must be read as a whole, and in doing so Article 13 thereof must be considered in context with the rest of it, and not as a detached fragment, for the real intent of the parties as expressed in the instrument is the dominant object. Westinghouse Electric Supply Co. v. Burgess, 223 N.C. 97, 25 S.E.2d 390. "The heart of a contract is the intention of the parties." Jones v. Palace Realty Co., 226 N.C. 303, 37 S.E.2d 906, 907.

Agreements must receive a reasonable interpretation, according to the intention of the parties at the time of executing them, gathered from the language employed by them, and in ascertaining that intention we are to consider the character of the contract and its objects and purpose. First National Bank of St. Mary's at Leonardtown v. Maryland Casualty Co., 142 Md. 454, 121 A. 379, 30 A.L.R. 618.

Davis v. Frazier, 150 N.C. 447, 64 S.E. 200, 202, quotes from Bishop on Contracts, § 387, as follows: "`If the main body of the writing is followed by a proviso wholly repugnant thereto, it must necessarily be rejected, because otherwise the entire contract will be rendered null. But where it can be construed to qualify the main provisions, so that all may stand together, it will be retained.'" This is restated in summary in Westinghouse Electric Supply Co. v. Burgess supra.

"Where the language of an agreement is contradictory, obscure, or ambiguous, or where its meaning is doubtful, so that it is susceptible of two constructions, one of which makes it fair, customary, and such as prudent men would naturally execute, while the other makes it inequitable, unusual, or such as reasonable men would not be likely to enter into, the interpretation which makes a rational and probable agreement must be preferred." 12 Am.Jur., Contracts, p. 792.

Utley v. Donaldson, 94 U.S. 29, 24 L. Ed. 54, states: "`Every intendment is to be made against the construction of a contract *837 under which it would operate as a snare. Hoffman v. Aetna Fire Ins. Co., 32 N.Y. 405.'"

Truitt V. Cox and wife, Merle D. Cox, prior to their separation had lived in the home on the High Point Road. After their separation in May 1948 he instituted an action against her seeking to have title to this property vested in him and his wife as tenants by the entirety. This action was pending for trial when the separation agreement and property settlement was entered into between them. Article 5 of the separation agreement and property settlement between them entered into on 19 January 1951 and duly recorded, provides it has been covenanted, contracted and agreed that this pending action shall be terminated by a consent judgment of dismissal, and there shall be simultaneously with the execution of this agreement an exchange of deeds so as to constitute Truitt V. Cox and Merle D. Cox tenants in common of this property. Apparently, title to the property was vested in Merle D. Cox, which accounts for the action and this provision of the instrument. The complaint alleges the simultaneous consummation of this part of the separation agreement and property settlement by deeds as specified in the instrument.

Article 13 of the separation agreement and property settlement following the main body of the instrument providing in effect that Truitt V. Cox can sell, transfer and convey his one-half undivided interest in this property, and it shall not be necessary in order that his grantee obtain a good title that Merle D. Cox shall sign the deed of conveyance, is wholly repugnant to Article 7 of the instrument. It is also wholly repugnant to these provisions of Article 6 of the separation agreement and property settlement: "The party of the first part (Truitt V. Cox) covenants, contracts and agrees to pay the mortgage loan payments, both principal and interest, now remaining unpaid upon the mortgage loan which encumbers the High Point Road property until the mortgage debt is paid in full. * * * In the event of the death of the party of the first part before the mortgage is paid in full, his estate shall be and become liable for the payment of the balance then due on said mortgage and the entire amount of said debt, both principal and interest, remaining unpaid shall be a charge and lien upon his one-half in said property so that the one-half interest of the party of the second part (Merle D. Cox) shall be free and clear of all encumbrances." If Article 13 is construed as plaintiffs contend, it would permit Truitt V. Cox to sell and convey one-half or the whole of his undivided interest in the property, and thereby in spite of Article 7 deprive Merle D. Cox of her right of sole occupancy and possession of the property so long as she lives, or of her right if she surrenders the possession to Truitt V. Cox to receive from him $250 a month so long as he receives the rentals therefrom, and of her option to repossess it, and receive the rents, and would also deprive her of her rights under Article 6 of the separation agreement and property settlement as quoted above. Under such a construction as contended for by plaintiffs, the instrument would be made inequitable and a snare to Merle D. Cox. Article 13 of the instrument will be rejected in so far as it purports to provide that Truitt V. Cox can sell and transfer his one-half undivided interest or any part thereof, in the home place on the High Point Road owned by himself and Merle D. Cox as tenants in common without the signature and approval of Merle D. Cox, and thereby deprive her of her rights so long as she lives as specified in Article 7 of the separation agreement and property settlement, and of her rights under Article 6 of the same instrument.

Plaintiffs' complaint affirmatively shows that Merle D. Cox's claim of right to sole occupancy and possession of the property on the High Point Road formerly owned by Truitt V. Cox and herself as tenants in common so long as she lives is not a cloud *838 on plaintiffs' title, who purchased with constructive notice, if not actual notice, of her rights under the recorded separation agreement and property settlement.

The judgment below sustaining the demurrer is affirmed, and the part of the judgment dismissing the action is affirmed, as plaintiffs stated to the court that they did not wish to amend their complaint because there were no other facts they could allege.

Affirmed.