Massengill v. . Oliver

WiNBORNE, J. To escape the bar of the statute of limitations, C. S., 441 (9), when pleaded, an action “for relief on the ground of fraud or *134 mistake” must have been commenced within three years from “the discovery by the aggrieved party of the facts constituting the fraud or mistake.” The exceptive assignment determinative of this appeal presents for decision only this question: Is this an action for relief on the ground of fraud ? The decisions in this jurisdiction indicate an affirmative answer. It is here a well settled principle that “where a mortgagee buys the equity of redemption of his mortgagor, the law presumes fraud, and the burden is upon the mortgagee to show the bona fides of the transaction,” as expressed in McLeod v. Bullard, 84 N. C., 516, approved on rehearing in 86 N. C., 210, and repeated in principle in numerous later cases among which are: Jones v. Pullen, 115 N. C., 465, 20 S. E., 624; Hall v. Lewis, 118 N. C., 509, 24 S. E., 209; Pritchard v. Smith, 160 N. C., 79, 75 S. E., 803; Cole v. Boyd, 175 N. C., 555, 95 S. E., 778; Jones v. Williams, 176 N. C., 245, 96 S. E., 1036; Harrelson v. Cox, 207 N. C., 651, 178 S. E., 361. In Jones v. Pullen, supra, Shepherd, C. J., directing attention to the inflexible rule that where a mortgagee purchases, directly or indirectly, at his own sale, the mortgagor may elect to avoid the sale, and this without reference to its being fairly made, and for a reasonable price, “not because there is, but because there may be fraud,” states: “If, however, the mortgagee with the power of sale deals directly with the mortgagor and purchases of him the equity of redemption, quite another principle applies. In such case there is, by reason of the trust relation, a presumption of fraud, but the mortgagee so purchasing may rebut the presumption by showing that the transaction was free from fraud or oppression and that the price was fair and reasonable. ... If the presumption of fraud is rebutted, the plaintiff has no election to set aside the sale, and a court of equity will grant him no relief.” Thus, an action to set aside such transaction is grounded in fraud. The presumption arising upon a showing of the deed from the mortgagors to the mortgagee while that relation exists is merely a rule of evidence. And, even though the burden then shift to the mortgagee to show the bona fides of the transaction, the controversy still revolves around the question as to whether the transaction is fraudulent. Other assignment need not be considered. Affirmed.