State Trust Co. v. Braznell

Barnhill, J. The court below made no ruling in respect to the reservation contained in the deeds from Hodges and Crowell, executor, 'to Long and wife. Hence the question of its sufficiency to protect the leasehold rights of plaintiff is not presented for decision. The defendant concedes that plaintiff “stands in the shoes or sits in the seat” of the Longs under whom it claims, and it may maintain this action to reform the deed to make it express the true contract in respect to its leasehold interest. Sills v. Ford, 171 N. C., 733, 88 S. E., 636; Bank v. Redwine, 171 N. C., 559, 88 S. E., 878; Machinery Co. v. Post, 204 N. C., 744, 169 S. E., 629; Roberts v. Massey, 185 N. C., 164, 116 S. E., 407. There is evidence in the record tending to show that (1) the contract of purchase and sale was made subject to existing leases; (2) it was understood and agreed that the deed of conveyance should contain a provision fully protecting the leasehold rights of plaintiff and other tenants; and (3) this intent was inadequately expressed and a valid, enforceable provision was omitted by mutual mistake of the parties. At the very inception of the somewhat extended negotiations Long discussed with Ewbank the outstanding leases and the rental income *214 from tbe building. lie advised Ewbank that be would not under any conditions sell unless these leases, particularly tbe lease to plaintiff, were fully protected. Ewbank advised Carl W. Braznell (agent of defendant in active charge of tbe negotiations) by letter that tbe bank bad a fifteen-year lease. He fully discussed this and other leases with Braznell and advised him of tbe conditions under which tbe Longs would sell. Braz-nell was furnished with a statement of monthly income from tbe building showing that tbe State Trust Company rental was $250 per month. Provision was inserted in tbe original option, in tbe contract to convey and in tbe deed, attempting to protect tbe rights of plaintiff. Ewbank actually acquired possession of Long’s copy of tbe leases, made them available to tbe defendant, and later delivered them to him. At tbe time tbe deed was delivered Braznell was informed that tbe leases were there in Ewbank’s office for bis inspection. Braznell bad bis attorney prepare tbe deed and bis attorney, on bis behalf, inserted in tbe deed a provision attempting to make tbe conveyance subject to outstanding leases. Thus the intent of tbe parties is apparent. There is, to be sure, some evidence.in tbe record tending to support the inference that Braznell knew tbe language used in tbe deed was not sufficient to protect tbe plaintiff’s lease and that be bad tbe deed prepared and tendered to plaintiff as a proper and full expression of tbe contract of tbe parties, intending at tbe time to take advantage of tbe insufficiency of tbe reservation so soon as tbe deed was delivered and recorded. But it is more charitable to assume that be was acting in good faith in an honest attempt to express tbe will of tbe parties than to conclude be made a deliberate and successful effort to mislead and deceive tbe Longs. In either event be cannot now complain. But tbe defendant contends that tbe Longs used tbe language they intended to use, believing it adequately expressed the intent of tbe parties. Thus, be says, there was a mistake of law and not of fact. A bare, naked mistake of law affords no grounds for reformation. This, however, is tbe general rule, qualified by many exceptions. Pelletier v. Cooperage Co., 158 N. C., 403, 74 S. E., 112; Hubbard and Co. v. Horne, 203 N. C., 205, 165 S. E., 347. Where tbe error of law induces a mistake of fact, that is, where, by reason of an error of expression or mistake as to tbe force and effect of tbe language used, tbe contract fails to express tbe intent of tbe parties, equity will afford relief. McKay v. Simpson, 41 N. C., 452; Womack v. Eacker, 62 N. C., 161; Kornegay v. Everett, 99 N. C., 30; Condor v. Secrest, 149 N. C., 201; King v. Hobbs, 139 N. C., 170; Pelletier v. Cooperage Co., supra; Anno. 141 A. L. R., 828, 834; 3 Pom. Eq. Jur., 298. “Tbe phrase 'mutual mistake’ means a mistake common to all tbe parties to a written instrument and usually relates to a mistake concern *215 ing its contents or its legal effect.” Hubbard and Co. v. Horne, supra. “It is wholly immaterial whether . . . the parties failed to make the instrument in the form they intended, or misapprehended its legal effect.” King v. Hobbs, supra; 45 Am. Jur., 615. All the parties conceived that the language used adequately protected the outstanding leases. This was a mistake of law. They intended to include in the deed a provision which would fully protect plaintiff and other tenants. By reason of the use of language mistakenly believed to be, but which was not, sufficient to accomplish the common purpose, such provision does not appear in the deed. They intended the deed to include what it does not include. This constitutes a mistake of fact justifying reformation. Even so, the defendant insists, the plaintiff claims under an unrecorded lease for more than three years and no notice, however full and formal, will supply want of registration. G. S., 47-18; Smith v. Turnage-Winslow Co., 212 N. C., 310, 193 S. E., 685; Bank v. Smith, 186 N. C., 635, 120 S. E., 215; Lawson v. Key, 199 N. C., 664, 155 S. E., 570; McClure v. Crow, 196 N. C., 657, 146 S. E., 713; Grimes v. Guion, 220 N. C., 676, 18 S. E. (2d), 170; Turner v. Glenn, 220 N. C., 620, 18 S. E. (2d), 197. He alleges in his answer that he had no “proper and legal notice” of the outstanding lease. This want of notice by registration seems to have been the “theme song” of his defense in the court below. He presents the question here by exception to the failure of the court below to charge the jury that he had the right to rely on the public registry of the county. This principle which relates notice to registration only is strictly adhered to by this Court. But relief here is not granted on the basis of notice. When a grantee accepts the conveyance of real property subject to an outstanding claim or interest evidenced by an unrecorded instrument executed by his grantor, he takes the estate burdened by such claim or interest. By his acceptance of the deed he ratifies the unrecorded instrument, agrees to stand seized subject thereto and estops himself from asserting its invalidity. Bank v. Vass, 130 N. C., 590; Bank v. Smith, supra; Hardy v. Fryer, 194 N. C., 420, 139 S. E., 833; Hardy v. Abdallah, 192 N. C., 45, 133 S. E., 195. The defendants, having offered no evidence, were entitled, as a matter of right, to the concluding argument. Rule 3, Rules of Practice in the Superior Courts, 221 N. C., 574; S. v. Raper, 203 N. C., 489, 166 S. E., 314. This right was accorded them. But the defendant excepts for that the court permitted counsel for the defendants Long to make the last argument. This, as between the two defendants, was within the discretion of the presiding judge. Hence the exception is without merit. *216 We have examined the other exceptive assignments of error brought forward and discussed in defendant’s brief. They fail to point out cause for a new trial. In the trial below we find No error.