This is an action for rescission, tbe plaintiffs alleging actionable fraud.
Tbe record discloses tbat none of'the exceptions and assignments of •error except those above set forth is in accordance with tbe rules of this Court. Tbe exceptions to tbe charge should be made as pointed out in Rawls v. Lupton, 193 N. C., p. 428, at p. 432. It is there said: “Continuity of tbe charge is necessary with tbe ‘specific’ exceрtions. Anything else is unfair to tbe trial judge — to have his charge cut up in piecemeal and disconnected.”
Tbe defendant, Laurel Park Estates, Inc., filed no answer to tbe complaint tbat set forth actionable fraud. Plaintiff, Mrs. Clark,, purchased *634 the lot in controversy for $5,000, paid one-fourtb casb and gave three negotiable notes for the balance, $1,250 each, due 12, 18 and 24 months, to Laurel Park Estates, Inc., or order. The Central Bank and Trust Company, as trustee, set up the defense that “Said Laurel Park Estates, Inc., duly endorsed, transferred and delivered to the defendant, Central Bank and Trust Company, as trustee, for value, and before maturity, the said three notes and the said defendant, Central Bank and Trust Company, as trustee, is now the bona fide holder of said notes,” and demanded judgment against the plaintiffs for the amount аnd interest.
The court below charged the jury, to which the Central Bank and Trust Company, trustee, excepted and assigned error: “The court instructs the jury that the defendant, Laurel Park Estates, Inc., not having answered, and from the evidence introduced, if the jury believe the same, under the definition of fraud and instructions later to be given, will answer the first issue Yes, and the second issue $1,250, and interest from the date of payment.” This instruction says "under the definition of fraud and instructions later to be given.”
In
Nichols v. Fibre Co.,
If it be conceded that the Central Bank and Trust Company, trustee, could take advantage of this, if the exception to the charge was properly made, yet on this record from all the evidence we could not hold that this was reversible error.
Proctor v. Fertilizer Co.,
“Fraud, it has been said, assumes so many different hues and forms that courts are compelled to cоntent themselves with comparatively few general rules for its discovery and defeat, and allow the facts and circumstances peculiar to each case to bear heavily on the conscience and judgment of the court or jury in determining its presence or absence.” 51 A. L. R., p. 47;
McNair v. Finance Co.,
The record discloses a charge of actionable fraud, so cunning, subtle and shrewd, that defendant, Laurel Park Estates, Inc., made no answer and allowed the action against it to go by default.
The evidence was plenary to establish the fraud as alleged practiced on unwary victims:
“ ‘Will you walk into my parlour,’ said the spider to a fly; "Tis the prettiest little parlour that ever you did spy.’ ”
*635 The agents of the Laurel Park Estates, Inc., set the web — they brought plaintiffs from their home in Maryville, Tenn., took them to Kenilworth Inn and plаces of amusement a,nd paid their expenses. Then took them to the top of Stradley Mountain, some eight miles from Asheville, N. C. A lecture was delivered by an agent, who said he had been all over the tuorld, and this was the most beautiful spot he had ever seen for a development. Then he described what the development was to have. Hard-surfaced roads, paved streets and sidewalks, water, electric lights, telephones, sewers, golf course, clubhouse, schoolhouse, a business section, etc. A hotel at a cost of a million or two dollars under contract to be erected on top of the mountain by the first of the year, to be called-“Lafayette Chateau,” underground wiring for electric lights and telephone connections, lakes, parks and those things which make “a beautiful place.” The water to be brought from Mount Pisgah watershed. That the money for these improvements was in the Central Bank and Trust Company in Asheville. They had a band concert and luncheon. From the office a megaphone was repeatedly saying “Sold.” “It seemed as if they were selling lots fast.” The agent guaranteed to refund to the purchasers or resell at a profit. Plaintiffs’ evidence was to the effect that this was not complied with. The subtle tempter was there and the lady plaintiff, with her husband standing by “She took of the fruit thereof and did eat.” The plat was ready. "He had the red ink mark put on lot 7 on the plaid It was near the imaginary Chateau. She borrowed the money to pay for the lot. She signed the notes and deed of trust and bought this property because of the agent’s “alluring portrayal” of the wonders to be made there. Later she went back to the place, portrayed almost perhaps as beautiful as the Garden of Edеn: “I went out there the other day to see if the improvements had been carried out. There is no paving there and it is just a waste place, grown up with scrubby pines. There are no telephone lines — :not anything in the world.” It turned out to be a “fool’s paradise.” It was in evidence that there was no money in the Central Bank and Trust Company for the purpose of making the improvements. All the above representations аre more than merely “dealer’s talk.” The evidence is abundant to be submitted to the jury to show no intention of performance. It may be termed “futurity fraud.”
In 1 Bigelow on Fraud, 484, it is said: “The general rule in regard to promises is that they are without the domain of the law unless they create a' contract, breach of which gives to the injured party simply a right of action for damages and not a, right to treat the other рarty as guilty of a fraud. But that proceeds upon the ground that to fail to perform a promise is no indication that there was fraud in the transaction. There may, however, have been fraud in it; and this fraud may have
*636
consisted in making a promise with intent not to perform it. To profess an'intent to do or not to do, when the party intends the contrary, is as clear a case of misrepresentation and оf fraud as could be made. A promise is- a solemn affirmation of intention as a present fact.”
Hill v. Gettys,
In
Braddy v. Elliott,
In
Herndon v. Durham,
161 N. C., p. 650, at p. 556, it is said: “A promise is usually without the domain of the law, unless it creates a contract, but if made when there is no intention of performance, and for the purpose of inducing action by another, it is fraudulent, and may be made the ground of relief.”
Abel v. Dworsky,
Bispham’s Equity (9 ed.), sec. 211, says: “The representation must not be an expression of intention merely. A man has no right to rely upon what another says he intends to do, unless, indeed, the expression of intention assumes such a shape that it amounts to a contract, when, of course, the party will be bound by his engagement and for the breach of which the other side has, ordinarily, аn adequate remedy at law. But if a promise is made with no intent to perform it, and merely with a fraudulent design to induce action under an erroneous belief, or if a representation amounts to a statement of fact, although dependent upon future action, in either case there is ground for equitable relief.” See
Walsh v. Hall,
In
May v. Loomis,
In
The evidence was to the effect that the interest payment was made before the discovery of the fraud and plaintiffs are in the position to put the parties in statu quo. They offered to reconvey and the judgment requires this to be done.
The next proposition: Did the court err in overruling motion of appellant, Central Bank and Trust Company, trustee, for a directed verdict on the third and fourth issues? We think not.
In
Bank v. Wester,
It may be noted that defendant in its defense does not allege that it “had no notice of any infirmity in the instrument or defeсt in the title of the person negotiating it.” The third issue was in conformity with the law and had this requisite.
C. S., 3033, is as follows: “A holder in due course is a holder who has taken the instrument under the following conditions: (1) That the instrument is complete and regular upon its face; (2) that he became the holder of it before it was overdue and without notice that it had been previously dishonored, if such was the fact; (3) that he took it for good fаith and value; (4) that at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it.” Bank v. Wester, supra.
These are material facts to be proved by the Central Bafik and Trust Company, trustee, by the greater weight of the evidence that it was a holder in due course, when under the facts as appear on the record in this case there was evidence to the effect that the notes were obtained by fraud. The Central Bank and Trust Company’s, trustee, evidence was to the effect that it was a holder in due course for the bondholders. The plaintiff’s evidence was to the contrary and to the effect that the Central Bank and Trust Company, trustee, did not take the notes in good faith and for value and without notice. What was the combination of facts and circumstances relied on by plaintiffs? (1) The three notes all had reference that each was one of a series secured by deed in trust on real estate bearing even date. (2) The release made by the Central Bank and Trust Company, as trustee, to Mrs. Clark, releasing lot in controversy. The release recites (a) a deed in trust from Stradley Mountains, Inc., dated 1 March, 1926, duly registered, to Central Bank and Trust Company, trustee, to secure certain indebtedness (b) on the same date a deed' from Stradley Mountains, Inc., certain land including the lot in controversy to defendant Laurel Park Estates, Inc., duly registered, (c) on the same date deed in trust from Laurel Park Estates, Inc., to Central Bank and Trust Company, trustee, certain lands including the *639 lot in controversy duly registered. (3) Tbe trust deed made to Central Bank and Trust Company, trustee, contained certain provisions before a release could be made by it, among other things (a) which consideration may be cash (b) or partly cash and partly obligations secured by purchase-money mortgage or deed of trust to Central Bank and Trust Company, as trustee, upon the property so sold to be released. (4) The lot was eight miles from Asheville at the time released with no improvements on it. By the terms of the trust the bank was authorized to release lots therefrom upon being paid “50% of the purchase price of the property so sold, provided in no event should the amount paid for each release be less than a sum equal to $1,000 per acre.” (5) The release from the bank to Mrs. Clark recites “in consideration of a sum of money sufficient under the terms of each of said deeds of trust to entitle the said party of the second part to a release of the land hereinafter described from the lien and effect of said deed of trust.” (6) The attorney of the Laurel Park Estates, Inc., in writing to plaintiff, said: “If however you do not wish to forward, the deed of trust and notes to me, mail the same to the Trust Department of the Central Bank amd Trust Company, and sign the enclosed letter addressed to that officer, and the deed will be placed there for delivery to you upon receipt of the notes and deed of trust properly signed and executed.” (7) John M. Clark also testified that C. W. Brown, the trust officer, told him that he “held them in trust for Laurel Park Estates, Inc., and Stradley Mountain Development Corporation.” (8) The Central Bank and Trust Company, trustee, knew by the deed of trust to it, or in the exercise of due cаre ought to have known, that the development was eight miles from Asheville, on Strad-ley Mountain. It knew, or in the exercise of due care ought to have known, that these lots with no improvements on them were selling at fabulous prices.
Plaintiff’s evidence was to the effect that the lot was released for “a sum of money sufficient under the terms of each of said deeds of trust.” The trust deed made by the Laurel Park Estates, Inc., to thе Central Bank and Trust Company, as trustee, contained a provision authorizing a release for cash. The evidence would indicate that the release was for cash, not for notes, and the Central Bank and Trust Company, trustee, for the bondholders, obtained a sum of money sufficient for the release and paid nothing of value for the notes — $3,750. One thousand dollars of the $1,250 cash payment could be inferred was paid it under the trust deeds for the bondholders, the minimum release for an acre being $1,000, and plaintiff purchased only one lot, No. Y, on the plat.
The president of the Laurel Park Estates, Inc., and its attorney and other officers were also directors of Stradley Mountain Development Corporation, and the president of Laurel Park Estates, Inc., its vice- *640 president. Tbe evidence would indicatе that the Central Bank and Trust Company, as trustee, held the notes in trust for the Laurel Park Estates, Inc.
John M. Clark testified that C. W. Brown, the trust officer, told him that he held the notes in trust for Laurel Park Estates, Inc., and Strad-ley Mountain Development Corporation. If this was true, the Central Bank and Trust Company, as trustee, could not hold the notes for 'the bondholders. All this was evidence to contradict the testimony of certain officers of the Central Bank and Trust Company, that the notes were held in trust by it for the bondholders. The probative force was for the jury.
In regard to the duty of a prudent man to make inquiry, see Mills v. Kemp, ante, at p. 314.
The law in regard to negotiable instruments is so well stated by
Hoke, J.,
in
Bank v. Fountain,
Notwithstanding the fact that the exceptions and assignments of error are not in accordance with the rules of this Court, we can find no error in the charge taken as a whole. We find in the judgment of the court below
No error.