#### W. J. FOY and C. E. IPOCK v. A. H. STEPHENS et als.

(Filed 24 March, 1915.)

1. Pleadings — Demurrer.

Upon demurrer to a complaint every reasonable intendment and presumption must be taken in favor of the pleader; and however inartifi-cially the complaint may be drawn, the demurrer should not be sustained if by a reasonable interpretation of the pleading a good cause of action is alleged.

2. Same — Defective Statement.

An amendment should be allowed to a complaint which defectively states a good cause of action, rather than dismiss the action upon demurrer.

3. Pleadings — Demurrer—Deeds and Conveyances — Collateral Agreements— Cancellation — Conditions—Bills and Notes.

In an action to invalidate a transaction in the sale of land the complaint alleged that "the defendant represented the entire tract to contain 5,000 acres, showing a plat thereto, and the deed was delivered and certain cash payments made to a third party and notes given in payment of the purchase price, to be held by him upon condition that the land should be found to contain the acreage represented and that the title should be found to be an indefeasible fee simple by investigation and certificate of a certain named attorney; that the tract was found to contain 3,315 acres, of which 2,109 acres were held and claimed by superior titles, and that the attorney reported the title to the whole tract defective. The plaintiffs offered to execute a reconveyance of the land and prayed an injunction against the negotiation and transfer of the note, alleging irreparable injury otherwise; that the money be repaid to them, and that the note be delivered for cancellation. Held, the complaint alleged a good cause of action, and a demurrer thereto was bad.

*4394. Bills and Notes — Mortgages—Registration—Void Notes.

Where a note is delivered upon conditions which are not fulfilled, and the note is consequently void, a mortgage given upon lands securing the note is also void as between the original parties, and the fact that the mortgage was recorded cannot avail anything.

5. Bills and Notes — Delivery—Intent—Trials—Evidence—Questions for Jury.

In order to make a valid delivery of a note, the act of delivery and the intent must concur, and where there are no intervening rights, the question of intent is ordinarily one for the jury.

6. Deeds and Conveyances — Fraud—Intent—Pleadings—Amendments.

In order to set aside a conveyance of land for fraud, the representations must not only have been false, and knowingly so, by the party making them, hut with the intent to deceive, and positively alleged in the complaint, and not by implication; but under the circumstances of this, case it is held that the plaintiff intended to charge a fraudulent intent, and an amendment should be allowed if this defense is relied on by him. •

Appeal by plaintiff from Peebles, J., at November Term, 1914, of CRAVEN.

Civil action. Tbe complaint and tbe answer were read and tben tbe defendants demurred ore terms upon tbe ground tbat tbe complaint failed to state a cause of action. His Honor sustained tbe motion and dismissed tbe action. Tbe plaintiffs appealed.

Guión & Guión for'plaintiffs.

D. L. Ward, Robert Ruarh for defendants.

Brown, J.

Tbe only question presented relates to tbe sufficiency of tbe complaint to make out a cause of action. We bave beld tbat a demurrer will not be sustained to tbe extent of dismissing tbe action, unless it entirely fails to state a cause of action.

If in any portion of it it presents facts sufficient to constitute a cause of action, or if facts sufficient for tbat purpose can be fairly gathered from it, tbe pleading will stand, however inartificially it may bave been drawn, or however uncertain, defective, or redundant may be its statements, for, contrary to tbe common-law rule, a veiy reasonable intendment and presumption must be made in favor of tbe pleader. It must be fatally defective before it will be rejected as insufficient. Brewer v. Wynne, 154 N. C., 472. This case is affirmed and cited with approval in tbe recent case of Hoke v. Glenn, 167 N. C., 594.

Where it is manifest tbat tbe complaint defectively states a good cause of action, and tbe defect can be cured by amendment, tbe courts will allow tbe amendment rather than dismiss tbe action. This is in tbe interest of justice and tbe speedy trial of actions.

Tbe complaint states substantially these facts: Tbat tbe defendant Stephens contracted to sell certain tracts of land to tbe plaintiff for *440$24,000, at tbe same time representing to tbe plaintiff tbat tbe said lands bad been fully surveyed and platted, and exhibited to plaintiffs a blueprint thereof, which survey purported to cover one entire tract or body of land containing 5,000 acres.

The defendant further represented that he had a good and indefeasible title to the land.

The plaintiffs further allege that they had no knowledge or information whatever concerning the acreage, boundaries, or title to the land • other than that imparted by the defendant; that they agreed to purchase said land at the price named upon condition that the tract contained the acreage as represented, and that the title was good and indefeasible.

It was agreed between the plaintiffs and the defendant that the plaintiffs should proceed to survey and plat the land and employ a lawyer to investigate the title upon the agreement of the defendant to convey the full boundaries and acreage by deed in fee.. The defendant executed to the plaintiffs a deed, which was duly recorded. The plaintiffs further allege that it was agreed that the plaintiff Foy pay into the hands of George H. Roberts $7,000, to be held by him to await the súrvey of the land for the purpose of ascertaining the acreage, as well as determining the title.

It was agreed that D. E. Henderson, an attorney, should investigate the title and the money should be paid over upon his certificate that the titles to said land were good and indefeasible. Upon like condition the plaintiff Foy executed his note for $4,000, which was deposited as aforesaid, and the sum of $1,000 was paid by Foy to the attorney, as per agreement with the defendant, to pay attorneys’ fees and expenses, the residué, if any, to be turned over to the defendant in case the purchase was finally consummated.

The pdaintiff Ipock executed his note for $12,000, secured by mortgage on his one-third interest in said lands so contracted to be conveyed. This note was delivered to the defendant with the distinct understanding and agreement that the defendant was to hold the same to await the report of the attorney as to the acreage, boundaries, and title to the land.

The plaintiffs further allege that it turned out upon a survey of the said land that the whole acreage thereof was 3,315 acres and that by actual survey out of that acreage 2,109 acres were held and claimed by superior titles, leaving only 1,206 acres, and the title to that was reported by the said attorney to be defective and insufficient; that said attorney reported that the whole of said acreage was defective in title, and he refused to give certificate of a good title thereto.

The plaintiffs further allege that the defendant well knew at the time he made the representations that the tract did not contain 5,000 acres, and that he did not have a good and indefeasible title thereto; that the *441said blue-print purporting to be a correct survey of said land was not a true copy of tbe survey. By these representations tbe plaintiffs allege tbat tbey were deceived with reference to tbe acreage and boundaries of tbe land, as well as to tbe title.

Tbe plaintiff alleges repeatedly tbat tbe defendant Stephens knew tbat tbe tract did not contain tbe number of acres represented; tbat be knew that tbe blue-print was an incorrect presentation of tbe land, and tbat be knew be bad no title to it. Tbe plaintiffs, allege tbat when these facts became known from tbe report of tbe attorney, tbey offered to execute a deed back to tbe defendant for tbe said land, and demanded tbat tbe said Roberts, with whom tbe money bad been deposited, return tbe same to them, and that tbe notes delivered to tbe defendant Stephens be delivered up for cancellation.

Tbe plaintiffs further allege tbat tbe defendant has been endeavoring to negotiate tbe sale of tbe said note, and tbat if be is permitted to do so, tbe plaintiffs would be irreparably injured. Tbe plaintiffs pray for an injunction, enjoining tbe assignment of tbe note, tbat tbe money be repaid to them by tbe said Roberts, and tbat tbe notes be delivered up to them for cancellation, and for other and further relief unnecessary to mention.

These facts would seem to us amply sufficient to justify, if established, tbe relief prayed for. Tbey state substantially two causes of action: First, tbe plaintiff bases bis ground for relief upon tbe contract and agreement of tbe parties. It is immaterial tbat tbe defendant made tbe plaintiffs a deed for tbe land, for tbe plaintiffs offered to reconvey it. It is immaterial t&at tbe mortgage executed by Ipock upon bis share of tbe land was recorded. Tbat may be canceled.

Tbe point is, Was tbe money deposited with Roberts and tbe notes delivered to tbe defendant Stephens upon tbe terms and conditions stated in tbe complaint ? If Stephens acquired no title to tbe note, be acquired no title to tbe mortgage, for tbe latter is merely security for tbe former, and if there was no unconditional delivery of tbe note, tbe fact tbat tbe defendant bad tbe mortgage put on record-would avail him nothing.

It is said by Mr. Justice Hoke in Gaylord v. Gaylord, 150 N. C., 232 : “It is a familiar principle tbat tbe question of tbe delivery of a deed or other written instrument, is very largely dependent on tbe intent of tbe parties at tbe time, and is not at all conclusively established by tbe manual or physical passing of tbe deed from tbe grantor to tbe grantee.”

■With reference to tbe delivery of a policy of insurance, tbe same justice said: “Tbe fact tbat a policy in a. given case has been turned over to tbe insured is not conclusive on tbe question of delivery. This matter of delivery is very largely one of intent, and tbe physical act of turning over a policy is open to explanation by parol evidence.” See, also, For *442 tune v. Hunt, 149 N. C., 358; Tarlton v. Griggs, 131 N. C., 216, and other authorities cited in Gaylord v. Gaylord, all of which show that the intent and act must concur in making a valid delivery, and that whether such existed is a question of fact to be found by the jury. Floyd v. Taylor, 34 N. C., 47.

The second ground upon which the plaintiffs base their claim for relief is because of the alleged fraud practiced upon the plaintiffs. It is true that the complaint fails to allege that the representations were made with intent to defraud. Such conclusion may be easily inferred, if the allegations of the complaint are established.

It is further true that fraud should be positively charged and not by implication. The representations must not only have been false and known by the plaintiff to be so-, but they must be made with the intent to deceive. Fraud cannot exist as a matter of fact where the intent to deceive does not exist, for it is emphatically the action of the mind which gives it existence. Foy v. Horton, 85 N. C., 172.

It is apparent from the allegations of the complaint that the plaintiffs have alleged that the representations were false and that the defendant knew them to be false; and it is apparent that the plaintiffs intended to allege that they were made with a fraudulent intent. This is a defective statement of a cause of action, and can be cured by amendment. If the plaintiffs rely upon this ground for relief, they will be permitted to amend their complaint so as to charge the necessary purpose to deceive.

His Honor erred in sustaining the demurrer ^nd in dissolving the injunction. The cause is remanded, with instructions to proceed in accordance with this opinion. .

Eeversed: