Harris v. McLeod

An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal

authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule

30(e)(3) of the North Carolina Rules of Appellate Procedure.

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA24-834

Filed 4 February 2026

Wake County, No. 23CV010666-910

MARY GLADYS HARRIS, Executor of the Estate of Dennis Junior McLeod, Plaintiff,

v.

ANTHONY HAROLD MCLEOD, Defendant.

Appeal by Plaintiff from order entered 16 May 2024 by Judge Debra S. Sasser

in Wake County District Court. Heard in the Court of Appeals 26 February 2025.

Davis Hartman & Wright, LLP, by Attorney R. Daniel Gibson, and Stam Law

Firm, PLLC, by Attorney Paul Stam, for plaintiff-appellant.

Batch, Poore & Williams, PC, by Attorney J. Patrick Williams, for defendant-

appellee.

STADING, Judge.

This case deals with a dispute over real property between Mary Gladys Harris

(“Plaintiff”)—the executor of Dennis Junior McLeod’s estate—and Anthony Harold

McLeod (“Defendant”). Plaintiff appeals from the trial court’s order granting

summary judgment in Defendant’s favor. On appeal, Plaintiff argues the trial court

erred in refusing to consider several affidavits filed in support of her motion for

summary judgment. She also asserts the trial court erroneously denied her motion

HARRIS V. MCLEOD

Opinion of the Court

for summary judgment and erroneously granted summary judgment for the non-

movant. After careful consideration, we reverse and remand for further proceedings.

I. Factual and Procedural Background

On 3 May 2023, Dennis Junior McLeod filed a complaint against Defendant—

Mr. McLeod’s nephew and Plaintiff’s son—concerning a dispute over real property.

The complaint alleged that on or about 17 March 2023, Mr. McLeod conveyed “all of

his real estate” to Defendant by general warranty deed (the “Deed”), including Mr.

McLeod’s residence (the “Property”) in Apex. In Mr. McLeod’s view, he conveyed the

Property subject to “an agreement by the parties that it was security for a debt which

[he] would pay to Defendant at $200/month.” Upon repaying the debt—in this case,

owed taxes—Mr. McLeod believed that Defendant would reconvey the Property back

to him.

Mr. McLeod’s complaint maintained: “Defendant prepared the [D]eed”; “No

excise tax stamps are shown on the [D]eed”; “the [P]roperty was in tax foreclosure” at

the time of the conveyance; and “Defendant paid . . . the Wake County Tax

Administrator . . . $3,295 which covered all property taxes due at the time.”

Thereafter, by and through counsel, Mr. McLeod tried to pay the entire debt to

Defendant on 3 April 2023 and 17 April 2023 in exchange for Defendant deeding the

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Property back to Mr. McLeod.1 Defendant “refused to reconvey the property” to Mr.

McLeod. On 13 July 2023, Mr. McLeod passed away.2

Plaintiff, as the executor of Mr. McLeod’s estate, filed an amended complaint

against Defendant on 3 August 2023, alleging that Defendant had paid just $3,295

for a piece of property that was worth far more. The amended complaint also noted

the poor physical, mental, and financial condition of Mr. McLeod at the time of the

transaction, suggesting a degree of impropriety on Defendant’s part:

1. . . . At the time of the act complained of [Mr. McLeod]

was 89 years of age and in poor physical and mental

condition. He had just been discharged from the hospital

for stage 3 kidney failure and susceptibility to imminent

heart attack or stroke. He was referred to hospice. [Mr.

McLeod] has only a 4th or 5th grade education and did not

read.

....

3. At the time of the conveyance [Mr. McLeod] was behind

in his property tax. Defendant, or his associates, told [Mr.

McLeod] that he was in tax foreclosure and he only had a

certain number of days to pay or he would be put out of his

home. Defendant only paid to the Wake County Tax

Administrator the sum of $3,295 which covered all

property taxes due at the time. . . . The tax value of the

property at the time was $88,630 and, on information and

belief, the fair market value was even greater. [Mr.

McLeod] at that time was in financial distress. His only

1 We note a minor discrepancy in the record. Mr. McLeod’s complaint and Plaintiff’s amended

complaint maintain that Defendant paid $3,295 in taxes on the Property. However, the letters sent

from Mr. McLeod’s attorney state $3,209. In any event, such discrepancy is immaterial to our analysis.

2 Mr. McLeod’s Last Will and Testament gave all “real and personal property . . . to my Executor who

shall sell the same and divide the net proceeds as follows: ½ to my sister, MARY GLADYS HARRIS

and ½ to my friend, BARBARA YAMASATA.” Although the will states the name “YAMASATA,” the

remainder of the record spells the name as Yamagata.

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income was from Social Security at about $900/month.

....

5. Although in form Exhibit A is a deed absolute, it was

actually entered into as security for a debt. Provisions for

redemption were omitted either through ignorance or

mistake or fraud, or undue advantage by, or undue

influence of the Defendant.

The amended complaint maintained that the parties executed the Deed “as security

for a debt,” and that the provisions “for redemption were omitted either through

ignorance or mistake or fraud, or undue advantage by, or undue influence of the

Defendant.”

Defendant testified to a slightly different version of events in his deposition.

Defendant stated that: he did not prepare the Deed for the subject property; he only

provided a zero on the excise tax portion of the Deed because an employee at the deed

office told him too; Mr. McLeod signed the Deed in the presence of a notary; although

present, neither Defendant nor Plaintiff observed Mr. McLeod sign the Deed; Mr.

McLeod “had all his faculties” when he signed the Deed; he did not know of the degree

of Mr. McLeod’s illness at the time of the conveyance; he only paid the taxes on the

Property so that he could help Mr. McLeod “save his land”; he “wasn’t trying to gain

anything” from paying the taxes on the Property; he did not know the present value

of the Property; he discussed paying the taxes on the Property with Plaintiff; and he

was unaware of Mr. McLeod’s level of education or inability to read.

Plaintiff moved for summary judgment on 8 February 2024. See N.C. Gen.

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Stat. § 1A-1, Rule 56 (2023). In support of her motion, Plaintiff attached several

affidavits: one by Plaintiff, and the other by Barbara Yamagata—a close friend of Mr.

McLeod’s. Plaintiff maintained: “There are no genuine issues as to any material fact.

The Estate is entitled to judgment as a matter of law because [Mr. McLeod] and

[Defendant] transacted an equitable mortgage entitling the Estate to redemption of

the property upon repayment to [Defendant] . . . plus interest at the legal rate.” In

Defendant’s response to the motion, he argued, “[t]here is a genuine issue of material

fact in this matter, specifically whether Defendant holds title to the [property] as an

equitable mortgagee or as an owner in fee simple.” As such, he maintained that

“Plaintiff’s motion for summary judgment should be denied” since “Plaintiff has not

established a prima facie case required for the court to find that an equitable

mortgage exists in this matter[.]”

By order entered 16 May 2024, the trial court determined: “there [wa]s no

genuine issue of material fact”; “Defendant [wa]s entitled to judgment as a matter of

law in his favor”; and that “Plaintiff’s [c]omplaint should be dismissed in its entirety.”

In reaching this conclusion, the trial court noted in a footnote, inter alia, that both

Plaintiff’s and Ms. Yamagata’s affidavits failed to “attest” that they had “personal

knowledge of the matters stated therein.” The trial court therefore refused to

consider the contents of either affidavit when rendering its decision. Plaintiff timely

appealed from the trial court’s order.

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II. Jurisdiction

This Court has jurisdiction over Plaintiff’s appeal pursuant to N.C. Gen. Stat.

§ 7A-27(b)(2) (2023) (“From any final judgment of a district court in a civil action.”).

III. Analysis

Plaintiff asserts the trial court erroneously refused to consider two affidavits3

that accompanied her motion for summary judgment because the affiants lacked

personal knowledge. Plaintiff further argues the trial court erroneously granted

summary judgment in Defendant’s favor; instead, maintaining the trial court should

have entered summary judgment in her favor.

“The standard of review for summary judgment is de novo.” Forbis v. Neal,

361 N.C. 519, 524, 649 S.E.2d 382, 385 (2007). “‘Under a de novo review, the court

considers the matter anew and freely substitutes its own judgment’ for that of the

lower tribunal.” Craig v. New Hanover Cnty. Bd. of Educ., 363 N.C. 334, 337, 678

S.E.2d 351, 354 (2009) (citation omitted). In resolving a motion for summary

judgment, “all inferences of fact . . . must be drawn against the movant and in favor

of the party opposing the motion.” Forbis, 361 N.C. at 524, 649 S.E.2d at 385 (quoting

Caldwell v. Deese, 288 N.C. 375, 378, 218 S.E.2d 528, 530 (1975)).

3 We note that Plaintiff provided an additional affidavit in support of her motion for summary

judgment—the affidavit of Christina Blackman. Plaintiff, however, does not argue that the trial court

erroneously failed to consider Ms. Blackman’s affidavit. We therefore do not consider whether the

trial court erred in concluding that Ms. Blackman did not possess the requisite personal knowledge to

attest to the matters contained in her affidavit.

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Summary judgment “shall be rendered forthwith if the pleadings, depositions,

answers to interrogatories, and admissions on file, together with the affidavits, if any,

show that there is no genuine issue as to any material fact and that any party is

entitled to a judgment as a matter of law.” N.C. Gen. Stat. §1A-1, Rule 56(c). “The

trial court may not resolve issues of fact and must deny the motion if there is a

genuine issue as to any material fact.” Forbis, 361 N.C. at 524, 649 S.E.2d at 385. “A

fact is material if it ‘would constitute or would irrevocably establish any material

element of a claim or defense.’” Vizant Techs., LLC v. YRC Worldwide, Inc., 373 N.C.

549, 555, 838 S.E.2d 616, 619 (2020) (citation omitted). And “a genuine issue is one

which can be maintained by substantial evidence.” Kessing v. Nat’l Mortg. Corp., 278

N.C. 523, 534, 180 S.E.2d 823, 830 (1971).

“The party moving for summary judgment bears the burden of bringing forth

a forecast of evidence which tends to establish that there is no triable issue of material

fact.” Creech v. Melnik, 347 N.C. 520, 526, 495 S.E.2d 907, 911 (1998). When “the

moving party meets this burden, the non-moving party must in turn either show that

a genuine issue of material fact exists for trial or must provide an excuse for not doing

so.” Lowe v. Bradford, 305 N.C. 366, 369, 289 S.E.2d 363, 366 (1982). An adverse

party

may not rest upon the mere allegations or denials of his

pleading, but his response, by affidavits or as otherwise

provided in this rule, must set forth specific facts showing

that there is a genuine issue for trial. If he does not so

respond, summary judgment, if appropriate, shall be

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entered against him.

N.C. Gen. Stat. § 1A-1, Rule 56(e). “The other methods for setting forth specific facts

under Rule 56 are through depositions, answers to interrogatories, admissions on file,

documentary materials, further affidavits, or oral testimony in some circumstances.”

Strickland v. Doe, 156 N.C. App. 292, 295, 577 S.E.2d 124, 128 (2003). However, “an

unverified complaint is not an affidavit or other evidence.” Kiker v. Winfield, 234

N.C. App. 363, 365, 759 S.E.2d 372, 373 (2014) (citation modified); see also Rankin v.

Food Lion, 210 N.C. App. 213, 220, 706 S.E.2d 310, 315–16 (2011) (quoting Tew v.

Brown, 135 N.C. App. 763, 767, 522 S.E.2d 127, 130 (1999)) (noting “the trial court

may not consider an unverified pleading when ruling on a motion for summary

judgment”). Relevant here, “summary judgment, when appropriate, may be rendered

against the moving party.” N.C. Gen. Stat. § 1A-1, Rule 56(c).

A. Consideration of Affidavits

Plaintiff argues that the trial court erroneously failed to consider the affidavits

that accompanied her motion for summary judgment on the basis of a lack of personal

knowledge. We agree.

“Affidavits supporting a motion for summary judgment must ‘be made on

personal knowledge.’” Hylton v. Koontz, 138 N.C. App. 629, 634, 532 S.E.2d 252, 256

(2000) (citation modified); see also N.C. Gen. Stat. § 1A-1, Rule 56(e) (“Supporting and

opposing affidavits shall be made on personal knowledge, shall set forth such facts as

would be admissible in evidence, and shall show affirmatively that the affiant is

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Opinion of the Court

competent to testify to the matters stated therein.”). While “a Rule 56 affidavit need

not state specifically it is based on ‘personal knowledge,’ its content and context must

show its material parts are founded on the affiant’s personal knowledge.” Hylton,

138 N.C. App. at 634, 532 S.E.2d at 256 (quoting Middleton v. Myers, 41 N.C. App.

543, 546, 255 S.E.2d 255, 256 (1979)) (citation modified). Phrased another way, Rule

56(e) affidavits comply with the personal knowledge requirement where the affidavits

“can be interpreted so as to comply upon their faces.” Fuller v. Southland Corp., 57

N.C. App. 1, 5, 290 S.E.2d 754, 757 (1982).

That said, “our courts have held affirmations based on personal awareness,

information and belief, and what the affiant thinks do not comply with the personal

knowledge requirement of Rule 56(e).” Hylton, 138 N.C. App. at 634, 532 S.E.2d at

256 (citations omitted and modified). “What an affiant thinks are facts, unless it is a

situation proper for opinion evidence, is not information made on personal knowledge

proper for consideration on a summary judgment motion.” Fuller, 57 N.C. App. at 6,

290 S.E.2d at 757 (citation omitted). “If an affidavit contains hearsay matters or

statements not based on an affiant’s personal knowledge, the court should not

consider those portions of the affidavit.” Williamson v. Bullington, 139 N.C. App. 571,

578, 534 S.E.2d 254, 258 (2000).

Here, Plaintiff’s affidavit stated:

1. [Plaintiff] [is] the Executrix of the Estate of [Mr.

McLeod] and I am his sister. I am the [P]laintiff in this

proceeding. I make the affidavit on my own personal

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knowledge. I am 79 years of age and competent to testify.

2. [Mr. McLeod] was in poor health on March 17, 2023. He

had been hospitalized earlier that month and upon release

was referred to hospice because of Stage 3 kidney disease

and congestive heart failure. He signed the deed just a few

days after being released from the hospital.

3. On [17 March] 2023, [Mr. McLeod] was in financial

distress. He was behind on his property taxes and received

only $900 per month in social security income.

4. [Mr. McLeod] was 90 years old on the date he signed the

deed.

5. [Mr. McLeod] only had a 4th or 5th grade education. He

could not read.

6. [Mr. McLeod] seemed distressed to me after he signed

the deed. I went to see Mr. Stam three days after [Mr.

McLeod] signed the deed, on Monday, March 20th. [Mr.

McLeod] was incontinent and wearing a diaper when we

went to Mr. Stam’s office.

7. In my opinion, [Mr. McLeod’s] home had a market value

of no less than $135,000 on [17 March], 2023, and is worth

over $200,000 today. [Mr. McLeod’s] mobile home was very

old. It had 1.058 acres of land and a big barn. I own my

home less than half a mile away. My home is worth

approximately $250,000 today and has less acreage (.7

acres).

8. [Mr. McLeod] continued to live in his home until shortly

before his death. He was in the hospital for approximately

a week before he died on July 13, 2023. I obtained the

medical records from his last hospital stay. They are

attached as Exhibit A.

Ms. Yamagata’s affidavit stated:

1. I was a close friend of Dennis Junior McLeod for 12

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years. I brought [Mr. McLeod] food, helped him with

household chores and shopping, took him out to eat, visited

every Saturday, and talked to him on the phone every day.

I was a companion to him until he died. I make this

affidavit on my own personal knowledge. I am 61 years of

age and competent to testify in this action.

2. [Mr. McLeod] was 90 years old on the date he signed the

deed.

3. [Mr. McLeod] only had a 4th or 5th-grade education and

could not read.

4. On March 17, 2023, [Mr. McLeod] was in poor health and

had been referred to hospice because of Stage 3 kidney

disease and congestive heart failure. He had just been

released from the hospital where he was treated for a

kidney infection. At that time, [Mr. McLeod] was very sick,

he was very old, moved slowly, and was incontinent.

5. [Mr. McLeod] was in financial distress on March 17,

2023. He was behind on his property taxes and only had

income of $900 per month from social security.

6. [Mr. McLeod] continued to live in his home until shortly

before his death, and he was in the hospital for

approximately a week prior to his death on July 13, 2023.

In denying Plaintiff’s motion for summary judgment, the trial court found that

these affidavits “d[id] not attest that the [affiants] had personal knowledge of the

matters stated therein.”

Our review of Ms. Yamagata’s affidavit leads us to hold that she possessed the

requisite personal knowledge under Rule 56(e). Also, we hold the same for the

majority of Plaintiff’s affidavit. However, Plaintiff’s statement that Mr. McLeod

“seemed distressed” after signing the deed does not comply with Rule 56(e) since it is

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Opinion of the Court

merely based upon “information and belief, and what the affiant thinks.” Hylton, 138

N.C. App. at 634, 532 S.E.2d at 256. Similarly, the medical records attached as an

exhibit to Plaintiff’s affidavit are improper given that Plaintiff herself would not be

able to offer them into evidence. See N.C. Gen. Stat. § 1A-1, Rule 56(e) (“Supporting

and opposing affidavits shall be made on personal knowledge, shall set forth such

facts as would be admissible in evidence, and shall show affirmatively that the affiant

is competent to testify to the matters stated therein.”). The trial court thus possessed

the latitude to not consider those portions of Plaintiff’s affidavit. Williamson, 139

N.C. App. at 578, 534 S.E.2d at 258.

As to the other portions of the affidavits, for starters, although not required by

our precedents, both affidavits expressly state they were made on the respective

affiant’s personal knowledge. See Hylton, 138 N.C. App. at 634, 532 S.E.2d at 256.

Moreover, a review of the contents of each affidavit demonstrates that “its material

parts are founded on the affiants[’] personal knowledge.” Id. (citation omitted and

modified). The context of Plaintiff’s affidavit indicates that she possessed personal

knowledge since Plaintiff was Mr. McLeod’s sister, and Plaintiff was serving as the

executor for Mr. McLeod’s estate at the time of the motion for summary judgment.

Considering that context, the content contained within Plaintiff’s affidavit is

consistent with the personal knowledge a family member or estate administrator

would possess, including matters pertaining to Mr. McLeod’s health, finances, and

affairs. Cf. id. at 635, 532 S.E.2d at 256. And contrary to Defendant’s urging,

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Plaintiff’s statement as to the value of the Property is proper since Plaintiff had

knowledge of the Property to form a basis for her lay opinion. See, e.g., Finney v.

Finney, 225 N.C. App. 13, 16, 736 S.E.2d 639, 642 (2013) (quoting Whitman v. Forbes,

55 N.C. App. 706, 711, 286 S.E.2d 889, 892 (1982)) (“It is well established that ‘[l]ay

opinions as to the value of the property are admissible if the witness can show that

he has knowledge of the property and some basis for his opinion.’”).

Additionally, the context of Ms. Yamagata’s affidavit reflects that she

possessed personal knowledge since she “was a close friend” of Mr. McLeod for twelve

years, spent time with him each week, brought supplies to his home when needed,

and “talked to him on the phone every day.” In view of that context, the content

therein is consistent with the personal knowledge a close friend would obtain. Cf. id.

Thus, after disregarding the portions noted above, the face of the affidavits

demonstrate compliance with Rule 56(e). Fuller, 57 N.C. App. at 5, 290 S.E.2d at 757.

Accordingly, the trial court erred by refusing to consider these affidavits.4

B. Genuine Issue of Material Fact

Plaintiff next argues the trial court erroneously granted summary judgment in

Defendant’s favor because uncontroverted evidence showed that: “Defendant

4 Ordinarily, an appellant “bears the burden of showing not only that an error was committed below,

but also that such error was prejudicial—meaning that there was a reasonable possibility that, but for

the error, the outcome would have been different.” Faucette v. 6303 Carmel Rd., LLC, 242 N.C. App.

267, 274, 775 S.E.2d 316, 323 (2015). However, since we conclude the trial court erroneously granted

summary judgment for Defendant by virtue of resolving several genuine issues of material fact, we do

not address whether Plaintiff suffered prejudice as a result of the trial court’s failure to consider these

affidavits in isolation. See, e.g., Forbis, 361 N.C. at 524, 649 S.E.2d at 385.

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provided grossly inadequate consideration for the [P]roperty”; Mr. McLeod “was in

distress”; Mr. McLeod “remained in possession of the [P]roperty”; and Mr. McLeod

“was illiterate.” We agree with Plaintiff, as well as Defendant’s position in his

response to the motion for summary judgment that “[t]here is a genuine issue of

material fact in this matter, specifically whether Defendant holds title to the real

estate . . . as an equitable mortgagee or as an owner in fee simple.”

In Plaintiff’s view, the trial court should have granted summary judgment in

her favor, maintaining that grossly inadequate consideration—standing alone—

warrants setting aside the Deed on the basis of fraud. See Wall v. Ruffin, 261 N.C.

720, 163 S.E.2d 116 (1964). Plaintiff also maintains the trial court should have

granted summary judgment in her favor and imposed an equitable mortgage. See

Hardy v. Neville, 261 N.C. 454, 135 S.E.2d 48 (1964). We disagree. For the reasons

below, we hold that neither party is entitled to summary judgment.5 The trial court

5 Although Defendant pled the statute of frauds as an affirmative defense, he is not entitled to

summary judgment on this basis at this phase of the proceedings. See N.C. Gen. Stat. § 22-2 (2023)

(“All contracts to . . . convey any lands, . . . shall be void unless said contract, or some memorandum or

note thereof, be put in writing and signed by the party to be charged therewith, or by some other person

by him thereto lawfully authorized.”); see also Yeager v. Dobbins, 252 N.C. 824, 826, 114 S.E.2d 820,

822 (1960) (“The statute of frauds is an affirmative defense and must be pleaded.”); see also Pickelsimer

v. Pickelsimer, 257 N.C. 696, 698, 127 S.E.2d 557, 559 (1962) (“It is settled law in North Carolina that

an oral contract to convey or to devise real property is void by reason of the statute of frauds (G.S. 22-

2).”). Notably, “an oral agreement to acquire legal title to land and thereafter reconvey to the grantor

upon specified terms and conditions is within the statute of frauds . . . and is unenforceable in the

absence of fraud, mistake or undue influence.” Dunn v. Dunn, 24 N.C. App. 713, 716, 212 S.E.2d 407,

409 (1975) (emphasis added); see also Rourk v. Brunswick Cnty., 46 N.C. App. 795, 796–97, 266 S.E.2d

401, 403 (1980) (emphasis added) (“It is well settled that except in cases of fraud, mistake, or undue

influence, parol trusts or agreements will not be set up or engrafted in favor of the grantor upon a

written deed conveying to the grantee the absolute title, and giving clear indication on its face that

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therefore committed error by entering summary judgment in Defendant’s favor.

We note that Plaintiff’s reliance on Wall is misguided. The Wall decision

provides that inadequate consideration, standing alone, does not justify setting aside

a deed on the basis of fraud:

The controlling principle established by our decisions is

that inadequacy of consideration is a circumstance to be

considered by the jury in connection with other relevant

circumstances on an issue of fraud, but inadequacy of

consideration standing alone will not justify setting aside

a deed on the ground of fraud. However, if the inadequacy

of consideration is so gross that it shows practically

nothing was paid, it is sufficient to be submitted to the jury

without other evidence.

261 N.C. at 723, 136 S.E.2d at 118. Plaintiff did not argue that she was entitled to

summary judgment strictly on the basis of a lack of consideration before the trial

court; instead, Plaintiff relied on the Hardy decision to establish that the conveyance

in question merely granted Defendant an equitable mortgage. See Rolan v. N.C. Dep’t

of Agric. & Consumer Servs., 233 N.C. App. 371, 381, 756 S.E.2d 788, 794–95 (2014)

(quoting Weil v. Herring, 207 N.C. 6, 10, 175 S.E. 836, 838 (1934)) (“An examination

of the record discloses that the cause was not tried upon that theory, and the law does

not permit parties to swap horses between courts in order to get a better mount [on

such title was intended to pass.”). At this stage, it is unclear whether Defendant acquired the Property

as a result of fraud, undue influence, or mistake, which Plaintiff pled in her amended complaint. See

id. Thus, even though there is no writing supporting the oral, contemporaneous agreement to reconvey

the Property, the statute of frauds may be inapplicable to the instant case. At this stage in the

proceedings, we are unable to determine whether the defense bars Plaintiff’s ability to recover under

an equitable mortgage theory.

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appeal].”). We therefore turn to Plaintiff’s equitable mortgage argument made in

reliance on Hardy.

“The term ‘equitable mortgage’ is used as a catchall term to connote all of the

transactions which, despite peculiarities of form or the appearance of a non-security

deal, are given the effect of a mortgage when examined by a court with equitable

powers.” Eagle’s Nest, Inc. v. Malt, 70 N.C. App. 397, 400, 319 S.E.2d 685, 687 (1984)

(citation omitted). “An ‘equitable mortgage’ may be created when real property is

conveyed together with an option to repurchase the property, where the intention of

the parties at the time of the transaction was to secure a debt.” Tomika Invs., Inc. v.

Macedonia True Vine Pentecostal Holiness Church of God, Inc., 136 N.C. App. 493,

497, 524 S.E.2d 591, 594 (2000) (citing McKinley v. Hinnant, 242 N.C. 245, 251, 87

S.E.2d 568, 572–73 (1955)). “Where, upon the face of a transaction it is doubtful

whether the parties intended to make a mortgage or a conditional sale, courts of

equity are inclined to consider it a mortgage, because, by means of conditional sales,

oppression is frequently exercised over the needy.” O’Briant v. Lee, 214 N.C. 723,

731–32, 200 S.E. 865, 871 (1939) (citation modified).

In Eagle’s Nest, we noted the following principles concerning whether a party

holds title to real property as an equitable mortgagee as opposed to in fee simple:

When a debtor conveys land to a creditor by deed absolute

in form and at the same time gives a note or otherwise

obligates himself to pay the debt, and takes from the

grantee an agreement to reconvey upon payment of the

debt, the transaction is a mortgage. But if the agreement

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leaves it entirely optional with the debtor whether he will

pay the debt and redeem the land or not, and does not bind

him to do so, or continue his obligation to pay, the

relationship of mortgagor and mortgagee may not be held

to continue unless the parties have so intended. . . . If it is

a debt which the grantor is bound to pay, which the grantee

might collect by proper proceedings, and for which the deed

to the land is to stand as security, the transaction is a

mortgage; but if it is entirely optional with the grantor to

pay the money and receive a reconveyance, he has not the

rights of a mortgagor, but only the privilege of

repurchasing the property.

....

Whether any particular transaction amounts to a mortgage

or an option of repurchase depends upon the real intention

of the parties, as shown on the face of the writings, or by

extrinsic evidence, and the distinction is whether the debt

existing prior to the conveyance is still subsisting or has

been satisfied by the conveyance. If the relation of debtor

and creditor still continues, equity will regard the

transaction as a method of securing a debt—and hence a

mortgage.

70 N.C. App. at 400, 319 S.E.2d at 687–88 (cleaned up); see also Ricks v. Batchelor,

225 N.C. 8, 11, 33 S.E.2d 68, 70 (1945); see also Ferguson v. Blanchard, 220 N.C. 1,

7, 16 S.E.2d 414, 418 (1941).

And in Hardy v. Neville, our Supreme Court noted some material questions to

evaluate whether a party holds title as an equitable mortgagee or in fee simple:

Our cases furnish ample guides pointing to the right

answer. “If the relation of debtor and creditor still

continues, equity will regard the transaction as a method

of securing a debt -- and hence a mortgage.” Ricks v.

Batchelor, 225 N.C. 8, 33 S.E. 2d 68. A material question

also is: does the relationship of debtor and creditor

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continue to exist after the conveyance? Ferguson v.

Blanchard, 220 N.C. 1, 16 S.E. 2d 414. If the intent is to

secure an obligation at the inception of the transaction it

will be considered in equity a mortgage, and nothing

else. McKinley v. Hinnant, 242 N.C. 444, 87 S.E.2d 568.

Other questions material to decision in favor of holding a

deed a mortgage are: The grantor is in distress at the time

of the transaction. O’Briant v. Lee, 214 N.C. 723, 200 S.E.

865. The grantor is permitted to remain in

possession. Culbreth v. Hall, 159 N.C. 588, 75 S.E.

1096. The price for reconveyance was not the value of the

land but exactly the amount the grantees had advanced,

plus interest, insurance and taxes. Kemp v. Earp, 42 N.C.

167.

261 N.C. at 457, 135 S.E.2d at 51. When determining “whether the transaction was

merely a deed with option to repurchase or was a mortgage, the fact that the value of

the property conveyed was much greater than the amount of the debt secured

thereby, is some evidence that the parties intended that the deed operate as a

mortgage.” Tomika Invs., 136 N.C. App. at 497, 524 S.E.2d at 594.

In Hardy, the plaintiffs executed a deed to J.P. Neville and his wife, the

defendants, in exchange for financial assistance with an outstanding debt the

plaintiffs owed in the amount of $8,736.70. 261 N.C. at 456, 135 S.E.2d at 50. At the

time, the “plaintiffs were heavily indebted and threatened with the foreclosure of two

deeds of trust on their farm.” Id. In the plaintiffs’ view, “the deed executed . . . was

in fact security for a debt and in equity a mortgage.” Id. The plaintiffs held this view

in light of the fact that they contemporaneously executed the deed and the following

contract:

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Opinion of the Court

contemporaneous with the execution of the said deed

referred to in the preceding paragraph [the defendants],

entered into a contract in the nature of an option with the

[plaintiffs], by the terms of which said [the defendants]

agreed to sell and reconvey the real estate described in said

deed for the purchase price of $ 8,736.70, plus interest at

the rate of six per cent per annum, plus all taxes paid by

the said [the defendants] on said real estate and all

premiums of insurance advanced by [the defendants].”

Id. The plaintiffs thus contended the trial court erroneously failed to pass on its

motion for judgment on the pleadings. Id. at 458, 135 S.E.2d at 51.

On review, the North Carolina Supreme Court concluded that the trial court

should have entered judgment on the pleadings in favor of the plaintiffs, reasoning:

The defendants’ answer shows (1) the consideration for the

deed was exactly the amount paid in discharge of the

plaintiffs’ debts; (2) the contract price for repurchase was

the exact amount of that indebtedness, plus interest,

insurance and taxes; (3) the second contract was for the

purpose of giving the plaintiffs additional time to redeem;

(4) in case of further default, provision was made for a sale,

private by agreement, public otherwise; and the

satisfaction of the debt from the proceeds. Thus the

defendants’ pleading makes out a clear case of debtor-

creditor relationship between the Hardys and the Nevilles.

The Nevilles held the legal title as security for their debt.

The Hardys owned the equity of redemption. Both

together, but neither alone, could sell and convey a good

title to the purchaser.

Id. Accordingly, the Court held: the trial court “should have ruled as a matter of law

the plaintiffs and [the defendants] occupied the relationship of debtors and creditors”;

“the deed dated February 2, 1961, was in equity a mortgage conveying the lands to

the grantees as security for the indebtedness due by the grantors”; and “subject to

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Opinion of the Court

this indebtedness, [the plaintiffs], being the owners of the equity of redemption, are

entitled to have the deed cancelled upon the payment of that indebtedness.” Id. at

458, 135 S.E.2d at 51–52 (citation modified).

In Eagle’s Nest, this Court determined “whether [the] defendant h[eld] title to

the real estate as an equitable mortgagee rather than as an owner in fee simple” in

light of a conveyance made by the plaintiff. 70 N.C. App. at 399, 319 S.E.2d at 687.

The plaintiff “sought a loan from [the] defendant to cure a default in [a] promissory

note secured by [a] deed of trust.” Id. The plaintiff later conveyed the property to the

defendant by deed in exchange for repayment of its outstanding debts owed and

simultaneously entered into an option contract to repurchase the property:

The deed contained an exception whereby the defendant

grantee assumed and agreed to pay the balance due under

the purchase money note secured by the deed of trust in the

sum of $ 231,338.40. Revenue stamps were affixed to the

deed in the sum of $ 120,000.00, indicating a purchase price

of $ 120,000.00.

Simultaneously, there was executed and recorded an

option and lease agreement which provided generally [that

the defendant] granted to Eagle’s Nest the exclusive option

to purchase the lands involved in this controversy at any

time beginning 1 July 1982 and expiring 24 December 1982

for the sum of $ 412,000.00. On 24 December 1982 the

option would lapse.

Id. Sometime in December 1982, the plaintiff notified the defendant of its intent to

exercise the option to purchase on or about 13 December 1982—eleven days before

the expiration of the option. Id. However, the plaintiff “did not tender its option

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Opinion of the Court

payment,” instead filing a complaint against the defendant on 20 December 1982. Id.

Given that “the time to exercise the option [had] expired, [the] defendant pray[ed]

that he be declared the fee simple owner.” Id. (citation modified). The trial court

ultimately entered summary judgment in the defendant’s favor. Id.

On appeal to this Court, the plaintiff maintained that the trial court

erroneously granted summary judgment for defendant since a genuine issue of

material fact existed concerning whether an equitable mortgage was created. Id. On

review, our Court determined that the plaintiff merely obtained an option to purchase

as opposed to the right to redeem, and that the plaintiff failed to exercise the option

within the requisite timeframe. Id. at 401–02, 319 S.E.2d at 688–89. It also

determined that the plaintiff offered no evidence to rebut the defendant’s motion. Id.

at 402, 319 S.E.2d at 688–89. This Court thus concluded: “Eagle’s Nest had a right

to repurchase, not redeem, the property conveyed; but its rights were entirely

optional”; “the deed conveyed the property to defendant, who owns the property free

of any claim by Eagle’s Nest”; and the “defendant was entitled to judgment as a

matter of law.” Id. at 402–03, 319 S.E.2d at 689.

Turning to the instant case, the trial court granted summary judgment for

Defendant. Our review of the record, however, reveals that a genuine issue of

material fact remains since it is unclear whether Defendant obtained the Property as

an equitable mortgagee or in fee simple. Forbis, 361 N.C. at 524, 649 S.E.2d at 385.

Although there is no physical evidence that Mr. McLeod and Defendant

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Opinion of the Court

entered into a separate contract contemporaneously like the parties in Hardy, the

attendant circumstances surrounding the conveyance are similar. 261 N.C. at 457,

135 S.E.2d at 51. In Defendant’s answer to Plaintiff’s motion for summary judgment,

he maintained, “there was no discussion of any repayment of the tax debt by [Mr.

McLeod] and no discussion of any terms of reconveyance to [Mr. McLeod].” Yet in his

deposition, Defendant testified that he only paid the taxes on the Property so that he

could help Mr. McLeod save his land, and that he “wasn’t trying to gain anything

from” helping Mr. McLeod. See Kessing, 278 N.C. at 535, 180 S.E.2d at 830 (citation

omitted and modified) (noting that “if there is any question as to the credibility of

witnesses or the weight of evidence, [ ] summary judgment should be denied[.]”). And

approximately two-and-a-half weeks after the conveyance, on 3 April 2023, Mr.

McLeod attempted to tender payment of the tax debt in full to Defendant in exchange

for Defendant deeding the Property back to him. Moreover, Defendant allowed Mr.

McLeod “to remain in possession” of the Property despite allegedly having transferred

it to Defendant in fee simple. Hardy, 261 N.C. at 457, 135 S.E.2d at 51. In fact, in

his deposition, Defendant stated: “[Mr. McLeod] wanted to die at home, and that’s

what I was trying to help him do. Nobody else would save his land.” A genuine issue

of material fact thus remains as to whether Defendant and Mr. McLeod established

a debtor-creditor relationship, and whether they intended for the debtor-creditor

relationship to continue after the conveyance. Id. And unlike Eagle’s Nest, there is

no assertion that Mr. McLeod’s right to reclaim the property was subject to a time

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Opinion of the Court

constraint or “was entirely optional.” 70 N.C. App. at 402–03, 319 S.E.2d at 689.

Additionally, at the time of the conveyance, both Plaintiff and Ms. Yamagata

attested that Mr. McLeod possessed a “4th or 5th grade education,” he was in

financial distress, behind on his property taxes, eighty-nine years old, and in poor

physical and mental health. Whereas Defendant maintained that at the time of the

conveyance: he had no knowledge of the degree of Mr. McLeod’s illness; he was

unaware of Mr. McLeod’s level of education or inability to read; and Mr. McLeod “had

all his faculties.” Thus, a genuine of issue of material fact also exists concerning

whether Mr. McLeod was “in distress at the time of the transaction.” Hardy, 261

N.C. at 457, 135 S.E.2d at 51; O’Briant, 214 N.C. at 729–30, 200 S.E. at 869.

Moreover, the amount Mr. McLeod sent Defendant to reclaim the Property

thereafter is consistent with the debt total—$3,295—as opposed to its approximate

market value. Hardy, 261 N.C. at 458, 135 S.E.2d at 51; Tomika Invs., 136 N.C. App.

at 497, 524 S.E.2d at 594 (noting “the fact that the value of the property conveyed

was much greater than the amount of the debt secured thereby, is some evidence that

the parties intended that the deed operate as a mortgage”). This attempted payment,

in such a monetary amount, further establishes a genuine issue of material fact as to

whether Mr. McLeod intended to transfer the Property to Defendant in fee simple.

Had Mr. McLeod intended to convey his Property outright—as the trial court

concluded—he likely would not have attempted to tender repayment of the debt to

Defendant shortly thereafter on two separate occasions. Furthermore, Plaintiff’s

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Opinion of the Court

affidavit attested to the following concerning the Property’s value:

In my opinion, [Mr. McLeod’s] home had a market value of

no less than $135,000 on March 17 2023, and is worth over

$200,000 today. [Mr. McLeod’s] mobile home was very old.

It had 1.058 acres of land and a big barn. I own my home

less than half a mile away. My home is worth

approximately $250,000 today and has less acreage (.7

acres).

The trial court therefore erroneously resolved several genuine issues of material fact

when awarding summary judgment in Defendant’s favor. See, e.g., Forbis, 361 N.C.

at 524, 649 S.E.2d at 385.

For all these reasons, we hold the trial court erroneously granted summary

judgment for Defendant. As noted by our Supreme Court in Koontz v. Winston-Salem,

“summary judgment provides a drastic remedy and should be cautiously used so that

no one will be deprived of a trial on a genuine, disputed issue of fact.” 280 N.C. 513,

518, 186 S.E.2d 897, 901 (1972) (citation modified).

IV. Conclusion

In sum, we conclude the trial court committed error by failing to consider

several of the affidavits that accompanied Plaintiff’s motion for summary judgment.

Furthermore, we conclude the trial court erroneously granted summary judgment in

Defendant’s favor since a genuine issue of material fact exists. We therefore reverse

the trial court’s order and remand for further proceedings consistent with this

opinion.

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Opinion of the Court

REVERSED AND REMANDED.

Judges ARROWOOD and CARPENTER concur.

Report per Rule 30(e).

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