Perkins v. Langdon , 233 N.C. 240 ( 1951 )

63 S.E.2d 565 (1951) 233 N.C. 240

PERKINS et al.
v.
LANGDON.

No. 737.

Supreme Court of North Carolina.

February 28, 1951.

Robert H. Dye, Fayetteville, and Cooper, Sanders & Holt, Burlington, for defendant-appellant.

Brooks, McLendon, Brim & Holderness, Greensboro, and James R. Nance, Fayetteville, for plaintiffs-appellees.

JOHNSON, Justice.

The pertinent allegations of the plaintiffs' complaint are succinctly summarized by Denny, J., in stating the facts in connection with the opinion in the decision on the former appeal. 231 N.C. 386, 57 S.E.2d 407. There, it appears that the plaintiffs originally set up and declared upon a parol contract by the terms of which they alleged the defendant agreed to lease to them two tobacco sales warehouses in the city of Fayetteville for a term of three years. The plaintiffs further alleged that the defendant breached the contract by selling the warehouses after the end of the first year. However, the complaint was silent on the question as to whether the defendant covenanted with the plaintiffs that he would not sell the warehouses during the term of the lease. Therefore, since a sale of leased property, in the absence of a stipulation against alienation, does not ipso facto work a breach of contract, the defendant's demurrer ore tenus, lodged in this Court, was sustained.

When the case went back to the court below, the plaintiffs, under leave there granted, amended their complaint. An analysis of the amended pleading discloses that the amendments allowed below fall into two classes: first, allegations in effect that (a) the defendant covenanted not to sell the warehouse properties during the three-year term of the lease, and (b) that the defendant breached his covenant against sale by selling the properties after the end of the first year to a bona fide purchaser; second, allegations to the effect that the original contract between the plaintiffs and the defendant provided for the operation of the warehouses under a joint adventure arrangement between the parties, whereby the plaintiffs "as managers" were to operate the warehouses for the joint account of the plaintiffs and the defendant for a period of three years.

The amendments in both of the foregoing classes are challenged by the defendant's motion to strike. Therefore the defendant's appeal presents this question for decision: Are the amendments to the complaint relevant and material to the case, within the meaning of the statute and decisions prescribing and interpreting the rules under which pleadings may be amended in cases like this one?

G.S. § 1-163 is the statute which fixes the scope of the court's power in allowing amendments. It provides in pertinent part as follows: "The judge or court may, before and after judgment, in furtherance of justice, and on such terms as may be proper, amend any pleading * * * by inserting other allegations material to the case; or when the amendment does not change substantially the claim or defense, by conforming the pleading or proceeding to the fact proved. * * *"

An analysis of this statute lends support to the view that the scope of the court's power to allow amendments is broader when dealing with amendments proposed before trial than during or after trial. The statute contains alternate provisions: the court "may, before and after judgment, * * * amend any pleading, * * * by inserting other allegations material to the case; or when the amendment does not change substantially the claim * * * by conforming the pleading or proceeding to the fact proved." It would seem that a fair interpretation of the alternate provision, "or when the amendment does not change substantially the claim * * * by conforming the pleading or proceeding to the fact proved," is referable to amendments offered during or after trial for the purpose of conforming the pleadings to the facts proffered or admitted in evidence. The power to grant such tardily proposed amendments necessarily should be and is more restricted in scope than is the power to allow amendments offered prior to trial under circumstances which afford the other litigant ample opportunity to investigate and answer the new matter set up. 41 Am.Jur., Pleading, section 296, top p. 495. The portion of the statute dealing with the power to allow these delayed amendments by its very language excludes amendatory allegations which are calculated to "change substantially the claim" sued on. This language of the statute is clear. Ordinarily it calls for literal interpretation and application, so as to exclude proffered amendments which would either bring in a new cause of action or change substantially the form of the action originally sued on.

The other part of the statute confers upon the court the power to "amend any pleading * * * by inserting other allegations material to the case." We interpret this portion of the statute as being intended to regulate the allowance of amendments before trial (or during trial where allowed under circumstances affording the adverse litigant fair opportunity to investigate and rebut any new matters brought in by way of amendment, even to the extent, if needs be, of granting a continuance for the term). This section of the statute confers upon the court broad, sweeping discretionary powers of amendment. The language of this part of the statute gives the court the power to insert other allegations "material to the case." Here, the word "case" should be construed ordinarily in its broader, more comprehensive sense, as embracing the relevant facts arising out of or connected with the transactions forming the subject of action declared upon in the complaint. It would seem that this phase of the statute is necessarily referable to and should be construed and applied, in the exercise of a sound judicial discretion, in connection with the provisions of G.S. § 1-123, which prescribes the rules under which several causes of action may be united in the same complaint, and which permits a plaintiff, as a matter of right, to unite in the original complaint "several causes of action, of legal or equitable nature, or both, where they all arise out of * * * the same transaction, or transaction connected with the same subject of action." See also another related statute, G.S. § 1-164.

The foregoing dual aspect of the statute under consideration, G.S. § 1-163, is recognized in a number of our more discriminating decisions. Nassaney v. Culler, 224 N.C. 323, 30 S.E.2d 226; Hatcher v. Williams, 225 N.C. 112, at page 114, 33 S.E.2d 617; Capps v. Atlantic Coast Line Railroad Co., 183 N.C. 181, 111 S.E. 533, and cases cited therein; Bank of Ashe v. Sturgill, 223 N.C. 825, 28 S.E.2d 511. See also Hylton v. Town of Mount Airy, 227 N.C. 622, 44 S.E.2d 51. The foregoing general principles also seem to be in accord with better reasoned authorities from other code jurisdictions. See 41 Am.Jur., Pleading, sections 296, 297, 304, 305, 306, 308, 309, and 310.

It is observed that the powers of amendment conferred by this statute, G.S. § 1-163, are by its very terms left to be exercised in the discretion of the court. Therefore no inflexible rule applicable to all cases can be laid down. Necessarily each case must to some extent be decided upon its particular facts. However, the power of the court to allow amendments is subject to recognized limitations, among which are these:

(1) A litigant may not set up by amendment a wholly different cause of action, i. e., one which does not arise out of or connect itself in a material aspect with the transaction set out in the original complaint. Nassaney v. Culler, supra. In 41 Am.Jur., Pleading, section 308, bot. p. 503 and top p. 504, it is said that "the test is whether an attempt is made to state facts which give rise to a wholly distinct and different legal obligation against the defendant, or set up another cause of controversy * * *. A test generally laid down for a departure is whether proof of the existence of additional facts will be required."

(2) Inconsistent causes of action may not be joined in the same complaint. Lykes & Co. v. Grove, 201 N.C. 254, 159 S.E.360; Hatcher v. Williams, supra. This rule is amplified and explained in 1 Am.Jur., Actions, section 83, p. 469, as follows: "Causes of action which are in their nature incongruous or inconsistent cannot be united in the same petition, even though they arise out of the same transaction or out of transactions connected with the same subject of action. Causes of action are inconsistent with each other when they cannot stand together; when, if one is true, the other cannot be; or when one defeats the other."

(3) Where a related "new cause of action may be introduced by way of amendment to the original pleadings; * * * the established limitation on the operation of its relation to the commencement of the suit is that, if the amendment introduce a new matter, or a cause of action different from the one first propounded, and with respect to which the statute of limitations would then operate as a bar, such defense or plea will have the same force and effect as if the amendment were a new and independent suit." Stacy, J. (now C. J.) in Capps v. Atlantic Coast Line Railroad Co., supra [183 N.C. 181, 111 S.E. 536.] See also 34 Am.Jur., Limitation of Actions, section 260, p. 212.

In the light of the foregoing principles, we now examine the amendments allowed in the instant case:

First, as to the allegations to the effect that (a) the defendant covenanted not to sell the warehouse properties during the term of the lease, and (b) that he breached the covenant by selling after the end of the first year to a bona fide purchaser. These allegations appear to be material to the case. They merely amplify the cause of action originally declared upon; they are relevant and germane to the subject of action set out in the complaint. These allegations are consistent "with the gravamen of the complaint." Hatcher v. Williams, supra [225 N.C. 112, 33 S.E.2d 618]; Davis v. Rhodes, 231 N.C. 71, 56 S.E.2d 43; Baker v. Baker, 230 N.C. 108, 52 S.E.2d 20; Ely v. Early, 94 N.C. 1; Nassaney v. Culler, supra.

Second, as to the amendments to the effect that the original contract between the parties provided for the "operation" of the warehouses under a joint adventure arrangement between them, whereby the plaintiffs "as managers" were to operate the warehouses for the joint account of the parties for a period of three years. These allegations appear to bring into the case a wholly different cause of action. True, the new matter is connected in a sense with the original subject of action, but only remotely so, and not in a material or relevant sort of way. The establishment of these allegations would require the proof of additional facts and give rise to a wholly distinct and different legal obligation against the defendant. This will not do. Cooper v. Southern Railroad Co., 165 N.C. 578, 81 S.E. 761; 41 Am.Jur., Pleading, section 308; Casstevens v. Casstevens, 231 N.C. 572, 58 S.E.2d 368; Clevenger v. Grover, 212 N.C. 13, 193 S.E. 12, 124 A.L.R. 82; Jones v. Vanstory, 200 N.C. 582, 157 S.E. 867. Moreover, the joint adventure allegations bring into the case a contradictory cause of action,—one that is inconsistent with the cause declared upon in the complaint. The allegations of the complaint seek to establish the relation of landlord and tenant as the basis of recovery. By these amendments, the plaintiffs are endeavoring to set up the alternate relation of joint adventurers. If the one is true, the other cannot be. These allegations should be stricken. Lykes Clark v. East Lake Lumber Co., 158 N.C. 139, 73 S.E. 793; 1 Am.Jur., Actions, section 83.

Decision here will be effectuated by modifying the order below so as to allow paragraphs (a), (b), (c), (d), and (g) of the motion to strike, and by striking:

(a) the word "operation";

(b) the term "and to assist the plaintiffs in the solicitation of patronage and with any information possessed by him which would be valuable or helpful in the successful operation of said warehouses";

(c) the term "as managers";

(d) the term "his share of the proceeds from said operations";

(g) the word "aforesaid."

And subject to these modifications, the order below is affirmed.

Modified and affirmed.