Carroll v. . Brown , 228 N.C. 636 ( 1948 )

Civil action to recover on a promissory note, executed 30 April, 1946, for $600.00 alleged to be due and payable one day after date with interest at the rate of six percent per annum until paid.

The defendants filed answer, alleging that at the time the note was executed it was agreed by the parties that the note was not to draw interest and that the principal sum was to be paid out of the profits of a partnership business in which the plaintiff and the defendant, Arlie W. Brown, were then engaged. The defendants further allege in their answer that the plaintiff has heretofore wrongfully taken over all the partnership assets which were sufficient to pay the said note. The defendants also set up a counterclaim and ask for an accounting of the assets of the partnership.

The plaintiff filed a reply in which he denies there were any profits derived from the partnership and alleges that he has heretofore closed out the partnership business.

When this cause came on for hearing in the Court below, counsel for plaintiff moved for judgment on the pleadings. The motion was allowed and judgment was entered for the principal sum, together with interest thereon at six percent per annum, from 30 April, 1946, until paid. The defendants appeal, assigning error. The only question involved on this appeal is: Was the plaintiff entitled to judgment on the pleadings?

The allegation of the plaintiff to the effect that the note upon which he bottoms his action, draws interest from date until paid at the rate of six percent per annum, is denied by the defendants in their answer. The note is not set out in the complaint, hence we think the pleadings raise a question of fact for the jury. Bessire Co. v. Ward, 206 N.C. 858,175 S.E. 208; Wilson v. Allsbrook, 203 N.C. 498, 166 S.E. 313.

Moreover, the defendants allege it was understood at the time this note was executed that it was to be paid out of partnership profits, from a partnership in which the plaintiff and one of the defendants, Arlie W. Brown, were then engaged. In the case of Ripple v. Stevenson, 223 N.C. 284,25 S.E.2d 836, this Court said: "It is permissible for the parties to agree that a note shall be paid only in a certain manner, e. g., out of a particular fund, by the foreclosure of collateral, or from rents collected from a certain building, etc. Jones v. Casstevens, 222 N.C. 411. And this part of the agreement may be shown, though it rest in parol."

The appellee contends that the general rule that one partner cannot sue another partner at law until there has been a complete settlement of the partnership affairs and a balance struck applies in this case, citing Pughv. Newbern, 193 N.C. 258, 136 S.E. 707. Therefore, he contends the cross-action for an accounting to ascertain whether or not the partnership has sufficient profits out of which the note may be paid cannot be maintained. The position is untenable. There are numerous exceptions to the general rule laid down in Pugh v. Newbern, supra, among them being where the partnership property has been wrongfully converted, and "Where the partnership has been terminated, all debts paid and the partnership affairs otherwise adjusted with nothing remaining to be done but pay over the amount due by one to the other, such amount involving no complicated reckoning."

Furthermore, it is not permissible to enter judgment on the pleadings against a party seeking affirmative relief when the allegations upon which the prayer for relief is based are denied. "Every fact necessary to be established as a basis for the judgment asked must be admitted either by failure to deny the specific allegations or by specific admission of the facts." Oldham v. Ross, 214 N.C. 696, 200 S.E. 393; Poole v. Scott,ante, 464, 46 S.E.2d 145. Here the defendants deny certain material allegations, interpose a defense, and seek affirmative relief.

The plaintiff's motion for judgment on the pleadings should have been denied. Hence, the judgment below is

Reversed.