Whitley v. O'NEAL , 5 N.C. App. 136 ( 1969 )

168 S.E.2d 6 (1969) 5 N.C. App. 136

Hallett Ward WHITLEY and wife, Kathleen C. Whitley
v.
Dick O'NEAL and wife, Daphne D. O'Neal.

No. 692SC128.

Court of Appeals of North Carolina.

June 18, 1969.

LeRoy Scott, Washington, for plaintiff appellants.

John A. Wilkinson, Washington, for defendant appellees.

MORRIS, Judge.

In oral argument in this Court, the defendants entered a demurrer ore tenus on the ground that the plaintiffs' complaint does not state a cause of action. There is some confusion as to what theory plaintiffs are relying upon in seeking relief. Their complaint, apparently, attempts to set forth a cause of action based upon fraud. North Carolina does not follow the strict rule that a party must succeed, if at all, only upon the theory set forth in his pleading. "This strict rule savors of the technicalities of the common law system; and North Carolina follows the more liberal view that the party is entitled to any relief justified by the material facts alleged in his pleading and established by proof, even though such facts do not justify recovery on his original theory." 1 McIntosh, N.C. Practice 2d, § 999. The facts alleged and established are controlling. Lytton Mfg. Co. v. House Mfg. Co., 161 N.C. 430, 77 S.E. 233. Plaintiffs' complaint does not sufficiently state a cause of action based upon fraud because it is not alleged that the statements made to the plaintiffs by the defendant Dick O'Neal concerning the selling price of the land and the division of the proceeds were made with the knowledge that they were false. In order for a promissory representation to be the basis of an action for fraud, facts must be alleged from which a court and jury may reasonably infer that the defendant did not intend to carry out such representations when they were made. Hoyle v. Bagby, 253 N.C. 778, 117 S.E.2d 760. This amounts to a misrepresentation of an existing fact.

Paragraph No. 5 of the plaintiffs' complaint contains the following:

"That thereafter, plaintiff operated the aforesaid property as a store and motel until September 16, 1966. That plaintiffs and defendants agreed to sell the said property, provided they could find a suitable purchaser at a suitable price. That it was agreed between plaintiffs and defendants that the total consideration received for the sale of said property would be divided one-half to plaintiffs and one-half to defendants. That both plaintiffs and defendants began searching for a buyer for the above property."

The allegations contained in this paragraph are admitted by the defendants. We think these allegations, along with other allegations to the effect that the defendants conveyed only 30/100 of the property, retained a 20/100 interest, and received the equivalent of $4,000 plus one-half of the checking account, constitute a cause of action based upon a breach of contract. Defendants argue that this contract is not enforceable because of the statute of frauds. However, "[i]t is clear that in North Carolina an oral contract to divide the profits from the purchase and sale of real estate is not within the statute of frauds. Newby v. Atlantic Coast Realty Co., 180 N.C. 51, 103 S.E. 909; 182 N.C. 34, 108 S.E. 323; Brogden v. Gibson, 165 N.C. 16, 80 S.E. 966." Cook v. Lawson, 3 N.C.App. 104, 164 S.E.2d 29. Defendants' demurrer is overruled.

It is alleged and admitted that on 16 September 1966 plaintiffs and defendants agreed to sell the property in question and divide the proceeds. We think the 20/100 interest in the property retained by the defendants must be considered to be "proceeds" of the sale just as if they had conveyed all of their interest in the property and received interest in unrelated property plus the same amount of cash that the plaintiffs received. In either case we do not think that it can be said that there has been an equal division of the "proceeds" of the sale. Thus, the contract between the plaintiffs and defendants has been breached. We think plaintiffs' evidence was sufficient to support their allegations for recovery based upon the theory of breach of contract; therefore, the judgment of nonsuit entered below was improper.

It is apparent from the briefs and oral arguments that plaintiffs argued this case in the trial court on the theory of fraud, and that the theory discussed herein has not previously been argued. We recognize the general rule that a party will not be allowed to switch theories when he gets to the appellate court, even though the pleadings and proof justify a recovery based upon a theory unasserted in the trial court. General Finance & Thrift Corp. v. Guthrie, 227 N.C. 431, 42 S.E.2d 601.

"However, there is no rigid rule which prevents the Supreme Court from considering a theory not considered below. Thus, upon plaintiff's appeal from judgment of nonsuit entered at the close of the evidence, the Supreme Court has considered theories of recovery not advanced by plaintiff's attorney in his argument to the trial judge. And when the plaintiff has recovered on a theory untenable to the Supreme Court, but the facts alleged and proved justify recovery on some other theory, the court, while reversing the judgment, will not direct judgment for defendant, but will remand the case for a new trial on the tenable theory." 1 McIntosh, N.C. Practice 2d, § 999(5), p. 562.

Also, see Jackson v. Parks, 216 N.C. 329, 4 S.E.2d 873; and Voorhees v. Porter, 134 N.C. 591, 47 S.E. 31, 65 L.R.A. 736, where new theories were considered on an appeal by plaintiff from a judgment of nonsuit.

For the reasons stated, we think there must be a

New trial.

CAMPBELL and BRITT, JJ., concur.