Rural Plumbing & Heating, Inc. v. H. C. Jones Construction Co.

149 S.E.2d 625 (1966) 268 N.C. 23

RURAL PLUMBING AND HEATING, INC.
v.
H. C. JONES CONSTRUCTION CO., Inc., et al.

No. 529.

Supreme Court of North Carolina.

August 26, 1966.

Lassiter, Leager, Walker & Banks, Raleigh, for plaintiff appellee.

George M. Anderson and E. Ray Briggs, Raleigh, for defendant appellants.

SHARP, Justice.

Defendants' assignments of error 1 through 4 relate to the exclusion of evidence. These assignments do not comply with Rule 19(3), Rules of Practice in the Supreme Court, in that appellant did not incorporate therein the excluded evidence and thus disclose the alleged error. They will not, therefore, be considered. Pratt v. Bishop, 257 N.C. 486, 126 S.E.2d 597. In our view of this case, however, they are immaterial.

Although appellant does not raise the point, this case presents a novel situation in that the issues submitted to the jury did not arise upon the pleadings but upon a contract entered into by the parties a year after the pleadings had been filed. The contract specified that, if certain payments totaling $105,000.00 were made as they came due, plaintiff's claim of $131,099.91, contained in causes of action 4 and 5, would be discharged. If, however, Jones Co. defaulted, and its default continued for 30 days after plaintiff had given written notice thereof, the contract became "a judicial admission" that Jones Co.'s liability to plaintiff was the amount for which plaintiff had sued.

The stipulation entered into at the time of the trial on November 4, 1965, incorporated the contract by reference and established the payments which Jones Co. had made pursuant to it. This stipulation clearly reveals that Jones Co. had paid in full only the amounts due under paragraph 1 (a) and (b) of the contract; all other payments were in default. If this default had continued for thirty days after written notice to Jones Co., the contract constituted a judicial admission of defendants' liability in the amount of $131,099.91, less the stipulated payments. To fix the amount, it would be necessary only to subtract the stipulated payments and to compute the interest due. Thus, the only issue of fact which the parties left unstipulated was whether plaintiff had given notice of default as required by the contract and, if so, whether that default had continued for a period of 30 days thereafter. The uncontradicted evidence was that such notice had been given on July 28, 1964, reaffirmed on August 14, 1964, September 4, 1964, and September 30, 1964, and that the default has continued to date. Plaintiff was entitled, therefore, to have had the judge instruct the jury that, if it found the facts to be as all the evidence tended to show, it would answer the issue relating to notice and continued default in favor of the plaintiff. Chisholm v. Hall, 255 N.C. 374, 121 S.E.2d 726. The first issue submitted to the jury incorporated these questions, and was answered in plaintiff's favor.

It is the rule with us that "[i]ssues arise upon the pleadings, when a material fact * * * is maintained by one party and controverted by the other." G.S. § 1-196; Jenkins v. Trantham, 244 N.C. 422, 94 S.E.2d 311; McIntosh, North Carolina Practice and Procedure § 508 (1929). The pleadings must support the judgment, which may not be based on facts not alleged in the complaint and entirely inconsistent with it. McCullen v. Durham, 229 N.C. 418, 50 S.E.2d 511; Shelton v. Davis, 69 N.C. 324. Although the parties may not agree upon improper issues, Nebel v. Nebel, 241 N.C. 491, 85 S.E.2d 876; Miller v. Miller, 89 N.C. 209, they may, by stipulation or judicial admission, establish any material fact which has been in controversy between them, and thereby eliminate the necessity of submitting an issue to the jury with reference to it. Millikan v. Simmons, 244 N.C. 195, 93 S.E.2d 59. Once a stipulation is made, a party is bound by it and he may not thereafter take an inconsistent position. Austin v. Hopkins, 227 N.C. 638, 43 S.E.2d 849; 83 C.J.S. Stipulations § 22 a (1953). The sum and substance of the foregoing precepts is that it is the duty of the judge to submit such issues as are necessary to settle the material controversies in the pleadings. In the absence of such issues, without admissions of record sufficient to justify the judgment rendered, this Court dill remand the case for a new trial. Tucker v. Satterthwaite, 120 N.C. 118,27 S.E. 45.

The contract of April 1, 1964, and the stipulation of November 4, 1965, incorporating it were made part of the record in this case at the trial. They did not, however, change the theory upon which the fourth and fifth causes of action were stated in the complaint. They created no inconsistencies and in no way negated any material allegation. See Dobias v. White, 240 N.C. 680, 83 S.E.2d 785; King v. Coley, 229 N.C. 258, 49 S.E.2d 648. Although they added the issues of default and notice to the case, the ultimate issue—the amount of Jones Co.'s liability to plaintiff growing out of causes four and five—remained the same.

Without any doubt the parties' contract and stipulations prevented a compulsory reference in this case, and greatly simplified what would otherwise have been a very involved lawsuit. Courts look with favor on stipulations designed to simplify, shorten, or settle litigation and save cost to the parties, and such practice will be encouraged. Chisholm v. Hall, supra; 83 C.J.S. Stipulations § 2 (1953). In some jurisdictions the parties may "waive the issues made by the pleadings and stipulate for a trial on the merits regardless of such issues." 83 C.J.S. Stipulations §§ 10(6), 22 a (1953). See Blades v. Des Moines City Ry. Co., 146 Iowa 580, 123 N.W. 1057; Traill v. Ostermeier, 140 Neb. 432, 300 N.W. 375; Bruner v. Burch, 179 Okl. 338, 65 P.2d 1215. This, however, is not the rule in North Carolina except in controversies without action, which do not contemplate pleadings, G.S. § 1-250, and perhaps in a case agreed. McIntosh, op cit. supra § 518. Nor, under our practice, do stipulations dispense with the necessity that the pleadings support the proof. "(W)here the pleadings do not distinctly and unequivocally raise an issue, it should not be submitted." Henderson v. Atlantic Coast Line R. R., 171 N.C. 397, 398, 88 S.E. 626, 627.

After plaintiff had decided to invoke the provisions of paragraph 7 of the contract, the proper procedure would have been for it to have filed an amended complaint in which the two remaining causes "were brought up to date," and those which had been settled eliminated from the pleadings. This would have greatly clarified a confused situation and preserved some symmetry in the case. Notwithstanding, under the circumstances here disclosed, the ends of justice will best be served by treating the stipulations and contract as an amendment to the complaint. The purpose of the requirement that issues must arise on the pleadings is to prevent surprise and to give each party the opportunity to prepare his case. King v. Coley, supra. No risk of surprise existed here.

Defendants make no point here that the issues submitted did not arise upon the pleadings nor did they, at the trial, tender other issues or except to those used. Indeed, after trial all parties stipulated that the issues submitted to the jury were based on the contract of April 1, 1964. This case has been fairly tried, and, upon the whole record, it is apparent that the result would have been the same had all rules of pleadings been strictly observed. It is also patent that another trial upon this same evidence would result in an identical verdict.

The procedure followed here appears to be without precedent in this jurisdiction, and we note the irregularity in order to point out that such a departure from established rules of pleadings is not to be encouraged and is hazardous. For example, defendants assign as error the failure of the court to charge that plaintiff had waived Jones Co.'s default by crediting 22% of the two progress payments received from the Florence job more than 30 days after giving notice of default against the $25,000.00 due under paragraph 1(d) of the contract. This assignment is without merit for two reasons: (1) The circumstances under which these payments were made and received were not such as to constitute a waiver. Fairchild Realty Co. v. Spiegel, Inc., 246 N.C. 458, 98 S.E.2d 871. (2) Defendants have no pleadings which raise the issue. When the facts constituting a waiver do not appear in the pleadings, the party relying thereon must specially plead the defense, and it "must be pleaded with certainty and particularity and established by the greater weight of the evidence." Hall v. Odom, 240 N.C. 66, 70, 81 S.E.2d 129, 133. Accord, Wright v. Mercury Insurance Co., 244 N.C. 361, 93 S.E.2d 438; Lamb v. Staples, 236 N.C. 179, 72 S.E.2d 219.

Defendants' other assignments have been considered and found to be without merit.

The judgment of the court below is

Affirmed.