Loman-Garrett Supply Co., Inc. v. Dudney

289 S.E.2d 600 (1982)

LOMAN-GARRETT SUPPLY COMPANY, INC.
v.
E. C. DUDNEY and Dudney, Inc.

No. 8118SC660.

Court of Appeals of North Carolina.

April 6, 1982.

Tuggle, Duggins, Meschan, Thornton & Elrod by Thomas S. Thornton and Rayford K. Adams, III, Greensboro, for plaintiff-appellee.

Ralph G. Jorgensen, Tabor City, for defendants-appellants.

ARNOLD, Judge.

As their first assignment of error, defendants contend that the court erred in granting summary judgment against the individual defendant. Since the guaranty was signed after plaintiff had extended credit to the corporate defendant, new consideration was required to make the guaranty enforceable and no such consideration was given.

Plaintiff defends the court's grant of summary judgment on grounds that a guaranty under seal requires no consideration, and that, in any event, defendant failed to plead the affirmative defense of failure of consideration as required by G.S. 1A-1, Rule 8(c). Plaintiff notes that the affirmative defense which defendant did set forth in his answer, that of failure to fulfill a condition precedent, is one strongly disfavored by courts and that it was not supported by defendant's affidavit.

We agree with plaintiff that the relevant question is one of consideration, not of condition precedent. We do not agree, however, that the court could not properly consider the question of failure of consideration in ruling upon plaintiff's motion for summary judgment.

Summary judgment is a drastic remedy which should be granted only upon a showing that there exists no material factual issue and that the movant is entitled to judgment as a matter of law. Atkinson v. Wilkerson, 10 N.C.App. 643, 179 S.E.2d 872 (1971). In determining the existence of a triable issue of fact, the judge may consider verified pleadings and affidavits submitted by the parties in support thereof. Indeed, our Supreme Court has held that for the purpose of opposing a summary judgment motion an affirmative defense may be raised for the first time by affidavit. Bank v. Gillespie, 291 N.C. 303, 230 S.E.2d 375 (1976). Defendant having raised his defense of failure of consideration in his affidavit, we hold that his failure to plead the defense was not fatal even though the preferred practice is to require a formal amendment to the pleadings. Bassett v. Griggs, 47 N.C.App. 104, 266 S.E.2d 702 (1980). We note, moreover, that plaintiff was placed on notice of the substance, if not the label, of defendants' affirmative defense by the pleadings. The stated basis for defendants' claim of failure of condition precedent is precisely that which supports the defense of failure of consideration.

Even if properly raised, plaintiff argues that the consideration defense was rendered moot by the fact that the guaranty was signed under seal. It is true that a seal "imports consideration" in North Carolina. Mobil Oil v. Wolfe, 297 N.C. 36, 39, 252 S.E.2d 809, 811 (1979); First Peoples Savings & Loan Association v. Cogdell, 44 N.C.App. 511, 261 S.E.2d 259 (1980). However, the effect of a seal is not to preclude the court's consideration of the issue entirely as plaintiff suggests, but only to raise a presumption of consideration which must be rebutted by clear and convincing evidence. Mills v. Bonin, 239 N.C. 498, 80 S.E.2d 365 (1954); Little v. Oil Company, 12 N.C.App. 394, 183 S.E.2d 290 (1971). Defendant is entitled to have a jury determine whether his evidence is sufficient to rebut the presumption here since this is an issue of fact. Summary judgment was therefore improper and must be reversed.

Defendants' remaining assignments of error relating to the propriety of the court's entry of default judgment against the corporate defendant attack that judgment on purely technical grounds. We hold that any error in the judge's failure to substitute the word "Judge" for that of "Clerk" on the judgment form was harmless as a matter of law.

The summary judgment against E. C. Dudney in his individual capacity is reversed and the cause remanded for trial.

The default judgment against Dudney, Inc. is affirmed.

CLARK and WEBB, JJ., concur.