Mills v. Koscot Interplanetary, Inc.

187 S.E.2d 372 (1972) 13 N.C. App. 681

Mrs. Peggy MILLS
v.
KOSCOT INTERPLANETARY INC., a foreign corporation.

No. 7222SC9.

Court of Appeals of North Carolina.

March 29, 1972.

Raymer, Lewis & Eisele by Douglas G. Eisele, Statesville, for plaintiff appellant and appellee.

Broughton, Broughton, McConnell & Boxley by John D. McConnell, Jr., Raleigh, for defendant appellant and appellee.

CAMPBELL, Judge.

DEFENDANT'S APPEAL

Defendant asserts that its motion for judgment on the pleadings should have been sustained. We do not agree. This motion was made under Rule 12 of the North Carolina Rules of Civil Procedure, G.S. § 1A-1, Rule 12. The defendant's motion was made prior to the amendment to the complaint. It is to be passed upon, however, in the light of the evidence presented at the trial and the amendment to the complaint which was thereafter allowed by the trial court. 2A Moore's Federal Practice, § 12.15, p. 2349 (2d Ed.1968). When so considered under the new notice theory of pleading, we think the complaint as amended was sufficient. Sutton v. Duke, 277 N.C. 94, 176 S.E.2d 161 (1970).

Under the pleadings as amended defendant was put on notice that plaintiff claimed to have entered into a contract with defendant pursuant to which plaintiff had paid the defendant $2500 for the right to sell distributorships; that unbeknownst to the plaintiff, defendant entered into a consent judgment pursuant to which plaintiff was effectively prevented from reaping the rewards to which she was entitled by her contract since she no longer could sell distributorships and that this was the primary inducement for the contract and payment of $2500 to the defendant by the plaintiff.

Defendant next argues that it was error for the trial court to deny its motions for a directed verdict at the close of the plaintiff's evidence and at the close of all the evidence. A motion for a directed verdict is proper only in a jury trial. Where the case is tried without a jury the proper motion is for involuntary dismissal under Rule 41(b). Bryant v. Kelly, 10 N.C.App. 208, 178 S.E.2d 113 (1970), 279 N.C. 123, 181 S.E.2d 438 (1971). We will treat the defendant's motions for a directed verdict as such. The motion made at the close of the plaintiff's evidence will not be considered as the defendant offered evidence and only the motion at the conclusion of all the evidence is therefore presented. Wells v. Sturdivant Life Insurance Co., 10 N.C.App. 584, 179 S.E.2d 806 (1971).

"In ruling on a motion to dismiss under Rule 41(b), applicable only ``in an action tried by the court without a jury,' the court must pass upon whether the evidence is sufficient as a matter of law to permit a recovery; and, if so, must pass upon the weight and credibility of the evidence upon which the plaintiff must rely in order to recover." Airport Knitting, Inc. v. King Kooton Yarn Co., 11 N.C.App. 162, 180 S.E.2d 611 (1971).

The evidence presented by the plaintiff tended to establish that she paid defendant $2500 to become a director distributor in defendant's organization; that she did so in reliance on defendant's representations that its activities were legal; that defendant had been advised by the Secretary of State that its operations might be illegal; that one of the material benefits of being a director distributor was the privilege of selling distributorships; that defendant entered a consent decree which prevented plaintiff from selling distributorships.

The plaintiff has presented evidence of a contract, a breach by defendant and damages. Where plaintiff's evidence shows a contract and an act by defendant rendering it impossible for plaintiff to perform her part of the agreement, a prima facie case has been made out. Cook v. Lawson, 3 N.C.App. 104, 164 S.E.2d 29 (1968). The question of credibility is one for the trier of the facts. The Judge properly denied the motion to dismiss.

The final assignment of error presented by the defendant is that the trial court committed error in its findings of fact, conclusions of law and judgment. As defendant admits, this is a broadside exception. It merely challenges the sufficiency of the facts found to support the judgment entered. Browning v. Humphrey, 241 N.C. 285, 84 S.E.2d 917 (1954). We have, nevertheless, reviewed the evidence, and we conclude that it supports the findings of fact, and these in turn support the judgment rendered.

PLAINTIFF'S APPEAL

Plaintiff asserts that it was error for the trial court to conclude that she was not entitled to punitive damages for fraud.

In order for there to be fraud, the plaintiff must show, among other things, that, "``defendant knew that the representation was false, or made it recklessly, without any knowledge of its truth and as a positive assertion.'" Tractor & Auto Supply Co., Inc. v. Fayetteville Tractor & Equipment Co., Inc., 2 N.C.App. 531, 163 S.E.2d 510 (1968), quoting from Cofield v. Griffin, 238 N.C. 377, 78 S.E.2d 131 (1953).

In addition for the plaintiff to recover punitive damages for fraud there must be some element of aggravation as when the wrong is done wilfully or under circumstances of rudeness or oppression or in a manner which evinces a reckless and wanton disregard of the plaintiff's rights. Swinton v. Savoy Realty Co., 236 N.C. 723, 73 S.E.2d 785 (1953).

The evidence in this case tends to show that while defendant was aware of an opinion to the contrary by the North Carolina Attorney General, nevertheless, defendant had been advised by legal counsel that its operations in North Carolina were lawful. Defendant did not admit illegality in the consent judgment entered against it. There has been no judicial determination that defendant's operations are not lawful. The most that can be said is that the question remains in doubt.

The trial judge concluded that the defendant, in representing that its operations were lawful, was merely stating an opinion of law concerning which there has not yet been any legal determination. He further concluded that the representations did not constitute fraud entitling the plaintiff to punitive damages. The plaintiff has failed to show that defendant knew its representations were false and that any representation was accompanied by such aggravation as would entitle plaintiff to punitive damages.

The trial judge's conclusions are supported by his findings of fact, and the evidence supports the facts found. We find no error in the denial of punitive damages.

On plaintiff's appeal affirmed.

On defendant's appeal affirmed.

BRITT and GRAHAM, JJ., concur.