Automobile Dealer Resources, Inc. v. Occidental Life Insurance

190 S.E.2d 729 (1972) 15 N.C. App. 634

AUTOMOBILE DEALER RESOURCES, INC.
v.
OCCIDENTAL LIFE INSURANCE COMPANY OF NORTH CAROLINA.

No. 7210SC518.

Court of Appeals of North Carolina.

August 23, 1972.

Hatch, Little, Bunn, Jones & Few by William P. Few and Harold W. Berry, Jr., Raleigh, for plaintiff appellee.

Smith, Anderson, Blount & Mitchell by John H. Anderson, Henry A. Mitchell, Jr., and Samuel G. Thompson, Raleigh, for defendant appellant.

GRAHAM, Judge.

A temporary injunction will ordinarily be granted pending trial on the merits (1) if there is probable cause for supposing that plaintiff will be able to sustain his primary equity and (2) if there is reasonable apprehension of irreparable loss unless injunctive relief be granted, or if in the court's opinion it appears reasonably necessary to protect plaintiff's rights. U-Haul Co. v. Jones, 269 N.C. 284, 152 S.E.2d 65; Conference v. Creech and Teasley v. Creech and Miles, 256 N.C. 128, 123 S.E.2d 619.

The law recognizes a distinction, however, between prohibitory and mandatory injunctions. A prohibitory injunction seeks to preserve the status quo, until the rights of the parties can be determined, by restraining the party enjoined from doing particular acts. Clinard v. Lambeth, 234 N.C. 410, 67 S.E.2d 452. A mandatory injunction is intended to restore a status quo and to that end requires a party to perform a positive act. 2 McIntosh, N.C. Practice and Procedure 2d, § 2194, p. 404. A mandatory injunction is comparable in its nature and function to a writ of mandamus, Carroll v. Warrenton Tobacco Board of Trade, 259 N.C. 692, 131 S.E.2d 483, and will ordinarily be granted only where the injury is immediate, pressing, irreparable, and clearly established. Highway Com. v. Brown, 238 N.C. 293, 77 S.E.2d 780. See also Huggins v. Board of Education, 272 N.C. 33, 157 S.E.2d 703; Annot. Preliminary Mandatory Injunction, 15 A.L.R. 2d 213. "While in the greater number of instances injunction is a preventive remedy, there is no doubt that the court has jurisdiction to issue a preliminary mandatory injunction where the case is urgent and the right is clear; and, if necessary to meet the exigencies of a particular situation, the injunctive decree may be both preventive and mandatory." Leaksville Woolen Mills v. Land Co., 183 N.C. 511, 513, 112 S.E. 24, 25.

Defendant contends that the injunction granted in this case is mandatory because it requires the performance of positive acts. It argues that the evidence and the court's findings will not support an injunction of this nature.

We are inclined to view the injunction issued here as prohibitory. Defendant has not ceased the performance of its duties under the contract of 1 October 1968, as amended. It has only threatened to do so. The injunction simply prohibits defendant from carrying out this threat. The effect is to continue the status between the parties until trial, and not to impose a new status or to restore a status that has been interrupted.

However, whether the injunction is deemed to be prohibitory or mandatory, we are of the opinion that it is justified. In reviewing orders for temporary injunctive relief an appellate court may look beyond the findings of fact made by the trial court and determine from the evidence whether a preliminary injunction is justified. Owen v. DeBruhl Agency, Inc., 241 N.C. 597, 86 S.E.2d 197. Plaintiff's theory, which is fully supported by the evidence, is that its business has been almost completely structured around its contract with defendant. An interruption by defendant in the performance of its duties under the contract would result in an immediate loss of commissions on ninety percent of plaintiff's credit insurance business. This would render plaintiff unable to meet its current expenses, cause its $300,000.00 indebtedness to the bank to become immediately due, and result in plaintiff's immediate insolvency. Plaintiff's network of agents would disintegrate and plaintiff would likely cease to exist as a going business. This constitutes, in our opinion, sufficient evidence of an immediate, pressing, and irreparable injury to justify the order requiring defendant to continue its business relationship with plaintiff pending a final hearing.

A balancing of the equities involved further convinces us of the appropriateness of the relief granted.

Defendant contends it is entitled to unilaterally terminate the contract for two principal reasons. First, it contends plaintiff has failed to respond to a demand that it reimburse defendant in the sum of $185,324.82, allegedly owed for business closed during 1964 through 1968. This alleged indebtedness apparently arises from guarantees of profit made to defendant by a company which merged with plaintiff in 1969. According to defendant's affidavit, this indebtedness was not discovered until April 1972 after "an intensive review and research of the Occidental credit insurance program." Demand for payment was first made on 13 April 1972.

We fail to see how defendant will be harmed by continuing its business relationship with plaintiff, at least until there can be a legal determination of this claim. On the other hand, considerable harm could result to plaintiff if it is now put to an election between paying a claim which it questions, or immediately suffering disastrous consequences to its business.

Secondly, defendant says it is informed plaintiff has made arrangements to write insurance for a company other than defendant in the state of Florida and that plaintiff is in the process of making similar arrangements in other states. Assuming this to be true, defendant fails to show how this justifies a breach in the contractual relationship between the parties. The relationship established by the contract of 1 October 1968, as amended, is not exclusive. Defendant is not precluded under the contract from accepting contracts for credit insurance generated by other agencies. Likewise, plaintiff is free to sell insurance for other companies, subject only to the requirement that it place with defendant one-half of all the credit insurance it sells in any one year or $5,000,000.00 in new premiums, whichever is greater.

Defendant contends the preliminary injunction fails to meet the requirements of G.S. § 1A-1, Rule 65(d). This rule provides, among other things, that an injunctive order "shall set forth the reasons for its issuance; shall be specific in terms; shall describe in reasonable detail, and not by reference to the conplaint or other document, the act or acts enjoined or restrained. . . ."

The first requirement is met by the court's findings of fact and conclusions of law, which show clearly the reason for the order's issuance.

Defendant strenuously argues that the second requirement is not met, contending that many of the terms used in the order are ambiguous and not sufficiently defined. For instance, defendant questions the court's use of the words "to accept" and the word "generated" in enjoining defendant from "refusing to accept credit life, credit accident and health insurance business generated by the Plaintiff.. . ." These exact words were used in defendant's letter of 24 April 1972 wherein plaintiff was advised that defendant "will be unable to accept new issues of credit life and credit A & H insurance generated through Automobile Dealer Resources on and after May 1, 1972.. . ." Other phrases cited by defendant as ambiguous or indefinite are phrases which appear in the contract of 1 October 1968. The parties functioned under the contract, apparently without complaint, for more than three years. Defendant cannot insist now that the court speak with more clarity than did plaintiff and defendant in establishing the relationship which the court now seeks to preserve, especially when no showing is made as to any previous difficulty on the part of either party in understanding the language used.

We find that the order also complies with the third mandate of Rule 65(d). The question in this connection is whether the party enjoined can know from the language of the order itself, and without having to resort to other documents, exactly what the court is ordering it to do. The acts which defendant is enjoined from ceasing are set forth specifically in the order itself. The fact that after a description in the order of each act enjoined, there is added "pursuant to the contract. . . dated October 1, 1968 . . .," or a similar phrase, is without significance. This wording simply shows the source of the duty. It does not modify in any manner the description of the conduct enjoined.

Affirmed.

PARKER and VAUGHN, JJ., concur.