Lexington Homes, Inc. v. W. E. Tyson Builders, Inc.

331 S.E.2d 318 (1985)

LEXINGTON HOMES, INC., d/b/a Contractors Wholesale Building Supply, Plaintiff,
v.
W.E. TYSON BUILDERS, INC., Original Defendant and Third-Party Plaintiff,
v.
Oscar L. NORRIS, Third-Party Defendant. and
LEXINGTON HOMES, INC., d/b/a Contractors Wholesale Building Supply, Plaintiff,
v.
W.E. TYSON, Defendant.

No. 8412SC230.

Court of Appeals of North Carolina.

July 2, 1985.

Hutchens & Waple by H. Terry Hutchens and John K. Burns, Jr., Fayetteville, for plaintiff.

J. Duane Gilliam and Barrington, Jones, Armstrong & Flora by Carl A. Barrington, Jr., Fayetteville, for defendant and third-party plaintiff W.E. Tyson Builders, Inc.

PHILLIPS, Judge.

The only question raised by this appeal is whether the evidence presented at trial was sufficient to support the claim of W.E. Tyson Builders, Inc. that Lexington Homes, Inc. and Oscar L. Norris tortiously interfered with its contract with First Atlantic Corporation and The Northwestern Bank. We are of the opinion that the evidence was sufficient to support the claim made and that the trial court erred in directing a verdict against the defendant and third party plaintiff, W.E. Tyson Builders, Inc.

It has long been the law in this State that one who tortiously interferes with the contract rights of another is liable for the damage caused thereby. Jones v. Stanly, 76 N.C. 355 (1877). When viewed favorably to the defendant, as the law requires, the evidence presented tends to show the following: In furtherance of its plan to build houses on the Golf Acres lots and sell them, defendant had entered into a valid construction loan agreement with First Atlantic Corporation and The Northwestern Bank, incident to which defendant had received a draft for $114,210 and deposited it in its account. Lexington Homes and its President, Oscar L. Norris, knew that defendant had the construction loan; that the $114,210 draft obtained under the contract had been deposited in defendant's bank account; that checks had been written and mailed thereon to other suppliers in the approximate amount of $42,000; and that defendant's business would be disrupted if payment on the draft was stopped. Lexington Homes and Norris nevertheless got First Atlantic to stop payment on the draft by falsely representing to it that defendant was not going to pay plaintiff and the other suppliers from the loan funds; and they did this without justification for the malicious purpose of coercing or intimidating defendant into immediately paying in full plaintiff's bill, which was several hundred dollars larger than it should have been. The unjustified interference by the appellees caused defendant to stop payment on the several checks it had written against the $114,210 deposit, and caused some checkholders to file liens against the property; delayed the completion and sale of the houses for several months; and increased defendant's expenses in completing the houses in the approximate amount of $60,000 to $80,000.

While the rule laid down in 86 C.J.S. Torts § 44 that an action will lie against one who wrongfully interferes with the contract rights of another had been recognized by our Supreme Court in numerous cases, including Bryant v. Barber, 237 N.C. 480, 75 S.E.2d 410 (1953), Coleman v. Whisnant, 225 N.C. 494, 35 S.E.2d 647 (1945), and Jones v. Stanly, supra, so far as our research discloses, the proof required for such an action had not been itemized until Childress v. Abeles, 240 N.C. 667, 84 S.E.2d 176 (1954). In Childress the Court stated that in these cases it is necessary to show: (1) That a valid contract existed between the plaintiff and a third person, conferring upon the plaintiff some contractual right against the third person; (2) that the outsider had knowledge of the plaintiff's contract with the third person; (3) that the outsider intentionally induced the third person not to perform his contract with the plaintiff; (4) that in so doing the outsider acted without justification; (5) that the outsider's act caused the plaintiff actual damages. Id. at 674, 84 S.E.2d at 181, 182. It is obvious, we think, that the requisites stated, except that the tort feasor be an "outsider," are met by the evidence recorded in this case, but what an "outsider" is was not explained by the Childress Court, though it cited with approval Jones v. Stanly, supra, a case which certainly involved a "non-outsider," if there be such a thing. In that case a judgment against the President and Superintendent of the Atlantic & North Carolina Railroad for wrongfully causing the railroad that he managed not to perform its contract to transport a large number of cross ties for plaintiff was reinstated, without the Court even intimating that the defendant's status as an insider excused or justified the tort committed. In a later case involving another defendant that had a legitimate interest in and was closely connected with the contract allegedly interfered with the Court clarified this ambiguity in the Childress decision by declaring that a "defendant's status as an outsider or a non-outsider is pertinent only to the question of justification for his action," Smith v. Ford Motor Co., 289 N.C. 71, 88, 221 S.E.2d 282, 292 (1976), and held that Ford Motor Company had no right to interfere with its dealer's management contract with plaintiff for any purpose other than promoting the efficient operation of the dealership. Since the evidence in this case tends to show that plaintiff and Norris acted unjustifiably for the improper purpose of obtaining payment of a sum defendant did not owe, plaintiff's status as a creditor entitled to collect the actual amount that defendant owed it is immaterial to the case, as explained later.

The appellees contend here, as they did in obtaining the dismissal in the court below, that the evidence presented was insufficient to establish the following three things defendant was obliged to prove; that First Atlantic breached its contract with defendant; that appellees were not justified in having payment on the $114,210 draft stopped; and that defendant was actually damaged as a consequence of the interference. The grounds relied upon for these contentions and the arguments made in support of them are largely irrelevant to the thrust and tenor of defendant's case against them and the recorded evidence in support of it. First of all defendant does not have to prove that appellees caused First Atlantic to breach its contract with defendant, because its claim is only that appellees wrongfully interfered with defendant's rights under the contract; and clear, direct evidence that appellees did wrongfully interfere with its contract rights was presented. According to the evidence, the appellees caused First Atlantic to stop payment on the draft that defendant lawfully had in its bank account and had written checks against. That defendant had a right to possess the draft and use it free from the wrongful interference of others is clearly inferable from the facts that it had a loan agreement with First Atlantic, a lending rather than an eleemosynary institution, and that First Atlantic issued and delivered the draft to defendant. That defendant did not show, as appellees contend, that the underlying loan agreement required First Atlantic to issue the draft at that time and in that amount, or that the draft might have been issued later or in a different way without recourse on defendant's part, is beside the point. As Justice Barnhill so cogently pointed out in the concurring opinion to Bruton v. Smith, 225 N.C. 584, 36 S.E.2d 9 (1945), a party to a contract has the right to reap the benefits of it, such as they are, free from the wrongful interference of others; and since First Atlantic as a contracting party issued the draft to defendant at that time and in that manner defendant had a right to use and enjoy that benefit of its contract free from the wrongful interference of the appellees or anyone else.

The appellees' argument as to justification, equally wide of the mark, starts and stops with their legitimate interest in obtaining early payment of the sum owed from the funds received by defendant. The evidence which tends to show that the appellees falsely claimed that defendant was not going to pay it or the other suppliers and contractors with the draft funds, and that their purpose was to obtain several hundred dollars in funds plaintiff was not entitled to was not even addressed.

And as to damages, the appellees simply and incorrectly argue that W.E. Tyson's testimony that defendant incurred "some seventy or eighty thousand dollars in additional expenses" in the construction of the ten houses did not "rise above the level of speculation" and that no other evidence of damages was presented. In the first place, Tyson's testimony as to the extra expense incurred because payment of the draft was stopped was purportedly based on the witness's personal knowledge, and was thus factual, rather than speculative, in nature. In the second place, the witness's purported knowledge of what he testified to was neither gainsaid by other evidence, nor questioned by the appellees, who waived cross-examination. Nor is it fatal to defendant's case that Tyson neither itemized the additional expenses he claimed were incurred nor explained in any detail why defendant did not accept the $114,210 draft that First Atlantic issued to defendant and its lawyer two days after payment on the first draft was stopped. These weaknesses in the witness's testimony go to its weight, they do not affect its legal sufficiency. Furthermore, the testimony as to the extra expense incurred because payment on the draft was stopped was not the only evidence presented as to defendant's damages. Tyson also testified that defendant had to stop payment on checks of its own amounting to about $42,000 and that those six or seven checkholders filed liens against the property when their checks were cancelled. This evidence by itself tends to show that defendant was actually damaged in some pecuniary amount by the tort complained of. That Tyson did not further testify as to the amount of the charges that defendant had to pay for stopping payment on the several checks and for the several lien filings, does not mean that defendant was not damaged thereby; it only means that the evidence could not support an award of damages in any substantial amount. But the evidence is sufficient to support an award of nominal damages, as our law provides that where a legal wrong is shown, the one wronged is entitled to nominal damages, though no substantial loss or damage has been proved. Hairston v. Atlantic Greyhound Corp., 220 N.C. 642, 18 S.E.2d 166 (1942); Bowen v. The Fidelity Bank, 209 N.C. 140, 183 S.E. 266 (1936). In order to make out a case for the jury the victim of contract interference does not have to show that substantial damages resulted; it is enough if the evidence shows that the victim suffered some damage, and the evidence presented in the trial below tended to show that.

Reversed and remanded.

WHICHARD, J., concurs.

JOHNSON, J., concurs in the result.

WHICHARD, Judge, concurring.

The scope of a claim for tortious interference with contract includes not only procurement of breach but also all invasions of contractual relations that retard, make more difficult, or prevent performance, or make performance of less value to the promisee. Annot., 84 A.L.R. 43, 52 (1933); see generally Carpenter, "Interference with Contract Relations," 41 Har.L.Rev. 728 (1928). If defendant here cannot prove breach—since its contract with First Atlantic did not specify a date it was due the funds and since First Atlantic reissued the check within one day after it stopped payment on the draft—defendant has at least presented evidence that due to the filing of liens against its property subsequent performance of the contract was of less value to it.

As to the element of justification, slip op. at 11, to be actionable interference with contract must be otherwise than in the legitimate exercise of one's own equal or superior right. Carpenter at 763. Whether plaintiff and third party defendant were unjustifiably demanding early payment or were acting within a privilege to protect a right to money due is ordinarily a question for the jury. See Annot., 26 A.L.R.2d 1227, 1264 (1952). I do not believe that on the evidence here we can say as a matter of law that plaintiff and third party defendant acted with or without sufficient legal reason. Childress v. Abeles, 240 N.C. 667, 674-75, 84 S.E.2d 176, 182 (1954) ("Justification imports `a sufficient lawful reason why a party did or did not do the thing charged, a sufficient lawful reason for acting, or failing to act. It connotes just, lawful excuse, and excludes' legal `malice.' ").

For these reasons and for those stated in the opinion, supra, I agree that the evidence on defendant Tyson Builders' counterclaim, viewed in the light most favorable to it, is sufficient to support a claim for tortious interference with contract and to withstand plaintiff and third-party defendant's motion for directed verdict.