Bumgarner v. Tomblin

306 S.E.2d 178 (1983)

Ernest L. BUMGARNER and George Griffin
v.
A. Clyde TOMBLIN and wife, Janet L. Tomblin.

No. 8229SC550.

Court of Appeals of North Carolina.

September 6, 1983.

Yelton, Farfour & McCartney by Charles E. McCartney, Jr., Shelby, for plaintiffs-appellants.

Robert W. Wolf, Forest City, and Hamrick, Bowen, Nanney & Dalton by Louis W. Nanney, Jr., Rutherfordton, for defendants-appellees.

PHILLIPS, Judge.

A final judgment on all the claims of all the parties has not been entered. Nor will the plaintiffs suffer loss of a substantial right without an immediate appeal. Therefore, plaintiffs' appeal is interlocutory and premature under Rule 54(b), N.C. Rules Civ. Proc. But in our view the administration of justice will be served by us treating the appeal as a writ of certiorari in accordance with Rule 21(a), N.C. Rules App.Proc.

Plaintiffs contend the trial court erred in granting defendant's summary judgment motion on the claims involving the Duncan's Creek Township land. Summary judgment lies where a claim can be resolved as a matter of law and no genuine issue of material fact exists. Plaintiffs claim that the defendant agreed to take care of the remaining indebtedness on the land through long term financing, negotiations with the sellers, and sales of timber from the property until it could be developed. Defendant maintains that the parties agreed to share the liabilities as well as the profits of the land. The basis for a breach of contract recovery is plaintiffs' lost profits from potential sales of the land due to defendant's mismanagement of his alleged duty to finance the land purchase. Since defendant denies ever having such a contractual duty, a genuine issue of material fact exists. Moreover, each side accuses the other of stymieing sales to potential buyers. These accusations raise a genuine issue as to the material fact of who was responsible for the lost profits. The plaintiffs' first cause of action depends on the terms of a disputed oral contract and whether either party frustrated performance of the contract. These issues of credibility should be resolved by a jury.

Nor does the statute of frauds, G.S. 22-2, defeat plaintiffs' claim for contract damages regarding the Duncan's Creek Township land. Plaintiffs do not seek to enforce an oral contract by defendant to sell them land; instead, they seek to enforce an alleged promise by defendant to take care of debt payments and to achieve a profitable resale. The North Carolina Supreme Court has declared that "the statute [of frauds] has no application to those contracts whereby two persons agreed to purchase land, either generally or as a single venture, for the purpose of reselling the same at a profit and sharing the same between them." Newby v. Atlantic Coast Realty Co., 182 N.C. 34, 38, 108 S.E. 323, 325 (1921).

For the same reason, the statute of frauds does not bar the claim for contract damages regarding the Morgan Township land. The breach of contract alleged in the second cause of action relates to defendant's failure to divide the profits as agreed. The statute of frauds clearly does not apply to an oral contract to divide profits from the sale of land. Whitley v. O'Neal, 5 N.C. App. 136, 168 S.E.2d 6 (1969).

The plaintiffs' claims for fraud in their first and second causes of action are not barred by the statute of frauds. Kent v. Humphries, 303 N.C. 675, 281 S.E.2d 43 (1981).

The pleadings and depositions forecast enough evidence of constructive fraud to survive a summary judgment motion. Constructive fraud may arise where the plaintiffs have reposed a special confidence in the defendant which creates a fiduciary relationship. Vail v. Vail, 233 N.C. 109, 63 S.E.2d 202 (1951). Constructive fraud is presumed from the breach of a fiduciary duty; it does not require intentional deception as an essential element. Miller v. First National Bank of Catawba County, 234 N.C. 309, 67 S.E.2d 362 (1951).

From 1973 to 1976 the defendant had legal title to land beneficially owned, in part, by the plaintiffs. According to the plaintiffs: Defendant promised to take care of the financing until they could turn a profit; defendant and plaintiffs agreed to hold the land for resale; because of the defendant's legal skills, proximity to the land, and knowledge of real estate, the plaintiffs reposed a special confidence in him. Thus, sufficient evidence of a fiduciary relationship exists to create a jury issue. Furthermore, there is a genuine issue of material fact as to whether defendant breached any fiduciary duty since plaintiffs allege he turned away prospective buyers, resulting in eventual foreclosure and loss of profits. The facts that defendant did not benefit from the deals on the land and that he no longer has an interest in the land are no barrier to a constructive fraud claim. Plaintiffs have shown enough facts supporting a constructive fraud claim to defeat a summary judgment motion.

Defendant argues that plaintiffs' first cause of action amounts to a collateral attack on the foreclosure sale and should be barred by laches; however, the foreclosure sale was merely the consequence of defendant's actions. Plaintiffs' suit charges the defendant's actions, not the foreclosure, as being a breach of contractual or fiduciary duties.

Plaintiff Bumgarner contends the trial court erred in ordering summary judgment against his second cause of action, based upon allegations that defendant used some of the profits from the sale of the Morgan Township land for his own benefit rather than sharing the profits equally with the plaintiffs.

Both sides admit to an agreement to divide the profits three ways. Defendant argues that plaintiffs' failure to put any money into purchasing the land constituted a lack of valuable consideration to support their agreement, thereby justifying any nonperformance on his part; but valuable consideration need not be money. Any benefit to the promisor or any loss to the promisee, including the promisee doing something he is not bound to do or refraining from exercising a right, suffices as consideration for a promise. Carolina Helicopter Corp. v. Cutter Realty Co., Inc., 263 N.C. 139, 147, 139 S.E.2d 362, 368 (1964). Plaintiff Bumgarner allegedly devoted his time and knowledge as a real estate entrepreneur in seeking out prospective buyers; if so, his efforts were consideration enough to support any promise by defendant to manage and help sell the property.

Defendant informed plaintiff Bumgarner that his profit from the sale to Peek should be listed as $13,653.53 for tax purposes; yet defendant, who handled the transaction, paid only $6,920.24 to plaintiff Bumgarner as his share of the proceeds. This discrepancy raises a genuine issue of material fact which should have overcome defendant's motion for summary judgment as to plaintiff Bumgarner's contract and fraud claims.

Defendant states that his deed of 43 acres to plaintiffs served as an accord and satisfaction. An accord and satisfaction requires an agreement, which is the accord, and performance of the agreement, which is the satisfaction. Dobias v. White, 239 N.C. 409, 80 S.E.2d 23 (1954). Similarly, a compromise and settlement, a modification, and a novation all require a new agreement between the parties. Plaintiff Bumgarner specifically denies agreeing to take the 43 acres in lieu of his share of the profits. His denial creates a genuine issue of material fact as to whether an accord or modification or novation occurred, so summary judgment was improper.

Both plaintiffs contend the trial court erred in granting summary judgment against their third cause of action asking for punitive damages. Though, generally, punitive damages were not recoverable in fraud actions at one time, that is no longer the case. Newton v. Standard Fire Insurance Co., 291 N.C. 105, 229 S.E.2d 297 (1976); Kleinfelter v. Northwest Builders and Developers, Inc., 44 N.C.App. 561, 261 S.E.2d 498 (1980). Which is as it always should have been, it seems to us, since the calculated deceit of others, to their detriment, inherent in all frauds, merits punishment if any civil wrong does. While intentional deceit is not a necessary element for constructive fraud, an abuse of fiduciary responsibility can be just as gross and aggravating. Thus, to the extent that plaintiffs have stated fraud claims that should be submitted to a jury, so also have they stated a basis for punitive damages.

Finally, plaintiff Griffin contends the trial court erred in denying his summary judgment motion as to defendant's counterclaim. We hold that a genuine issue of material fact exists, but that the statute of limitations bars part of the counterclaim.

Defendant's counterclaim asks for reimbursement of the payments totaling around $20,000 that he made on his $44,619 note. Only the defendant's name is on the note, although it was a refinancing of notes both Griffin and defendant had been liable on. A claim for equitable contribution depends on one party paying more than his share of a common obligation on which both (or all) parties are liable. Nebel v. Nebel, 223 N.C. 676, 28 S.E.2d 207 (1943). Since Griffin was not liable on the note involved in the counterclaim, defendant cannot seek contribution from him. Nor is there any evidence of a contract of indemnity. Yet defendant has stated evidence sufficient to raise a jury issue in quasi contract. An implied or quasi contract rests upon the equitable principle that a person may not unjustly enrich himself at the expense of another. Root v. Allstate Insurance Co., 272 N.C. 580, 158 S.E.2d 829 (1968).

G.S. 1-52(1) sets a three-year limit on bringing implied contract actions. Plaintiff Griffin argues that the statute of limitations bars the counterclaim since defendant executed the deed of trust on 17 June 1975 and did not file his counterclaim until 11 July 1980. But the limitations period does not begin to run, of course, until the injured party is at liberty to sue. Wheeless v. St. Paul Fire and Marine Insurance Co., 11 N.C.App. 348, 181 S.E.2d 144 (1971). Defendant could not sue for reimbursement until he had paid out something. When all of defendants' payments were made and their amount is not clearly shown by the record, but it does appear that some payments were made before 11 July 1977. As to those payments, summary judgment based on the statute of limitations should have been entered for plaintiff Griffin. But as to subsequent payments, the counterclaim presents a triable issue.

Thus, the order granting defendant A. Clyde Tomblin's motions for summary judgment is reversed; and the order denying plaintiff Griffin's motion for summary judgment against defendants' counterclaim is reversed, but only to the payments made before 11 July 1977.

Reversed in part; affirmed in part.

HILL and JOHNSON, JJ., concur.