Roberson v. Swain, 235 N.C. 50 (1952)

Feb. 1, 1952 · Supreme Court of North Carolina
235 N.C. 50


(Filed 1 February, 1952.)

1. Pleadings § 19c—

Upon demurrer, a pleading will be liberally construed, giving tbe pleader the benefit of every reasonable inference and intendment deducible from the facts alleged as well as all relevant inferences of fact, and the demurrer cannot be sustained if upon the entire pleading any part presents facts or reasonable inferences of fact sufficient to constitute a cause of action.

2. Evidence § 39—

Parol evidence is competent to show that an obligation was assumed only under certain contingencies, certainly upon allegations that the delivery of the paper writing attacked was produced by fraudulent misrepresentations.

*513. Fraud § 3—

A promissory misrepresentation may constitute the basis of fraud when it. is made to mislead the promisee, and the promissor, at the time of making it, has no intent to comply therewith, since in such instance the state of mind of promissor is a subsisting fact.

4. Fraud § 9 — Complaint held sufficient to state cause of action for fraud.

The complaint alleged an agreement under which plaintiff was to sell certain real and personal property to defendant for a stated consideration to be evidenced by notes executed by defendant and his wife. Only a part of the consideration agreed upon was set forth in writing. Plaintiff further alleged that defendant tendered notes representing the entire purchase price signed by defendant alone, but that, upon plaintiff’s objection, defendant promised to take the notes and have them signed by defendant’s wife also, and return same to plaintiff, that thereupon plaintiff delivered that part of the agreement which was in writing, but that defendant failed and refused to deliver the notes representing the purchase price. Held: The complaint is sufficient to state a cause of action for fraud.

5. Same—

Allegations to the effect that defendant by fraudulent misrepresentations induced plaintiff to execute and deliver an agreement for the sale of real property, and thereafter had title to same transferred to a corporation in which defendant owned the majority of stock, and alleging facts sufficient to support the inference that transfer of title to the corporation was a part of the scheme to deprive plaintiff of property by fraud, and that the corporation had actual knowledge thereof, is held sufficient to state a cause of action against the corporation, and the corporation may be joined as a party defendant.

6. Pleadings §§ 2, 19b—

Plaintiff may unite in a single action several causes of action if they all arise out of the same transaction or transactions connected with the same subject matter, and tell a connected story forming a general scheme tending to a single end.

6. Pleadings § 19b—

Where there is no misjoinder of causes of action, the fact that one defendant may not be a proper or necessary party is not ground for demurrer, but may be regarded as surplusage.

Appeal by plaintiff from Bone, J., March 1951 Term, "Wake.

Civil action for the cancellation of the written part of a contract, for a restraining order and for an accounting.

Plaintiff and defendant Swain on and prior to 26 July, 1947, were tenants in common and as such owned certain real estate and personal property in the city of Ealeigh. This property was known as tbe E & S Packing Company and consisted of lands, buildings, slaughter house, equipment, improvements and additions. Plaintiff bargained to convey her interest to defendant Swain. She thereafter instituted this action *52to vacate her contract to convey said property alleging fraud in its procurement.

Defendant Swain and tbe corporate defendant filed separate demurrers to tbe complaint on tbe ground tbat tbe complaint does not state a cause of action against either defendant and on tbe further ground tbat there is a misjoinder of parties defendant and causes of action.

From a judgment sustaining tbe demurrers of both defendants, and dismissing tbe action, plaintiff appealed, assigning errors.

Wheeler Marlin, Clem B. Holding, and Douglass & McMillan for plaintiff, appellant.

Brassfield •& Maupin and B. Roy Garter for defendants, appellees.


A demurrer admits tbe truth of all allegations of fact and such inferences of fact as can reasonably be drawn from a pleading. As against a demurrer, a complaint must be liberally construed and every reasonable inference and intendment deducible therefrom must be resolved in favor of tbe pleader before a demurrer prevails. A pleading cannot be overthrown by a demurrer unless it is wholly insufficient. If, upon a liberal construction of tbe entire pleading, any part presents facts or reasonable inferences of fact which taken as true make out a cause of action, tbe pleading is sufficient to repel tbe attack of tbe demurrer. Mills Co. v. Shaw, Comr. of Revenue, 233 N.C. 71, 62 S.E. 2d 487; Sparrow v. Morrell & Co., 215 N.C. 452, 2 S.E. 2d 365; Meyer v. Fenner, 196 N.C. 476, 146 S.E. 82; Deaton v. Deaton, 234 N.C. 539; Guerry v. Trust Co., 234 N.C. 644.

On this question, Barnhill, J., in Mills Co. v. Shaw, Comr. of Revenue, supra, said: “It must be fatally defective in tbat it fails to allege any fact or combination of facts which, if true, entitles plaintiff to some relief.” Blackmore v. Winders, 144 N.C. 212, 56 S.E. 874; Fairbanks, Morse & Co. v. Murdock Co., 207 N.C. 348, 177 S.E. 122.

Tbe complaint in the instant case presents a difficult question, but viewed in tbe light of tbe controlling principles of law, we are led to tbe conclusion tbat it is sufficient to repel tbe demurrers of tbe defendants.

Tbe pertinent facts stated in tbe complaint are as follows: On and prior to 26 July, 1947, plaintiff and defendant Swain owned as tenants in common certain real and personal property in tbe city of Raleigh, known as tbe R & S Packing Company. This property consisted of land, buildings, slaughter bouse, improvements and equipment. Plaintiff owned 3/4ths interest in tbe land and 5/8tbs interest in tbe improvements, additions and equipment, while tbe defendant Swain owned 1/4th interest in the land and 3/8ths interest in tbe improvements, additions and equipment. Upon negotiations instituted by Swain, plaintiff agreed to *53sell and Swain agreed to purchase plaintiff’s interest in both the real and personal property at the price of $150,000. It was agreed that this contract should be carried out by the execution and delivery to the plaintiff of two series of promissory notes signed by defendant Swain and his wife, Pearl M. Swain, one series aggregating $30,000 and the other series aggregating $120,000. These notes were to be payable at various-intervals beginning 1 January, 1949, to and including 1 January, 1960. The total of both series of notes represented the total consideration agreed upon as the purchase price of plaintiff’s interest in said property. It was further agreed that a part of the contract would be written embodying the terms and conditions of the sale of the property and reciting a consideration of $30,000. The series of notes aggregating $120,000 for some-reason not disclosed by the record were not to appear in the written part of the contract.

On 26 July, 1947, D. M. Roberson, husband and agent of plaintiff, and defendant Swain met in Williamston, North Carolina, to complete the transaction. Swain had prepared all of the notes, including those set out in the paper writing and those agreed to be delivered in addition thereto, but none of the notes had been signed by the wife of defendant Swain. The contract provided that all of the notes were to be signed by both Swain and his wife. When this discrepancy was called to the attention of Swain by plaintiff’s agent, Swain represented to plaintiff’s agent that he would take all of said notes back to Raleigh and in compliance-with the original agreement would obtain the signature of his wife to all of the notes and immediately return them to the plaintiff. It was upon this statement and representation that plaintiff’s husband delivered to-defendant Swain the paper writing with the notes. At that time it was the distinct understanding between plaintiff’s agent and defendant Swain that Swain would have his wife execute all of said notes and would immediately forward them to the plaintiff. Defendant Swain has kept the written part of the contract, but has failed and refused and still fails and refuses to deliver to the plaintiff said notes representing the consideration of said agreement.

The plaintiff sets forth in her complaint that the statements and representations made by the defendant Swain to her agent that he would have said notes executed according to the agreement and return them to the plaintiff were false and that defendant Swain knew the statements were false and that they were made by him with the intent to deceive the plaintiff and that relying upon said false representations, plaintiff was deceived to her injury in delivering to said Swain the written part of the agreement. The complaint alleges that a delivery of the paper writing upon the consideration and upon the representation of Swain makes the *54delivery of the written part of the contract ineffectual in law and that it should be set aside.

The complaint further alleges that defendant Swain has caused to be formed a corporation which is designated as R & S Packing Company, the identical name by which the property holding of plaintiff and defendant Swain is known, and that the title to said property has been put in the name of the corporation by Swain; that the grantee had knowledge of the fraud; and that a transfer of the property by said corporation would be detrimental and injurious to the rights of the plaintiff. The complaint asserts that in some way the defendant Swain owns a majority of the stock of said corporation and that by reason of the matters and things alleged in the complaint, she is entitled to an order restraining the corporation from disposing of any of the property above mentioned.

The contract here is for the sale of both real and personal property. Jamerson v. Logan, 228 N.C. 540, 46 S.E. 2d 561. The essential problem arises from the delivery of the written portion of the contract. The contention of the plaintiff is that the paper writing represented only a portion of the contract and that the whole contract included the execution and delivery of notes by the defendant Swain and his wife in the aggregate amount of $150,000, and that the written part of the contract was delivered upon the strength of the false and fraudulent representations made by defendant Swain. Since the written part of the contract falls within the statute of frauds, delivery of it is a prerequisite to its effectiveness. “Both the delivery of the instrument and the intention to deliver it are necessary to a transmutation of title.” Insurance Co. v. Cordon, 208 N.C. 723, 182 S.E. 496.

"Whether the paper writing was delivered or whether its physical passage into the hands of Swain was induced by his fraudulent representations are jury questions upon the evidence to be adduced at the trial and upon appropriate instructions from the court. Gaylord v. Gaylord, 150 N.C. 222, 63 S.E. 1028; Fortune v. Hunt, 149 N.C. 358, 63 S.E. 82; Tarlton v. Griggs, 131 N.C. 216, 42 S.E. 591; Carroll v. Smith, 163 N.C. 204, 79 S.E. 497; Lee v. Parker, 171 N.C. 144, 88 S.E. 217; Insurance Co. v. Cordon, supra.

If the physical delivery of the paper writing was conditioned upon a delivery to the plaintiff of the notes representing the purchase price properly signed by Swain and his wife, upon a failure of that condition the delivery is ineffectual. Lerner Shops v. Rosenthal, 225 N.C. 316, 34 S.E. 2d 206. But the plaintiff bottoms her cause of action upon the fraud of the defendant Swain and not upon a conditional delivery of the paper writing.

Be that as it may, it is well established in this jurisdiction that parol evidence may be used to show that an obligation is assumed only upon *55certain contingencies. Jones v. Casstevens, 222 N.C. 411, 23 S.E. 2d 303; Kindler v. Trust Co., 204 N.C. 198, 167 S.E. 811; Thomas v. Carteret, 182 N.C. 374, 109 S.E. 384; Insurance Co. v. Morehead, 209 N.C. 174, 183 S.E. 606. Tbis is certainly true wben tbe delivery of a paper writing is induced by fraudulent representations as bere alleged.

Wben a representation contains all tbe elements of fraud except tbat it. is not a representation of an existing fact but is promissory in nature, tbe “state of mind” of tbe promissor is material. If be made tbe promissory representations merely to mislead tbe promisee witb no intent to' comply witb tbe promise, and tbe other elements of fraud are made to appear, sucb representations will support an action in fraud notwithstanding tbe promissory nature of the representation, for tbe “state of mind” of the promissor is a subsisting fact. What bis condition of mind was at tbe time and bis intent in respect to tbe fulfillment of tbe promise presents a question for tbe jury. Laundry Machinery Co. v. Skinnerr 225 N.C. 285, 34 S.E. 2d 190; Williams v. Williams, 220 N.C. 806, 18 S.E. 2d 364; Bank v. Yelverton, 185 N.C. 314, 117 S.E. 299.

Therefore, it appears plaintiff has stated facts sufficient to repel a demurrer.

As to tbe demurrer of defendant corporation: A logical inference to be drawn from the plaintiff’s complaint is tbat defendant Swain has caused to be formed a corporation bearing tbe identical name as tbat used to designate tbe property holdings of tbe plaintiff and defendant Swain and tbat be caused tbe title to tbe property in question to be placed in tbe name of tbe corporation. Just bow tbis was accomplished does not clearly appear. Tbe complaint is, however, susceptible to an inference tbat tbis fact is a part of tbe manipulations of defendant Swain in bis effort to gain control and ownership of tbe property for $30,000, wben in fact it is worth $150,000. Tbe complaint is susceptible also to tbe inference tbat tbe corporation was created by tbe defendant Swain for tbe purpose of confusing tbe issue and of juggling tbe property in sucb a way as to defeat tbe plaintiff’s claim.

Tbe complaint in tbe instant case relates a connected story forming a general scheme and tending to a single end. Tbe plaintiff may unite in a single complaint several causes of action if they all arise out of tbe same transaction or a transaction connected witb tbe same subject matter. Shaffer v. Bank, 201 N.C. 415, 160 S.E. 481.

While tbe complaint does not state specifically tbat tbe formation of tbe corporation for tbe purpose of taking title to tbe property was a part of tbe fraudulent plan and purpose of defendant Swain to obtain plaintiff’s property for an inadequate consideration, an inference to tbat effect is permissible from tbe entire complaint. “And if tbe objects of tbe suit are single, and it happens tbat different persons have separate interests *56in distinct questions which arise out of the single object, it necessarily follows that such different persons must be brought before the court in order that the suit may conclude the whole subject.” Barkley v. Realty Co., 211 N.C. 540, 191 S.E. 3.

If the corporation is not a proper or necessary party, this fact may he regarded as surplusage and is not grounds for a demurrer. Shuford v. Yarborough, 197 N.C. 150, 147 S.E. 824; Furniture Co. v. R. R., 195 N.C. 636, 143 S.E. 242.

The cases cited in defendant’s brief have been thoroughly examined and are factually distinguishable from the instant case.

Applying the applicable rules of law, we must conclude that the plaintiff is entitled to be heard upon the merits of the case and that the demurrers of the defendants were improperly sustained.

The ruling of the court below is