*1 IN THE COURT SUPREME 118 guаrd- acting on its own behalf as of North Carolina State acting preclude public purse from also on did not it ian of by principle under the stated Therefore the mother. behalf of (plaintiff) to the mother entitled bene- is Restatement judicata such of her with reference to of res of the rules fits by State of North the time controlled at were interests litiga- 1963, this time, all of her interests in At the Carolina. remedy. by State the state. had no She civil controlled tion were (1956). she 2d 126 Therefore Robinson, 245 95 v. judicata the benefits of res and entitled to bound both was with the (here paternity) regard questions of fact essential litigated (here by actually plea of judgment were which judgment final 1963. guilty) and determined deny his estopped the criminal defendant is case. paternity in the civil (1962), Taylor, Taylor 257 N.C. S.E. 2d authority persuasive majority overrules sub silentio is mutuality parties for the rules of there was sufficient
that res Taylor distinguishable in that apply. judicata to use, while the instant case involves an a defensive involved Grindstaff, King v. use, principle involved. But offensive (1973) sanction the 2d 799 seems to 200 S.E. III, Max See O. Gardner “Offen- of the doctrine. use offensive Judgment Estoppel— as Collateral Prior Assertion sive Plaintiff?” Rev. Hands of the N.C.L. A Sword dissenting join opinion. and Moore Justices Huskins capacity in her as Trustee RACHEL BERT OESTREICHER W. (Now HASPEL) O. and DAVE RACHEL W. OESTREICHER STORES, II v. AMERICAN NATIONAL INC. OESTREICHER COMPANY, & STORES MANUFACTURE NATIONAL a/k/a COMPANY L & S FURNITURE JOHNSTON’S d/b/a No. 34 (Filеd 1976) 17 June 6; interlocutory Appeal Procedure Error Rules Civil § not 54— — — right adjudicated right ap- substantial claims order —all — peal effect of Assembly of an not intend to restrict did The General affecting right” judicial a “substantial order immediate SPRING TERM *2 Oestreiclier v. Stores provided by (d) by engrafting G.S. 1-277 and G.S. 7A-27 thereon the 54(b) requirement judge finding the trial make a there just delay” “is no party reason for appeal order for a to from an adjudicating rights order than fewer the all and claims of the all parties expressly inapplicable since Rule appeal is where an provided by “other statutes.” Appeal 2. compensatory and Error 6— punitive damages § claims for and — anticipatory summary judgment and punitive breach for claims — damages anticipatory right appeal and breach to compensatory In an damages action to recover for breach aof agreement, punitive damages, damages lease anticipatory and for lease, plaintiff right of
breach the had the to immediate granting summary judgment from an order for defendant on the punitive damages anticipatory claims for and breach since the order right” plaintiff a affected “substantial of to have all three claims judge jury at the tried same time the same and if the claims werе subject summary judgment. not to — — Damages 3. 11— punitive § breach of contract fraud and deceit dam- —ages sufficiency complaint of complaint Plaintiff’s was sufficient to a state claim for for relief punitive damages based fraud and deceit defendant agreement by intentionally breach of a understating lease net its continuing period sales over a deprived of time so that $10,000 of rent in excess of to which she was entitled under the of the terms lease. 21; 4. peaceful Contracts Landlord 6— § and Tenant § covenant of occu- — — — pancy percentage requirement rent as of sales occupancy no of premises anticipatory of lessee’s vacation not breach occupy required premises "during A lessee was to the the term provision guarantees of the lease in the lease that the lessor to uninterrupted possession peaceful premises the lessee and of “so the performs long occupies, complies with, it and as the covenants and con- lease”; occupancy implied was a ditions the nor covenant of use or obligated pay percentage the lease the lessee to because rent a guaranteed certain in addition net sales over a amount to a minimum premises high was not sum where use restricted to a sales busi- percentage provision, that would activate rent ness and the lessee assign right transfer, to or sublet to had the business not com- express petitive im- with the lessor’s business. Since there was no requiring occupy premises, plied to lessee covenant premises expiration prior allegation that he vacated anticipatory proper of action for did not state a cause breach the lease of contract. — power of of attachment bond court 7— reduction § 5. Attachment summary Upon rendition of for defendant as to claims anticipatory contract, breach with remaining, judge of contract trial had for breach claim discretionary power bond his reduce the substituted exercise keep basically proportion property thus bond for attached 1-440.37, remainder case. G.S. to the COURT IN THE SUPREME v. Stores — request bond absence of reduction attachment Attachment 7— — findings presumption findings justify request of fact failed to Where property, attached defendant’s bond substituted for modification is support judge presumed found facts sufficient his the trial reducing the bond. order Lake, and Exum concur in the result. Justices Huskins Sharp dissenting. concurring Chief Justice concurring dissenting join in Justices Brаnch and Moore opinion. *3 discretionary petition decision of the for review of the On 303, (opin- Appeals, App. Court J.) by Morris, J., Martin, Parker, J., concurred ion dismissing by plaintiff summary for the Session, granted by J., Seay, the March 1975 at defendant County Superior Court. Rowan building a is the trustee of a trust owns
Plaintiff July 1961, plaintiff, lessor, Salisbury, North Carolina. On lessee, Company, for L S Furniture into a lease with & entered having years, period the premises a of ten with lessee for years. Lessee option to the lease for an additional five renew pay plus percent agreed (5%) five a minimum rental a stated amount. net sales above recognize the lease was amended to 17 June
On lessee and in interest the former defendant as the successor essentially original upon conditions the same renew the lease ending five-year 30 June 1976. term for a advising July that plaintiff defendant wrote to 22On Salisbury operations on or about cease its would defendant October applied 1974, plaintiff action and July commenced 30On posting $80,000. attachment, for On bond
for an order attached, property and defendant was date, defendant’s same filed an enabling $80,000, undertaking it to in the amount property. retain alleging of action: complaint three causes damages filed a Plaintiff contrаct, based on (2) punitive (1) Breach (3) contract, an-
continuing breach of fraud involved ticipatory of contract. breach TERM 1976 SPRING Stores summary judgment was allowed
Defendant’s motion for regarding plaintiff’s for for relief claims anticipatory contract, for as to breach of but overruled giving a first reason, breach contract. cause of action for Without $15,000. judge bond to the trial reduced defendant’s summary judgment, the motion for connection with indicating that defendant filed a of affidavits number sale”; “going that defendant had out of business conducted a bankruptcy; going that defend- was insolvent and would be into years thus, and, previous ant underpaid total for understated his sales percentage of portion rent based of his building; there was sales; defendant such vacated defendant, against involuntary bankruptcy petition filed for major by agreement credi- which was later withdrawn noth- ; of the leasehold fair market value tors and ing. opinion. necessary related in facts will be
Other Thurston F. Carlton, Thurston Richard Rhodes & appellant. ap- Linn Coughenour Linn Stable defendant pellee. *4 COPELAND, Justice. ap- dismissing plaintiff’s Appeals err of
Did the Court judgment? not a final peal it was because question, must determine properly evaluate this we To 1A-1, 54(b) which reads meaning Statutes of General true as follows:
“ multiple involving mul- uрon or (b) Judgment claims pre- relief is parties. one for tiple more than claim —When counterclaim, action, claim, whether as a an sented multiple parties claim, third-party or when crossclaim, or may judgment as to final involved, enter a the court are parties claims or than all of the but fewer one or more delay is deter- just a/rid it so only reason no there is for if judgment then be sub- judgment. shall Such mined provided these by appeal otherwise or as ject to review entry of such absence of In the other statutes. rules or decision, how- any of or other form judgment, order final IN THE SUPREME COURT designated, ever adjudicates which fewer than all rights claims or the par- and liabilities of all fewer than ties any shall not terminate the action as to of claims parties or subject shall not then be to review either by appeal except provided by or expressly otherwise as these of Similarly, rules or other statutes. in the absence entry judgment, any such a final order or other form subject any decision is to revision at time the the before entry judgment adjudicating all claims and rights parties.” added.) (Emphasis liabilities of all the Since the federal courts have had a type similar rule since and as amended in 1946 and we should examine their rule. 6 Moore’s Federal [5], (2d Practice 54.01 54.01 §§ [6.-4] 1976). ed. comparable federal rule is as follows: “ (b) Judgment upon multiple involving claims or mul- parties.
tiple presented When more than one claim for relief action, claim, an cross-claim, whether counterclaim, as a third-party claim, multiple or parties involved, or when are may entry the court direct the of a final to one parties or more but fewer all than of the claims or express upon just an determination that there is not rea- delay express entry son direction judgment. In the absence of such determination and any direction, decision, order or form other however designated, adjudicates fewer than all the claims or rights parties liabilities fewer than all the shall any parties, not terminate the action as to claims subject and the order or form other of decision is to re- entry judgment adjudicat- vision at time before ing rights all and the the claims and liabilities of all parties.” (Emphasis added.) Rules of Civil Procedure for Courts, 28, App. District the United States U.S.C. Rule *5 54(b) (1970). history England. of the rule leads us In Metcalfe’s Eng. Case, Rep., (1615), 11 Coke 77 1193 that was held general judgment permit appealed rule not would a to be completely disposed
that not had Our action. federal reasoning many years. courts relied on the of this case for TERM 1976 SPUING v. Stores Prаctice, supra:, But Case 6 Moore’s Federal 54.19. § Metcalfe’s continuing validity only has in insofar the federal courts finality Practice, “complete is warranted.” 6 Moore’s Federal 54.19, supra at at 212. right appeal
At common law there no from the de- of court, way any cision of could re- a decision be by judgment.” viewed was “writ of writ of false a error or starting 1-277, (1969). G.S. with Annot. 307 Prior to 1868 December, Chapter of North enactment in 2 of the Laws of 1, 2, 4, 7, 82-89, in North were Carolina decisions Carolina §§ generally by error,” by “praying appeal,” “writ an reviewed legislature or “certiorari.” Jn 1868 the enacted Code change. Procedure, of error made notable Civil which a Writs longer abolished, prayed (and appeals were were no allowed) Procedure, 296, 299 but taken. were Code Civil §§ Procedure, judge (1868). had Under the new Code Civil nothing granting appeal, with for it was act do an Allison, party Campbell appealing the' alone.
(1869). background General North
It was that the Carolina with Assembly observed adopted 54(b) in It will be Rule exception included 54(b) is not one notable our Rule has limited our Rule is applicability of Federal Rule. The provided rules language expressly these “except as exception, lan- specific Except other for this or statutes.” all than appeal fewer guage permit if would not an of our Rule judgment provided determined unless it is the claims are Howard, delay.” Arnold v. just reason for there “is no App. appealability limitation Because otherwise, we provide expressly applicable other statutes where provides 1-277, as follows: which consider G.S. judicial every may from be taken “(a) appeal An court, upon judge superior of a determination order or inference, legal whether involving or law a matter of or a substantial term, affects which made in or out effect which in proceeding; or or action claimed action, prevents a determines action, or taken; might discontinues or grants new trial. refuses a *6 IN THE SUPREME COURT Stores
“ (b) Any right party interested shall have the appeal immediate ruling juris- from an adverse as to diction person of the property court over de- may party fendant or preserve exception such his upon any subsequent determination appeal in the cause.” (Emphasis added.) When the Assembly North Carolina General enacted the new Rules of Civil repeal Procedure in it did not General fact, Statutes 1-277. In it left the old statute intact as to sub- (a) merely section and (b). Chapter added subsection (j), §3 1967 Session Laws. Our consistently Court has interpreted 1-277 G.S. so as to give any party to a appeal lawsuit a to an immediate every judicial from right determination which substantial affects a party,
of that adjudication, or which constitutes a final even when that disposes only determination part lawsuit. Highway Nuckles, Commission v. (1967),
2d property Highway sought Commission to condemn presented of defendants. There were two issues (1) taking trial court: What land was in the action? (2) just compensation property What was the for the questions separately taken? The trial court considered these and made a plain- determination the first issue adverse to duly findings excepted tiff. Plaintiff to the court’s re- in this gard immediately Rather, appeal. but did not continued pursue superior court, eventually the matter in issue damages excepted award of determined. Defendant to the appealed. time, plaintiff attempted At appeal prior determination first issue. Court, opinion an Sharp (now Our Justice Chief
Justice), plaintiff’s purported appeal dismissed because of its perfect appeal required failure rules. within time However, doing, very clearly in so Court set forth meaning application of G.S. 1-277 as follows: governed by
“Appeals 1-277, in civil are actions G.S. every permits appeal judicial which ing an order involv- right. a matter of law which affects a substаntial Ordi- narily, judgment, lies from final but an interlocutory injury order which work corrected will if appealable. [Citation omitted.] before final TERM 1976 SPRING *7 merely disposes decision which not of the whole but ‘[A] of a separate subject and matter distinct branch of litigation’ immediately appeal- and is final nature Error, (1962).” 2d, Appeal able. Am. Jur. and supra added.) Highway Nuckles, (Emphasis Commission at 13. by spoke opinion Huskins,
In an on this Justice our Court general proposition 448, 453, Stanback, in Stanback v. (1975) S.E. 2d : interlocutory
“Ordinarily, appeal from an order fragmentary premature will be dismissed as and unless right injury order affects some substantial and will work judg- appellant appeal if not from final corrected before ment. [Citations omitted.]” affecting
In Rule our examination of “other statutes” 54(b), provides 7A-27(d), we also note General which Statutes as follows:
“(d) any interlocutory judgment of a or From order pro- superior or court or district court in a civil action ceeding (2) (1) right, which a substantial or Affects judgment prevents a effect determines the action and might taken, (3) appeal or Discontinues trial, appeal action, (4) or a new lies Grants refuses right directly Appeals.” to the Court Chapter 7A, statute, entitled This which is included Department,” passed in the same General “Judicial Assembly (b). that enactеd Rule 54
[1] In our case the judgment Judge Seay did not have the pur terminating and, thus, did not effect port the entire lawsuit rights parties adjudicate and claims of all the all 7A-27(d) 1-277 and seem to the lawsuit. General Statutes right right” give But is affected. if “substantial applicable case, we to our in order for these statutes to be Assembly some in 1967 intended must assume that the General thing by as set out the use of the words “or other statutes” they 54(b). It obvious intended these words in Rule seems something mean because these words were not included Assembly Certainly the did not intend Federal Rule. General appeal provided G.S. 1-277 to restrict by engrafting 54(b) requirements upon (d) them. 7A-27 Rule IN THE SUPREME COURT us, Assembly 54(b) It seems to the General in Rule used expressly provided the words stat- “as these rules or other utes” in order to avoid conflict between (a) (d). fact, (a) G.S. 1-277 matter 1-277 7A-27 As a G.S. part has been a of our law without amendment since Assembly “sweep we assume the General did intend to rug.” under the
Historically, ap- Appeals our Court of has dismissed all peals where fewer than all than of the claims or fewer all the parties were determined the trial court unless in its provided just delay.” Howard, “there is no reason for Arnold v. swpra. Numerous cases have followed with the result. The same *8 interlocutory net effect of these that no order or decisions is judgment multiple party multiple in a is or claim situation appealable judge expressly unless the trial determines in the judgment just delay.” Thus, itself that is there “no reason for requirement judge, effect, has left it to this the trial in to to certify judgment judgment subject that final the is a and language 54(b). per appeal express immediate as the Rule 54(b) modify Appeals interpreted The Court of has Rule engrafting 7A-27(d), by upon and the well G.S. 1-277 G.S. recognized aggrieved” requirements “party been who has deprived right,” requirement additional of a “substantial the finding” by judge judgment “express trial the the in delay.” just there for that is “no reason We believe inter- wrong. pretation is subject
In first on this the case decided the Court of Howard, Appeals, supra, plaintiff Arnold v. filed civil action against original defendants, Howards, to recover the bal- turn, allegedly Howards, promissory The in ance due on a note. complaint against party filed answer and also filed a third indemnity. filed, Clardy seeking pleadings the third- After were summary judgment party on the third- defendant moved for original granted, party complaint. motion This was and gave excepted objected notice to the order defendants of appeal. Appeals on its dismissed Court doing, Appeals heavily relied the Court of own motion. so 54(b) interpretation the federal courts of Rule : “Although parties question no con- have raised cerning judgment matter, we note that the from original appeal adjudicates purport now defendants rights parties’ and than all the ‘the of fewer and liabilities TERM 1976 SPRING v. Stores just that it contains no that ‘there is no rea determination delay.’ 54(b) substantially son for is similar to Our Rule 1961, (b) the Federal Rule 54 that Rule amended in appropriate and it Federal is therefore to look to applying decisions guidance in our Rule. As authorities for those 54(b) point out, the Rule arose authorities need for opportunity joinder claims and increased for liberal provided. parties Procedure which the new Rules of Civil As the United States Su described [Citations omitted.] used preme Court, 54(b), the trial court ‘is under Rule determine, “dispatcher.” permitted first as a It is decision” instance, appropriate time when each “final in a than all” of the claims “one or more but less Sears, ready appeal.’ Roebuck multiple claims action is 1306, 1297, Mackey, 100 L.Ed. & Co. U.S. Federal Rule Under the S.Ct. the North Carolina as 54(b), in 1961 and under amended function also performs the trial court multiple-claim actions. multiple-party well as actions as granted the Rule, is the trial court Under the North Carolina one judgment as to discretionary power to a final enter ‘оnly parties, all the claims or more but fewer than delay determined just it is so if there no reason for making By ex added.) (Emphasis judgment.’ in the just is ‘no there press determination judge certifies delay,’ in effect trial *9 reason subject judgment to immediate judgment and final the is a in express determination appeal. an In the absence of such ‘any form 54(b) or other judgment, order the Rule makes adjudicates fewer decision, designated, which of however than rights fewer of and liabilities the or the than .all claims pro By express interlocutory final. parties,’ and not all the ‘subject remains Rule, an order the such vision of adjudi entry any of time revision at before the all rights of cating and liabilities the the all claims and ‘subject to review not then parties,’ and such an order is provided expressly except by appeal as or otherwise either such an 1-277 is not G.S. rules or other statutes.’ these 1A-1, Rule to G.S. express 54(b).” See Comment authorization. 258-59, 210 Howard, supra at Arnold v. at 493-94. of because Appeals fell into error believe the of We Court significant Federal North Carolina difference in the IN THE SUPREME COURT v. Stores exception 54(b)
Rules.
is no
in
Rule
There
Federal
for a
appeal
under “other statutes.”
addition,
Appeals
In
Arnold
we
in
believe the
Court
relationship
misconstrued the
between Federal Rule
appellate jurisdiction
The Federal
of the federal courts.
courts;
jurisdiction
appellate
not
it
does
affect
merely
expedites
judgments
the district
issuance
final
recognized
judicially
statutory
courts.
exception,
absence of
or
courts,
appellate
enactment
the federal
as
before
Rules,
jurisdiction,
when
when
Federal
have
Wright
Miller,
the trial court has
final
See
made a
decision.
Federal Practice and
Procedure: Civil §§
Mackey,
fact,
Sears,
As
Roebuck &
a matter of
in
Co.
supra,
1306-07,
435, 437-38,
at
at
suggest justice require that the ends of that we determine entering summary whether the court trial committed error in judgment against in second and third causes practical jus- standpoint, action. From a it seems to that us requires despite tice appeal be allowed the fact judge just the trial failed to “there rea- enter the words is no delay” judgment. son very in his This have omission could part well judge. been an on the inadvertence of the trial He certainly permitted appeal, intended that other- appeal wise would not he have entered the account entries on language required plaintiff and would have to seek certiorari. Ervin, speaking Raleigh
Justice Ed- for our Court v. wards, 528, 529, (1951), 234 N.C. S.E. said this: designed
“Appellate procedure is to eliminate the unneces- sary delay expense repeated fragmentary appeals, present single and appeal the whole case for determination in judgment. end, from the final To this the statute defining right appeal prescribes, substance, Supreme an does not to the lie Court from inter- locutory Court, Superior order unless such interlocu- tory deprives appellant order of a substantial might which he lose if the order is not reviewed before judgment. 1-277; Veazey City Durham, final G.S. v. Emry 377; Parker, 57 S.E. 2d 261, 16 236.” Raleigh Judge Our Court held in v. Edwards that Trial Sharp (now Justice) permitting party Chief was correct *11 IN THE SUPREME COURT v. Stores sought
claiming to intervene in land to cоndemned an interest petitioner proceedings. that a The further held the Court permitting appeal interven- was not entitled to from the order by legal rights preserv- party fully protect tion since the can its ing allowing appealing exception intervention and to the order adverse, judgment upon the merits. General Statutes interlocutory Thus, order the concluded that this 1-278. Court allowing petitioner deprive “of a sub- intervention did not the right may if order is not reviewed stantial which it lose the judgment.” before final Dictionary at 2280 Third New International Webster’s affecting right” legal right
(1971) “a defines “substantial as involving distinguished from matters substance a. matter of affecting right materially interests which of form: a those protected ma- preserved and law: a man is entitled to have right.” terial
[2] The causes of action that allege are related damages punitive cause to each He second other. seeks alleged first cause of defendant misconduct because try Judge Seay required plaintiff relating cause his first of action. action, alleged of the de fraudulent failure require possibly pay proper To him later to rental. fendant try in would the second of action for cause judicial manpower and be destruc an use of volve indiscriminate rights sense and dеfendant. Common tive of both judge jury that hears claim us that the same tells the puni alleged hear the fraudulent breach of contract should damage cause of action thereon. The third tive claim based alleged anticipatory arose from breach of contract. This gave and second birth to first same lease contract judge jury token, should By same causes. same ones, along assum the first and second hear the cause with third judgment. subject summary ing plaintiff’s is not cause right” If here. that a “substantial is involved We believe summary judgment, subject not the causes of action were plaintiff right three causes tried to have all had a substantial judge jury. The case falls same time same at the squarely right” as defined of “substantial within the definition Nuckles, Highway by Webster’s, sutpra. also Commission See dismissing supra. Appeals was in error Court appeal. TERM 1976 SPRING
[1] We hold that the 1967 General provided Assembly did restrict (d) by en- G.S. 1-277 and 7A-27 *12 grafting requirements 54(b) Rule hold that them. We' speaking Rule in is where refers to “or other statutes” particular 7A-27(d). of General 1-277 and Statutes question The second erred in is whether trial court granting summary judgment dismissing plaintiff’s claim for punitive damages. Under provisions 1A-1, 56, party of G.S. mov ing summary judgment clearly has the burden of establish ing genuine any there is no as to issue material and fact that as a judgment result he is entitled to a matter of as a law.
Page
Singleton
Sloan,
697,
;
v.
(1972)
281 N.C.
Plaintiff makes in his incorporates allegations herein “1. Plaintiff all paragraphs his in first claim for relief. Upon alleges plaintiff
“2. information and belief fraudulently wilfully pay plain- the defendant failed percentage provisions para- tiff amounts due under the graph 3 of the lease contract. Upon alleges plaintiff
“3. information and belief wilfully, fraudulently inaccurately reported defendant plaintiff continuing period net sales to over a time. continuing
“4. That defendant’s conduct plaintiff deprived has been substantial revenues $10,000. excess the sum IN THE COURT SUPREME Stores entitled, by defendant’s virtue of
“5. That $100,000.” conduct, in the amount incorporates paragraph 1 It will noted that allegations for breach all of action contained in the first cause cause, plaintiff refers paragraph first contract. of the provides paragraph paragraph That 3 of the lease contract. yearly lease periods minimum the various rental for ranges original $10,000 for the first from an contract. This years years $15,000 final for the $14,500 for next five 5-year Paragraph provides: period. further pay (5) percent of five “The Lessee will the Lessor including annum, net $240,000 per
net sales excess of department owned Lessee dur- made leased sales ing option period, if exer- *13 the of lease. For term (5) percent cised, pay of to the Lessor five the Lessee will including annum, $300,000 per net of the sales excess by by any department Lessee leased owned net sales made during option.” the term of the means, we must what “net sales”
In order to determine paragraph 4 the lease: refer to of term ‘Net shall be construed
“4. That the Sales’ returns, gross less entire sales of merchandise mean the charges sales, repossessions, discounts, on and sales finance during the term of this lease.” tax levied on sales required the lessee furnish also that This lease contract giving year a sales audit for a each to the lessor statement percent year (5%) the five preceding to calculate the order charge. provided: Paragraph 5 further rental right expense, audit Lessor, has the at her “The verify Lessee, the if desires to the records of the she so computation percentage rental.” the statement action, made a which is has in first cause of Plaintiff the allegation punitive damages, an part of second cause for pro- continually the lease failed to honor “defendants have that by regard provision paragraph 3 percentage to the visions by understating net revenues as defined the amount of sales lease.” paragraph 4 of the said that showed evidence affidavits
The offered into years defendant had misinformed period 9 that for a 1976 133 SPRING TERM plaintiff net trust his sales and that the was entitled five (5%) percent $224,663.92, total understatement percent five (5%) $11,233.20. amounts to general Our punitive Court has held that or ex- as a rule emplary damages are with for breach of awarded contract exception King marry. of a v. Insur- breach of a contract to Co., ance 159 2d
However, Realty Co., in Swinton v. 73 S.E. general (1953), prop- our Court itself addressed sought osition arising damages involved in our for fraud case. Plaintiffs sought arrangement from contract and in addition punitive damаges. aged Negroes plaintiffs The facts that were disclosed they without were induced to enter education and purchase actually a contract for the of a lot feet price $2,000 by representa- at a and fraudulent false yards tion deep. feet wide boundaries were 268 Judge Trial jury Bone to the actual dam- submitted issues for ages punitive damages. jury verdict of returned a by $1,500 opinion Our each. Court in an Justice Devin Chief striking judgment punitive modified the damages. out say subject:
Our had Court this to uniformly has been held with us “[I]t may awarded in sound discretion of the jury though limits, and within reasonable to such an award does not conclusion because follow as a of law jury against has found issue of fraud defendant. There *14 aggravation accompanying must an element be of injury. money tortious conduct which causes Smart may damages not included in assessment be of as a simply wrong, matter of course of an because actionable but only aggravation, when there are of as when some features wrong willfully is done or under circumstances of rudeness, oppression, or in a manner which evinces a reck- rights. disregard plaintiff’s less and Baker wanton 1, Realty Winslow, v. 184 N.C. 113 570.” Swinton v. S.E. Co., supra 725, at 73 2d at 787. S.E. damages cases,
“In some in actions recover fraud, punitive damages suggested asked, whеre are it is aggravated that a line of demarcation drawn between simple fraud, damages punitive fraud and with allowable in the one and refused in the other. In note in 165 case a A.L.R. IN THE SUPREME COURT 134 v. Stores 616, is to constitute ‘All that can be said is said: aggravated element of additional fraud there must be some necessary beyond goes asocial facts behavior ” Realty Co., simple v. create a fraud.’ Swinton case supra 726, at 2d 73 S.E. at 787. language:
Then the Court with continued think the in each case rule is that facts “[W]e representations must determine whether the fraudulent alleged accompanied by acts as to were such and conduct subject wrongdoer dam- to an assessment of additional ages, purpose punishing him what has been for the ” ‘outrageous Realty Co., called supra conduct.’ 236 Swinton v. his
at
It is
held that
those
are
dam
given
compensatory damages
ages which
are
addition
reckless, malicious,
“wanton,
oppressive
char
because
or
Damages
complained
2d,
22 Am. Jur.
acter
the acts
of.”
§
damages
beyond
generally go
compensatory
(1965).
dam
Such
usually
punish
ages,
they
are
allowed to
defendant and
generally
2d, supra
deter others. 22 Am. Jur.
It is
held
damages
right,
punitive
are
not as a matter
recovered
jury.
Graves,
Allred v.
but
the discretion of the
(1964);
Dawson, 244
2d 186
Hinson v.
N.C.
N.C.
23,
S.E.
you
(1956).
rule
cannot have
It is further stated in 25 at 1128: § requisite aggravated are “Where circumstances present, exemplary damages may be allowed in tort cases though incidentally even the tort involves a contract.” Realty Co., supra, Our Court in Swinton v. seems dicta adopt general suggested philosophy C.J.S., supra in 25 as 120, by following language: the use of the think the rule case facts in each “[W]e representations must determine whether fraudulent alleged accompanied by were such and conduct acts wrongdoer subject the to an assessment additional dam- ages, purpose punishing for the him for what has been ” ‘outrageous Realty Co., called his supra conduct.’ Swinton v. at at 787.
[3] We believe that the allegations contained in the first claim language alleging complaint relief are couched in *16 IN THE COURT SUPREME allegations contract, the lease at the time
breach of but same which the of fraud and deceit are obvious from the manner in alleged. charges by intentional under- breach is Plaintiff gross substantially reduced the statement of the sales defendant plaintiff rental to which under the contract. Cer- was entitled tainly one, cause, incorporates the second the first smacks fraudulently alleges willfully, Plaintiff tort. that “defendant inaccurately reported net It seems to us that sales.” allegations bring plaintiff within the rationale the overall Realty supra. Co., of Swinton v. involving consistently fraud,
In üsed cases our Court has language following: such as the damages awarded, except cases
“Punitive are never fraud, malice, when there is an element either of ... aggravation causing other in the act or omission causes injury.” Co., 318, 323 416, 163 Holmes v. The Railroad 94 N.C. ; (1886) Co., see v. Insurance 274 N.C. Clemmons (1968) ; Smith, 2d 761 Nunn v. ; (1967) Lines, 2d 497 Van Louven v. Motor S.E. 539, 135 (1964). S.E. 2d 640 purpose puni-
It seems us that view of the for which plaintiff proper tive are assessed has stated a cause of action. the so-called breach of contract actions that smack involved, think of tort because of the and deceit we do not fraud enough just pay permit that which the defendant required place. pay in If this lease contract him to the first gain nothing law, If were the defendant has all to to lose. caught scheme, he is not in his fraudulent then he is able resulting profits. caught, If retain the only dishonest he is he has pay paid that which he should have in the first back place. See 31 N.C.L. Rev. 473 type that in case with substan- believe of contract We emanating from the fraud and deceit the
tial tort overtones require punished per- rule would that defendant be better mitting damages. By plaintiff punitive to recover virtue such expenses he incurred punishment, could at least receive litigation. in the summary granting court erred in conclude We seeking second claim for relief for defendant in the damages. stage, pleading now The case is SPRING TERM Stores
Oestreicher v. and it remains to be seen whether or not the will be allegations McCarthy, proof. able to sustain with C. his John Damagеs gen- (1976) (involving Faith Punitive in Bad Cases cases). erally type insurance *17 question
The next that we must whether the trial decide is granting summary judg- court in defendant’s motion erred for damages resulting plaintiff’s ment as from an to claim for alleged anticipatory breach of the lease contract. cause, complaint relating plaintiff part to of his allegations
incorporates dis- the first two claims above alleges: paragraph 2 cussed and in alleges
“Upon plaintiff that and belief information anticipatorily the lease defendants are about to breach agreement vacating premises prior to contract , agreement option expiration . . . the said lease contract attached in ‘Plaintiff’s Exhibit C’ as shown a letter marked hereto ” . July advising plaintiff 22 1974 a “Exhibit C” was letter n in premises described
that defendant intended to vacate Shortly thereafter lease contract on or about October 1974. in July proceedings 1974, plaintiff attachment on 31 filed against filed County Plaintiff Superior defendant. Rowan supporting Court to rent he had tried effect that affidavits had been unsuccess- premises but to various firms area that defendant the effect Plaintiff filed further affidavits to ful. Salisbury going-out-of-business his Char- sale at conducted him locations; mailed defendant that on 14 Nоvember 1974 lotte building keys would be the effect a letter to keys January him; were 1975 the in turned over all utili- indicated that plaintiff. affidavit also delivered 1974, and that 18 November terminated on or about ties were Affidavit January marked plaintiff a letter received on 30 being indicating time at that defendant Exhibit 11 in excess creditors, were well that his liabilities his overseen defendant assets, that neither insolvent and that he was his any responsible rent would be committee of creditors nor his January plaintiff re- January 1975. About after petition bank- that defendant’s the effect ceived letter to IN THE SUPREME COURT ruptcy filed 16 1974 had October been withdrawn. The affidavit following language: dated March 1975 had the “That the pursuant defendant is current in its rent lease, only securing
said because a bond is in force rendered this action.” along This affidavit with all the other affidavits of Judge Seay and defendant were before ment on 26 March 1975. With judg- when he entered a regard to the action, third cause of following: the court entered the plaintiff seeks to recover the “[T]he rent due for the remainder of the anticipatory question term of the lease in because of
breach giving of the lease the defendant notice of its intention to premises vacate prior to the expiration ing lease; of the term of the appear- and it further finding to the Court and the Court as a fact that there requirement is no lease that occupy the defendant *18 during premises the term of the lease.” Thereupon, the trial summary judgment court entered a for de- fendant the second and third causes of action and denied summary judgment for the first cause of action. The court undertaking reduced defendant’s in proceedings the attachment $15,000. $80,000 to Appeal by Judge Seay entries were entered April on 4 language using in the usual without the clause referred to in just 54(b), delay.” “there is no reason for Contracts, (1951)
4 Corbin on anticipatory § defines breach as follows: anticipatory “An by breach of promisor contract a repudiation
a duty of his contractual before the time fixed performance the contract for his has arrived. Such a may repudiation be made either word or act.” See Contracts, also 11 Williston on (3d 1968). ed. Plaintiff contends that duty defendant had a under the occupy lease contract to premises the demised and conduct a business following therein because of the language in the con- July tract dated 1 1961: “2. That agrees the Lessor put covenants and to possession premises
Lessee of said beginning at the TERM SPRING guarantees Lessee, peaceful to and un- term and said Long Occupies, interrupted possession As thereof So It performs with, complies the covenants and conditions (Emphasis added.) of this lease.”
occupying [4] premises reference is that referred lease contract to in paragraph to defendant’s above. pay on the defendant has continued to the minimum rent Since required agreement, question is premises the lease sole gives plaintiff a of action for whether lease itself cause premises. to defendant’s of intent to It seems notice vacate portion upon by plaintiff of the relied as estab us lease duty lishing occupancy a defendant’s is in fact statement obligations proper plaintiff’s to the defendant. A construction say guarantees language defend seems during peacefully occupy premises the term ant’s of the lease.
occupy [4] Without premises, a provision in the appears lease requiring fails defendant state anticipatory of contract unless proper breach cause action for by looking duty occupy at it can into the contract we read determining implied four there is an “from its corners” to do business. covenant provides:
Paragraph 1 of the lease consideration, terms “1. That for the hereby forth, set Lеssor and conditions hereinafter furni- operation of a retail Lessee, for the unto the leases lines, retail other business and kindred ture competitive with Oestreicher-Winner business not wholesale violate business, present and which does line of their *19 following premises. ordinance, ...” any described the local was entered was purpose the lease The for which fact that the to tend high would type business not produce to a sales restricted promote acti- to $240,000 $300,000 or so over net sales these over of net sales provisions for 5% of the rent vation to intend parties did not the further indicates amounts duty occupy business. and conduct impose a to provides: Paragraph of the lease transfer, or as- right . The Lessee has “13. . . premises leased part sign lease, of or to sublet THE IN SUPREME COURT Stores provided property may to whom the business be leased competitive or sublet is not with Oestreicher-Winner during present business, (10) their of line first ten years of this lease.” years
That the lessee had first 10 of the lease transfer, assign long sublet the lease so as the business competitive not with is further indication Oestreicher-Winner parties duty impose occupy that the did intend high promote conduct a business so sales as to activation of rent based on net sales. litigated jurisdictions This kind has of case been in other varying varying providing
under
factual situations
results. See
following:
Leases,
cases cited in the
Friedman
6.9-6.11
§§
;
(1974)
(1971) ;
3d 971
A.L.R.
32-39 A.L.R. 2d Later Case
;
(1969)
(1954) ;
Service 728-730
Our Court in Jenkins v. Rose’s
606,
(1938)
subject.
Defendant retained the under this lease years paid 1936 and rents said the sums of $3,609.07, $3,648.18 $2,400.00, respectively. $3,126.88, operate premises did not a store on the defendant but con- its in another location in the same Plain- ducted business town. claim for additional rent on rent tiff based his the basis of the year, paid previous Plaintiff for the contended that under prem- bound the lease defendant was to conduct a store on the diligence ises with reasonable and that its failure to do was a so finding court, the contract of lease. lower breach of The after being $1,061.38, facts, the amount of rendered this average gross years 1933, sales for the 1934 and percent deducting $2,400.00. Our held after Court reversed and any agreement requiring defendant lease failed to show that the premises. operate within the demised a store Court plaintiffs protected the lease showed that held that further their by requiring a minimum rental interests get operated defendant whether the store at a loss would implied contended there was an cove- profit. Defendant or at a opinion nant, held that this In an our Court so. but Schenck, Court, speaking for our it was said: Justice duty applicable occupy tenant
“The rule premises of 46 is thus stated in the annotations or use A.L.R., liability question page ‘Apart 1134: from the at waste, obligation, under no it seems tenant therefor, specific provision occupy or in the absence use, though premises, one use, the leased even or continue both, expected they parties, intended that *21 IN THE SUPREME COURT particular would purpose they be used for the to which ” adapted seemed to be or constructed.’ Rose’s Jenkins v. Stores, supra, Inc., at 609. This case seems to be almost on “all-fours” with our case. are thus We covenant controlled it and implied hold that no there was to do business under the terms of this lease where premises high use of the is not restricted to a sales business percentage that would рrovision activate the rent and the lessee may transfer, assign or sublet competitive business not with lessor’s business. Finally, plaintiff reducing contends the court erred in de- original undertaking
fendant’s $80,000 from a bond of to a bond $15,000. At the quite outset we fragmentary. find the record only entry subject in the record on this after execution of undertaking $80,000 defendant’s Seay by Judge was that made summary judgment
in his order: Is Fuethee Oedeeed the amount of the de- “It undertaking fendant’s proceeding the attachment herein be reduced to Fifteen Thousand Dollars.” excepted assigns Plaintiff to this and it as Plaintiff error. require judge made no motion to the trial to find the facts con- cerning the bond reduction. all the [5] When this pleadings matter was in the case, heard, as well as all the affidavits that Judge Seay had before him had been Presumably offered both sides. he took all these into arriving summary consideration in at the entered, as well as the reduction in Upon defendant’s bond. rendition of summary judgment for defendant as to the second and third action, causes of Seay with remaining, Judge first cause had discretionary power to exercise his to reduce the bond substituted for property thus, the attached and, keep basically the bond proportion with the remainder of the case. See G.S. 1-440.37. Balsey, Mülhiser 11 S.E. (1890), our procedure Court set forth proper perfecting judgment vacating rendition of a a warrant of judgments and like such as the vacation or modifica-
attachment TERM 1976 SPRING v. Stores pursuant property attached for the of a bond substituted tion 1-440.39: G.S. Judge province of the cases, “In this and it is like usually produced evidence, to hear the below Court affidavits, find the facts form him in the before Lineberger, 90 arising thereupon. Pasour v. apply N.C., law com- party should If a the cases there cited. *22 law, applying the then he
plain erred in so that the Court findings its assign to state and ask the Court error should might record, he have in the so material facts of the appeal to this Court. exceptions, on of his the benefit fail or should if the Court case, it would be error arising fact, findings the law its to so state refuse upon the same. party reason- complaining practice affords the “Such arising law, in the dis- opportunity have errors of to able action, ancillary matters in the
position of incidental many very cases, lessens Court, while, it by corrected below, expedites proceedings Court the labor costs.” and saves action
[6] Since failed to request findings of fact to justify bond, presumed that it is of defendant’s modification order, and this support his sufficient judge facts trial found Buhmann, 160 N.C. v. appeal. Lumber Co. not reviewable on acquiesced in apparently (1912). Plaintiff 75 S.E. be heard judge cannot the trial discretion exercised alleging party it. shown must be complain Error now. supra. Buhmann, Lumber Co. defendant’s in the reduction no error court finds
The undertaking $15,000. follows:
The result is as dismissing Appeals (1) opinion of the Court The appeal is reversed. summary entering judg- judge
(2) trial order of the The is reversed. cause of action as to the second ment for defendant entering judge in trial (3) order of the No Error of action. the third cause summary judgment defendant as to undertaking defendant’s (4) in the reduction of No Error $15,000. IN THE SUPREME COURT Lake, Huskins, Justices and Exum concur in result. Sharp concurring dissenting. Chief Justice majority’s Appeals I concur in the decision that the Court 54(b). 1A-1, majority opinion has misconstrued G.S. Rule correctly states, “Certainly Assembly the General did not intend right appeal provided restrict 1-277 and G.S. by engrafting 7A-27(d) 54(b) requirements upon Rule them.” Indeed, appealable judgments makes which were appealable prior not to its enactment. partial summary judgment
Under 1-277 G.S. which de- termined multiple-claim fewer than all of the claims in a action immediately appealable would not be unless the order affected right. substantial This is true because such an would order finally determine the entire action —there would still be claims remaining general in the case. Under G.S. 1-277 the rule is “ ‘an will not lie until there is a final determination interlocutory of the whole case. It lies from an when order puts may destroy impair it or end to the action or where ” seriously imperil appellant.’ some substantial *23 Childs, 575, 578, (1965). v. State 265 N.C. S.E. Veazey Durham, (1950). See 2d 377 54(b) All Rule did was to restrict the unit to which the finality concept words, applied. would be In other it allows judge appeal judgment the trial finally to authorize an from a that though a claim determines for relief even there are other remaining only requirement claims The additional action. just delay. that must be met is that there is for The no cause necessarily appealable same order or would not be right. under G.S. 1-277 unless it Thus also affected a substantial 54(b) increasing appellate Rule effect of the avenues of has the judgments review. Final than all the claims are now on fewer immediately appealable judge that there if the trial determines just regardless judg- delay, those is no of whether cause rights previously ments affect substantial as that term has been I to Rule defined. This is what believe comment says: means when it considering section, that
“In remembered this should be by except left modified this section. 1-277 was intact as § only ‘party appeals when a other will continue to lie words right,’ aggrieved’ deprived has of a ‘substantial been TERM 1976 SPRING judgment. modification a final The here is that when there is delay just express no reason when there is an determi- effect, to finality nation the unit concept which the applied Thus, shall is rule made a smaller one. if two presented are to the trial claims court and one of them is the subject disputed ruling, of a ruling will lie if the appealable involving would have been in an action that claim judge requisite and if the makes alone determination.” N. C. 1A Stats., p. Gen. Vol. at agree
I also in claim for relief in which issues of punitive compensatory and properly jury are for the both issues should be tried at the judge time same same jury, require and that separately them to be tried at right. would different times violate substantial In such a however, situation, multiple claims are not involved. “[W]hen suing plaintiff legal right alleges is to vindicate one several damage, presented elements one claim is and subdivision (b) apply.” Wright does 54] 10 C. Miller, & A. [of Federal Practice and Procedure
Further, my view, this case involves no issue of damages. complaint present purports allege action (3) separate relief, relating three claims for all to defendant’s alleged perform obligations failure its plaintiff’s lessee. portion captioned relief,”
In the “first claim for alleges she entitled to guar- recеive as rent in addition to a amount, percentage sales; anteed minimum defendant, by understating of the net
the amount its net sales had failed obligation; comply that, with its failure, reason of said indebted to defendant an amount in excess of $10,000.00 plus interest. portion captioned,
In the relief,” plaintiff “second claim for *24 alleges, upon belief, information and “wilfully, that defendant inaccurately fraudulently reported plain- the net sales to the continuing period time,” depriving tiff plaintiff over of thus in $10,000.00; of revenues of substantial excess and on account plaintiff punitive of defendant’s conduct is entitled to recover damages $100,000.00. in of the amount portion captioned, relief,” plaintiff
In the “third claim for damaged alleged $30,000.00 plus she was in the amount of in- terest, legal costs, fees, because defendant closed its store IN THE SUPREME COURT prior premises of the contract and vacated leased
in breach third referred expiration of the term. This claim is to to “anticipatory breach.” one for allege plaintiff that does that defendant has It is noted guaranteed any portion pay minimum to rental. failed Recovery relief,” is, plaintiff’s “first claim for that on for obligations, pre- to meet contractual defendant’s failure requisite its of consideration her “second claim for relief.” Both pаid defendant in full it to whether has the rental was relate pay guaranteed obligated to excess of the minimum rental —in during period on its net sales defendant conducted —based premises. in leased its business agree portion opinion I with that Court’s which holds obligated possession was not to remain defendant in
that
carry
premises
expiration
business in the leased
until
on
Hence,
agree
summary judgment
I
lease.
that
the term the
properly
on
“third claim for relief” was
entered.
defendant
portion
opinion
I dissent from
which
Court’s
“second
relief”
her
claim for
has
holds
stated
damages.”
punitive
my opinion,
proper
of action
In
“a
cause
concerning
allegations
recovery
damages
punitive
these
granted,
relief can
fail to state a claim
and I
Judge Seay
agree
pleadings
that from the
with
affidavits and
affirmatively appears
prove
cannot
entitlement
damages.
Hardy
Toler,
punitive
See
v.
218 S.E.
N.C.
;
Smith,
(1975)
v.
Nunn
No decision has come
which holds that a
damages
punitive
plaintiff is entitled to recover
on account of a
obligated
pay
what he is
defendant’s failure
pay.
contract
Moreovеr,
opinion
the cases cited in the
are
Court’s
my
with
view.
full accord
King
Co.,
Insurance
(1968), the order allowed the complaint allegations to strike from the defendant’s motion recovery concerning prayer and the motion to defendant’s dismiss the therefor. ground judg- the order was the nature of overruled *25 TERM SPRING 1976 147 sustaining allege ment demurrer for failure to fácts sufficient damages. punitive to constitute a cause action for King, plaintiff liability In company sued his insurance compensatory damages. alleged punitive He the defend- wilfully obligations refusing ant had by breached its contractual to against defend a counterclaim which had been asserted plaintiff by failing in an pay automobile collision case and against plaintiff obtained on the counterclaim. allegations upon The which the based his damages punitive recover were as follows: He referred to the “aggravated defendant’s conduct as fraud.” He to the referred “wilful,” “intentional,” defendant’s breach of contract as disregard rights “wanton plaintiff,” of the and as “cal- hamper, prevent impair plaintiff’s culated ... and/or legal position” in the automobile collision case. opinion The of Justice exception Lake states: “With the promise marry, given a breach of for are not Realty Co., 723, breach of contract. Swinton v. 236 73 785; R., 100, S.E. 2d 235; Richardson v. R. 126 N.C. 35 S.E. Law, Contracts, Restatement of the on 342. See also: Williston § Contracts, Ed., 1340; Damages, Ed., Rev. Sutherland on 4th § Damages, 390; Sedgwick Ed., 603; on 9th McCormick § Damages, § 81; Damages, p. 318; 2d, Hale on 22 Am. Jur. § Damages, 245; C.J.S., Damages, 120; Annot., 84 A.L.R. § § 398, 1345.” Id. at 159 S.E. 2d at “The Court concluded: complaint by present action, including allegations in the striken superior alleges court, the order of the breach McCarthy, contract ages the defendant.” Id. See Dam- J. Punitive Cases, in Bad Faith 2.29 considering are not
We
a factual situation in which it is
alleged
party
that a
was induced to enter into a contract
representation.
reason of false and fraudulent
factual
Such a
Greenwald,
situation was involved in Saberton v.
St.
Ohio
Realty
(1946) ;
N.E.
lished, purchase that defendants induced the a lot of price by falsely $2,000.00 150 feet land at the fraudulently representing lot as boundaries IN THE SUPREME COURT *26 v. Smith
State designated pointed out the defendants an area and embraced Answering yards deep.” issues, separate “268 feet wide damages plaintiff jury $1,500.00 and actual the punitive awarded $1,500.00. appealed at from The defendant in accordance with the recover striking judgment by there- modified the verdict. This Court damаges. punitive opinion of Chief allowance states: are inclined to the view that facts Devin “We Justice warrant are not sufficient the allowance of here in evidence damages. insult, indignity, no There was evidence punitive malice, motive than oppression or bad other the same false they representations for which have received the amount de- requires not think the additional . do law that an manded. . . We Id. punishment should be meted out in action.” this amount for 2d at 788. at King, epithets used to describe defendant’s
As insufficient to constitute a claim dam conduct are ages. 1A-1, (b) provides: G.S. “In all note that aver- We mistake, constituting fraud, duress or ments of circumstances particularity. Malice, shall be stated with fraud mistake knowledge may intent, person of mind other condition of a generally.” Mangum Surles, As we said in averred be 91, 96, (1972), 187 S.E. “Rule codifies existing requirement previously practice in our State fraud, to establish duress or mistake must the facts relied alleged.” alleged present case has shown an Her claim for relief intentional breach contract. second does allege adequately merely for fraud or not action deceit but realleges underlying basis her contract action. join opinion.
Justices Branch Moore STATE NORTH CAROLINA v. JAMES OF VERNON SMITH
No. 47 (Filed 1976) June — challenges prejudicial Jury peremptory 7— ten for State not error allowing Though (b) there a violation of 9-21 G.S. peremptory challenges, ten instead nine the error was State