Munchak Corp. v. Caldwell

246 S.E.2d 13 (1978)

37 N.C. App. 240

The MUNCHAK CORPORATION (Delaware) and RDG Corporation, a joint venture d/b/a the Carolina Cougars and the Munchak Corporation (Georgia) v. Joe L. CALDWELL.

No. 7718SC841.

Court of Appeals of North Carolina.

July 18, 1978.

*15 Forman & Zuckerman by William Zuckerman, Greensboro, and Powell, Goldstein, Ferazier & Murphy, Atlanta, Ga., for plaintiffs-appellants.

Smith, Moore, Smith, Schell & Hunter by Bynum M. Hunter and James L. Gale, Greensboro, for defendant-appellee.

ARNOLD, Judge.

I.

The plaintiffs' first contention is that the trial court erred (1) in denying plaintiffs' motion to amend their complaint to allege fraud, (2) in instructing the jury that fraud was not an issue, and (3) in refusing to instruct the jury that fraud of an agent is chargeable to a principal with knowledge.

Plaintiffs made their motion to amend pursuant to G.S. 1A-1, Rule 15 which reads in pertinent part:

"(a) Amendments. A party may amend his pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, he may so amend it at any time within 30 days after it is served. Otherwise a party may amend his pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires. . . . "(b) Amendments to conform to the evidence.When issues not raised by the pleadings are tried by the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, either before or after judgment, but failure so to amend does not affect the result of the trial of these issues."

Although it is difficult to determine from the record exactly when plaintiffs made their motion to amend, it is clear that the motion came at some point during the trial. Under Rule 15(a), the ruling on such a motion is left to the discretion of the trial judge with the mandate, however, that where justice so requires, leave to amend shall be freely granted. Plaintiffs do not argue that the trial judge abused his discretion in refusing to grant leave. Instead they argue that the amendment to allege fraud should have been allowed in order that the amended pleadings would conform to the evidence at trial. See Rule 15(b). We cannot find, however, that the pleadings were amended by the doctrine of implied consent. In Eudy v. Eudy, 288 N.C. 71, 215 S.E.2d 782 (1975), the Supreme Court, in applying Rule 15(b), accepted the analysis of the Sixth Circuit:

"`We think it clear that if a theory of recovery is tried fully by the parties, the court may base its decision on that theory and may deem the pleadings amended accordingly, even though the theory was not set forth in the pleadings or in the pretrial order. See Wallin v. Fuller, 476 F.2d 1204 (5th Cir. 1973); Monod v. Futura, Inc., 415 F.2d 1170 (10th Cir. 1969); Dering v. Williams, 378 F.2d 417 (9th Cir. 1967); Fed.R.Civ.P. 15(b). However, the implication of Rule 15(b) and of our decision in Jackson v. Crockarell, 475 F.2d 746 (6th Cir.) is that a trial court may not base its decision upon an issue that was tried inadvertently. Implied consent to the trial of an unpleaded issue is not established merely because evidence relevant to that issue was introduced without objection. At least it must appear that the parties understood the evidence to be aimed at the unpleaded issue. See Bettes v. Stonewall Ins. Co., 480 F.2d 92 (5th Cir. 1973); Standard Title Ins. Co. v. Roberts, 349 F.2d 613, 620 (8th Cir. 1965); Niedland v. United States, 338 F.2d 254, 258 (3d Cir. 1964).'" Id. at 77, 215 S.E.2d at 786-87, quoting MBI Motor Co., Inc. v. Lotus/East, Inc., 506 F.2d 709 (6th Cir. 1974).

The evidence which plaintiffs contend should have led to an amendment under Rule 15(b), included testimony of Ehrlich, *16 Boyar and Caldwell that the erroneous provision in the contract was known to them on 28 October 1970, two days before the contract was signed. Moreover, according to plaintiffs' position, despite an "ambiguity" in subparagraph (c) of Paragraph 5, Ehrlich, Boyar and Caldwell elected not to mention the "ambiguity" for fear of drawing attention to the erroneous pension provision.

First of all, we disagree with plaintiffs' interpretation of the testimony they cite. Ehrlich, a witness of plaintiffs, testified:

". . . I pointed out that I didn't like Paragraph (c) because I thought it was ambiguous and should be clarified, and I explained it to Mr. Caldwell and Mr. Boyar, and Mr. Caldwell and Boyar both read it over and Boyar ventured the opinion that we should leave the paragraph alone because it was an item of great consideration and that if we tried to delineate or carefully define subparagraph (c), they might think the rest of the paragraph was subject to renegotiation, and he did not want to renegotiate it."

In addition, both Boyar and Caldwell testified that they did not want to renegotiate Paragraph 5 and, therefore, elected not to call attention to subparagraph (c). We see no evidence of fraud in this record, and no evidence from which an inference of fraud can be drawn.

Secondly, we believe that the evidence cited by plaintiffs as supporting the issue of fraud went to the issue of mutual mistake which was properly raised by the pleadings. Defendant, under the reasoning of the Eudy case, was not required to object to evidence properly raised by the pleadings. His failure to do so, therefore, did not amount to his implied consent to amend the pleadings to allow the issue of fraud.

It is our conclusion that the motion to amend the pleadings was properly denied, and we find no error in the trial court's failure to charge the jury on the issue of fraud.

II.

Plaintiffs' next contention is that the trial court erred in striking the testimony of plaintiffs' witnesses Scheer and Gorham, and in instructing the court on the interpretation of the word "agreement" as contained in testimony by deposition of Kenneth Goldman. In essence, the trial court refused to allow testimony by three of plaintiffs' witnesses that an agreement other than the written contracthad been reached; the court further instructed the jury at one point during the presentation of evidence that it would consider the word "agreement" only as it was used pertaining to preparation of a final draft for adoption by the parties. It is plaintiffs' argument that since plaintiffs must prove the terms of an oral agreement as one prerequisite for reformation, testimony that an agreement, or meeting of the minds, was reached is competent. We cannot agree with this argument. Whether an agreement was reached is a mixed question of law and fact. In the instant case, this question was an ultimate issue to be determined by the court and the jury, not a conclusion to be drawn by a witness. See 1 Stansbury § 130 (Brandis Rev.Ed.1973). See also, Moye v. Eure, 21 N.C.App. 261, 204 S.E.2d 221, cert. denied 285 N.C. 590, 205 S.E.2d 723 (1974). We also point out that plaintiffs were in no way restricted in testifying as to the details of the negotiations. Thereafter it was for the jury to determine whether an agreement was reached.

Moreover, even if it be assumed that the court's instruction to the jury to consider the word "agreement" only as it related to preparation of a final draft for adoption of the parties was error, any error was harmless in view of the court's final charge to the jury:

"A court has the power to reform an instrument for the mutual mistake of the parties in order to make the instrument express their true intent, but I further instruct you that a court may not reform an instrument or one of its provisions unless the mistake is mutual. Where the parties agree as to the provisions which *17 should be inserted in an instrument, but through inadvertence or mistake of the draftsman, the instrument fails to express the intent of the parties, the instrument or a provision therein may be reformed, but an instrument or one of its provisions may not be reformed for inadvertence of the draftsman if the instrument as drawn is in accord with the understanding of one of the parties, the remedy of reformation being available only in instances of mutual mistake." III.

Finally, plaintiffs assign error to the ruling by the court which disallowed the introduction of plaintiffs' Exhibit No. 7 into evidence. The result of this ruling, in plaintiffs' view, deprived the jury from considering notes made by Caldwell's own negotiating agent, Kenneth Goldman, which notes, according to plaintiffs, reflect that Caldwell's pension was to be equivalent to the NBA pension plan then in effect.

The handwritten notes contained in the exhibit are, for the most part, illegible. Nor is there any date on the notes. Both sides present authority relating to the introduction of business records made at or near the time of the transaction and authenticated by a witness who is familiar with such records and with the method by which the records were made. Defendant's position is that no basis was shown from which to infer that Exhibit No. 7 actually was made at or near the time of the transaction.

We conclude that it is unnecessary to decide whether the exhibit should have been admitted as a business record. Any error in the exclusion of the exhibit was harmless to plaintiffs. The very same evidence which plaintiffs contend the exhibit reflected, i. e., that Caldwell was to receive the equivalent pension plan as was in effect in the NBA, was contained in the deposition of Kenneth Goldman which plaintiffs presented to the jury. See Rowe v. Murphy, 250 N.C. 627, 109 S.E.2d 474 (1959).

We can find no error sufficiently prejudicial to warrant a new trial.

No error.

BRITT and MORRIS, JJ., concur.