Douglass v. Brooks

87 S.E.2d 258 (1955)

242 N.C. 178

Katherine Goins DOUGLASS v. Nolan BROOKS, Hazeline B. Chambers and husband, Osbia Chambers.

No. 528.

Supreme Court of North Carolina.

May 4, 1955.

*262 Henry L. Kiser, Bessemer City, for plaintiff appellee.

L. B. Hollowell and J. L. Hamme, Gastonia, for defendant appellants.

BOBBITT, Justice.

Appellants do not assign as error the denial of their motions for judgment of involuntary nonsuit. However, they seek indirectly to avail themselves of the accepted rule that a motion for judgment of involuntary nonsuit will be allowed when there is a material variance between allegation and proof. Andrews v. Bruton, 242 N.C. 93, 86 S.E.2d 786, and cases cited. Their contention is that the judgment should be reversed because the trial judge submitted the case to the jury on a theory at variance with the cause of action alleged by plaintiff. In passing, it is noted that a new trial, rather than a reversal of judgment, would result if there is prejudicial error in the trial judge's instructions to the jury.

The complaint, in paragraph 4, alleges the contract as stated above. However, appellants emphasize the following allegations of paragraph 3: "That said contract was several months in the making and is in part verbal and partially in writing, same being composed of various verbal understandings and agreements, letters, which, taken together, constitute a definite and binding contract between the parties," copies of these writings, marked Exhibits 1-19, both inclusive, being attached to and by reference made a part of the complaint. It is argued that the contract on which the case was tried was the Contractual Agreement bearing date of 14 February, 1953; and that this was a departure or variance from the contract as alleged.

Appellants' position is untenable. The correspondence indicates the relationship of the parties before and after the Contractual Agreement was signed. The correspondence, in some respects, throws light on certain provisions of the Contractual Agreement but does not vary plaintiff's obligations. For example, Brooks' letter of 18 February, 1953, gives the description of the land referred to in Brooks' letter of 5 February, 1953, and in plaintiff's letter of 11 February, 1953. The two letters last mentioned set forth the contract as alleged. True, when Brooks prepared or had prepared the Contractual Agreement he modified the original agreement by inserting a new provision at variance therewith, to wit: "Deeds are to be delivered to payee (sic) at the completion of the final payment." Since the only effect of this modification was to relieve Brooks of his obligation under the original agreement to deliver the deed when plaintiff made the down payment, defendants have no ground for complaint on account thereof. The Contractual Agreement was not signed until April, 1953. However, it appears that Brooks considered the contract as made in February, 1953, for upon that basis he makes the calculation that $220 was in arrears in February, 1954. The Contractual Agreement, a copy of which was attached to the complaint and by reference made a part thereof, was the instrument by which they defined formally and finally the terms of their agreement. Correspondence prior thereto, while relevant to identify and describe the land, was superseded by the Contractual Agreement. This appears plainly from the complaint and attached exhibits. Correspondence subsequent thereto was relevant, as bearing upon the defendants' alleged right to declare an abandonment of the contract by plaintiff rather than upon the terms of the contract. The court below correctly considered and tried plaintiff's case on this basis. Indeed, Brooks testified, referring to the Contractual Agreement: "That is our agreement; that is it."

Appellants contend that the court was in error in instructing the jury that the Contractual Agreement was a contract of sale and purchase, as contended by plaintiff, rather than an option, as contended by *263 defendants. This contention is without merit. By its terms, both parties were bound, one to sell and the other to purchase.

The consideration for an option is executed (paid) when the contract is made. The unilateral obligation arising therefrom binds the prospective seller; but the prospective purchaser may or may not exercise his right to purchase upon the terms stated. If he fails to do so, the only result is the loss of the consideration given for the option. In a contract of sale and purchase, bilateral obligations arise, the purchaser's obligation to pay the purchase price and the seller's obligation to sell and convey constituting reciprocal considerations. This distinction has been pointed out in many decisions including Trogden v. Williams, 144 N.C. 192, 56 S.E. 865, 10 L.R.A.,N.S., 867; Winders v. Kenan, 161 N.C. 628, 77 S.E. 687. Also, see 55 Am. Jur. 496, Vendor and Purchaser, sec. 29.

Two well-settled rules rest, at least in part, upon the distinction noted above, viz.: In the absence of special circumstances, (1) time is of the essence of a mere option to purchase land, Bateman v. Kramer Lumber Co., 154 N.C. 248, 70 S.E. 474, 34 L.R.A.,N.S., 615; Winders v. Kenan, supra; and (2) time is not of the essence of a contract of sale and purchase, Falls v. Carpenter, 21 N.C. 237; Davis v. Martin, 146 N.C. 281, 59 S.E. 700; Howell v. Pate, 181 N.C. 117, 106 S.E. 454; Crawford v. Allen, 189 N.C. 434, 127 S.E. 521. As stated by Brown, J., in Davis v. Martin, supra: "There is a decided distinction between an option to purchase, which may be exercised or not by the prospective purchaser, and an absolute contract of sale, wherein one of the parties agrees to sell, and the other to buy, certain property; the sale to be completed within an agreed time. In the latter case, the mere lapse of time with a contract unperformed does not entitle either party to refuse to complete it, and therefore time is not of the essence of the contract; but where the contract is merely an option generally, without consideration, of course, time is of the essence."

Plaintiff made the $500 down payment. She made additional payments as stated which, although plaintiff was in arrears, were accepted by defendants without objection. The last such payment was plaintiff's check of 14 January, 1954, for $80. No word of dissatisfaction was expressed by Brooks prior to his letter of 8 February, 1954. Plaintiff did nothing to indicate any intention on her part to abandon the contract. Both plaintiff and Brooks treated the contract as subsisting. That Brooks so regarded it appears plainly from the following excerpts from his testimony. "The latter part of February, 1954, I wired her twice and called her over the telephone to get her to give up the property, call off the deal. So I could sell to this other party for cash." Again: "I had accepted a deposit of $800.00 from one party offering to buy the land on a 30-day basis, provided I could clear with my niece Katherine."

Chief Justice Ruffin, in Falls v. Carpenter, supra, discusses at length the principles of equity applicable in such cases. In that case the purchaser was in arrears, but even so the seller continued to receive and accept from the purchaser payments on account of the balance of purchase price. The seller, for reasons not material here, sold and conveyed the land to another party. The contention that the purchaser's failure to meet payments when due constituted an abandonment by him of the contract was soundly rejected. The conclusion reached is compressed in this sentence: "Having allowed it (the contract) to subsist after the default he (seller) cannot put an end to it by an action which, supposing it to subsist, is in violation of it; but to that end there must be a previous, formal and reasonable notice that if the purchaser does not fulfill it, the other party will not hold himself bound."

In Scarlett v. Hunter, 56 N.C. 84; White v. Butcher, 59 N.C. 231; Faw v. Whittington, 72 N.C. 321, the principles declared by Chief Justice Ruffin are approved and *264 applied. In Scarlett v. Hunter, supra, Pearson, J. (later C. J.), says: "Where there is a contract for the sale of land, the vendee is considered in equity as the owner, and the vendor retains the title as security for the purchase-money. He may rest satisfied with this security as long as he chooses, and when he wants the money he has the same right to compel payment by a bill for specific performance as the vendee has to call for title. The right to have a specific performance is mutual, and when the vendee is let into possession, and continues in possession, as in our case, it is taken for granted that the parties are content to allow matters to remain in statu quo until a movement is made by one side or the other. These principles are fully discussed in Falls v. Carpenter, 21 N.C. 237, which is decisive of this case."

And in Faw v. Whittington, supra, Bynum, J., says: "Assuming the law to be that a vendee can abandon by matter in pais his contract of purchase, it is clear that the acts and conduct constituting such abandonment must be positive, unequivocal and inconsistent with the contract. The mere lapse of time or other delay in asserting his claim, unaccompanied by acts inconsistent with his rights, will not amount to a waiver or abandonment."

It appears that the above principles, as stated by this Court, are in accord with rulings in like cases in other jurisdictions. 49 Am.Jur. 55, Specific Performance sec. 42; 81 C.J.S., Specific Performance, § 110, p. 638; Williston on Contracts, Rev. Ed., sec. 852.

The parties, having recognized the contract as subsisting, notwithstanding the arrears in payments, defendants had no right to treat the contract as abandoned unless plaintiff failed to comply with its strict terms within a reasonable time after definite notice from defendants that they would treat the contract as abandoned unless such strict compliance was made. Such demand and notice are prerequisite to placing the purchaser in default under circumstances such as those that existed here.

It is noted that the Contractual Agreement contains no provision that the entire unpaid balance of purchase price shall become due upon failure of plaintiff to pay when due any one or more of the monthly installments. It is noted further that defendants' attempted renunciation of the contract eliminated any necessity for a tender of the full purchase price if such were otherwise necessary, Bateman v. Hopkins, 157 N.C. 470, 73 S.E. 133; Lennon v. Habit, 216 N.C. 141, 4 S.E.2d 339.

Appellants contend that the court in effect gave a peremptory instruction to the jury in plaintiff's favor on the first issue. It does not appear that this was done. However, upon the admitted documentary evidence and Brooks' testimony it would appear that such peremptory instruction would have been appropriate.

Appellants make the further contention that the trial judge predicated his instructions relating to the Contractual Agreement upon the finding by the jury by the greater weight of the evidence "that these parties signed this agreement." They call attention to Brooks' testimony to the effect that he (Brooks) signed it and "signed it for Hazeline." As to Hazeline B. Chambers, a sufficient answer to this contention is that plaintiff testified that Hazeline B. Chambers and Brooks had signed the contract before plaintiff received it. However, for reasons stated below, the failure of Osbia Chambers to sign it and whether Hazeline B. Chambers signed it or Brooks signed her name are immaterial under the circumstances of this case.

In this Court defendants demurred ore tenus to the complaint for that it fails to allege facts sufficient to constitute a cause of action. The demurrer is overruled. While each ground assigned has been considered, none of the points raised require further discussion other than those relating to defendants Chambers. In this connection, the demurrer is predicated upon the failure of the complaint to allege that Hazeline B. Chambers executed any power *265 of attorney or other instrument authorizing Brooks to sell her land and upon the failure to allege the execution of the contract of sale by Osbia Chambers.

This action was brought against Brooks and process was served only on him. The defendants Chambers entered the case by voluntary general appearances. They adopted the answer of Brooks, which in turn speaks time after time of "the defendants." The answer is signed by counsel "for Defendants." In his voluntary general appearance, defendant Osbia Chambers "hereby agrees that he will fully comply with any judgment which may be rendered in the action entitled as above." Paragraph 16 of the complaint alleges that defendant Hazeline B. Chambers holds legal title to the land and that she is legally bound by the actions of Brooks. Defendants' answer to paragraph 16 admits in effect that Brooks had authority to execute the contract he made with plaintiff, but defendants characterize such contract as an option rather than as a contract of sale. The Statute of Frauds, G.S. § 22-2, is not pleaded. In the trial below, defendants Chambers raised no question concerning their obligation to perform whatever agreement Brooks may have made concerning the land. Neither of them testified at the trial. It may be fairly implied that neither was present at the trial. The conclusion is inescapable from a study of the record that the land, as Brooks stated to plaintiff in his letter of 18 February, 1953, belonged to him and he caused the record title to be put in the name of Hazeline B. Chambers for purposes of his own. Although parties, neither Hazeline B. Chambers nor Osbia Chambers has asserted ownership of the land.

Defendants' position in the trial below, as stated in the agreed statement of case on appeal, was as follows:

"The defendants contended that all of said writings and oral statements constituted an option to purchase the realty involved in which time was the essence of the agreement and failure to pay promptly forfeited all of the plaintiff's rights and that defendant (sic) breached said contract and thereby lost all of her rights."

No error prejudicial to defendants has been made to appear. Indeed, under the undisputed evidence, the result could hardly have been otherwise.

No error.

BARNHILL, C. J., took no part in the consideration or decision of this case.