Wilson v. McClenny

152 S.E.2d 529 (1967)

269 N.C. 399

S. E. WILSON v. G. Gay McCLENNY, D. F. McDavid, Walter G. Mason and William M. McClenny.

No. 283.

Supreme Court of North Carolina.

February 3, 1967.

*531 Battle, Winslow, Merrell, Scott & Wiley, by Robert M. Wiley, Rocky Mount, for plaintiff appellee.

Bridgers, Horton & Britt, Tarboro, and Dill & Fountain, by Thomas G. Dill, Rocky Mount, for defendant appellants.

HIGGINS, Justice.

The pleadings before the Court at the first trial are carefully analyzed and the evidence thereon reviewed in detail by Justice Sharp on the first appeal. Wilson v. McClenny, 262 N.C. 121, 136 S.E.2d 569. With respect to the questions therein answered, that opinion is the law of the case.

The former decision established the paper writing dated November 21, 1958, as the valid contract of the parties. A copy was attached to the complaint and the original was introduced in evidence, and its due execution was admitted. Judge Bone, therefore, correctly instructed the jury to answer the first issue, Yes. Likewise, the former opinion holds as a matter of law that further defenses 1, 2 and 3 set up in the defendants' answer are not sufficient to invalidate the contract nor to relieve the defendants of responsibility under it. Hence, only the fourth further defense was available to the defendants.

Our former decision correctly holds, "If defendants are to be released from their obligations under the agreement they must establish their fourth defense, i. e., that plaintiff failed to perform his duties as president because of alcoholism." On the basis of this holding, Judge Bone submitted issue No. 2. However, after the case was remanded to the Superior Court for a new trial on the first cause of action, and before the second trial, Judge Bundy, in his discretion, allowed the defendants to amend their fourth further defense. The Judge in term, in his discretion, may allow *532 amendments. Chappell v. Winslow, 258 N.C. 617, 129 S.E.2d 101. The amended version is quoted in the statement of facts.

At the time of the amendment, on plaintiff's motion, the court ordered the defendants to file a bill of particulars. With this order they complied, alleging, among other things, that plaintiff as president had paid more than $6,000.00 of company funds "to individuals or corporations as unauthorized rebates or commissions in excess of that which is allowed by law and proper insurance practices." The bill of particulars gives the date, the amount, the payee of each check, and sometimes the account for which it purported to be in payment. Some of these checks were marked for furniture and office equipment. No such account appears to have been set up on the books; and no such equipment was present or listed in the company's supplies. The defendants charged that the plaintiff used these company funds for unlawful rebates and not for furniture and equipment.

By reply, the plaintiff alleged the defendants knew about the rebates and the giving of company checks to pay them; and that they participated in, and in some instances initiated the payments. He pleaded this knowledge and participation as an estoppel and as a bar to the defendants' right to assert them as acts of justification for the breach of their contract to vote for him as president.

If the jury should find the plaintiff was guilty of such mismanagement of the company business as disqualified him to discharge the duties of President, the finding would absolve them of liability under their contract even though the acts of mismanagement were committed while the plaintiff was sober.

From the foregoing it seems clear that the amended fourth further defense alleges mismanagement in addition to the excessive use of alcohol as a bar to the plaintiff's right to recover. At first blush, it appears this additional charge of mismanagement is embraced in the third issue which the Judge submitted. However, Judge Bone instructed the jury as follows: "So I charge you that if you answer the second issue, Yes, then you should answer the third issue, No. But if you have answered the second issue, No, then you would answer the third issue, Yes."

The foregoing is equivalent to a peremptory instruction to decide both issues on the finding with respect to the plaintiff's excessive use of alcohol. When the jurors answered the first issue No, the instruction compelled them to answer the third issue, Yes. Mismanagement sufficient to warrant discharge or the refusal to re-employ would be a good defense regardless of the use of alcohol.

We are doubtful whether the plea of estoppel raised by the plaintiff's reply is good. The plaintiff and the three defendants were not the only stockholders of the company. All had a duty to the other stockholders, to the company's creditors, and to its policy holders to see to it that the company was not mismanaged. Any participation in mismanagement would be a breach of trust. Perhaps neither the defendants' knowledge nor even their participation in the mismanagement would compel them to vote for one whose conduct rendered him disqualified. These are matters to be considered by the court when the evidence is in and the issues are to be determined.

We are submitting these views for the consideration of the trial judge in determining the issues at the next trial. The court will submit such issues as are raised by the pleadings and supported by the law and the evidence. G.S. § 1-200; Carland v. Allison, 221 N.C. 120, 19 S.E.2d 245; King v. Coley, 229 N.C. 258, 49 S.E.2d 648; Wheeler v. Wheeler, 239 N.C. 646, 80 S.E.2d 755. All material issues must be tried unless waived, and it is error not to try them. Porter v. Western N. C. R. Co., 97 N.C. 66, 2 S.E. 581. The rule applies to new matter alleged in the answer. Griffin v. United Service Life Ins. Co., 225 N.C. 684, 36 S.E.2d 225.

*533 The court's charge that issue No. 3 should be answered, Yes, if the jury answered issue No. 2, No, was error in that it took away from the defendants their charge of mismanagement raised by their amended fourth further defense.

This case was first tried in September, 1963, and again in June, 1966. Between these two dates a mistrial was ordered in the Superior Court. We regret the necessity of returning the case for another trial; however, the peremptory instruction took from the defendants their defense of mismanagement and the violation of proper insurance practices alleged in the amended fourth further defense. Such mismanagement may be found to be a complete defense even if the plaintiff was always sober. For this error, we order a

New Trial.