Childress v. Abeles

84 S.E.2d 176 (1954)

240 N.C. 667

Sid P. CHILDRESS v. Murray J. ABELES and Clarence A. Troutman, t/a Universal Company.

No. 666.

Supreme Court of North Carolina.

October 13, 1954.

*181 Thomas Turner, Greensboro, for plaintiff, appellee.

Womble, Carlyle, Martin & Sandridge, Winston-Salem, York & York, High Point, By: W. F. Womble, Winston-Salem, for defendants, appellants.

PARKER, Justice.

The defendants contend by their assignments of error that the lower court erred in overruling their demurrer ore tenus made during the introduction of evidence, in denying their motion for nonsuit, in admitting and excluding testimony, and in charging the jury. Before discussing their assignments of error, we advert to certain relevant principles of law.

"The right to make contracts is both a liberty and a property right." Coleman v. Whisnant, 225 N.C. 494, 35 S.E.2d 647, 656; Morris v. Holshouser, 220 N.C. 293, 17 S.E.2d 115, 137 A.L.R. 733. In consequence, the overwhelming weight of authority in this nation is that an action in tort lies against an outsider who knowingly, intentionally and unjustifiably induces one party to a contract to breach it to the damage of the other party. Bryant v. Barber, 237 N.C. 480, 75 S.E.2d 410; Coleman v. Whisnant, supra; Jones v. Stanly, 76 N.C. 355; cases collected in the annotations of 26 A.L.R.2d 1227 and 84 A.L.R. 43; 30 Am.Jur., Interference, Secs. 18-32; 86 C. J.S., Torts, § 44; Restatement of the Law of Torts, Sec. 766.

To subject the outsider to liability for compensatory damages on account of this tort, the plaintiff must allege and prove these essential elements of the wrong: First, that a valid contract existed between the plaintiff and a third person, conferring upon the plaintiff some contractual right against the third person. Eller v. Arnold, 230 N.C. 418, 53 S.E.2d 266; Winston v. Williams & McKeithan Lumber Co., 227 N.C. 339, 42 S.E.2d 218; Bruton v. Smith, 225 N.C. 584, 36 S.E.2d 9; Kirby v. Reynolds, 212 N.C. 271, 193 S.E. 412; Swain v. Johnson, 151 N.C. 93, 65 S.E. 619; 28 L. R.A.,N.S., 615; Holder v. Cannon Mfg. Co., 138 N.C. 308, 50 S.E. 681; Haskins v. Royster, 70 N.C. 601; 16 Am.Rep. 780. Second, that the outsider had knowledge of the plaintiff's contract with the third person. Sineath v. Katzis, 218 N.C. 740, 12 S.E.2d 671; Morgan v. Smith, 77 N.C. 37; Haskins v. Royster, supra. Third, that the outsider intentionally induced the third person not to perform his contract with the plaintiff. Holder v. Cannon Mfg. Co., 135 N.C. 392, 47 S.E. 481; Haskins v. Royster, supra; 30 Am.Jur., Interference, Sec. 22. Fourth, that in so doing the outsider acted without justification. Dulin v. Williams, 239 N.C. 33, 79 S.E.2d 213; Winston v. Williams & McKeithan Lumber Co., 228 N.C. 786, 47 S.E.2d 19; Bruton v. Smith, supra; Coleman v. Whisnant, supra; Holder v. Atlantic Joint-Stock Land Bank, *182 208 N.C. 38, 178 S.E. 861; Elvington v. Waccamaw Shingle Co., 191 N.C. 515, 132 S.E. 274; Biggers v. Matthews, 147 N.C. 299, 61 S.E. 55; Haskins v. Royster, supra. Fifth, that the outsider's act caused the plaintiff actual damages. Haskins v. Royster, supra; Watts Co. v. American Bond & Mortgage Co., 267 Mass. 541, 166 N.E. 713, 84 A.L.R. 12.

The outsider has knowledge of the contract within the meaning of the second element of the tort if he knows the facts which give rise to the plaintiff's contractual right against the third person. "If he knows those facts, he is subject to liability even though he is mistaken as to their legal significance and believes that there is no contract or that the contract means something other than what it is judicially held to mean." Restatement of the Law of Torts, Sec. 766(e). Justification imports "a sufficient lawful reason why a party did or did not do the thing charged, a sufficient lawful reason for acting or failing to act. It connotes just, lawful excuse, and excludes" legal "malice." 51 C.J.S. p. 421. As a consequence, the outsider acts without justification in inducing the breach of contract within the purview of the fourth element of the tort if he has no sufficient lawful reason for his conduct. Townsend v. United States, 68 App.D.C. 223, 95 F.2d 352; Louis Kamm, Inc., v. Flink, 113 N.J.L. 582, 175 A. 62, 99 A.L.R. 1; State v. Williams, 166 S.C. 63, 164 S.E. 415; Mercardo v. State, 86 Tex.Crim. 559, 218 S.W. 491, 8 A.L.R. 1312.

There are frequent expressions in judicial opinions to the effect that malice is requisite to liability in an action for inducing a breach of contract. It is not necessary, however, to allege and prove actual malice in the sense of personal hatred, ill will, or spite in order to make out a case for the recovery of compensatory damages against the outsider for tortiously inducing the breach of the third person's contract with the plaintiff. The term "malice" is used in this connection in its legal sense, and denotes the intentional doing of the harmful act without legal justification. Coleman v. Whisnant, supra; Holder v. Cannon Mfg. Co., supra; Morgan v. Smith, supra; Haskins v. Royster, supra; 30 Am. Jur., Interference, Sec. 23. Indeed, actual malice and freedom from liability for this tort may coexist. If the outsider has a sufficient lawful reason for inducing the breach of contract, he is exempt from liability for so doing, no matter how malicious in actuality his conduct may be. A "`"malicious motive makes a bad act worse, but it cannot make that wrong which, in its own essence, is lawful."'" Bruton v. Smith, supra [225 N.C. 584, 36 S.E.2d 10]; Holder v. Atlantic Joint-Stock Land Bank, supra; Biggers v. Matthews, supra. For this reason, actual malice is ordinarily material in an action for inducing a breach of contract only on the issue of whether punitive damages should be awarded. Reichman v. Drake, 89 Ohio App. 222, 100 N.E.2d 533. See, also, in this connection Wright v. Harris, 160 N.C. 542, 76 S.E. 489. Notwithstanding it is not an element of the cause of action, actual malice may negative the existence of justification in a particular case. This is true because the outsider is never justified in inducing a breach of contract solely for the purpose of visiting his personal hatred, ill will, or spite upon the plaintiff. Restatement of the Law of Torts, Sec. 766(m).

In enumerating the essential elements of the tort, we omitted the use of the term "legal malice" to achieve simplicity of statement and promote clearness of comprehension. Legal "`malice is proved if it appears that the defendant with knowledge of the contract intentionally and without justification induced one of the contracting parties to break it'". Meadowmoor Dairies v. Milk Wagon Drivers' Union, 371 Ill. 377, 21 N.E.2d 308, 313; Anderson v. Moskovitz, 260 Mass. 523, 157 N.E. 601. Hence, malice in a legal sense is necessarily present in all cases where the second, third, and fourth elements of the tort exist.

The accepted rule with us is to construe liberally a complaint with every reasonable intendment and presumption in favor of the pleader. The complaint must be *183 fatally defective before its total rejection. Winston v. Williams & McKeithan Lumber Co., supra; Scott v. Statesville Plywood & Veneer Co., 240 N.C. 73, 81 S.E.2d 146.

The complaint in substance alleges the existence of a valid contract between the plaintiff and the Trogdon Furniture Co., conferring on plaintiff contractual rights against the Trogdon Furniture Co.; that the defendants had knowledge of this contract; that plaintiff had fully performed and was entitled to the full commissions, and the defendants intentionally and without justification induced the Trogdon Furniture Company not to perform its contract with the plaintiff to the plaintiff's actual damage. The allegations of the complaint, as amended, contain all the essential allegations necessary to recover damages for wrongfully inducing a breach of contract, and the lower court was correct in overruling the defendants' demurrer ore tenus.

The defendants contend that they were entitled to judgment of nonsuit on these grounds: One, the defendants were acting in the exercise of an absolute right; Two, the plaintiff failed to prove the existence of a valid and enforceable contract between himself and the Trogdon Furniture Company because there was no consideration for the contract; that it was indefinite and uncertain, and that it was unenforceable by reason of the Statute of Frauds; Three, because the contract was terminable at will.

As to the defendants' contention that they were acting in the exercise of a lawful right, because the plaintiff was acting in competition with them. If the plaintiff was in competition with the defendants, the defendants would be justified in interfering. The evidence considered in the light most favorable to the plaintiff tended to show that the plaintiff had a valid contract with the Trogdon Furniture Company, that the defendants had actual knowledge of this contract, and intentionally and without justification induced the Trogdon Furniture Company not to perform its contract with him, and that he did not act in competition with defendants. A close reading of the entire evidence and the charge of the court shows that the case was tried below on these conflicting contentions, supported by evidence, and the jury decided in favor of the plaintiff.

The defendants contend there was no consideration for plaintiff's contract with the Trogdon Furniture Company. The plaintiff's evidence tends to show these facts: The defendants had a conversation with the plaintiff relative to procuring a contract from a manufacturer to make television cabinets and stands for them, and at that time the defendant Abeles said to plaintiff, if he could secure a manufacturer to make goods for them "I'll see that you get commissions and I'll not interfere in your commissions in any way." When negotiations were initiated between the defendants and the furniture company, the defendants said the furniture company was to pay commissions to plaintiff. When the controversy arose between the plaintiff and the defendants over $256 owed plaintiff by defendants on a transaction not connected with plaintiff's or defendants' contract with the furniture company, both defendants being present, the defendant Abeles said to plaintiff, "if you sue me, I'll knock you out of thousands of dollars worth of commissions." The defendant Abeles said on cross-examination: "I knew Mr. Childress was to get a commission if the deal was consummated. I know that he got a commission for a while. I know Mr. Trogdon stopped it, because Mr. Troutman and I asked him to stop it." When the question arose as to whether the furniture company would make goods of a different design for defendants at a certain price, the furniture company told the defendants they could not at that price, unless the plaintiff's commissions were reduced. The furniture company saw plaintiff, who reduced his commissions, and the goods were made. Ray Trogdon testified when negotiations first started with the defendants, both defendants said he, Trogdon, was to pay commissions to plaintiff. This evidence tends to show that the agreement of the Trogdon Furniture Company, to pay *184 commissions to the plaintiff was in contemplation of the plaintiff, the defendants and the Trogdon Furniture Company, when the contract was made between the defendants and the furniture company, and between plaintiff and the furniture company. Such evidence necessarily means that the agreement to pay the commissions to plaintiff was intended at the time of the execution of the contract between the defendants and the Trogdon Furniture Company as a part of the consideration for the contract, and the contract was a valid consideration for the promise to pay the commissions. It was not a past consideration. Bryant v. Hayes, 63 Ga.App. 440, 11 S.E.2d 360; Id., 66 Ga.App. 221, 17 S.E.2d 765; 1 Williston on Contracts, Sec. 142, Rev.Ed.

Ray Trogdon, president of the Trogdon Furniture Company, a witness for plaintiff, testified on cross-examination: "Any agreement was personal between me and Mr. Childress as my employee. There was nothing said between Mr. Childress and me as to how long I was going to pay him commissions. I felt at liberty to terminate my relationship at any time I saw fit. It was up to him and myself." The commissions were to be paid on sales to the defendants. The rate of commissions was fixed. This contract is terminable at will. Phillips Lumber Co. v. Smith, 7 Ga.App. 222, 66 S.E. 623; Kirby v. Reynolds, supra; Elmore v. Atlantic Coast Line R. Co., 191 N.C. 182, 131 S.E. 633, 43 A.L.R. 1072; Richardson v. Wilmington & W. R. Co., 126 N.C. 100, 35 S.E. 235; Williston on Contracts, Rev.Ed., Vol. 1, Sec. 39. The contention of defendants that plaintiff's contract is too indefinite and uncertain is not tenable. The law does not favor the destruction of contracts on such ground. Fisher v. John L. Roper Lumber Co., 183 N.C. 485, 111 S.E. 857, 35 A.L.R. 1417; Chew v. Leonard, 228 N.C. 181, 44 S.E.2d 869.

The fact that plaintiff's contract with the Trogdon Furniture Company was terminable at will is not available as a defense to the defendants. Mr. Justice Hughes said in Truax v. Raich, 239 U.S. 33, 36 S. Ct. 7, 9, 60 L.Ed. 131: "The fact that the employment is at the will of the parties, respectively, does not make it one at the will of others * * * by the weight of authority, the unjustified interference of third persons is actionable although the employment is at will." See also Anno. 84 A.L.R., p. 60 at f, where the authorities are assembled; 30 Am.Jur., Interference, p. 78.

Elmore v. Atlantic Coast Line R. Co., supra, and Richardson v. Wilmington & W. R. Co., supra, relied upon in defendants' brief, are not in point. Both were actions against the employer, not against third persons. In Kirby v. Reynolds, supra, relied upon by defendants, the facts are different; the plaintiff was sui juris and voluntarily resigned his employment.

The defendants contend also that the plaintiff's action should have been nonsuited because the agreement between plaintiff and the Trogdon Furniture Company was entered into in Georgia, and that Sec. 20-401 and Subsection 5 of said section of the Georgia Code Ann. provides that any agreement (except contracts with overseers) that is not to be performed within one year from the making thereof to be binding on the promisor, the promise must be in writing, signed by the party to be charged therewith, or some person by him lawfully authorized.

This contention of the defendants is without validity. The overwhelming weight of authority is that the defense of the Statute of Frauds is personal to the parties to the contract, and such a defense is not available to strangers to the agreement. Georgia and North Carolina decisions are in accord with the general rule. Saunders v. Sasser, 86 Ga.App. 499, 71 S.E.2d 709; Gilbert Hotel No. 22, Inc. v. Black, 67 Ga.App. 221, 19 S.E.2d 796; Waynesboro Planing Mill v. Perkins Mfg. Co., 35 Ga.App. 767, 134 S.E. 831; Harry's Cadillac-Pontiac Co. v. Norburn, 230 N.C. 23, 51 S.E.2d 916; Maney v. Andrews Tanning Extract Co., 194 N.C. 736, 140 S.E. 738; Cowell v. Phoenix Ins. Co., 126 N.C. 684, 36 S.E. 184, 37 C.J.S., Frauds, *185 Statute of § 220a; 49 Am.Jur., Statute of Frauds, Sections 588, 589 and 591.

The defendants further contend that plaintiff has no cause of action against them for the recovery of actual damages because the plaintiff still has his cause of action against the Trogdon Furniture Company for damages for breach of the contract to pay him commissions. This contention has been rejected by the great majority of courts which have passed on the question. The fact that "A" also has a cause of action against "B" for breach of contract does not prevent his having a cause of action in tort against a third person who wrongfully and without justification induces "B" to breach the contract with "A". Lien v. Northwestern Engineering Co., S. D., 39 N.W.2d 483; Louis C. Moser & Co. v. Kremer, 192 Misc. 85, 80 N.Y.S.2d 199; Frischman v. Metropolitan Tobacco Co., 199 Misc. 844, 104 N.Y.S.2d 446; Phillips & Benjamin Co. v. Ratner, 2 Cir., 206 F.2d 372; Hornstein v. Podwitz, 254 N.Y. 443, 173 N.E. 674, 84 A.L.R. 1; Harvey Corporation v. Universal Equipment Co., 158 Fla. 644, 29 So. 2d 700.

The defendants' motion for judgment of nonsuit was properly overruled.

The defendants in their brief have four assignments of error as to the court's rulings upon the evidence. They cite no authorities in support of their argument as to these assignments of error. We deem it necessary to discuss only one.

The court declined to admit in evidence a letter dated 26 July 1949 written by the Trogdon Furniture Company, apparently in response to the defendants' letter of 22 July 1949 to it. On 22 July 1949 the defendant Troutman wrote to the Trogdon Furniture Company in substance: The plaintiff and the defendants have reached a parting of the ways, as he has attempted to go into competition with us; for this reason we must decline to do any further business with you through Mr. Childress. The pertinent part of the letter of the Trogdon Furniture Company in reply follows: "Your announcement of a severance of all relations between you is somewhat shocking. Also, to have you tell me he is in competition with both you and ourselves is something he certainly has not discussed with me whatever. * * * As for our bringing to a close our deal with Mr. Childress, we don't see how this will be possible, legally or morally, as we are dealing with him strictly on a commission basis. This, of course, can be stopped by you by writing both of us, and indicating in your letters that a copy is being mailed to both ourselves and to him. In such announcement you could set out that from this date on any new business placed with us would be on a no-commission basis to Mr. Childress, or anyone else. We could then accept your new proposition on your terms." Plaintiff introduced in evidence the defendants' letter of 22 July 1949 to the Trogdon Furniture Company.

The evidence in the Record shows that the defendants had full knowledge of the facts which gave rise to the plaintiff's contractual right against the Trogdon Furniture Company, and full knowledge that the Trogdon Furniture Company was paying the plaintiff commissions on the goods manufactured and sold by it to them. Acting with this knowledge they knew that their acts in wrongfully inducing the Trogdon Furniture Company to breach its contract with plaintiff would be highly injurious to him. There is no evidence in the Record that the defendants followed the suggestion in the Trogdon Furniture Company's letter that the payment of commissions could be stopped by writing both the Trogdon Furniture Company and plaintiff, and indicating in their letters that a copy is being mailed to both ourselves and to him; and the failure of defendants to write a letter as suggested would seem to indicate that the defendants acted wrongfully, without justification and with actual malice. In our opinion the exclusion of this evidence was not prejudicial to defendants.

If the defendants had contended that this letter was competent to negative actual malice on their partno such contention *186 is made in their briefits exclusion was harmless, for the jury awarded no punitive damages.

We have carefully read the court's charge to the jury in its entirety with particular attention to the defendants' exceptions and their argument and the authorities set forth in their brief, and are unable to perceive any prejudicial error therein which would justify the award of a new trial.

All the defendants' assignments of error are overruled. The jury's verdict and the judgment thereon will not be disturbed.

No error.

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