Mas Corp. v. Thompson

Annotate this Case

302 S.E.2d 271 (1983)

MAS CORPORATION, t/a and d/b/a Holiday-West Motel, Plaintiff, v. Ernest A. THOMPSON, t/a and d/b/a Thompson Sign Co., Defendant and Third-Party Plaintiff, v. Mahmood Ali SIDDIQUI and Shamshad Ali Siddiqui, Third-Party Defendant.

No. 8218SC344.

Court of Appeals of North Carolina.

May 3, 1983.

*274 Hugh C. Bennett, Jr., High Point, for plaintiff and third-party defendants-appellants.

Stern, Rendleman & Klepfer by John A. Swem, Greensboro, for defendant-appellee.

VAUGHN, Chief Judge.

Appellants' first four arguments are that the trial court erred in denying their motions for summary judgment and directed verdict, and in granting defendant's motion for directed verdict on two of appellants' claims. The purpose of summary judgment is to bring litigation to an early decision on the merits without the delay and expense of trial when no material facts are at issue. McNair v. Boyette, 282 N.C. 230, 192 S.E.2d 457 (1972). That purpose cannot be served after there has been a trial. Denial of a motion for summary judgment, therefore, should not be reviewable on appeal from a final judgment rendered on a trial on the merits. See Parker Oil Co. v. Smith, 34 N.C.App. 324, 237 S.E.2d 882 (1977); Annot., 15 A.L.R.3d 899, 922 (1967). Appellants present identical arguments for the trial court's allegedly erroneous denial of their motions for summary judgment and directed verdict. We shall consider their argument only with respect to the denial of their motion for a directed verdict. Upon motion for a directed verdict, all the evidence which tends to support the nonmovants' case against it must be taken as true and viewed in the light most favorable to the nonmovant, the nonmovant is entitled to the benefit of every reasonable inference which may be reasonably drawn from the evidence, and the motion may be granted only if, as a matter of law, the evidence is insufficient to grant a verdict for the nonmovant. Kelly v. International Harvester Co., 278 N.C. 153, 179 S.E.2d 396 (1971). Any party may move for a directed verdict at the close of all the evidence. G.S. 1A-1, Rule 50(a). The court may direct a verdict for the party with the burden of proof when the credibility of the movant's evidence is manifest as a matter of law. North Carolina National Bank v. Burnette, 297 N.C. 524, 256 S.E.2d 388 (1979). Appellants assign as error the trial court's denial of their motion for a directed *275 verdict on three grounds. They contend that their motion for directed verdict should have been granted because the contract required Thompson to use sections of the former Holiday Inns sign so as not to infringe on the Holiday Inns trademark.

The general rule is that when a written contract is unambiguous the interpretation is a question of law, but when the terms of the contract are ambiguous it is for the jury to ascertain the meaning. Goodyear v. Goodyear, 257 N.C. 374, 126 S.E.2d 113 (1962). The following language "It is understood that sections of the above described sign will be from former sign, used so as not to infringe on Holiday Inn trade-mark" is ambiguous for three reasons. First, there is no promise by either party. The sentence began "It is understood," which, when viewed in the light most favorable to Thompson, does not clearly indicate that Thompson was promising anything.

Second, there was conflicting evidence as to the parties' intentions. Obviously, a contract should be construed, whenever possible, to give effect to the intentions of the parties. Adder v. Holman & Moody, Inc., 288 N.C. 484, 219 S.E.2d 190 (1975). Thompson said, in his deposition, that he included that sentence for two reasons: to let Siddiqui know that the sign would contain used materials, and to let him know that the Holiday Inns trademark would not be used. According to Siddiqui, the sentence was included so as to hold Thompson responsible for furnishing signs satisfactory to Holiday Inns. Since there is conflicting evidence of the parties' intentions, the interpretation of the contract was a question of fact for the jury to decide.

Third, Siddiqui's subsequent conduct indicates he was engaged in a consistent pattern of misusing Holiday Inns trademarks. Subsequent conduct of the parties, after executing a contract, is admissible to show their intent. Heater v. Heater, 53 N.C.App. 101, 280 S.E.2d 19, review denied, 304 N.C. 194, 285 S.E.2d 99 (1981). Affidavits of two Holiday Inns employees show that in October 1980 and January 1981, more than a year after Siddiqui's franchise was terminated, Holiday Inns place mats, guest checks, towels, telephone facing strips, and commode cleanliness strips were found in Siddiqui's motel. These blatant infringements cast doubt on Siddiqui's assertion that Thompson promised not to infringe on the Holiday Inns trademark. Moreover, when Siddiqui asked Thompson to change the sign in December because of Holiday Inns' complaints he agreed to pay Thompson on a cost-plus basis, which indicates he did not consider Thompson liable for the infringements.

The above circumstances, which must be viewed in the light most favorable to Thompson, indicate there is ample evidence to grant a verdict in favor of the nonmovant, and the trial court did not err in denying the appellants' motions for a directed verdict.

Appellants argue that, notwithstanding any issues of material fact in the interpretation of the contract, their motion for directed verdict should have been granted because G.S. 25-2-312(3) requires Thompson to deliver the signs free from any claim of infringement. G.S. 25-2-312(3) provides:

Unless otherwise agreed a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any third person by way of infringement or the like but a buyer who furnishes specifications to the seller must hold the seller harmless against any such claim which arises out of compliance with the specifications. (Emphasis added.)

Again, viewing the evidence in the light most favorable to Thompson, it is clear that G.S. 25-2-312(3) does not apply in this case. Thompson's evidence tends to show that the parties agreed Siddiqui would be liable for any infringement. Even if it is unclear what, precisely, was "otherwise agreed", the statute only applies if nothing was said as to liability, and the other conditions are fulfilled. In this situation, where the parties thought they had agreed to something, what their agreement actually was is a question of fact for the jury.

*276 Appellants further argue that the trial court should have granted Siddiqui's motion for directed verdict because Thompson is barred from enforcing his lien against Siddiqui individually since Siddiqui was merely an agent of Holiday-West Motel. The rule, however, is that "[a]n agent who makes a contract for an undisclosed principal is personally liable as a party to it unless the other party had actual knowledge of the agency and of the principal's identity.... The duty is on the agent to make this disclosure and not upon the third person with whom he is dealing to discover it." Howell v. Smith, 261 N.C. 256, 258-259, 134 S.E.2d 381, 383 (1964). In Howell, plaintiff sued defendant for the balance due for petroleum products he sold defendant. Defendant alleged that he purchased the products as an officer of the corporation, so the corporation was solely liable for the debt. Defendant contended that five invoices and checks with the corporate name which he sent plaintiff gave plaintiff notice of the principal corporation. The Supreme Court disagreed, holding that the receipt of five statements, mailed in envelopes bearing the corporate name, and the individually signed checks with the corporate name printed on them were insufficient to establish actual knowledge that plaintiff was dealing with the corporation, not the individual defendant. Moreover, the court said "the use of a trade name is not as a matter of law a sufficient disclosure of the identity of the principal and the fact of agency." Howell v. Smith, 261 N.C. at 259, 134 S.E.2d at 384. Here, Thompson said, in his deposition, that Siddiqui "acted to me totally as an individual. He never referred to any corporation, any partner, any anything other than just him as an individual, is how I dealt with him." We find that since Thompson had no actual notice of the corporate principal, the use of "Holiday-West" on documents and correspondence does not preclude Thompson's recovery from Siddiqui individually.

Appellants also assign as error the trial court's granting Thompson's motion for a directed verdict on the claims of statutory warranty under G.S. 25-2-312(3), and unfair trade practices. We have already discussed why the statutory warranty was inapplicable in this case, and a directed verdict on this claim was appropriate. As to the claim of unfair trade practices, the statute, G.S. 75-1.1(a), provides: "Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful." A practice is unfair when it offends established public policy or when it is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers. Johnson v. Phoenix Mutual Life Insurance Co., 300 N.C. 247, 266 S.E.2d 610 (1980). The appellants' evidence, taken as true and viewed in the light most favorable to the appellants, shows no evidence that Thompson did anything which offended public policy or was immoral, unethical, oppressive, unscrupulous, or injurious. Appellants contend that Thompson was deceptive when he filled his name in the blank on the contract which said "architect". Absent any indication that appellants read it or relied on it in any way the jury could not find this to be an unfair or deceptive act. Moreover, in their verdict, the jury found that Siddiqui had assumed responsibility for infringement, so any error of the trial court in not submitting the issue of unfair trade practices was harmless. See Hendricks v. Hendricks, 273 N.C. 733, 161 S.E.2d 97 (1968).

We have carefully reviewed appellants' remaining assignments of error and find them to be without merit.

No error.

WEBB and EAGLES, JJ., concur.