Royster v. Hancock

Annotate this Case

69 S.E.2d 29 (1952)

235 N.C. 110


No. 742.

Supreme Court of North Carolina.

February 1, 1952.

*30 W. M. Hicks, Oxford, Ruark & Ruark, and Joseph C. Moore, Jr., all of Raleigh, for plaintiffs appellants.

T. G. Stem, Edward F. Taylor, Oxford, Marshall T. Spears, Durham, and Royster & Royster, Oxford, for defendant appellee.


The only question presented is, did plaintiffs make out a case sufficient to repel defendant's demurrer to the evidence and motion for judgment as of nonsuit? The facts impel an affirmative answer to this question.

The fact that the note in question is under seal raises the presumption of a good and sufficient consideration. Angier v. Howard, 94 N.C. 27; Wester v. Bailey, 118 N.C. 193, 24 S.E. 9; Lentz v. K. B. Johnson & Sons, 207 N.C. 614, 178 S.E. 226. The plaintiffs allege execution, delivery and nonpayment of the note. These "issuable facts" are admitted by the defendant and when so admitted become as effective as if established by a jury's verdict. McIntosh, 475, 476; Leathers v. Tobacco Co., 144 N.C. 330, 57 S.E. 11, 9 L.R.A.,N.S., 349; McCaskill v. Walker, 147 N.C. 195, 61 S.E. 46; Fleming v. Norfolk Southern R. R., 160 N.C. 196, 76 S.E. *31 212; Barbee v. Davis, 187 N.C. 78, 121 S.E. 176. This is true even when the defendant attaches to his admission certain qualifications. Cook v. Guirkin, 119 N.C. 13, 25 S.E. 715; Eames v. Armstrong, 142 N.C. 506, 55 S.E. 405.

By the introduction of the note, the execution and delivery of which are admitted in the answer, plaintiffs made out a prima facie case even though the note is not negotiable. Stronach v. Bledsoe, 85 N.C. 473; Carrington v. Allen, 87 N.C. 354; Hunt v. Eure, 188 N.C. 716, 125 S.E. 484; Hunt v. Eure, 189 N.C. 482, 127 S.E. 593; Roberts v. Grogan, 222 N.C. 30, 21 S.E.2d 829. When the plaintiff thus makes out a prima facie case, the defendant is put to the election of going forward with proof or take his chance of an adverse verdict. Speas v. Merchants Bank & Trust Co., 188 N.C. 524, 125 S.E. 398; Webster v. Wachovia Bank & Trust Co., 208 N.C. 759, 182 S.E. 333; Warren v. Pilot Life Insurance Co., 215 N.C. 402, 2 S.E.2d 17; Russ v. Western Union Telegraph Co., 222 N.C. 504, 23 S.E.2d 681.

The defendant in this case seeks to avoid liability upon the claim that the note is based on a gambling transaction and therefore there is a failure of consideration. This is a matter requiring the defendant to offer proof, or take his chance with the jury upon plaintiffs' prima facie case. G.S. § 25-33; Lentz v. K. B. Johnson & Sons, supra. He is permitted to show, if he can, a failure of consideration by parol evidence, for the presumption of fact arising in favor of plaintiff upon an introduction of a sealed note is rebuttable. Patterson v. Fuller, 203 N.C. 788, 167 S.E. 74; American Agricultural Chemical Co. v. Griffin, 202 N.C. 812, 164 S.E. 577; Taft v. Covington, 199 N.C. 51, 153 S.E. 597; Farrington v. McNeill, 174 N.C. 420, 93 S.E. 957.

The defendant invokes as a matter of avoidance and defense the principle set forth in C.S. 2144 (1919), now G.S. § 16-3, which provides that certain transactions, including trading in cotton futures and stocks where actual delivery is not intended, are illegal and void, and C.S. 2146 (1919) which provided that when the defendant in any action pending should allege specifically in his verified answer that plaintiff's cause of action was founded upon a contract made void by C.S. 2144, the burden of proof should be upon the plaintiff to show by proper evidence that the contract sued upon is a lawful contract. The defendant contends that the note sued upon arose out of transactions condemned by C.S. 2144 and that his verified answer setting up that fact has the effect of putting on the plaintiffs the duty of proving the validity of the transaction upon which the note is based. There would be force in this argument, except for the fact that C.S. 2146, the statute relied upon, was repealed by Chapter 236, Public Laws of 1931, and the further fact that the note sued upon is a contract executed and delivered on January 1, 1941, more than nine years after the repeal of said statute.

Defendant cites and relies upon Fenner v. Tucker, 213 N.C. 419, 196 S.E. 357, to support the position taken by him in this particular respect, but he apparently overlooks the fact that the contract sued upon in the Fenner case antedated the repeal of the statute. This distinction is clearly pointed out in the Fenner case and again in Cody v. Hovey, 216 N.C. 391, 5 S.E.2d 165.

It will be noted that the defendant makes no averment of any gambling or stock market transactions between himself and plaintiffs' testator after December 1929, nor does he make the assertion that the note upon which this suit is based is a renewal of any prior note. He does, however, admit the execution and delivery of the very contract upon which this suit is prosecuted, which contract postdates Chapter 236, Public Laws of 1931. Hence, plaintiffs' suit is completely relieved of the burden formerly imposed under C.S. 2146.

The language "as per our agreement" appearing in the note is merely "a statement of the transaction which gives rise to the instrument" and in nowise affects the validity of the note. G.S. § 25-9.

It is clear from the prevailing principles of law applicable to the facts here presented that the pleadings and plaintiffs' evidence make out a prima facie case sufficient to *32 repel defendant's demurrer to the evidence and withstand his motion for judgment as of nonsuit.

The judgment of the court below is


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