Mangum v. Surles

187 S.E.2d 697 (1972)

281 N.C. 91

Mavie M. MANGUM, Trustee for Mary B. Matthews v. Derry Thomas SURLES and wife, Minnie Marie Matthews Surles.

No. 7.

Supreme Court of North Carolina.

April 12, 1972.

*699 Bryan, Jones, Johnson, Hunter & Greene, by K. Edward Greene, Dunn, for plaintiff appellant.

Samuel S. Stephenson, Angier, and David K. Stewart, Dunn, for defendant appellees.

SHARP, Justice:

Plaintiff's assignments of error raise two questions for consideration: Did the trial judge err (1) in denying plaintiff's motion to amend her complaint to allege fraud in conformity with the evidence and (2) in refusing to submit the issue whether defendants had fraudulently obtained plaintiff's signature to the deed in suit.

The threshold question is whether the Court of Appeals erred in holding that the *700 record contained no evidence tending to show that defendants procured the execution of the deed by fraud. Obviously, if plaintiff produced no such evidence, the proposed amendment and issue were properly refused. However, we are at a loss to understand this ruling by the Court of Appeals or defendants' contention, stated in their brief, that plaintiff offered "not a scintilla of evidence" to show fraud on the part of the defendants. Plaintiff testified that defendants, after asking her "to ride around with them" took her to Mr. Stephenson's law office on 25 March 1969. There D. T. asked her to sign a $500.00 note for him. She signed because he and his wife had always been good to her; that no one ever told her she was signing a deed and, so far as she knows, she never did.

Plaintiff's testimony, the stipulation that defendants paid no monetary consideration for the deed, the evidence tending to show plaintiff's impaired mental and physical condition and that defendants "claimed they were looking after her," were more than sufficient to make out a prima facie case of fraud in the factum. Mills v. Lynch, 259 N.C. 359, 130 S.E.2d 541 (1963); Furst v. Merritt, 190 N.C. 397, 130 S.E. 40 (1925). See Wall v. Ruffin, 261 N.C. 720, 136 S.E.2d 116 (1964). If her testimony was not true, its falsity was peculiarly within defendants' knowledge; yet neither they, nor any of the persons connected with the execution of the deed, took the stand to contradict plaintiff. See Maxwell v. Procter & Gamble Distributing Co., 204 N.C. 309, 316, 168 S.E. 403, 406 (1933), and cases there cited.

The two questions raised by this appeal are so interrelated they must be treated as one.

In addition to her lack of mental capacity, plaintiff alleged that the manner and circumstances by which defendants obtained her signature to the challenged deed "constituted a fraudulent act." She did not, as required by G.S. § 1A-1, Rule 9(b), state "with particularity" the circumstances constituting the alleged fraud. Rule 9(b) codifies the requirement previously existing in our State practice that the facts relied upon to establish fraud, duress or mistake must be alleged.

Prior to 1 January 1970, the effective date of the Rules of Civil Procedure, absent allegations of fact which would constitute fraud if true, evidence of fraudno matter how complete and convincingcould not be submitted to the jury. Proof without allegation was as ineffective as allegation without proof. Eastern Steel Products Corporation v. Chesnutt, 252 N.C. 269, 113 S.E.2d 587 (1960); Calloway v. Wyatt, 246 N.C. 129, 97 S.E.2d 881 (1957); Colt Co. v. Kimball, 190 N.C. 169, 129 S.E. 406 (1925); 1 McIntosh, N. C. Practice and Procedure § 990 (2d Ed. 1956). Under this rule, a case which had been tried upon its merits, and judgment entered upon the jury's verdict, could be dismissed in the Supreme Court upon a demurrer ore tenus to the complaint. Howze v. McCall, 249 N.C. 250, 106 S.E.2d 236 (1958).

Under the former procedure, because of plaintiff's failure to allege fraud with particularity, Judge Hall's refusal to permit the amendment tendered at the close of the evidence and to submit the issue of fraud would have been unassailable. However, to eliminate the waste, delay, and the injustice which sometimes resulted from belated confrontations between insufficient allegations and plenary proof, Rule 15(b) was enacted. Its first two sentences control this case: "When issues not raised by the pleadings are tried by the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, either before or after judgment, but failure so to amend does not affect the result of the trial of these issues."

*701 Dean Dickson Phillips' comments on Rule 15(b), which are quoted in full in Roberts v. William N. and Kate B. Reynolds Memorial Park, 281 N.C. 48, 187 S.E.2d 721, include the following pertinent statements: "A party who fails to object to evidence is of course initially presumed to have given `implied consent' by silence. He can avoid the effect only by satisfying the court that under the circumstances, his consent to having certain issues considered by the trier of fact should not be implied from his failure to object to particular evidence. This may be a most difficult position to sustain. Counsel cannot in prudence under this rule fail to object to any evidence which seems even remotely to be opening up issues not raised by the pleadings." Phillips, 1970 Supplement to 1 McIntosh, N.C. Practice & Procedure § 970.80.

Rule 15(b), except for one minuscule, immaterial phrase, is a verbatim copy of Federal Rule 15(b); so federal decisions interpreting this rule are apposite. Sutton v. Duke, 277 N.C. 94, 176 S.E.2d 161 (1971). Illustrative cases analogous to the one under consideration are discussed and cited below.

In Slavitt v. Kauhi, 384 F.2d 530 (9th Cir. 1967), in a suit against the owners of the Barefoot Bar and two of its employees, plaintiff alleged that Kapana, one of the employees, maliciously threw him down a flight of steps. The plaintiff's evidence showed that Kapana left him in a drunken condition at the top of a flight of stairs and that he was injured when he fell down the stairway. The trial judge refused the plaintiff permission to amend in order to conform pleadings to proof and declined to submit the issue of negligence. On appeal, the court held that Rule 15(b) required the judge to allow the requested amendment and to instruct the jury that it could predicate a verdict for the plaintiff upon the negligence of Kapana, if they found "such to have been the fact." Accord, Bradford Audio Corporation v. Pious, 392 F.2d 67 (2d Cir. 1968) (official immunity not pleaded, but evidence of it considered); United States Fidelity & Guaranty Co. v. United States, 389 F.2d 697 (10th Cir. 1968); Mazer v. Lipshutz, 360 F.2d 275 (3d Cir. 1966) (although release given by plaintiff to an alleged joint feasor not pled, evidence considered and case decided on merits); Zappia v. Baltimore & Ohio Railroad Company, 312 F.2d 62 (6th Cir. 1963) (although contributory negligence not pleaded, under the evidence, issue properly tried by court); Hasselbrink v. Speelman, 246 F.2d 34 (6th Cir. 1957) (sudden emergency not pleaded but evidence thereof required judge to submit issue to jury.)

In Hester v. New Amsterdam Casualty Company, 287 F. Supp. 957 (D.S.C.1968), involving the issue of fraud, the court said: "Rule 15(b) also applies to fraud when the issue as to its existence is tried by the implied consent of the parties. It is proper for the court to treat the issue of fraud as if it had been raised in the pleadings." Id. at 972. Accord, United States v. Cushman, 136 F.2d 815 (9th Cir. 1943).

In J. C. Millett Co. v. Distillers Distributing Corp., 258 F.2d 139 (9th Cir. 1958), after specific and uncontradicted evidence establishing a breach was introduced, the plaintiff moved to amend its complaint to conform to this proof. The trial judge's denial of the motion was reversed on appeal. The court emphasized that Rule 15 (b) requires that leave to amend be freely granted unless the objecting party satisfies the court that the amendment will prejudice him upon the merits. Accord, Cramer v. Hoffman, 390 F.2d 19 (2d Cir. 1968); Lomartira v. American Automobile Insurance Co., 371 F.2d 550 (2d Cir. 1967); United States v. Stephen Brothers Line, 384 F.2d 118 (5th Cir. 1967); Securities and Exchange Commission v. Rapp, 304 F.2d 786 (2d Cir. 1962); Decker v. Korth, 219 F.2d 732 (10th Cir. 1955); Watson v. Cannon Shoe Co., 165 F.2d 311 (5th Cir. 1948); Bradford Audio Corporation v. Pious, supra.

The foregoing decisions establish that where no objection is made to evidence on the ground that it is outside the *702 issues raised by the pleadings, the issue raised by the evidence is nevertheless before the trial court for determination. The pleadings are regarded as amended to conform to the proof even though the defaulting pleader made no formal motion to amend. Failure to make the amendment will not jeopardize a verdict or judgment based upon competent evidence. If an amendment to conform the pleadings to the proof should have been made in order to support the judgment, the Appellate Court will presume it to have been made. However, amendments should always be freely allowed unless some material prejudice is demonstrated, for it is the essence of the Rules of Civil Procedure that decisions be had on the merits and not avoided on the basis of mere technicalities. See 3 Moore's Federal Practice § 15.13 (1968).

In this case plaintiff was entitled as a matter of law to have the issue of fraud submitted. It follows, therefore, that she was also entitled as a matter of law to amend her complaint to conform her pleadings to the evidence. Since there must be a new trial, orderly procedure, compliance with Rule 9(b), and good technique now require that the amendment actually be made. In the situation where an issue not raised by the pleadings has been tried by express or implied consent, answered by the jury or the judge, and the judgment rendered on the verdict has been affirmed on appeal, the failure to amend should not, and does not, affect the results of the trial which has been had upon the merits. The litigation is ended. When, however, a retrial is ordered for failure to submit the issues raised by the evidence but not by the pleadings, failure of the court to allow an amendment in order to conform the pleadings to the proof, or when a dismissal or directed verdict is erroneously entered upon the ground of a fatal variance between allegation and proof, as pointed out by Justice Branch in Roberts v. Reynolds, ante, practical considerations intervene. The judge who presides at the trial is entitled to know the theory and the state of the case confronting him without having to review the transcript of the case on appeal. Where the rules require specificity or affirmative pleading the pleadings should conform to the evidence, and there can be little justification for a failure to conform them during the interval between the decision on appeal and the retrial. The case is entitled to this protection.

The decision of the Court of Appeals is reversed. The cause will be remanded to the Superior Court for a trial de novo upon amended pleadings.

Reversed.