Beacon Homes, Inc. v. Holt, 703

• Decision Date: 04 February 1966
• Docket Number: No. 703,703
• Citation: 146 S.E.2d 434,266 N.C. 467
• Parties: BEACON HOMES, INC. v. Shirley HOLT.
• Court: North Carolina Supreme Court

Page 434

146 S.E.2d 434

266 N.C. 467

BEACON HOMES, INC. v. Shirley HOLT.

No. 703.

Supreme Court of North Carolina.

Feb. 4, 1966.

Herbert B. Hulse and Sasser & Duke, Goldsboro, for plaintiff.

Elreta Melton Alexander, Greensboro, for defendant.

LAKE, Justice.

When the appeal was called for argument in this Court the defendant demurred ore tenus to the complaint on the ground that it failed to state a casue of action. Upon such a demurrer the complaint must be construed as a whole. Little v. Little, 205 N.C. 1, 169 S.E. 799. The allegations of the complaint are to be construed liberally in favor of the plaintiff and all reasonable inferences are to be drawn. Hargrave v. Gardner, 264 N.C. 117, 141 S.E.2d 36; Steele v. Locke Cotton Mills, 231 N.C. 636, 58 S.E.2d 620. If, when so construed, the complaint states a cause of action, in any view of it, the demurrer must be overruled. Burroughs v. Womble, 205 N.C. 432, 171 S.E. 616; Scott v. Aetna Life Insurance Co., 205 N.C. 38, 169 S.E. 801; Griffin v. Baker, 192 N.C. 297, 134 S.E. 651.

So construed, the complaint alleges that Mary Holt Richardson, mother of the defendant, contracted with the plaintiff for the construction by it of the house upon the lots in question, giving the plaintiff a warranty that she, Mary Holt Richardson, owned the land, in reliance upon which warranty the plaintiff, in good faith, constructed the house upon the land, improving its value by $3,300; that the defendant, who was and is the owner of the land, claimed ownership thereof and of the house after the construction was complete; the plaintiff thereupon offered to remove the building and restore the lots to their original condition but the defendant has refused to permit the plaintiff to do so; the defendant has assumed dominion over the house and has rented it to a tenant from whom she has collected rent; that the plaintiff has not been paid for the construction of the house and the defendant has been unjustly enriched to the extent of the improvement, in value, of her land.

Taking these allegations to be true, as we must upon a demurrer, they state a cause of action in favor of the plaintiff against the defendant for unjust enrichment. This right of action is not the same as the common law right, or the right under the statute, General Statutes, Chap. I, Art. 30, to claim for betterments when one, in possession of land under color of title, constructs permanent improvements thereon and is thereafter sued in ejectment by the true owner. That right was and is a defensive right. It accrues when an owner of the land seeks and obtains the aid of the court to enforce his right to possession. Board of Commissioners of Roxboro v. Bumpass, 237 N.C. 143, 74 S.E.2d 436. It applies only where the improvement was constructed by one who was in possession of the land under color of title and who, in good faith and reasonably, believed he had good title to the land. Pamlico County v. Davis, 249 N.C. 648, 107 S.E.2d 306; Harrison v. Darden, 223 N.C. 364, 26 S.E.2d 860; Rogers v. Timberlake, 223 N.C. 59, 25 S.E.2d 167; Faison v. Kelly, 149 N.C. 282, 62 S.E. 1086.

In Rhyne v. Sheppard, 224 N.C. 734, 32 S.E.2d 316, the plaintiff having acquired title to two lots in a real estate development, in good faith built a house on two other lots, believing them to be the lots described in his deed. He sued the true owner of the lots for the value of the improvement. Here, neither the common law nor the statutory right to betterments was applicable, for the improver was not being sued and had no color of title to the lots upon which the house was constructed. A demurrer by the defendant to the complaint was overruled, this Court, through Barnhill, J., later C. J., saying:

'* * * Plaintiff is not confined to a common law action for improvements, if indeed such right may be enforced by independent action. G.S. § 1-340. He may resort to the equitable doctrine of unjust enrichment frequently enforced under the doctrine of estoppel. If the complaint sufficiently states a cause of action under this principle of law, it must stand.

'Where a person has officiously conferred a benefit upon another, the other is enriched but is not considered to be unjustly enriched. The recipient of a benefit voluntarily bestowed without solicitation or inducement is not liable for their value. But he cannot retain a benefit which knowingly he has permitted another to confer upon him by mistake.

In the present case, the complaint does not allege facts sufficient to show an estoppel of the defendant by silently standing by and permitting the construction with knowledge of it. The complaint alleges that while the plaintiff was constructing the house upon her land 'the defendant Shirley Holt knew, or should have known, that the house was being erected upon such land.' This is not an allegation that she actually had such knowledge. She owed no duty to the plaintiff to maintain a watch upon her lot to see that no unauthorized person built a house upon it. Therefore, the allegation that she 'knew or should have known' that it was being built is not sufficient to charge her with actual knowledge thereof.

Neither can the complaint be sustained on the theory that by exercising dominion over the house and renting it to tenants the defendant ratified the contract made by her mother with the plaintiff. There can be no ratification unless the person making the contract professed to do so on behalf of the person claiming or claimed to be the principal. General Air Conditioning Co. v. Douglass, 241 N.C. 170, 84 S.E.2d 828; Rawlings v. Neal, 126 N.C. 271, 35 S.E. 597. The theory of the present complaint is that the defendant's mother contracted with the plaintiff on her own account, representing herself to be the owner of the land.

We are thus brought to the question of whether the plaintiff can maintain this action solely on the ground of unjust enrichment of the defendant through a bona fide mistake of fact by the plaintiff, which mistake is not induced by the conduct of the defendant.

The plaintiff did not construct the house believing itself to be the owner of the land. It did so believing the person with whom it contracted was the owner. The plaintiff could certainly have brought suit upon its contract against the defendant's mother with whom it made its contract. That right it has not lost by virtue of the defendant's ownership of the land. However, the plaintiff's mistake of fact as to the ownership of the land was a mistake as to the risk involved in contracting with the defendant's mother and it may be assumed that, but for that mistake, the house would not have been built upon the defendant's land.

The plaintiff does not seek in this action to hold the defendant liable for the payment of the contract price of the house, nor does it seek to recover from her its expenses in the construction. The right of a landowner to remove from his premises a structure placed thereon by a trespasser, innocently or otherwise, and to sue the trespasser for damages, including the cost of such removal, is not involved in this action. The question is, Can the owner of a lot upon which a house has been built by another, who acted in good faith under a mistake of fact, believing he had a right to build it there, keep the house, refuse to permit the builder to remove it so as to restore the property to its former condition enjoy the enhancement of the value of the property and pay nothing for the house? For the owner to do so is as contrary to equity and good conscience as it would be if the builder had believed itself to be the owner of the land. See: Rhyne v. Sheppard, supra.

In United States Fidelity and Guaranty Co. v. Reagan, 256 N.C. 1,...