Bryant v. Nationwide Mut. Fire Ins. Co.

• Decision Date: 07 May 1985
• Docket Number: No. 274PA84,274PA84
• Citation: 313 N.C. 362,329 S.E.2d 333
• Parties: Teddy Ray BRYANT and wife, Oma P. Bryant v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY.
• Court: North Carolina Supreme Court

Page 333

329 S.E.2d 333

313 N.C. 362

Teddy Ray BRYANT and wife, Oma P. Bryant v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY.

No. 274PA84.

Supreme Court of North Carolina.

May 7, 1985.

Gardner, Gardner, Johnson and Donnelly by Gus L. Donnelly, Mount Airy, for plaintiffs-appellees.

Petree, Stockton, Robinson, Vaughn, Glaze and Maready by W. Thompson Comerford, Jr., and G. Gray Wilson, Winston-Salem, for defendant-appellant.

FRYE, Justice.

This appeal presents two separate and distinct issues that are procedural in nature. The first issue is whether the Court of Appeals erred in reversing the trial court's entry of judgment notwithstanding the verdict in favor of defendant on two of the issues submitted to the jury. The answer is no. The second issue is whether the Court of Appeals erred in reversing the trial court's alternative grant of a new trial for defendant. The answer is yes.

FACTS

On 20 September 1980, defendant, Nationwide Mutual Fire Insurance Company, issued a fire insurance policy insuring the dwelling and contents owned by plaintiffs, Teddy Ray and Oma P. Bryant. The insured property was located near Pinnacle, within Stokes County. At approximately 4:30 a.m. on 14 April 1981, while plaintiffs' policy was in full force and effect, plaintiffs' insured dwelling and contents were totally destroyed by fire. The evidence at trial tended to show that Mr. Bryant had taken his family to his brother-in-law's house in Mt. Airy, approximately twelve miles from Pinnacle, the evening before. One of the reasons, according to Mr. Bryant, for going to Mt. Airy was to work on a painting job for a Mrs. Grover Hyatt; however, Mrs. Hyatt testified and denied ever hiring or even knowing Mr. Bryant. Plaintiffs were notified of the fire at approximately 6:30 a.m. the morning of 14 April 1981. At approximately 10:00 a.m. that same morning, a detective and arson expert with the State Bureau of Investigation arrived at the scene of the fire to investigate its origin and cause. It was the opinion of the SBI detective that the fire was incendiary in nature, i.e., a fire nonaccidental in nature and that is intentionally caused.

Roger Cranford, a large loss adjuster for Nationwide, testified that he was contacted the following morning about the fire and that the fire was being investigated by the local authorities. After receiving a company report, Mr. Cranford contacted Mr. Bryant and conducted a recorded telephone interview on 16 April 1981. Mr. Bryant expressly consented to the interview being recorded. According to Mr. Cranford, the purpose of this interview was "to try and determine where the insured was, possibly how the fire happened, and financial conditions of the insured."

During this telephone interview, Mr. Bryant was asked general questions regarding his personal background and family, the approximate value of his home and its contents, circumstances surrounding the fire and its possible cause, and the value of his assets. Although he was not specifically asked to enumerate any debts, he was asked whether his mortgage was current and if he owed "anybody any money that they've come and asked you for...." Additionally, Mr. Bryant stated that he was married to Oma P. Bryant, when, in fact, he was still legally married to his first wife, Eunice. Teddy and Oma Bryant had lived together for fifteen years and were the parents of three children. In May 1982, approximately one year later, they did become legally married.

On or about 3 June 1981, plaintiffs prepared and submitted a proof of loss form to Nationwide. On the proof of loss form plaintiffs listed three mortgages, Bank of Pilot Mountain, J.R. Jessup, and Ronnie Bennett, as encumbrances on the insured property. No other portion of this form required that the insured list additional outstanding debts. Afterwards, on 1 July 1981, a sworn statement was obtained by Nationwide's attorney from both plaintiffs. During this question-and-answer period, plaintiffs estimated their debts to be approximately $22,293. This sum included the three mortgages that had previously been listed on plaintiffs' proof of loss form dated 3 June 1981, plus five outstanding judgments. Mr. Bryant also stated that he and Oma had never been legally married.

On 14 August 1981, plaintiffs instituted an action against Nationwide, claiming that defendant "has failed and refused to pay to the plaintiffs the amounts due to them under its policy of insurance; ..." Nationwide denied coverage in its answer and alleged inter alia that plaintiffs deliberately set the fire and made repeated material misrepresentations to defendant during investigation of the fire. Nationwide based its defense of misrepresentation on the answers given by plaintiffs during the foregoing interview sessions and the results of their independent investigations of the claim.

During May 1982, after this action was commenced and approximately five months prior to trial, Nationwide took the deposition of Mr. and Mrs. Bryant. These depositions were not introduced into evidence at trial but were referred to during cross- examination of plaintiffs. In this pre-trial deposition, Mr. Bryant revealed for the first time the existence of a disputed debt in the amount of $5,000 or $6,000 that he owed to a Mrs. Effie Stanley. At trial Mr. Bryant testified that the amount he owed to Mrs. Stanley should actually be reduced by $3,000 and offered the following explanation:

Mrs. Stanley wanted her son--none of her kids lived in the country near her, they all live in other states. She wanted to buy my house for her son. She paid me three thousand dollars to hold the house for her for a period of, I don't know, I think maybe sixty days. She gave me the three thousand dollars. Her son couldn't come up with the money to buy the house with, which I was not obligated to give her the three thousand back, but I decided it would be wrong for me to keep it. So I just considered myself owing her that three thousand back, ...

The evidence at trial further tended to show that prior to the fire Mr. Bryant actually owed an undisputed amount of approximately $27,000, ¹ comprised primarily of debts in excess of $25,000 previously revealed by plaintiffs during pre-trial interviews. Additional debts totaling approximately $1,300, which had not been referred to by plaintiff in earlier interviews, were disclosed at trial. At the close of plaintiff's evidence, defendant moved for a directed verdict, which was denied by the trial judge. At the close of all the evidence, both parties' motions for directed verdicts were denied. The trial judge submitted three issues to the jury, which were answered as follows:

1. Did the plaintiffs Teddy Ray Bryant and Oma P. Bryant burn or procure the burning of their dwelling?

ANSWER: NO

2. Did the plaintiffs Teddy Ray Bryant and Oma P. Bryant swear falsely or make material misrepresentations in connection with any matter pertinent to their claim for insurance proceeds?

ANSWER: NO

3. What amount of damages, if any, are the plaintiffs entitled to recover of the defendants?

(a) For real property $34,750

(b) For personal property $12,500

(c) For additional living expenses $ 0

After return of the jury verdict for plaintiffs, plaintiffs moved for judgment notwithstanding the verdict on issue 3(a), or in the alternative, for a new trial on that same issue. This motion was denied by the trial judge. Defendant's motions for judgment notwithstanding the verdict and a conditional new trial were allowed "as to the second and third issues on the ground that the verdict is contrary to the greater weight of the evidence and that defendant is entitled to judgment as a matter of law." Furthermore, the court ordered a new trial as to those two issues in the event that judgment notwithstanding the verdict in defendant's favor was subsequently vacated or reversed. Plaintiffs appealed to the Court of Appeals. That court reversed the judgment of the trial court and remanded the case with instructions that judgment for the plaintiffs be entered on the jury's verdict. Defendant filed a petition for rehearing with the Court of Appeals, which was denied. This Court subsequently granted defendant's petition for discretionary review pursuant to G.S. 7A-31.

I.

RULE 50

: JUDGMENT NOTWITHSTANDING THE VERDICT

Rule 50 of the North Carolina Rules of Civil Procedure is entitled: Motion for a directed verdict and for judgment notwithstanding the verdict. It provides in pertinent part as follows:

(b) Motion for Judgment Notwithstanding the Verdict.--

(1) Whenever a motion for a directed verdict made at the close of all the evidence is denied or for any reason is not granted, the submission of the action to the jury shall be deemed to be subject to a later determination of the legal questions raised by the motion. Not later than 10 days after entry of judgment, a party who has moved for a directed verdict may move to have the verdict and any judgment entered thereon set aside and to have judgment entered in accordance with his motion for a directed verdict; or if a verdict was not returned such party, within 10 days after the jury has been discharged, may move for judgment in accordance with his motion for a directed verdict. In either case, the motion shall be granted if it appears that the motion for directed verdict could properly have been granted....

Defendant argues that the Court of Appeals should not have reversed the trial judge's entry of judgment notwithstanding the verdict on the second and third issues pursuant to Rule 50(b) of the North Carolina Rules of Civil Procedure. The Court of Appeals did not directly address nor advance its reasoning for reversing the trial court's entry of judgment notwithstanding the verdict in favor of defendant. Although the Rule 59 motion in the alternative to set aside the verdict and for a new trial was dealt with in that court's opinion, the only apparent justification for reversing the Rule 50(b) motio...