Cunningham v. Brown

• Citation: 276 S.E.2d 718,51 N.C.App. 264
• Decision Date: 07 April 1981
• Docket Number: No. 801SC475,801SC475
• Court: Court of Appeal of North Carolina (US)
• Parties: Lance R. CUNNINGHAM and wife, Pamela H. Cunningham v. Louise Johnson BROWN.

Page 718

276 S.E.2d 718

51 N.C.App. 264

Lance R. CUNNINGHAM and wife, Pamela H. Cunningham v. Louise Johnson BROWN.

No. 801SC475.

Court of Appeals of North Carolina.

April 7, 1981.

Twiford, Trimpi, Thompson & Derrick by C. Everett Thompson, Elizabeth City, for plaintiff-appellant.

Leroy, Wells, Shaw, Hornthal, Riley & Shearin by L. P. Hornthal, Jr., Elizabeth City, for defendant-appellee.

WHICHARD, Judge.

We note initially that the court's order adjudicates fewer than all of the claims and adjudicates the rights and liabilities of fewer than all of the parties. Although defendant does not raise the issue of appealability, the appellate court should dismiss the appeal on its own motion if plaintiff-wife has no right to appeal. Waters v. Personnel, Inc., 294 N.C. 200, 240 S.E.2d 388 (1978). An order which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties is reviewable only under two sets of circumstances. First, Rule 54(b) specifically provides that if the judge entering the order determines that there is "no just reason for delay" and includes a statement to that effect in the judgment, the judgment will be final and immediately appealable. G.S. 1A-1, Rule 54(b). Second, if the interlocutory order "affects a substantial right" of the party appealing or "in effect determines the action and prevents a judgment from which an appeal might be taken" the party has a right to appeal under G.S. 1-277 or G.S. 7A-27. See Investments v. Housing, Inc., 292 N.C. 93, 232 S.E.2d 667 (1977); Newton v. Insurance Co., 291 N.C. 105, 229 S.E.2d 297 (1976); Oestreicher v. Stores, 290 N.C. 118, 225 S.E.2d 797 (1976); Leasing Corp. v. Myers, 46 N.C.App. 162, 265 S.E.2d 240 (1980) (contains a discussion of the North Carolina cases on appealability as affected by Rule 54(b) and a diagram for determining where a case fits within the appealability framework).

The order appealed from in the case sub judice does not state that the judge found no just cause for delay. Consequently, the order is not an immediately appealable "final judgment" under Rule 54(b); and we must determine whether it is appealable under G.S. 1-277 or G.S. 7A-27. G.S. 1-277 provides, in pertinent part:

(a) An appeal may be taken from every judicial order or determination of a judge of a superior or district court, upon or involving a matter of law or legal inference, whether made in or out of session, which affects a substantial right claimed in any action or proceeding; or which in effect determines the action, and prevents a judgment from which an appeal might be taken; or discontinues the action, or grants or refuses a new trial.

G.S. 1-277(a) (Supp.1979). Although the order here did not dispose of the entire lawsuit, it did dispose of all claims asserted by plaintiff-wife. Had plaintiff-wife not joined her claims against defendant with those of plaintiff-husband, the order granting summary judgment against her would have been a final judgment in the case. Because plaintiffs did join their claims, the order was interlocutory in the sense that it did not dispose of the cause as to all parties. See Veazey v. Durham, 231 N.C. 357, 361-362, 57 S.E.2d 377, 381 (1950). ¹ The order, however, denied plaintiff-wife a jury trial on her claim against defendant and, therefore, affected a substantial right. See Nasco Equipment Co. v. Mason, 291 N.C. 145, 229 S.E.2d 278 (1976). See also Industries, Inc., v. Insurance Co., 296 N.C. 486, 493, 251 S.E.2d 443, 448 (1979) (where the court discussed its holding in Nasco ). It "in effect determines the action" as to her claim against defendant. We hold, therefore, that the summary judgment dismissing plaintiff-wife's claim is immediately appealable under G.S. 1-277 and G.S. 7A-27.

The court based its rulings here on the release of plaintiff-husband, a Massachusetts resident, executed in the State of Massachusetts by plaintiff-wife, a Massachusetts resident, and delivered in that state to her husband's insurer. The parties have not raised the conflict of laws questions presented by this state of facts. Under G.S. 8-4 and Arnold v. Charles Enterprises, 264 N.C. 92, 141 S.E.2d 14 (1965), however, we are required to take judicial notice of foreign law, even in the absence of reference thereto by the parties, when foreign law governs the action.

Generally, North Carolina adheres to the lex loci contractus rule, which holds that the law of the state in which a contract was formed governs matters of execution, validity and interpretation. Fast v. Gulley, 271 N.C. 208, 155 S.E.2d 507 (1967); Davis v. Davis, 269 N.C. 120, 152 S.E.2d 306 (1967). With regard to the validity of a release interposed as a defense to a tort claim, however, some jurisdictions follow the rule in Restatement (Second), Conflict of Laws § 170 (1971) which is that the law of the place of injury controls. See e. g., Bittner v. Little, 270 F.2d 286, 288 (3d Cir. 1959); Kussler v. Burlington Northern, Incorporated, 606 P.2d 520 (Mont.1980). The Restatement rule has been criticized both as not founded on sound legal principle or decision and as producing the absurd result of "deny(ing) effect to the parties' ... intention by applying the law of the clearly fortuitous place of accident." Ehrenzweig, Releases of Concurrent Tortfeasors in the Conflict of Laws: Law and Reason Versus the Restatement, 47 U.Va.L.Rev. 712, 713 (1960).

Our research indicates that the law of Massachusetts, lex loci contractus, and that of North Carolina, lex loci delicti, do not differ with respect to the substantive questions involved here. ² "There would be no profit, then, for us to exercise ourselves here to determine which law is to be applied, for to do so would take us into a 'highly complex and confused part of conflict of laws.' " Arnold, 264 N.C. at 97, 141 S.E.2d at 17. We conclude that the questions presented by this appeal can properly be determined by reference to the law of North Carolina.

We turn, then, to the questions presented. The trial court granted summary judgment for defendant, dismissing plaintiff-wife's claim, on the basis of a release given to plaintiff-husband's insurer in exchange for the sum of $4,975, which release defendant pled in bar of plaintiff-wife's claim. Plaintiff-wife, by her failure to answer defendant's request for admissions regarding the release, is deemed to have admitted its execution for the consideration alleged as well as its content. G.S. 1A-1, Rule 36. The instrument provided that plaintiff-wife

release(d) and forever discharge(d) LANCE CUNNINGHAM (plaintiff-husband) and any other person, firm or corporation charged or chargeable with responsibility or liability ... from any and all claims ... particularly on account of all personal injury, disability ... loss or damages of any kind already sustained or that (she) may hereafter sustain in consequence of (the accident). (Emphasis supplied.)

Nothing else appearing this instrument constituted a bar to plaintiff-wife's claim, because "(a) release executed by the injured party and based on a valuable consideration is a complete defense to an action for damages for the injuries." Caudill v. Manufacturing Co., 258 N.C. 99, 102, 128 S.E.2d 128, 130 (1962), quoting from, Ward v. Heath, 222 N.C. 470, 24 S.E.2d 5 (1943). Not only did the instrument release plaintiff-husband; but because of the language "and any other person, firm or corporation charged or chargeable with responsibility or liability", nothing else appearing, it also released all "other entities involved in the occurrence which produced the settlement with one participant that led to the release," including defendant. Battle v. Clanton, 27 N.C.App. 616, 619, 220 S.E.2d 97, 99 (1975), review denied, 289 N.C. 613, 223 S.E.2d 391 (1976). It thus became "necessary for the plaintiff (releasor) to prove ... matter in avoidance" of the release. Caudill, 258 N.C. at 102, 128 S.E.2d at 130.

A release, like any other contract, is subject to avoidance by a showing that its execution resulted from fraud or mutual mistake of fact. See Ward v. Heath, 222 N.C. 470, 24 S.E.2d 5 (1943) (fraud); Cheek v. R.R., 214 N.C. 152, 198 S.E. 626 (1938) (mutual mistake); 1 Williston, Contracts § 15 at 28 (3d ed. 1957). This rule of contract law is founded on the proposition that there can be no contract without a meeting of the minds; and that when a contract is executed under circumstances amounting to fraud or mutual mistake, the requisite meeting of the minds does not occur. Thus, plaintiff-wife here could avoid the effect of the release pleaded by defendant in bar of her claim by showing that the release was procured under circumstances amounting to fraud or mutual mistake.

This she sought to do by the introduction of the affidavit which the trial court excluded. The trial court specifically stated in its order allowing defendant's motion for summary judgment that the objection to introduction of the affidavit was made "on the grounds of the parol evidence rule." This rule, which is a rule of substantive law, provides that a written contract cannot be contradicted by evidence of prior or contemporaneous negotiations or conversations. Craig v. Kessing, 297 N.C. 32, 34, 253 S.E.2d 264, 265 (1979). It in effect establishes a presumption that the writing accurately reflects the matters on which the minds of the parties ultimately met.

The parol evidence rule does not, however, preclude admission of extrinsic evidence when one of the parties seeks to prove that a written agreement was executed under circumstances amounting to fraud or mutual mistake. Mackay v. McIntosh, 270 N.C. 69, 153 S.E.2d 800 (1967) (mutual mistake); Fox v. Southern Appliances, 264 N.C. 267, 141 S.E.2d 522 (1965) (fraud). In these circumstances the offering party does not seek to contradict a written agreement, but seeks to show the existence of facts which prevented a meeting of the minds and the consequent formation of a...