Eastern Steel Products Corp. v. Chestnutt

• Decision Date: 06 April 1960
• Docket Number: No. 234,234
• Citation: 252 N.C. 269,113 S.E.2d 587
• Parties: EASTERN STEEL PRODUCTS CORPORATION v. James F. CHESTNUTT and B. S. Harrison t/a Sampson Master Switch Company.
• Court: North Carolina Supreme Court

Page 587

113 S.E.2d 587

252 N.C. 269

EASTERN STEEL PRODUCTS CORPORATION v. James F. CHESTNUTT and B. S. Harrison t/a Sampson Master Switch Company.

No. 234

Supreme Court of North Carolina.

April 6, 1960

Battle, Winslow, Merrell, Scott & Wiley, Rocky Mount, for plaintiff, appellant.

Nance, Barrington & Collier and Rudolph G. Singleton, Jr., Fayetteville, for defendants, appellees.

BOBBITT, Justice.

The issuance of our writ of certiorari, in effect, granted to plaintiff the right of immediate appeal from the order of Judge Bone. In perfecting such appeal, Rules of Practice in the Supreme Court, 221 N.C. 544, apply. Collier v. Mills, 245 N.C. 200, 95 S.E.2d 529. The record before us contains no assignment(s) of error. This is ground for dismissal for failure to comply with Rule 19(3). As to what is required in respect of assignments of error, see Nichols v. McFarland, 249 N.C. 125, 105 S.E.2d 294, and Hunt v. Davis, 248 N.C. 69, 102 S.E.2d 405.

Even so, this Court, in the exercise of its general supervisory jurisdiction (N.C. Constitution, Article IV, Section 8), has decided to consider and pass upon the questions raised by plaintiff's exceptions. Hereafter, it should be clearly understood that the rules applicable to an appeal apply to a review upon certiorari where such review, permitted under Rule 4(a) (242 N.C. 766), is in effect an appeal.

It was alleged and admitted that plaintiff and defendants entered into a contract whereby plaintiff would manufacture switches in accordance with a model switch furnished by defendants, for distribution by defendants.

Plaintiff, in substance, alleged: Differences arose between plaintiff and defendants, defendants contending they had been damaged on account of delays in delivery and defects in the switches manufactured by plaintiff and suggested 'the arrangement be terminated.' Plaintiff asserted a claim for $20,670.07 for the manufacture of dies and switches 'in accordance with the arrangements between the parties.' 'Extended negotiations were had between the parties and finally all their differences were compromised and settled by execution of a contract, prepared by the defendants, on the 28th day of July 1958,' as per copy attached to and made a part of the complaint.

Plaintiff, alleging that it performed its obligations under the contract of July 28, 1958, seeks to recover a balance of $11,725, with interest, allegedly owing by defendants under the terms of said contract.

The contract of July 28, 1958, in which plaintiff is designated party of the first part and Sampson Master Switch Company is designated party of the second part, in substance, provides: The party of the first part has sold and delivered to the party of the second part 'the goods and chattels following, namely: All of the dies and jigs in its possession for the manufacture of Sampson Master Switches and also approximately 3,300 Sampson Master Switches.' Title to the said goods and chattels 'is reserved by and remains vested in the said party of the first part until the payment in full of the sum of Fourteen Thousand Dollars ($14,000), which amount is unpaid on the purchase price of the said goods and chattels, and will become payable as follows: $3.50 per switch as delivered to the party of the second part, with purchase price of switches to be secured by notes executed by B. S. Harrison payable thirty (30) days after delivery date of varying numbers of switches until all of switches manufactured by party of the first part have been delivered to party of the second part.' Provision is made, in the event of default, for the repossession of said goods and chattels by the party of the first part and for a foreclosure sale thereof. The contract contains these provisions: (1) 'It is mutually agreed that the party of the second party may return to party of the first part all switches that are not in a saleable condition and that said switches will be put in a saleable condition by party of the first part.' (2) '* * * upon delivery of approximately 3300 switches we (plaintiff) shall collect $1.50 for tooling cost on all switches sold by Sampson Master Switch Company whether made by Eastern Steel Products Corporation or not, until such time as the full amount of $14,000 is paid.' The contract of July 28, 1958, contains no reference to a prior contract or prior dealings between the parties.

Answering, defendants admitted that '650 switches were delivered and paid for'; that defendants had sold 'approximately 150 switches since July 28, 1958'; and that plaintiff's demand for payment had been refused. Except as stated, the answer proper denies the material allegations of the complaint, alleging 'that the true facts relative thereto will appear in the further answer, defense, and counterclaim of these answering defendants.'

In their further answer (considering only the portions thereof not stricken by Judge Bone's order), defendants alleged that plaintiff had breached its original contract with defendants in that it did not make delivery as required by the contract and that the switches when delivered were defective. They alleged, inter alia, that 'it soon became apparent that the plaintiff neither had the knowledge, personnel or quality control to produce a product in conformity with the specifications furnished it by the defendants,' and that 'the plaintiff and defendants agreed that the contract should be rescinded, and they entered into negotiations to adjust and settle their differences'; and that, 'although the defendants were not compelled to do anything further, they agreed to reimburse the plaintiff for the actual and reasonable costs incurred up to the date of rescission to the extent these costs were properly proven.' Defendants admitted execution of the contract of July 28, 1958, but alleged they did so under the following circumstances: Plaintiff submitted 'a large ledger sheet, on which were listed the alleged actual and reasonable expenses of plaintiff. The defendants again requested supporting evidence of the correctness of the figures, but plaintiff stated that they were still not available. The figures on the ledger sheet totaled $20,670.07. The defendants informed the plaintiff that the charges were excessive and incorrect. In a spirit of compromise the defendants executed the alleged contract sued upon, (on the express condition that the plaintiff submit to the defendants sworn proof of the correctness of the figures upon which the compromise was based and on the absolute assurance of the plaintiff to the defendant(s) of the truthfulness and correctness of said figures. The defendants have repeatedly requested that the plaintiff submit the sworn proof of the figures as agreed, but the plaintiff has refused and failed to submit said sworn proof, and continues to do so.)'

Plaintiff's motion No. 2 is directed to that portion of paragraph XV of the further answer indicated above by parentheses.

Plaintiff's motion No. 3 is directed to paragraph XVI of the further answer wherein defendants alleged generally that they were induced to sign the contract of July 28, 1958, by the false and fraudulent representations of plaintiff in respect of the amount of its costs.

Plaintiff's motion No. 4 is directed to paragraph XVII of the further answer, viz.: 'That the defendants have no means of discovering the true costs incurred by the plaintiff in tooling and for dies and jigs, but they are informed and believe that the reasonable cost therefor is $5,000, and upon such information and belief allege that the plaintiff should not be entitled to any larger sum, if it is entitled to any sum at all.'

In defendants' allegations of the further defense, to which plaintiff's motions numbered 7, 10, 12, 13 and 14 are directed, and in the four paragraphs wherein defendants assert a cross action for damages of $105,042.50, to which plaintiff's motions numbered 15, 16, 17 and 18 are directed, defendants allege breaches by plaintiff of the original contract between the parties and consequential damages.

Defendants, in their prayer for relief, in addition to the recovery of damages, ask that the court adjudge that 'the title to the dies and jigs hereinbefore referred to be vested in the defendants.' However, no facts are alleged which would entitle defendants to such adjudication apart from the provisions of the contract of July 28, 1958. This portion of defendants' prayer would seem to be at cross-purposes with other allegations of their pleading.

True, the burden of proof was on plaintiff to establish its allegation that the written contract of July 28, 1958, was executed as a compromise settlement of the dispute between the parties as to their rights and liabilities arising out of the original contract. Winkler v. Appalachian Amusement Co., 238 N.C. 589, 79 S.E.2d 185. Even so, it appears affirmatively from defendants' allegations, quoted above, that the negotiations leading up to the execution of the written contract of July 28, 1958, were for the purpose of adjustment and settlement of the differences that had arisen between the parties.

It is noted that, under the contract of July 28, 1958, plaintiff agreed to sell and deliver to defendant some 3,300 Sampson Master Switches and also all of...