Girard Trust Bank v. Belk

• Decision Date: 05 June 1979
• Docket Number: No. 7826SC621,7826SC621
• Parties: GIRARD TRUST BANK, v. Henderson BELK, Frank W. Wilson, Palmer Ford and Henderson Belk Enterprises, Inc.
• Court: North Carolina Court of Appeals

Page 430

255 S.E.2d 430

41 N.C.App. 328

GIRARD TRUST BANK, v. Henderson BELK, Frank W. Wilson, Palmer Ford and Henderson Belk Enterprises, Inc.

No. 7826SC621.

Court of Appeals of North Carolina.

June 5, 1979.

Fairly, Hamrick, Monteith & Cobb by S. Dean Hamrick and F. Lane Williamson, Charlotte, for plaintiff-appellant.

Weinstein, Sturges, Odom, Bigger, Jonas and Campbell by T. LaFontine Odom and L. Holmes Eleazer, Jr., Charlotte, for defendants-appellees.

MORRIS, Chief Judge.

Plaintiff's Appeal

Plaintiff assigns error to the entry of summary judgment dismissing defendants Belk and Henderson Belk Enterprises, Inc. Plaintiff's primary contention is "that the circumstantial evidence that Belk was a party to the fraud is overwhelming." Furthermore, plaintiff cites Temel-Peck's indebtedness to Belk as a motive for the alleged scheme, Belk's control of the corporations as the opportunity to perpetrate the fraud, along with the knowing acceptance of the benefits of the fraudulent transaction, failure to make an investigation of the transaction (acquiescence), and a "ratification" of the conduct as "strong indications that he knew the entire situation from its inception." Plaintiff's position, therefore, appears to be that not only do the inferences drawn from the materials submitted in opposition to the motion for summary judgment prove that Belk must have been involved in the alleged fraudulent scheme, but that his conduct of ratification and acceptance of the benefits establish his liability. See generally 37 C.J.S. Fraud § 61.

The elements of fraud long have been clearly enunciated by the courts in this State. In a recent decision determining that judgment on the pleadings was inappropriate in a fraud case because of the existence of material issues of fact, the Court noted:

"While fraud has no all-embracing definition and is better left undefined lest crafty men find a way of committing fraud which avoids the definition, the following essential elements of actionable fraud are well established: (1) False representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made with intent to deceive, (4) which does in fact deceive, (5) resulting in damage to the injured party." Ragsdale v. Kennedy, 286 N.C. 130, 138, 209 S.E.2d 494, 500 (1974).

Summary judgment here was apparently entered because of the trial court's opinion that as a matter of law Belk was not responsible for the alleged fraud of his agent merely because of the legal relationship between Belk as an officer and director of the corporations which Wilson served. See Knitting Mills Co. v. Earle, 237 N.C. 97, 74 S.E.2d 351 (1953). However, as noted above, plaintiff's allegations indicate more than just the agency relationship. Plaintiff's averments tie Belk to the alleged scheme through inferences that he must have been involved because of his relationship with all of the parties and his potential personal benefit from the transaction. Plaintiff relies upon inferences which it maintains should be drawn from the circumstantial evidence to establish the above-mentioned elements of fraud. The effect of such inferences on the propriety of summary disposition of the case must be considered.

The threshold inquiry in reviewing the propriety of the entry of summary judgment concerns whether genuine issues of material fact are raised by the pleadings and papers filed in conjunction with the motion. The burden is upon the party moving for summary judgment to show, in order to be entitled to judgment, that no such questions of fact remain to be resolved. Bank v. Gillespie, 291 N.C. 303, 230 S.E.2d 375 (1976). That movant's papers must be carefully scrutinized, while those of the opposing party are to be indulgently regarded. Kidd v. Early, 289 N.C. 343, 222 S.E.2d 392 (1976); Page v. Sloan, 281 N.C. 697, 190 S.E.2d 189 (1972). The defendant Belk's affidavit and deposition suggest that Belk was completely unaware of the nature of financing for purchase of the ten Disposacons, and that Belk at no time acted for Automated in any transaction or scheme as alleged by the plaintiff. As a matter of fact, Belk's testimony indicated that he knew absolutely nothing about Automated's business and could not testify about it without checking the records, including who ran the Company. An example:

"As to whether I had 7,750 shares of the 10,000 shares of outstanding stock and had the right to control it, I had a stock interest in it. As to whether I actually participated in the running of Automated it would be hard to answer that question. Occasionally, I did see the books. I don't think I ever wrote any checks on the company. I don't know exactly how to answer the question as to whether I ever saw any checks written on the company. As to whether I ever checked the company books I observed some of the reports. I just don't remember how often I observed the reports.

Frank Wilson probably had something to do with running Automated in 1972 and 1973. I don't think Mr. Wilson was the one that ran the company from the time he came to Charlotte until at least 1974. As to whether during the time Automated has been in Charlotte anyone other than Frank Wilson has been in charge of running the company, I'd have to check the records.

While the company was in Charlotte it did sell some disposal machines. I'd have to check the records to tell where these machines were purchased. I did have dealings with Leavesley Industries, Incorporated. They made some of the products that ADS sold at one time. I'd have to check the records to see how this relationship began. I did talk to someone that represented the company. I don't remember the specific details, what sort of dealings I had with any representative of that company. I'd have to check to see if I brought a lawsuit suing them for a million dollars for something I claimed they did wrong to me. I'd have to check to see if I ever brought a lawsuit against Leavesley Industries, Incorporated. I think that a company probably that I had an interest in may have brought a lawsuit but I don't know exactly the way you word things how to answer them. That lawsuit is not still pending. I suppose the lawsuit you have reference to has been settled. You would have to check with my attorney to see if I just took a dismissal in that lawsuit.

ADS did make some purchases from Leavesley. They purchased some equipment. I don't know how you would describe it. It was for use in the operation of ADS's activities. I'd have to check the records to see just what they did buy. . . .

I did know a Mr. Temel. I don't exactly remember where I met him. I don't even remember when it was or what it was. I have met him. I wouldn't say I have met him on a number of occasions, no, more than one.

As to what sort of business dealings I or any of my companies had with Mr. Temel, can you be more specific? Some companies that I have had interest in have had some transactions with Mr. Temel. I'd have to check the records to see what companies. I understand that ADS was one of them.

As to how I understand it, I understand from lawsuits that were brought that it had some dealings with them. It is my testimony that I had no dealings with Mr. Temel insofar as many business relationship with ADS is concerned. It is absolutely correct that I never talked with Mr. Temel at all about any business dealings he had with ADS. I don't know for sure who represented ADS in these business dealings.

I understand Mr. Frank Wilson had some dealings with Mr. Temel. My understanding is that Mr. Wilson on behalf of ADS sold some machines to Mr. Temel's company. I believe it is correct, that is, Temel-Peck Enterprises."

On the other hand, plaintiff produced a significant volume of evidence intended to show that Belk must have been involved in the scheme or at least ratified the fraud because of his control of Automated and his relationship with the purchaser Temel-Peck. It is, therefore, apparent that defendant Belk relies heavily upon his own deposition testimony and affidavit to support his motion for summary judgment. Because of the importance of these papers, the credibility of Belk becomes a key issue in this matter, and where credibility is a key issue, summary judgment is seldom an appropriate procedure for resolution of the matter. See generally 10 Wright and Miller, Federal Practice and Procedure: Civil § 2726 (1973).

The issue of credibility presents an issue of fact which, if material, should be left to the trier of fact. Here, not only does the defendant Belk's testimony on deposition, when indulgently regarded in favor of plaintiff, appear inherently incredible, but inferences reasonably capable of being drawn from plaintiff's evidentiary material place doubt upon the credibility of defendant Belk's deposition testimony and affidavit. Compare, Kidd v. Early, supra. We are of the opinion that reasonable inferences available from the plaintiff's materials and the issue of Belk's credibility present material questions of fact such as to prevent the entry of summary judgment.

In our opinion there is another basis for disapproving of the granting of summary judgment in the case. The existence of fraud necessarily involves a question concerning the existence of a fraudulent intent on the part of the party accused of such fraud. The intent of a party is a state of mind generally within the exclusive knowledge of that party and, by necessity, must be proved by circumstantial evidence. Summary judgment is generally inappropriate under such circumstances. See generally 10 Wright and Miller, Federal Practice and Procedure: Civil § 2730 (1973). This stance was taken by the United States Court of Appeals for the Third Circuit which concluded that summary judgment in favor of the movant in an action based upon a complex scheme of fraud should not be utilized to draw factual inferences in favor of the moving party and to resolve genuine issues of credibility,...