Hilliard v. Newberry
| Decision Date | 29 September 1910 |
| Citation | 68 S.E. 1056,153 N.C. 104 |
| Parties | HILLIARD v. NEWBERRY et al. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Carteret County; Peebles, Judge.
Action by W. H. Hilliard, administrator, against A. O. Newberry and others. Judgment for plaintiff, and defendants appeal. Affirmed.
Action on a strict indemnity obligation will not lie till damage is suffered.
Where a contract is made not alone to indemnify plaintiff but also to perform a particular obligation, an action will lie on the breach of such obligation, though no damages have been suffered.
The action was instituted on February 2, 1910, and the complaint of plaintiff's duly verified, contained allegations to the effect: That on 27th day of January, 1908 plaintiff's intestate and defendant A. O. Newberry dissolved partnership theretofore existent between them. Defendant A. O. Newberry buying out the interest of the intestate, and in payment for such interest conveyed to plaintiff's intestate three tracts of land on which there was a mortgage, duly registered and now held by codefendant M. Hahn. This mortgage, annexed to and made part of the complaint, showed that it was given to secure a sum of money on which there was a balance now due and owing to defendant Hahn as stated. That at said time, in order to secure the intestate against said mortgage debt, the defendant A. O Newberry executed and delivered to intestate his note under seal as follows: That there was a balance due on said mortgage which defendant had failed to pay. That, before bringing this action, plaintiff administrator had demanded payment and settlement of said note and mortgage of defendant A. O. Newberry, and he had failed to pay same. Replying to defendant's answer, there was further allegation to the effect that A. O. Newberry was insolvent and incumbering his property by specific liens thereon to different persons, and that judgment on the note was necessary to the preservation and protection of plaintiff's rights under the contract, etc. Defendant A O. Newberry answered, admitting the dissolution of partnership and purchase of the assets, the conveyance of the realty in part payment and the execution of the note declared on, and admitted, further, that the mortgage had not been paid, and that a balance was still due thereon. Denying liability, defendant further alleged and claimed in effect: (1) That the obligation was strictly one of indemnity, and that no action thereon arose to plaintiff until he had suffered actual loss or damage by reason of the mortgage. (2) That no definite time was set for paying off the mortgage, and that it was understood and agreed at the time the note was given that, if A. O. Newberry was not in a position to pay the mortgage debt when due, he was to be at liberty to obtain an extension thereon from Hahn, and have the benefit of same in respect to the plaintiff's present claim. That defendant had obtained such extension and was gradually paying off the mortgage, and there was no likelihood that plaintiff would ever suffer damage by reason thereof. (3) That no notice of loss or damage actually suffered had been given before action brought. On perusal of the pleadings and motion duly made the court gave judgment for plaintiff on the note to be discharged on "production and surrender of said mortgage duly paid and satisfied of record," or on payment of amount due thereon principle and interest to plaintiff and costs of present action, and defendant excepted and appealed.
Abernathy & Davis, for appellants.
D. L. Ward, Moore & Dunn, Guion & Guion, and Loftin, Varser & Dawson, for appellee.
HOKE, J. (after stating the facts as above).
On the question presented, the authorities are to the effect that when a collateral obligation is in strictness one of indemnity, an action at law will not lie unless and until some actual loss or damage has been suffered, but, when the obligation amounts to a binding agreement to do or refrain from doing some definite, specific thing materially affecting the rights of the parties an action will presently lie for breach of such an agreement, and no damage need be shown. Even on a bond of strict indemnity, however, while an action at law would not lie until damage suffered, our own decisions under the old system were to the effect that a person could invoke the aid of the equity courts when the facts disclosed that such action was required for the preservation and maintenance of his rights under the contract. Burroughs v. McNeil, 22 N.C. 297. Recurring to the principle first stated in 16 A. & E. p. 179, it is said: "Where the promisor has undertaken to do a particular act or make a specific payment as well as to indemnify the...
To continue reading
Request your trial