Lane v. Griswold

• Decision Date: 28 February 1968
• Docket Number: No. 442,442
• Citation: 273 N.C. 1,159 S.E.2d 338
• Parties: , Blue Sky L. Rep. P 70,773 Janice H. LANE v. Alexander Brown GRISWOLD et al.
• Court: North Carolina Supreme Court

Page 338

159 S.E.2d 338

273 N.C. 1, Blue Sky L. Rep. P 70,773

Janice H. LANE v. Alexander Brown GRISWOLD et al.

No. 442.

Supreme Court of North Carolina.

Feb. 28, 1968.

Herbert, James & Williams, by Henry James, Jr., Charlotte, and Jordan, Wright, Henson & Nichols, by Karl N. Hill, Jr., Greensboro, for plaintiff appellant.

Hudson, Ferrell, Petree, Stockton, Stockton & Robinson, by R. M. Stockton, Jr., and W. F. Maready, Winston-Salem, and Covington & Burling, by David B. Isbell, Washington, D.C., for defendant appellees.

PARKER, C.J.

Defendants filed a demurrer to the complaint, and made a motion for judgment on the pleadings. A motion for judgment on the pleadings by defendants is tantamount to a demurrer on the ground that the complaint did not state facts sufficient to constitute a cause of action. Woodruff v. State Farm Mutual Automobile Ins. Co., 260 N.C. 723, 133 S.E.2d 704; Fisher v. Taylor Motor Co., 249 N.C. 617, 107 S.E.2d 94; Hill v. Parker, 248 N.C. 662, 104 S.E.2d 848; 3 Strong, N.C. Index, Pleadings, § 30, and Supplement to ibid; 71 C.J.S. Pleading § 425b. In Erickson v. Starling, 235 N.C. 643, 71 S.E.2d 384, Ervin, J., said for the Court:

'A demurrer and a motion for judgment on the pleadings are somewhat related procedural devices. Each denies the legal sufficiency of the pleading of an adversary and raises an issue of law upon the facts stated in such pleading. The scope of a motion for judgment on the pleadings surpasses that of a demurrer, however, in that the former is an application for an immediate judgment in the movant's favor. 71 C.J.S. Pleading § 425. * * *

'When a party moves for judgment on the pleadings, he admits these two things for the purpose of his motion, namely: (1) The truth of all well-pleaded facts in the pleading of his adversary, together with all fair inferences to be drawn from such facts; and (2) the untruth of his own allegations in so far as they are controverted by the pleading of his adversary.'

In Burton v. City of Reidsville, 240 N.C. 577, 581, 83 S.E.2d 651, 654, it is said: 'Moreover, if good in any respect or to any extent, a plea will not be overthrown by motion for judgment on the pleadings.'

On a motion for judgment on the pleadings it is error for the court to hear evidence and find facts in support of its judgment, since only the pleadings themselves may be considered. City of Reidsville v. Burton, 269 N.C. 206, 152 S.E.2d 147; Crew v. Crew, 236 N.C. 528, 73 S.E.2d 309; Remsen v. Edwards, 236 N.C. 427, 72 S.E.2d 879; Erickson v. Starling, supra.

In High Point Surplus Co. v. Pleasants, 263 N.C. 587, 139 S.E.2d 892, the Court said:

"On demurrer we take the case as made by the complaint.' Barber v. Wooten, 234 N.C. 107, 66 S.E.2d 690. The Court said in Hayes v. City of Wilmington, 243 N.C. 525, 538, 91 S.E.2d 673, 683: 'It is elemental that a demurrer may not call to its aid facts not appearing on the face of the challenged pleading. Union Trust Co. v. Wilson, 182 N.C. 166, 108 S.E. 500; Wood v. Kincaid, 144 N.C. 393, 57 S.E. 4; Davison v. Gregory, 132 N.C. 389, 43 S.E. 916.'

'It is a general and fundamental rule of pleading that on a hearing of a demurrer to a pleading the court ordinarily is limited to a consideration of the pleading demurred to, and an instrument or instruments expressly made a part of the pleading by apt words, and cannot consider evidence, documents, or instruments Aliunde of the challenged pleading, such as affidavits and stipulations of the parties. Moore v. W.O.O.W., Inc., 253 N.C. 1, 116 S.E.2d 186; Lamm v. Crumpler, 240 N.C. 35, 81 S.E.2d 138; Foust v. City of Durham, 239 N.C. 306, 79 S.E.2d 519; Towery v. Carolina Dairy, 237 N.C. 544, 75 S.E.2d 534; McDowell v. Blythe Bros., 236 N.C. 396, 72 S.E.2d 860; Union Trust Co. v. Wilson, 182 N.C. 166, 108 S.E. 500; Davison v. Gregory, 132 N.C. 389, 43 S.E. 916; 71 C.J.S. Pleading § 257; 41 Am.Jur., Pleading, § 246.

"According to the weight of authority, matters extrinsic to a pleading may not be considered on the hearing of a demurrer thereto, even though the parties stipulate or agree that such matters may be considered by the court in determining the demurrer.' 41 Am.Jur., Pleading, § 246, p. 466. To the same effect Anno. 137 A.L.R. 483.

'It is familiar learning that a demurrer admits, for the purpose of testing the sufficiency of the pleading, the truth of factual averments therein well stated and such relevant inferences as may be deduced therefrom, but it does not admit any legal inferences or conclusions of law asserted by the pleader. McKinney v. City of High Point, 237 N.C. 66, 74 S.E.2d 440. While G.S. 1--151 requires us to construe liberally the allegations of a challenged pleading, we are not permitted to read into it facts which it does not contain. Thomas & Howard Co. of Shelby, Inc. v. American Mutual Liability Insurance Co., 241 N.C. 109, 84 S.E.2d 337; Johnson v. Johnson, 259 N.C. 430, 130 S.E.2d 876.'

The relevant provisions of the North Carolina Securities Law are G.S. § 78--2, G.S. § 78--6, and G.S. § 78--22.

G.S. § 78--2 defines the terms 'offer to sell' or 'offer for sale': '(d) Offer to Sell, etc.--'Offer to sell' or 'offer for sale' shall mean every attempt or offer to dispose of, or solicitation of an order or offer to buy, a security or interest in a security for value.' The rest of this subsection of the statute is not relevant here. '(f) Sale, etc.--'Sale' or 'sell' shall mean every sale or other disposition of a security or interest in a security for value, and every contract to make any such sale or disposition.' The concluding sentence of this subsection is not relevant here.

G.S. § 78--6 sets out the prohibition which plaintiff contends was violated here: 'No securities * * * shall be offered for sale or sold within this State unless such securities shall have been registered by notification or by qualification as hereinafter defined * * *.' This statute contains exceptions which are not relevant here.

G.S. § 78--22 sets forth the remedy which plaintiff by this action seeks to invoke: 'Every sale or contract for sale made in violation of any of the provisions of this chapter shall be voidable at the election of the purchaser and the person making such sale or contract for sale, and every director, officer or agent of or for such seller, if such director, officer or agent shall have participated or aided in any way in making such sale shall be jointly and severally liable to such purchaser in an action at law in any court of competent jurisdiction upon tender to the seller of the securities sold or of the contract made for the full amount paid by such purchaser.' This section of the statute contains provisos not relevant here.

G.S. § 78--2(f) defines a 'sale' as a "sale' * * * shall mean every sale or other disposition of a security or interest in a security for value, and every contract to make any such sale or disposition.' In State v. Colonial Club, 154 N.C. 177, 69 S.E. 771, 31 L.R.A.,N.S., 387, the Court said: 'The word sale is thus defined: 'A sale is a transmutation of property from one man to another in consideration of some price or recompense in value.' 2 Blk. Com., 446.' In Commissioner of Internal Revenue v. Freihofer, 3 Cir., 102 F.2d 787, 125 A.L.R. 761, the Court said: 'Blackstone defined a sale as 'a transmutation of property from one man to another in consideration of some price or recompense in vacue 2 Bl. 446. It is a contract for the transyer of property from one person to another for a valuable consideration. See 7 Words and Phrases, First series, Sale, page 6291. There must be parties standing to each other in the relation of buyer and seller, their minds must assent to the same proposition, and a consideration must pass.' In accord Black's Law Dictionary, 4th Ed., definition of 'sale.'

Where the word 'sale' is used in G.S. § 78--2(f), in the absence of anything to the contrary appearing in the statute, it will be assumed that the word is intended to have its usual signification. Commissioner of Internal Revenue v. Freihofer, supra.

The complaint in the instant case alleges in substance: On 10 July 1961 plaintiff in Mecklenburg County, North Carolina, placed an 'unsolicited' order by telephone with defendants in Washington, D.C., to purchase 10,000 shares of Hydramotive Corporation at the price of $5,500, and this 'unsolicited' order was filled by defendants, as agent, through its own offices or through its clearinghouse in New York City. There is nothing in the complaint or answer to suggest or show that defendants had ever heard of the Hydramotive Corporation before receiving the 'unsolicited' order from plaintiff to buy. The only reasonable inference to be drawn from the language of the complaint is that in buying this stock for plaintiff, defendants were acting as her agent. It is true that there was a sale here, but it was a sale made by the selling securities dealer, or, if he was acting as broker, by his customer to plaintiff as purchaser for whom defendants here as buyer and broker were acting as agent for plaintiff. At this point title passed directly from the seller to the purchaser, the plaintiff, for whom the defendants were acting as agent and broker in purchasing the securities.

In 12 Am.Jur.2d, Brokers, § 131, it is said:

'According to most of the cases, the title to securities purchased by a stockbroker vests immediately in the customer whether the purchase is on margin or otherwise, and even though the broker retains possession of the stock certificate or the customer has paid nothing on the purchase price. Under this rule, the customer for whom a broker purchases stock is the owner thereof from the time of purchase, whether purchased in his name or not.'

In 12 C.J.S. Brokers § 29, it is said:

'Ordinarily, however, the title to, or ownership of, stock or other securities bought by a broker for a client on margin or otherwise, whether or not purchased in his own name, vests in the customer...