Lee v. Keck, 8315SC281

• Decision Date: 15 May 1984
• Docket Number: No. 8315SC281,8315SC281
• Court: North Carolina Court of Appeals
• Parties: Ronald D. LEE, Pamela L. Lee, Woodrow W. Weaver, Tommie L. Weaver, Stephen E. Cooke, Wilma F. Cooke, Robert Placer and Claire Placer v. Harvey L. KECK, Individually and wife, Patricia T. Keck, Cora G. Keck and Harvey L. Keck, Executor of the Estate of Kelly H. Keck.

Page 323

315 S.E.2d 323

68 N.C.App. 320

Ronald D. LEE, Pamela L. Lee, Woodrow W. Weaver, Tommie L.

Weaver, Stephen E. Cooke, Wilma F. Cooke, Robert

Placer and Claire Placer v. Harvey L. KECK, Individually and wife, Patricia T. Keck, Cora G. Keck and Harvey L. Keck, Executor of the

Estate of Kelly H. Keck.

No. 8315SC281.

Court of Appeals of North Carolina.

May 15, 1984.

David I. Smith, Burlington, for defendants-appellants.

James F. Walker and H. Clay Hemric, Jr., Gibsonville, for plaintiffs-appellees.

BECTON, Judge.

Plaintiff homeowners purchased lots in a subdivision developed by defendants. The road into the development, Keck Drive, was unpaved when the lots were sold. After several years of increasing tension with defendants over the paving of the road, plaintiffs filed this action. The Complaint alleged that plaintiffs relied on representations by Harvey Keck, both individually and as agent for Kelly Keck, his father (since deceased), and their respective wives, Patricia Keck and Cora Keck, that Keck Drive would be paved. These representations allegedly induced plaintiffs to purchase their lots. The Complaint sought punitive damages for fraud, treble damages for unfair trade practices, and specific performance of an alleged oral agreement to pave the road. Defendants denied any wrongdoing and counterclaimed for libel and resulting physical and mental suffering. The Counterclaim was later summarily disposed of, and plaintiffs took a voluntary dismissal of their claim for specific performance.

At trial, plaintiffs presented evidence that at the time the lots were sold, Harvey Keck had represented to each couple that he was working with the State to get Keck Drive paved. Evidence was also presented that Kelly Keck had been the payee of various checks written by plaintiffs for the purchase of land, that Harvey Keck took the checks and delivered receipts signed by Kelly Keck, and that Kelly Keck had made similar representations regarding the paving of Keck Drive. The land sold was owned by the entireties with the wives, Patricia Keck and Cora Keck. Both wives testified that Harvey Keck arranged the sales and that they received part of the proceeds. Plaintiffs also presented the county tax supervisor, who described the procedure for getting roads paved and the land ownership along Keck Drive, which effectively gave defendants veto power on any petition for paving. A real estate appraiser testified as to the diminution in value of plaintiffs' land as a result of the lack of paving; plaintiffs themselves introduced other evidence of damages. Plaintiffs also testified that a neighborhood petition to get Keck Drive paved had been torn up by Harvey Keck.

Defendants offered the testimony of Harvey Keck, who denied any promises or other representations concerning the paving of Keck Drive. Several other property owners in the development testified that defendants had made no representations to them concerning paving the road.

The jury found that Harvey Keck had perpetrated fraud in connection with the sale of land to each plaintiff, and that he committed unfair and deceptive trade practices in each instance, all the while acting as agent for Kelly, Cora and Patricia Keck. From judgment on this verdict, defendants appeal.

I

One of the plaintiffs testified that the deceased, Kelly Keck, told him that he left it to his son, Harvey Keck, to handle the proceedings concerning Keck Drive. Defendants objected that the evidence should have been excluded under N.C.Gen.Stat. § 8-51 (1981), the dead man's statute. However, defendants had, during the course of discovery, served interrogatories on each plaintiff asking what promises or statements Kelly Keck made to them concerning paving Keck Drive. Plaintiffs responded substantially in accord with the testimony defendants now find objectionable. We have recently held, in an identical situation, that service by defendants of interrogatories concerning transactions or communications with the deceased, which elicit without objection the otherwise incompetent evidence, constitutes a waiver by defendants of the protection of G.S. § 8-51. Wilkie v. Wilkie, 58 N.C.App. 624, 294 S.E.2d 230, disc. rev. denied, 306 N.C. 752, 295 S.E.2d 764 (1982); see also Hayes v. Ricard, 244 N.C. 313, 93 S.E.2d 540 (1956). Wilkie clearly controls, and this assignment must accordingly be overruled.

II

Plaintiffs served certain interrogatories on defendants. Since the Complaint prayed for punitive damages, defendants moved for a protective order "until such time as it is determined the issue of punitive damages is for the jury," and further sought a protective order on the grounds that the answers might tend to be incriminatory. Defendants assign error to the denial of this motion.

Although some earlier cases have apparently held that defendants may properly refuse to answer questions which may subject them to a civil penalty, it is clear even under those cases that the initial burden is on the defendant to show some actual potential prejudice; the matter may not rest with the ipse dixit of the defendants. Allred v. Graves, 261 N.C. 31, 134 S.E.2d 186 (1964). The cases under our new Rules of Civil Procedure indicate that defendant must at least "assist the court by pushing the door even a tiny bit ajar so as to disclose some rational grounds for believing that a real danger of self-incrimination" exists. Johnson County Nat'l Bank and Trust Co. v. Grainger, 42 N.C.App. 337, 342, 256 S.E.2d 500, 503, disc. rev. denied, 298 N.C. 304, 259 S.E.2d 300 (1979). This is certainly true for potentially incriminatory answers. Id. Assuming that defendants could properly object to what appear to this Court to be innocuous questions, they have failed to provide any justification other than some vague "belief" to support such an objection. This assignment of error is therefore without merit.

III

The court denied the pretrial motions of defendants Cora Keck and Patricia Keck for summary judgment on the claims against them. These defendants contend that no actual representations or other acts of fraud were committed by them.

On motion for summary judgment, the movant has the burden of showing that there is no issue of triable fact. Sharpe v. Quality Education, Inc., 59 N.C.App. 304, 296 S.E.2d 661 (1982). The facts asserted by the answering party must be accepted as true. Norfolk and Western Ry. Co. v. Werner Industries, Inc., 286 N.C. 89, 209 S.E.2d 734 (1974). The movant's burden in an action for fraud is especially heavy, since state of mind is usually at issue. Johnson v. Phoenix Mutual Life Ins. Co., 300 N.C. 247, 266 S.E.2d 610 (1980).

Plaintiffs proceeded on the theory that the wives were liable as principals for fraud perpetrated by Harvey Keck as their agent.

The general rule is that a principal is responsible to third parties for injuries resulting from the fraud of his agent committed during the existence of the agency and within the scope of the agent's actual or apparent authority from the principal, even though the principal did not know or authorize the commission of the fraudulent acts.

Vickery v. Olin Hill Construction Co., 47 N.C.App. 98, 102, 266 S.E.2d 711, 714, disc. rev. denied, 301 N.C. 106, 273 S.E.2d 312 (1980) (quoting Norburn v. Mackie, 262 N.C. 16, 23, 136 S.E.2d 279, 284-85 (1964)). A husband is not his wife's agent simply because of the marital relationship; but only "slight evidence" of agency suffices to charge her as a principal, when "she received, retains, and enjoys the benefits of a contract." Norburn v. Mackie, 262 N.C. at 23, 136 S.E.2d at 284; Passmore v. Woodard, 37 N.C.App. 535, 246 S.E.2d 795 (1978) (retention of benefits from a contract sufficient).

Defendants admitted in their answers to plaintiffs' interrogatories that Harvey Keck acted as Cora Keck's and Kelly Keck's agent. The Complaint further alleged that he acted as agent for his wife, Patricia Keck, and that the deeds for all the lots purchased by plaintiffs were signed by Harvey Keck and Patricia Keck. In her motion for summary judgment, Patricia Keck did not deny that she had received and retained benefits from these sales of entireties property. The Complaint contained ample allegations of misrepresentations by Harvey Keck. Movants' forecast of evidence does not establish plaintiffs' lack of a right to relief as a matter of law. Accordingly, the trial court properly denied these motions for summary judgment. Moreover, the admissions of both femme defendants at trial that they did in fact receive and retain proceeds of the subject sales substantiate the trial court's ruling.

IV

Defendants next contend, relying on the liberal provisions of N.C.Gen.Stat. § 1A-1, Rule 15(a) (1983), that the trial court's denial of their motions to amend constituted reversible error. Approximately eighteen months after the Complaint was filed, the trial court denied defendants' motions to add the defenses of the Statute of Frauds and the statute of limitations.

Rulings on motions to amend after the expiration of the statutory period are within the discretion of the trial court; that discretion is clearly not abused when granting the motion would be a futile gesture. Smith v. McRary, 306 N.C. 664, 295 S.E.2d 444 (1982). Therefore, the trial court did not abuse its discretion in denying leave to amend to add the Statute of Frauds defense, since the Statute of Frauds is no bar to an action to recover the difference between the actual value of real property and the value as represented, based on fraudulent misrepresentations in the sale of the property. Kent v. Humphries, 303 N.C. 675, 281 S.E.2d 43 (1981) (statute bars only enforcement of the invalid contract); Horne v. Cloninger, 256 N.C. 102, 123 S.E.2d 112 (1961) (rights of parties to a fraudulent transaction); see generally Annot., 13 A.L.R.3d 875, 936 (1967). Even if the plaintiffs had pursued their claim for specific performance of the alleged oral contract...