Munchak Corp. v. Caldwell, 7718SC841

• Decision Date: 18 July 1978
• Docket Number: No. 7718SC841,7718SC841
• Citation: 37 N.C.App. 240,246 S.E.2d 13
• Court: North Carolina Court of Appeals
• Parties: The MUNCHAK CORPORATION (Delaware) and RDG Corporation, a joint venture d/b/a the Carolina Cougars and the Munchak Corporation (Georgia) v. Joe L. CALDWELL.

Page 13

246 S.E.2d 13

37 N.C.App. 240

The MUNCHAK CORPORATION (Delaware) and RDG Corporation, a

joint venture d/b/a the Carolina Cougars and the

Munchak Corporation (Georgia) v. Joe L. CALDWELL.

No. 7718SC841.

Court of Appeals of North Carolina.

July 18, 1978.

Forman & Zuckerman by William Zuckerman, Greensboro, and Powell, Goldstein, Ferazier & Murphy, Atlanta, Ga., for plaintiffs-appellants.

Smith, Moore, Smith, Schell & Hunter by Bynum M. Hunter and James L. Gale, Greensboro, for defendant-appellee.

ARNOLD, Judge.

I.

The plaintiffs' first contention is that the trial court erred (1) in denying plaintiffs' motion to amend their complaint to allege fraud, (2) in instructing the jury that fraud was not an issue, and (3) in refusing to instruct the jury that fraud of an agent is chargeable to a principal with knowledge.

Plaintiffs made their motion to amend pursuant to G.S. 1A-1, Rule 15 which reads in pertinent part:

"(a) Amendments. A party may amend his pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, he may so amend it at any time within 30 days after it is served. Otherwise a party may amend his pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires. . . .

"(b) Amendments to conform to the evidence. When issues not raised by the pleadings are tried by the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, either before or after judgment, but failure so to amend does not affect the result of the trial of these issues."

Although it is difficult to determine from the record exactly when plaintiffs made their motion to amend, it is clear that the motion came at some point during the trial. Under Rule 15(a), the ruling on such a motion is left to the discretion of the trial judge with the mandate, however, that where justice so requires, leave to amend Shall be freely granted. Plaintiffs do not argue that the trial judge abused his discretion in refusing to grant leave. Instead they argue that the amendment to allege fraud should have been allowed in order that the amended pleadings would conform to the evidence at trial. See Rule 15(b). We cannot find, however, that the pleadings were amended by the doctrine of implied consent. In Eudy v. Eudy, 288 N.C. 71, 215 S.E.2d 782 (1975), the Supreme Court, in applying Rule 15(b), accepted the analysis of the Sixth Circuit:

" 'We think it clear that if a theory of recovery is tried fully by the parties, the court may base its decision on that theory and may deem the pleadings amended accordingly, even though the theory was not set forth in the pleadings or in the pretrial order. See Wallin v. Fuller, 476 F.2d 1204 (5th Cir. 1973); Monod v. Futura, Inc., 415 F.2d 1170 (10th Cir. 1969); Dering v. Williams, 378 F.2d 417 (9th Cir. 1967); Fed.R.Civ.P. 15(b). However, the implication of Rule 15(b) and of our decision in Jackson v. Crockarell, 475 F.2d 746 (6th Cir.) is that a trial court may not base its decision upon an issue that was tried inadvertently. Implied consent to the trial of an unpleaded issue is not established merely because evidence relevant to that issue was introduced without objection. At least it must appear that the parties understood the evidence to be aimed at the unpleaded issue. See Bettes v. Stonewall Ins. Co., 480 F.2d 92 (5th Cir. 1973); Standard Title Ins. Co. v. Roberts, 349 F.2d 613, 620 (8th Cir. 1965); Niedland v. United States, 338 F.2d 254, 258 (3d Cir. 1964).' " Id. at 77, 215 S.E.2d at 786-87, quoting MBI Motor Co., Inc. v. Lotus/East, Inc., 506 F.2d 709 (6th Cir. 1974).

The evidence which plaintiffs contend should have led to an amendment under Rule 15(b), included testimony of Ehrlich Boyar and Caldwell that the erroneous provision in the contract was known to them on 28 October 1970, two days before the contract was signed. Moreover, according to plaintiffs' position, despite an "ambiguity" in subparagraph (c) of Paragraph 5, Ehrlich, Boyar and Caldwell elected not to mention the "ambiguity" for fear of drawing attention to the erroneous pension provision.

First of all, we disagree with plaintiffs' interpretation of the testimony they cite. Ehrlich, a witness of plaintiffs, testified:

". . . I pointed out that I didn't like Paragraph (c) because I thought it was ambiguous and should be clarified, and I explained it to Mr. Caldwell and Mr. Boyar, and Mr. Caldwell and Boyar both read it over and Boyar ventured the opinion that we should leave the paragraph alone because it was an item of great consideration and that if we tried to delineate or carefully define subparagraph (c), they might think the rest of the paragraph was subject to renegotiation, and he did not want to renegotiate it."

In addition, both Boyar and Caldwell testified that they did not want to renegotiate Paragraph 5 and, therefore, elected not to call attention to subparagraph (c). We see no evidence of fraud in this record, and no evidence from which an inference of fraud can be drawn.

Secondly, we believe that the evidence cited by plaintiffs as supporting the issue of fraud went to the issue of mutual mistake which was properly raised by the pleadings. Defendant, under the reasoning of the Eudy case, was not required to object to evidence properly raised by the pleadings. His failure to do so, therefore, did not amount to his implied consent to amend the pleadings to allow the issue of fraud.

It is our conclusion that the motion to amend the pleadings was properly denied, and we find no error in the trial court's failure to charge the jury on the issue of fraud.

II.

Plaintiffs' next contention is that the trial court erred in striking the testimony of plaintiffs' witnesses Scheer and Gorham, and in instructing the court on the interpretation of the...