Nasco Equipment Co. v. Mason, 41

• Citation: 291 N.C. 145,229 S.E.2d 278
• Decision Date: 04 November 1976
• Docket Number: No. 41,41
• Court: United States State Supreme Court of North Carolina
• Parties: , 20 UCC Rep.Serv. 761 NASCO EQUIPMENT COMPANY, Plaintiff, v. Richard H. MASON, d/b/a Dick Mason Lumber Company, Original Defendant, Dick Mason Lumber Company, Inc., Additional Defendant, and First-Citizens Bank & Trust Company, Third-Party Defendant.

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229 S.E.2d 278 291 N.C. 145, 20 UCC Rep.Serv. 761 NASCO EQUIPMENT COMPANY, Plaintiff,
v.
Richard H. MASON, d/b/a Dick Mason Lumber Company, Original Defendant,
Dick Mason Lumber Company, Inc., Additional Defendant,
and
First-Citizens Bank & Trust Company, Third-Party Defendant. No. 41. Supreme Court of North Carolina. Nov. 4, 1976.

Basil L. Whitener and Anne M. Lamm, Gastonia, for plaintiff-appellant.

Hollowell, Stott & Hollowell by James C. Windham, Jr., Gastonia, for defendant-appellee.

EXUM, Justice.

The Court of Appeals dismissed plaintiff's appeal on the ground that the judgment appealed from 'adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties' without determining that there is 'no just reason for delay' as required by General Statute 1A--1, Rule 54(b). Since plaintiff asserted a right of appeal under General Statutes 1--277 and 7A--27, the first issue in the case is whether a partial summary judgment which 'affects a substantial right' but which fails to satisfy the requirements for appeal under Rule 54(b) is nevertheless appealable. We hold that it is.

On the merits the contest before us is between competing creditors of Mason Lumber Company, both of whom claim an interest in a chattel which had been delivered to Mason, a dealer, in the ordinary course of business by its supplier, Nasco Equipment Company. The creditors are the plaintiff Nasco and the third-party defendant First-Citizens Bank. The second issue thus presented is whether, upon the factual showing made by the parties, the bank is entitled to summary judgment in its favor. We hold that it is.

This action began with a complaint alleging debts owed plaintiff Nasco by defendant Mason for merchandise delivered. In addition, the complaint alleged that on April 12, 1973, defendant took into possession one Nasco Loadster, Serial No. 554, Model GF8, with 24-foot mast, and that the loadster was plaintiff's property and was being wrongfully possessed by Mason. Plaintiff sought to recover the possession of the loadster or in the alternative its value.

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Mason answered, denying Nasco's right to possession, counterclaiming for certain commissions owed him by plaintiff and interpleading First-Citizens as third-party defendant on the basis of an alleged security agreement granting the bank a security interest in the loadster. Mason's answer also alleged that Nasco conducted the business described [291 N.C. 148] in the complaint with Dick Mason Lumber Company, Inc., a corporation wholly owned by Mason. Mason prayed that the corporation 'be named as the proper party defendant.' By order the corporation was made a party defendant and claims against it were asserted in later pleadings by Nasco. Mason, individually, and his corporation will be referred to herein simply as 'Mason.' First-Citizens answered, alleging a perfected security interest in the loadster and denying Nasco's right to possess. In its response, Nasco contended that Mason had no power to create a security interest in the loadster. On the bank's motion the trial court granted summary judgment for First-Citizens.

The order granting summary judgment denies plaintiff a jury trial on the issue of its claim against the bank and, in effect, determines the claim in favor of the bank. Thus the order affects a substantial right and is appealable under General Statutes 1--277 and 7A--27. Rule 54(b) was designed to expand opportunities for appellate review to those circumstances where no other rule or statute allows appeal and, absent the requisite determination by the trial judge that there is 'no just reason for delay,' an appeal of the order would be barred because of lack of finality. Rule 54(b) allows the trial court to render a final, though partial, adjudication in these circumstances.

Thus, where a party has a statutory right of appeal even from an interlocutory order, Rule 54(b) will never bar appeal even though the order appealed from fails to find 'no just reason for delay.' This question was recently determined by this Court in Oestreicher v. Stores, 290 N.C. 118, 225 S.E.2d 797 (1976). Oestreicher, which held a summary judgment on the issue of punitive damages to be appealable, controls in this case. For these reasons, the Court of Appeals erred in dismissing plaintiff's appeal.

We therefore turn to a consideration of the merits of plaintiff's contention that summary judgment was improperly entered in the trial court. Rule 56(c) provides:

'The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact [291 N.C. 149] and that any party is entitled to a judgment as a matter of law.'

The nature and purpose of the summary judgment rule becomes more apparent upon a consideration of Rule 56(e), which provides, Inter alia:

'When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth Specific facts showing that there is a genuine issue for trial.' (Emphasis added.)

This Court has previously observed that the purpose of the rule is to eliminate formal trials where only questions of law are involved. Kessing v. Mortgage Corp., 278 N.C. 523, 180 S.E.2d 823 (1971). The procedure under Rule 56 is designed to allow a 'preview' or 'forecast' of the proof of the parties in order to determine whether a jury trial is necessary. Caldwell v. Deese, 288 N.C. 375, 218 S.E.2d 379 (1975). See Louis, 'Federal Summary Judgment Doctrine: A Critical Analysis,' 83 Yale L.J. 745 (1974). Thus a motion under Rule 56 allows the court to 'pierce the pleadings' to determine whether any genuine factual controversy exists. Singleton v. Stewart, 280 N.C. 460, 186 S.E.2d 400 (1972).

Since the 'heart of the summary judgment procedure and the test applied in reviewing . . . a trial court's ruling' on a Rule 56 motion is the finding that there is

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'no genuine issue as to any material fact,' Railway Co. v. Werner Industries, 286 N.C. 89, 95, 209 S.E.2d 734, 737 (1974); 10 Wright & Miller, Federal Practice and Procedure: Civil §§ 2716 and 2725 (1973), it is necessary to resolve the significance of the term 'material fact.' We said in Railway Co. v. Werner Industries, supra at 95, 209 S.E.2d at 737:

"The determination of what constitutes a 'genuine issue as to any material fact' is often difficult. It has been said that an issue is material if the facts alleged are such as to constitute a legal defense or are of such nature as to affect the result of the action, or if the resolution of the issue is so essential that the party against whom it is resolved may not prevail. A question of fact which is immaterial does not preclude summary judgment." (Emphasis added.)

[291 N.C. 150] It is apparent that one of the situations in which the use of Rule 56 would be appropriate is that in which a 'material fact' is alleged and denied by the parties but in which the preview of the proof reveals the...