Old Southern Life Ins. Co. v. Bank of North Carolina, N. A.

• Decision Date: 18 April 1978
• Docket Number: No. 7726SC292,7726SC292
• Citation: 36 N.C.App. 18,244 S.E.2d 264
• Court: North Carolina Court of Appeals
• Parties: OLD SOUTHERN LIFE INSURANCE CO. v. BANK OF NORTH CAROLINA, N. A., and All States Life Insurance Company.

Page 264

244 S.E.2d 264

36 N.C.App. 18

OLD SOUTHERN LIFE INSURANCE CO. v. BANK OF NORTH CAROLINA, N. A., and All States Life Insurance Company.

No. 7726SC292.

Court of Appeals of North Carolina.

April 18, 1978.

James, McElroy & Diehl by James H. Abrams, Jr., Charlotte, for plaintiff appellee.

Griffin, Gerdes, Harris, Mason & Brunson by N. Deane Brunson and C. Michael Wilson, and Fleming, Robinson & Bradshaw by A. Ward McKeithan, Charlotte, for defendant appellant.

BRITT, Judge.

Defendant contends in its sole assignment of error that the trial court erred in granting plaintiff's motion for summary judgment. Defendant argues: (1) that plaintiff was not entitled to summary judgment as a matter of law since it offered no affidavits, depositions or evidence of its unverified allegations which were all denied by defendant; and (2) that plaintiff was not entitled to summary judgment since defendant raised genuine issues of material facts on three questions: (a) whether plaintiff is the lawful owner and holder of the CD pursuant to a proper and valid assignment, (b) whether All States was a mere instrumentality or alter ego of III, and (c) whether the deposit by All States was security for the $370,000 loan of III.

Summary judgment is controlled primarily by G.S. 1A-1, Rule 56. Subsection (a) provides that a claimant may move with or without supporting affidavits for a summary judgment in his favor. Subsection (c) provides, among other things, that the judgment shall be rendered 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 and that any party is entitled to a judgment as a matter of law. Subsection (e) provides that any supporting or opposing affidavits shall be made on personal knowledge, "shall set forth such facts as would be admissible in evidence and shall show affirmatively that the affiant is competent to testify to the matters stated therein". Subsection (e) also provides that when a motion for summary judgment is made and supported as provided by Rule 56, an adverse party may not rest upon the mere allegations or denials in his pleading, but his response, by affidavits or as otherwise provided in the rule must set forth specific facts showing that there is a genuine issue for trial.

In addition, Kidd v. Early, 289 N.C. 343, 370, 222 S.E.2d 392, 410 (1976), sets forth the following standards for determining when summary judgment is appropriate for the claimant.

Nothing in our State Constitution nor in our decisions precludes summary judgment in favor of a party with the burden of persuasion when the opposing party has failed to respond to the motion in the manner required by Rule 56(e) or (f) and no "genuine issue as to any material fact" arises out of movant's own evidence or the situation itself challenges credibility. Under these circumstances Rule 56(e) provides that summary judgment shall be entered.

The purpose of Rule 56 is to prevent unnecessary trials when there are no genuine issues of fact and to identify and separate such issues if they are present. To this end the rule requires the party opposing a motion for summary judgment notwithstanding a general denial in his pleadings to show that he has, or will have, evidence sufficient to raise an issue of fact. If he does not, "summary judgment, if appropriate, shall be entered against him." To hold that courts are not entitled to assign credibility as a matter of law to a moving party's affidavit when the opposing party has ignored the provisions of section (e) and (f) would be to cripple Rule 56. See 10 Wright and Miller § 2740.

To be entitled to summary judgment the movant must still succeed on the basis of his own materials. He must show that there are no genuine issues of fact; that there are no gaps in his proof; that no inferences inconsistent with his recovery arise from his evidence; and that there is no standard that must be applied to the facts by the jury. . . .

See also 10 Wright & Miller, Federal Practice and Procedure: Civil § 2727 (1973).

In order to determine whether the movant has complied with the above requirements of Rule 56 and standards set forth by case law, North Carolina courts have followed the interpretation of similar provisions in Federal Rule 56 and allowed the court to consider the pleadings, affidavits that meet the requirements of G.S. 1A-1, Rule 56(e), depositions, answers to interrogatories, admissions, oral testimony, documentary materials, facts which are subject to judicial notice, and such presumptions as would be available at trial. Singleton v. Stewart, 280 N.C. 460, 186 S.E.2d 400 (1972); Butler v. Berkeley, 25 N.C.App. 325, 213 S.E.2d 571 (1975). Affidavits may be relied upon by the parties, but are not required, since the parties may rely upon matters in the record. However, Rule 56(e) does require an adverse party to do more than merely rely on his pleading if the movant supports his motion by affidavit or otherwise. Shuford, N.C. Civil Practice and Procedure § 56-6 (1975).

"[T]he question of when the burden will shift to the opposing party may depend on the type of proof utilized by the moving party. . . . '(I)f the proof in support of the motion is largely documentary and has a high degree of credibility the opponent must produce convincing proof attacking the documents in order to sustain his burden * * * . . ..' " If the moving party makes out a prima facie case that would entitle him to a directed verdict at trial, summary judgment will be granted unless the opposing party presents some competent evidence that would be admissible at trial and that shows that there is a genuine issue as to a material fact. 10 Wright and Miller, Federal Practice and Procedure: Civil § 2727, pp. 536, 537 (1973). In addition, as is true of other material introduced on a summary judgment motion, uncertified or otherwise inadmissible documents may be considered by the court if not challenged by means of a timely objection. 10 Wright and Miller, Federal Practice and Procedure: Civil § 2722 (1973).

Applying these principles to the present factual situation, we conclude that plaintiff presented sufficient competent evidence to support a summary judgment (in the form of a deposition and interrogatory of defendant, documentary exhibits and an affidavit) and that defendant failed to offer competent evidence to contradict plaintiff's evidence and raise a genuine issue of fact. An examination of the applicable law governing the CD and a close analysis of the three questions of fact which defendant contends it raised by presenting competent contradictory evidence to overcome plaintiff's summary judgment motion, supports this conclusion.

The crux of this case evolves around the CD which " . . . certifies that Allstate Life Ins. Co. or Commissioner of Ins. of Alabama as their interest may appear . . . " has deposited with defendant's Charlotte office $100,000. By the terms on the certificate, payment could be obtained "(u)pon surrender of (the) certificate properly endorsed 12 months after date, with interest of 41/4 percent per annum for the time specified only." However, the " . . . certificate (was) automatically renewed for a like term and interest rate if not presented for payment within 10 days after maturity."

By its terms the CD falls within the G.S. 25-9-105(1)(g) definition of instrument which states " 'Instrument' means a negotiable instrument (defined in § 25-3-104), or a security (defined in § 25-8-102) or any other writing which evidences a right to the payment of money and is not itself a security agreement or lease and is of a type which is in ordinary course of business transferred by delivery with any necessary indorsement or assignment." Since this certificate is an instrument within the scope of the U.C.C., it is governed by the principles stated in G.S. 25-3-805 applying Article 3 to instruments which are non-negotiable only because they are not payable to order or bearer. Savings and Loan Association v. Trust Co., 282 N.C. 44, 191 S.E.2d 683 (1972), and the rules stated under G.S. 25-9-304 regarding perfection of security interests in instruments.

Defendant first asserts that he has raised an issue of fact with respect to the validity of the assignment of the CD. We find no merit in this assertion because defendant failed to offer some competent evidence that could be admitted at trial which would raise a question of fact with respect to plaintiff's evidence that the assignment was valid or show a good reason in accordance with Rule 56(f) why it was unable to present facts justifying its opposition to the plaintiff's assertion. G.S. 1A-1, Rule 56, 10 Wright and Miller, Federal Practice and Procedure: Civil § 2727, p. 532 (1973).

Evidence presented by plaintiff at the hearing included its unverified complaint alleging that on 11 October 1975 All States assigned the CD to plaintiff and that it was the lawful owner and holder of the CD; a copy of the CD attached to the complaint indicating on its face a valid assignment; and plaintiff's interrogatory and deposition of defendant, through J. Larry Harrill, in which defendant failed to offer any fact which would place the validity of the assignment in issue. Defendant's evidence which allegedly raised a question of fact with respect to the validity of the assignment included its general denial of the assignment, based on information and belief, and the following statement in the plaintiff's deposition of defendant's J. Larry Harrill:

The Bank further contends that Old Southern Life Insurance Company (Old Southern) is not the lawful owner and/or holder of the certificate of deposit. We have no way to determine that Old Southern is or is not the lawful owner.

Although there is a purported assignment on the back of the certificate of deposit, which I have seen, we have no reason to believe that this is a valid...