Wachovia Realty Investments v. Housing, Inc., 60

Citation232 S.E.2d 667,292 N.C. 93
Decision Date07 March 1977
Docket NumberNo. 60,60
PartiesWACHOVIA REALTY INVESTMENTS et al. v. HOUSING, INC., et al. v. C. P. ROBINSON, Jr.
CourtUnited States State Supreme Court of North Carolina

Womble, Carlyle, Sandridge & Rice by W. P. Sandridge, Jr., Winston-Salem, for plaintiff.

Smith, Moore, Smith, Schell & Hunter by Jack W. Floyd and O. Max Gardner, III, Greensboro, for defendant.

LAKE, Justice.

The Superior Court was clearly in error in rendering summary judgment for a specified amount, the alleged unpaid balance due upon the note, while retaining for hearing and determination the claim of Housing, Inc., that it is entitled to a set-off or credit in approximately the same amount. If, as the Superior Court found, there remains a substantial controversy to be determined as to the right of Housing, Inc., to such credit, it is obvious that there remains such controversy as to the amount the plaintiff is entitled to recover from Housing, Inc. This being true, summary judgment for the amount so in controversy could not properly be entered. Zimmerman v. Hogg & Allen, 286 N.C. 24, 209 S.E.2d 795 (1974); Kessing v. Mortgage Corp., 278 N.C. 523, 180 S.E.2d 823 (1971).

The existence of this material of fact would, of course, not preclude the Superior Court from rendering summary judgment determining that Housing, Inc., is liable to the plaintiff for whatever amount may remain due and owing upon the note after all proper credits have been allowed, if there is no material issue of fact concerning the matters which Housing, Inc., has alleged as bases for its claim that the plaintiff released it from all liability and if such uncontroverted facts are insufficient to establish the alleged release.

It is equally clear that the entry of the judgment that the plaintiff have and recover of Housing, Inc., $204,603.55 affects a substantial right of Housing, Inc. Execution has been entered to enforce this judgment. Supplemental proceedings in execution have been instituted and an order has been entered by the Clerk of the Superior Court declaring the judgment a lien upon funds alleged to be owing to Housing, Inc., from the Housing Authority of the City of Winston-Salem. As the Court of Appeals observed in its opinion, G.S. 1--269 and G.S. 1--289 provide for a stay of execution upon a money judgment, provided the judgment debtor gives a bond or makes a deposit, and G.S. 1A--1, Rule 62(g), authorizes the court which rendered the judgment to stay its enforcement, pending its determination of other aspects of the litigation, upon such conditions as that court deems necessary to secure the benefit of the judgment to the judgment creditor. Either of those procedures would, however, even if successful require Housing, Inc., to incur substantial expense. Thus, the existence of those procedures for staying execution on the judgment does not prevent the entry of the judgment from affecting a substantial right of the judgment debtor.

G.S. 1--277(a) provides:

'An appeal may be taken from every judicial order or determination of a judge of a superior or district court, upon or involving a matter of law or legal inference, whether made in or out of session, which affects a substantial right claimed in any action or proceeding * * *.'

G.S. 7A--27(d) provides:

'From any interlocutory order or judgment of a superior court or district court in a civil action or proceeding which affects a substantial right * * * appeal lies of right directly to the Court of Appeals.'

These statutes were not repealed or nullified by the enactment of Chapter 1A of the General Statutes prescribing the presently effective Rules of Civil Procedure. In Highway Commission v. Nuckles, 271 N.C. 1, 13, 155 S.E.2d 772, 783 (1967), this Court, speaking through Justice Sharp, now Chief Justice, said: 'Ordinarily, an appeal lies only from a final judgment, but an interlocutory order which will work injury if not corrected before final judgment is appealable.' In Stanback v. Stanback, 287 N.C. 448, 453, 215 S.E.2d 30, 34 (1975), speaking through Justice Huskins, we said: 'Ordinarily, an appeal from an interlocutory order will be dismissed as fragmentary and premature unless the order affects some substantial right and will work injury to appellant if not corrected before appeal from final judgment.' See also: Currin v. Smith, 270 N.C. 108, 153 S.E.2d 821 (1967); Steele v. Hauling Co., 260 N.C. 486, 133 S.E.2d 197 (1963).

By virtue of G.S. 1A--1, Rule 54, the judgment rendered by the Superior Court was not a final judgment, but by virtue of G.S. 1--277 and G.S. 7A--27(d) it is, nevertheless, appealable and the Court of Appeals was in error in dismissing the appeal of Housing, Inc., without passing upon the merits thereof. In its brief in this Court, the plaintiff-appellee agrees that the judgment of the Superior Court is appealable and requests this Court to consider the appeal on its merits and affirm the judgment of the Superior Court, or, if not, to provide guidance to the trial court, and to the parties, as to what genuine issues of material fact require disposition by the Superior Court.

We turn now to the contention of Housing, Inc., that it has been released from all liability upon the note and, therefore, the Superior Court was in error in granting the motion of the plaintiff for summary judgment in any amount and in denying the motion of Housing, Inc., for summary judgment.

The first alleged basis for this contention is that Robinson and Johnson, the only stockholders of Housing, Inc., entered into an agreement on 23 February 1971 for a separation of their numerous business interests, to which agreement the plaintiff consented and by which Robinson assumed the duty to pay the construction loan evidenced by the note here in suit. Housing, Inc., asserts that this agreement constituted 'a novation in substituting C. P. Robinson Construction Company in the place of Housing, Inc., thereby releasing Housing, Inc., from its obligations under the construction loan documents.'

The following facts with reference to this matter are not in dispute:

1. On 6 May 1970, Housing, Inc., executed the note in suit for the principal sum of $3,624,220, secured by a deed of trust upon certain real estate known as North Hills in Winston-Salem, which land Housing, Ins., then owned and proposed to develop as a housing project for sale, in Phases I to VIII as completed, to the Housing Authority of Winston-Salem.

2. At the time the note was made, Robinson and Johnson were the only shareholders of Housing, Inc., each owning one-half of the outstanding capital stock, and they were jointly interested in a number of other business interests and development projects.

3. Contemporaneously with the execution of the note, Robinson, Johnson and their wives executed to the plaintiff, jointly and severally, an unconditional guaranty of payment of the note, the guarantors agreeing therein to remain bound, notwithstanding indulgences or extensions of time granted to the borrower and notwithstanding the surrender of any security held for the payment of the debt.

4. Substantially contemporaneously with the execution of the note, Housing, Inc., entered into a contract with C. P. Robinson Construction Company, of which Robinson was the sole shareholder, for the construction by that company of the North Hills project.

5. The agreement of 23 February 1971 between Robinson and Johnson provided in the portions thereof pertinent to this controversy:

'WHEREAS, it appears that the debts of Housing, Inc., (Not including certain mortgage obligations and an obligation on North Hills of $21,680.00) amount to $516,071.94, a schedule of which prepared by the accountant is attached hereto.

'NOW, THEREFORE, it is agreed Between the parties as follows:

'(2) That Robinson Shall complete the project known as North Hills in Winston-Salem, North Carolina, Without expense to Housing, Inc. and shall receive As consideration therefor all sales proceeds arising therefrom After discharging the existing construction loan and all bills unpaid in connection with the project.

* * *

* * *

'(5) As a condition to the transfer of the foregoing assets (properties not relating to this litigation), Robinson shall assume and pay obligations now owed by Housing, Inc. the aggregate amount of which shall be one-half of the amount arrived at by subtracting from total Nonmortgage liabilitites of $516,071.94 the following four items (items not related to this litigation.)

* * *

* * *

'The obligations assumed by Robinson under the terms of this paragraph shall include the note in favor of Commercial and Farmers Bank at Rural Hall, North Carolina. The balance of the funds payable under the provisions of this Paragraph 5 shall be paid by assuming other obligations designated by the accountant.' (Emphasis added.)

6. At all times legal title to the North Hills properties remained in Housing, Inc., except that Phases I through V were conveyed, when completed, to the Housing Authority of the City of Winston-Salem by deeds from Housing, Inc. (and were then released from the deed of trust by the plaintiff), and the rest of the properties were conveyed by the trustee in the deed of trust to the purchaser at a foreclosure sale conducted by him in 1972.

It is obvious, upon the face of the agreement of 23 February 1971 between Robinson and Johnson, that it did not constitute an assumption by Robinson of liability for the payment of the note in suit. With reference to the North Hills project, Robinson simply contracted to complete the project without further expense to Housing, Inc. This is a far cry from an assumption by him of personal liability for the payment of the note for $3,624,220, previously guaranteed by him, and a release by Robinson of Housing, Inc., from the latter's obligation to indemnify him in event he was required, under his guaranty, to pay the note. Robinson's undertaking to complete the project, at most, merely released ...

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