Whitten v. Bob King's AMC/Jeep, Inc.

• Decision Date: 08 February 1977
• Docket Number: No. 96,96
• Citation: 292 N.C. 84,231 S.E.2d 891
• Parties: Jerry W. WHITTEN v. BOB KING'S AMC/JEEP, INC. and R. L. King, Jr.
• Court: North Carolina Supreme Court

Page 891

231 S.E.2d 891

292 N.C. 84

Jerry W. WHITTEN v. BOB KING'S AMC/JEEP, INC. and R. L. King, Jr.

No. 96.

Supreme Court of North Carolina.

Feb. 8, 1977.

Henry C. Frenck, Winston-Salem, for plaintiff.

White & Crumpler by Fred G. Crumpler, Jr. and G. Edgar Parker, Winston-Salem, for defendant.

BRANCH, Justice.

The sole question before us is whether the Court of Appeals erred in concluding that the trial judge properly allowed the motion for summary judgment in favor of the corporate defendant, Bob King's AMC/Jeep, Inc.

The entry of summary judgment is appropriate only '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.' G.S. 1A--1, Rule 56(c). The burden of establishing the absence of any genuine issue as to a material fact rests on the moving party. Kidd v. Early, 289 N.C. 343, 222 S.E.2d 392. If the other party opposes the motion with evidentiary materials which indicate the existence of a genuine issue of material fact, or if the movant's own supporting materials suggest the existence of such an issue, then the motion must be denied. Kidd v. Early, supra.

Plaintiff alleged in both his original complaint and his amended complaint that 'on or about the 4th day of November, 1968 the plaintiff and the defendant corporation through its president R. L. King, Jr. Entered into a contract for the sale and transfer of stock . . ..' (Emphasis added.) However, all the evidence presented at the hearing on the motion for summary judgment tends to show that the alleged agreement (whether it be plaintiff's version or defendant's version) was orally entered into prior to the acknowledged date of incorporation of Triangle Motor Sales, Inc. in May of 1968. The written contract of 4 November 1968 was merely a memorandum reflecting the terms of that prior agreement. The deposition of plaintiff reveals the following pertinent information:

. . . I gave $5,000 directly to Mr. King in March of 1968, pursuant to our prior discussions to invest in the business. We had previously agreed that I would be a stockholder but a silent stockholder.

. . . In November of 1968 he reduced this agreement to writing which is Exhibit 'A', attached to the Complaint filed herein.

The deposition testimony of individual defendant is consistent with this chronology of events:

. . . In February of 1968 we discussed his coming to Winston to work for me . . .. At that time we did talk about Mr. Whitten investing in the corporation, about him loaning me money for a business . . .. He agreed to loan me $5,000 . . .. In February, March or April of 1968, Mr. Whitten did give me $5,000, which I deposited into my bank account.

. . . Prior to the statement (Exhibit 'A') we had only a verbal agreement. When Mr. Whitten gave me the $5,000, he had never had anything in writing. He subsequently asked me to prepare this statement. We had previously agreed that he was going to loan me $5,000. We reduced the agreement to writing . . ..

Although the complaint did not specifically allege that corporate defendant adopted the contract made on its behalf, we are of the opinion that the evidence presented at the hearing supported this theory.

It is recognized by case law and leading treatises that where the evidence presented at a hearing upon a motion for summary judgment would justify an amendment to the pleadings, such amendment should not be precluded by entry of summary judgment. Indeed, in proper cases it is desirable to treat the pleading as though it were amended to conform to the evidence presented at the hearing. Freeman v. Marine Midland Bank-New York, 2 Cir., 494 F.2d 1334; Rossiter v. Vogel, 2 Cir., 134 F.2d 908; 6 Moore's Federal Practice 56.10 (2d ed. 1976); Wright & Miller, Federal Practice and Procedure: Civil § 2738. See also Bank v. Gillespie, 291 N.C. 303, 230 S.E.2d 375. Under the facts of instant case, it is both proper and desirable that the complaint be treated as amended to conform to the evidence. We hasten to add that it is the better procedure at all stages of a trial to require a formal amendment to the pleadings.

A corporation cannot ratify a contract made on its behalf prior to its incorporation, since it could not have authorized the contract at that time. However, the corporation adopts the contract and becomes bound by its terms, if it accepts the benefits of the contract with knowledge of its provisions. Smith v. Ford Motor Co., 289 N.C. 71, 221 S.E.2d 282; McCrillis v. Enterprises, 270 N.C. 637, 155 S.E.2d 281; Robinson, North Carolina Corp. Law § 2--4 (2d ed. 1974); 18 Am.Jur.2d, Corporations § 122.

There can be no doubt that corporate defendant accepted the benefits of the contract between plaintiff and individual defendant when the $5,000 advanced by plaintiff was used as a part of its initial capitalization. At no time has corporate defendant attempted to repudiate the contract benefits previously obtained. Rather, it has retained plaintiff's initial contribution as a part of its working capital at all times prior to the institution of this action. Nevertheless, before a corporation can be held to have adopted a prior contract of its promoter, it must not only appear that it has accepted the benefits of the contract, but also that it did so...