Defendant appeals from a summary judgment order. Summary
judgment should be granted when “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.” N.C.G.S. § 1A-1, Rule 56(c) (2001). “An issue
is material if the facts alleged would constitute a legal defense,
or would affect the result of the action, or if its resolution
would prevent the party against whom it is resolved from prevailing
in the action.”
Koontz v. City of Winston-Salem, 280 N.C. 513,
518, 186 S.E.2d 897, 901 (1972). “The moving party bears the
burden of establishing the lack of a triable issue of fact.”
Sykesv. Keiltex Industries, Inc., 123 N.C. App. 482, 484-485, 473 S.E.2d
341, 343 (1996) (citing
Pembee Mfg. Corp. v. Cape Fear Constr. Co.,
313 N.C. 488, 329 S.E.2d 350 (1985)). If the movant meets its
burden, the nonmovant is then required to “produce a forecast of
evidence demonstrating that the [nonmoving party] will be able to
make out at least a
prima facie case at trial.”
Collingwood v.
G.E. Real Estate Equities, 324 N.C. 63, 66, 376 S.E.2d 425, 427
(1989). Furthermore, “the evidence presented by the parties must
be viewed in the light most favorable to the non-movant.”
Bruce-Terminix Co. v. Zurich Ins. Co., 130 N.C. App. 729, 733, 504
S.E.2d 574, 577 (1998).
“Evidence which may be considered under Rule 56 includes
admissions in the pleadings, depositions on file, answers to Rule
33 interrogatories, admissions on file whether obtained under Rule
36 or in any other way, affidavits, and any other material which
would be admissible in evidence or of which judicial notice may
properly be taken.”
Kessing v. Mortgage Corp., 278 N.C. 523, 533,
180 S.E.2d 823, 829 (1971).
See also PNE AOA Media, L.L.C. v.
Jackson Cty, 146 N.C. App. 470, 554 S.E.2d 657 (2001) (citing
rule).
Defendant argues that the trial court erred in granting
summary judgment for plaintiff, and contends that the evidence
raised a genuine issue of material fact regarding whether there was
consideration for the CD. The resolution of this issue requires us
to examine several features of the commercial transaction at issue.
First, plaintiff and defendant disagree about whether the CDis a negotiable instrument as defined by the Uniform Commercial
Code (UCC). We conclude that the CD at issue in the present case
is not a negotiable instrument, and therefore is not governed by
the negotiable instrument provisions of the UCC.
The UCC applies only to negotiable instruments. N.C.G.S. §
25-3-102. A “negotiable instrument” is “an unconditional promise
or order to pay a fixed amount of money[.]” N.C.G.S. . 25-3-104(a).
Negotiable instruments, also called simply “instruments,” may
include,
e.g., a personal check, cashier's check, traveler's check,
or CD. N.C.G.S. . 25-3-104. However, N.C.G.S. § 25-3-104(d)
provides that a financial document such as a CD “is not an
instrument if, at the time it is issued or first comes into
possession of a holder, it contains a conspicuous statement,
however expressed, to the effect that the promise or order is not
negotiable or is not an instrument governed by this Article.”
See
Holloway v. Wachovia Bank & Trust Co., 333 N.C. 94, 99-100, 423
S.E.2d 752, 755 (1992) (CD that included “terms precluding
transfer” held not a negotiable instrument, as it “lacks the
essential words of negotiability”).
In the instant case, the CD confirmation clearly states, in
upper case type, “NON-TRANSFERABLE.” We conclude that this
qualifies as “a conspicuous statement . . . that the promise or
order is not negotiable,” and, thus, that the CD does not fall
within the purview of the negotiable instrument provisions of the
UCC.
“Because the certificate of deposit at issue does not fallunder the UCC, we must turn to the common law.”
Holloway at 100,
423 S.E.2d at 755. The CD confirmation is a contract between
plaintiff and defendant, and its interpretation is governed by
principles of contract law.
Holloway, id. (CD represents a
contract between bank and depositor, evidenced by the CD);
In re
Estate of Heffner, 99 N.C. App. 327, 329, 392 S.E.2d 770, 771
(1990) (CD requires signature, as the “only writing purporting to
serve as a contract”).
The CD in the case
sub judice is a contract whereby plaintiff
agrees to deposit $10,000 with defendant for a period of 24 months
in return for a guaranteed interest rate of 4.65%.
The CD
confirmation states:
This confirmation acknowledges that the
Depositor named below has opened a CD account
with this bank, with an opening deposit in the
amount of $10,000.
The CD confirmation lists plaintiff as the depositor, and sets
forth other details regarding the CD's maturity date, interest
rate, account number, date opened, and taxpayer ID number. The CD
confirmation is signed by Huggins on the line titled “Authorized
Bank Signature.” Defendant has not contested the authenticity of
Huggins' signature, denied that she acted as defendant's agent, or
alleged any defect in the CD confirmation itself, or fraud in its
execution. We conclude that the CD confirmation represents a valid
contract between the parties and that, absent evidence that
warrants reform of the CD confirmation, it entitles plaintiff to
the amount stated on its face.
Defendant argues that the sworn affidavit of Huggins raises agenuine issue of material fact as to whether plaintiff provided
consideration ($10,000) for the CD. In her affidavit, Huggins
acknowledges that plaintiff obtained a loan from defendant, that
defendant required plaintiff to purchase a CD to secure the loan,
and that Huggins completed the documents involved in the
transaction and delivered them to plaintiff. She further concedes
that she gave plaintiff the CD confirmation with her signature.
The affidavit contains no allegations of fraud, undue influence,
misrepresentation, or mutual mistake. Rather, the affidavit states
that “[plaintiff] was mistakenly given a CD confirmation form which
acknowledged the opening of the CD account in the amount of
$10,000,” and that “[t]he CD confirmation form and Deposit Account
Agreement booklet should not have been given to [plaintiff.]” In
essence, Huggins asserts that she gave plaintiff the CD
confirmation “by mistake.”
Defendant contends that Huggins' affidavit is admissible to
show lack of consideration for the CD, and thus creates an issue of
fact. Plaintiff, however, argues that the parol evidence rule bars
admission of Huggins' affidavit. “The parol evidence rule is not
a rule of evidence but of substantive law. . . . It prohibits the
consideration of evidence as to anything which happened prior to or
simultaneously with the making of a contract which would vary the
terms of the agreement.”
Harrell v. First Union Nat. Bank, 76 N.C.
App. 666, 667, 334 S.E.2d 109, 110 (1985),
aff'd, 316 N.C. 191, 340
S.E.2d 111 (1986). “Generally, the parol evidence rule prohibits
the admission of evidence to contradict or add to the terms of aclear and unambiguous contract.”
Hansen v. DHL Laboratories, 316
S.C. 505, 508, 450 S.E.2d 624, 626 (1994),
aff'd, 319 S.C. 79, 459
S.E.2d 850 (1995). Thus, it is “assumed the [parties] signed the
instrument they intended to sign[,] . . . [and, absent] evidence or
proof of mental incapacity, mutual mistake of the parties, undue
influence, or fraud[,] . . . the court [does] not err in refusing
to allow parol evidence[.]”
Rourk v. Brunswick County, 46 N.C.
App. 795, 797, 266 S.E.2d 401, 403 (1980).
Defendant correctly states the common law principle of
contract law, that parol evidence of a failure of consideration may
be admissible to elucidate the terms of a contract.
Stachon &
Assoc. v. Broadcasting Co., 35 N.C. App. 540, 241 S.E.2d 884
(1978). However, in
Stachon, and other cases wherein parol
evidence was admitted to show lack of consideration, the evidence
pertained to a condition precedent that was not stated on the face
of the contract, but which was a condition on which the validity of
the contract depended. Therefore, the parol evidence did not
contradict the contract, but merely set out the full understanding
between the parties.
See Bailey v. Westmoreland, 251 N.C. 843, 112
S.E.2d 517 (1960) (admitting evidence that promissory note was not
to become binding obligation unless plaintiff received certain sum
from sale or collection of another note);
Perry v. Trust Co., 226
N.C. 667, 40 S.E.2d 116 (1946) (notes executed upon understanding
among parties, that plaintiff's uncle would pay back taxes on a
certain parcel of land);
Stachon & Assoc. v. Broadcasting Co., 35
N.C. App. 540, 241 S.E.2d 884 (1978) (notes executed on unstatedcondition that plaintiff would perform certain work for defendant).
In each of these cases, the parol evidence was necessary to explain
the terms of the contract. However, parol evidence is not
admissible to contradict the language of the contract.
Harrell v.
First Union Nat. Bank, 76 N.C. App. 666, 667, 334 S.E.2d 109, 110
(1985) (barring testimony that, notwithstanding unambiguous
language in 'Letter of Consent,' an unwritten agreement modified
its terms);
Rourk v. Brunswick County, 46 N.C. App. 795, 797, 266
S.E.2d 401, 403 (1980) (evidence “in direct conflict with the
[contract] is incompetent”). In the instant case, the CD
confirmation unambiguously states that plaintiff had deposited
$10,000 in a CD account, and the affidavit flatly contradicts this
language.
Notwithstanding the language of the CD confirmation, defendant
contends that language in its “Deposit Account Agreement” booklet
establishes that the CD confirmation was issued subject to a
condition precedent. This document states that an account “is not
opened or valid until we receive . . . the initial deposit in cash
or collectible funds.” The CD confirmation is, however, the
document that verifies or acknowledges that this condition
precedent (deposit of money) has already occurred. Therefore, the
bank booklet does not raise an issue of fact.
Nor is evidence of a unilateral mistake admissible to
contradict the terms of a contract.
Goodwin v. Cashwell, 102 N.C.
App. 275, 277, 401 S.E.2d 840, 840 (1991) (citation omitted) (parol
evidence rule excludes consideration of unilateral error made byone party in calculations pertaining to settlement agreement; Court
notes that a “unilateral mistake, unaccompanied by fraud,
imposition, undue influence, or like oppressive circumstances, is
not sufficient to void a contract”).
We conclude that defendant's affidavit (1) directly
contradicts the clear language in the contract between the parties;
(2) does not demonstrate that the CD was only to become effective
upon the occurrence of some future contingency; (3) alleges a
unilateral mistake by defendant; and (4) is therefore inadmissible
as a violation of the parol evidence rule, and thus is not proper
for consideration by the Court in ruling on plaintiff's summary
judgment motion. We further conclude that defendant produced no
competent evidence raising a genuine issue of material fact, and
that the trial court did not err in granting summary judgment in
favor of plaintiff. Accordingly, the trial court's entry of
summary judgment is
Affirmed.
Judges GREENE and HUDSON concur.
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