AAPCO v Smalley, (02-903) 06/17/2003

Appeal by defendants from judgment entered 31 January 2002 by Judge Ronald K. Payne in Watauga County Superior Court. Heard in the Court of Appeals 24 April 2003.

    Samuel F. Furgiuele, Jr., for plaintiff.

    Turner & Yates, P.A., by David W. Yates, for defendants.

    Eric F. Eller, for defendants.

LEVINSON, Judge.

On 4 April 2001, plaintiff filed a complaint against defendants alleging they breached an oral contract that provided for the formation of a joint venture in real property development and investment. The terms of the agreement were that the parties would buy and develop properties and split any profits equally. Plaintiff alleged defendants breached the agreement by converting funds and property for their own use. Both parties waived their rights to a jury trial, and on 31 January 2002, the trial court entered judgment against defendants. Defendants appeal contending inter alia the trial court erred in (1) denying their motion to dismiss plaintiff's claim at the close of plaintiff's evidence, (2) awarding plaintiff lost profits because plaintiff failed to present sufficient evidence of actual damages, and (3) finding defendant Charles Smalley jointly and severally liable for plaintiff's damages.

    We first address defendants' challenge to the trial court's finding that defendant Charles Smalley is liable, as a principal to the joint venture, for plaintiff's damages. The trial court specifically found:
        There is circumstantial evidence satisfactory to the Court that at the time Ms. Smalley negotiated the transfer of property in question into her name and that of her husband, she was acting as agent of her husband, and that her husband ratified such agency relationship by accepting the benefits negotiated by her on his behalf.

    An agent is “one who acts for or in the place of another by authority from him.” Trust Co. v. Creasy, 301 N.C. 44, 56, 269 S.E.2d 117, 124 (1980) (citing Julian v. Lawton, 240 N.C. 426, 82 S.E.2d 210 (1954)). “Where evidence of an agency relationship has been presented, agency becomes a fact to be proved and a question for the [fact-finder].” Poor v. Hill, 138 N.C. App. 19, 31, 530 S.E.2d 838, 846 (2000) (citing Industries, Inc. v. Distributing, Inc., 49 N.C. App. 172, 173, 270 S.E.2d 515, 516 (1980)). “When a trial court sits as the trier of fact, the court's findings and judgment will not be disturbed on the theory that the evidence does not support the findings of fact if there is any evidence tosupport the judgment, even though there may be evidence to the contrary.” Atlantic Veneer Corp. v. Robbins, 133 N.C. App. 594, 599, 516 S.E.2d 169, 173 (1999).
    Although one spouse is not jure mariti the agent of the other and no presumption of agency arises from the mere fact of the existence of a marital relationship, Beaver v. Ledbetter, 269 N.C. 142, 146, 152 S.E.2d 165, 169 (1967), an agency relationship between spouses “may be shown by direct evidence or by evidence of such facts and circumstances as will authorize a reasonable and logical inference that [one] was empowered to act for [the other].” Boyd v. Drum, 129 N.C. App. 586, 591, 501 S.E.2d 91, 96 (1998), aff'd, 350 N.C. 90, 511 S.E.2d 304 (1999) (quoting Norburn v. Mackie, 262 N.C. 16, 23, 136 S.E.2d 279, 284 (1964)). “'Slight evidence' of agency suffices to charge a spouse as a principal if that spouse 'receives, retains, and enjoys the benefit of [a] contract' entered into by the other spouse.” Poor, 138 N.C. App. at 31, 530 S.E.2d at 846 (quoting Norburn, 262 N.C. at 22, 136 S.E.2d at 284).
    In the instant case, plaintiff's counsel asked defendant Verna Smalley on cross examination whether “you [entered] into a business relationship with either Dale Ward or Aapco.” Defendant responded, “Yes, we did.” (emphasis added). Although subject to differing interpretations, the trial court could have reasonably understood defendant Verna Smalley's testimony to imply that both she and her husband, defendant Charles Smalley, entered into the subject agreement with plaintiff. “[I]t is for the trier of fact, and notan appellate court, to resolve any ambiguities and inconsistencies in [the testimony].” Hill v. Hanes Corp., 319 N.C. 167, 173, 353 S.E.2d 392, 396 (1987). Even if Verna Smalley, in her testimony concerning the formation of a business relationship with plaintiff, was not referring to the joint venture that is the subject of this case but rather to a prior dealing between the parties, “[t]he course of business dealing between the parties in similar transactions is competent evidence upon the question of agency.” Colyer v. Hotel Co., 216 N.C. 228, 230, 4 S.E.2d 436, 438 (1939).
    Additionally, defendant Verna Smalley admitted on cross- examination to having plaintiff deed the subject property in this case to both defendants, not just defendant Verna Smalley. Furthermore, on three separate occasions, both defendants granted portions of the subject property to third parties and received the resulting income. Finally, both defendants granted a deed of trust to Johnson County Bank in an effort to obtain funds to construct houses on the subject property and in furtherance of the joint venture.
    We also note that defendant Charles Smalley failed to testify in his own defense.
        [I]t has long been the rule in this state that the failure of a party [in a civil case] to take the stand to testify as to facts peculiarly within his knowledge and directly affecting him is “a pregnant circumstance” for the fact finder's consideration. If the party is a competent witness, his failure to go upon the stand “when the case is such as to call for an explanation . . . or the evidence is such as to call for a denial,” is a “circumstance against him” and a “proper subject of fair comment.”
In re Peoples, 296 N.C. 109, 152, 250 S.E.2d 890, 915 (1978), cert. denied sub nom. Peoples v. Judicial Standards Com., 442 U.S. 929, 61 L. Ed. 2d 297 (1979) (quoting York v. York, 212 N.C. 695, 701-702, 194 S.E. 486, 490 (1938) and Cuthell v. Greene, 229 N.C. 475, 481-82, 50 S.E.2d 525, 529 (1948)); see also Walker v. Walker, 201 N.C. 183, 159 S.E. 363 (1931).
    Upon careful review we find there is sufficient record evidence that defendant Verna Smalley acted as an agent for defendant Charles Smalley and that he “'receive[d], retain[ed], and enjoy[ed] the benefit of [the] contract' entered into by [his] spouse.” Poor, 138 N.C. App. at 31, 530 S.E.2d at 846 (quoting Norburn, 262 N.C. at 22, 136 S.E.2d at 284). Therefore, the trial court did not err in finding defendants jointly and severally liable for plaintiff's damages.

    At the close of plaintiff's evidence, the following exchange between the trial court and defendants' attorney occurred:
        MR. ELLER: Mr. Ward [plaintiff's president] testified as to what he believed the terms of the contract were, and what he testified was that she was going to put up the money, he was going to provide the work, get contractors and things and they would split the profit. He presented no evidence whatsoever as to whether or not there were any profits or losses, and if so what amount. . . .

        THE COURT: The motion will be denied at this time.

    Rule 41(b) provides, in pertinent part:
        After the plaintiff, in an action tried by the court without a jury, has completed the presentation of his evidence, the defendant,without waiving his right to offer evidence in the event the motion is not granted, may move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief.

N.C.G.S. § 1A-1, Rule 41(b) (2001).
        A Rule 41(b) motion challenges the sufficiency of plaintiff's evidence to establish plaintiff's right to relief. In a nonjury case, section (b) of this rule provides a procedure whereby, at the close of plaintiff's evidence, the judge can give judgment against plaintiff not only because his proof has failed in some essential aspect to make out a case but also on the basis of facts as he may then determine them to be from the evidence then before him. The trial judge sits as a trier of the facts and may weigh the evidence, find the facts against the plaintiff and sustain the defendant's motion under section (b) of this rule at the conclusion of the plaintiff's evidence, even though the plaintiff has made out a prima facie case which would have precluded a directed verdict for the defendant in a jury case.

Lumbee River Electric Corp. v. City of Fayetteville, 309 N.C. 726, 741, 309 S.E.2d 209, 218 (1983) (citations omitted); see also Greensboro Masonic Temple v. McMillan, 142 N.C. App. 379, 380, 542 S.E.2d 676, 677 (2001).
        When considering a Rule 41(b) motion, the trial court does not need to evaluate the evidence in the light most favorable to the plaintiff, as would be required by a ruling on a motion for directed verdict. A dismissal under Rule 41(b) should be granted when the plaintiff has shown no right to relief or if the trial court determines that the defendant should otherwise prevail as a matter of law.

Greensboro, 142 N.C. App. at 381-82, 542 S.E.2d at 678 (citations omitted).    In order to recover on a claim for breach of contract, a plaintiff must show (1) the parties entered into a valid contract, (2) the defendant breached the contract, and (3) damages resulted from the breach. Lee Cycle Ctr., Inc. v. Wilson Cycle Ctr., Inc., 143 N.C. App. 1, 10, 545 S.E.2d 745, 751 (2001). However, where a plaintiff makes out a prima facie case of breach of contract but submits no evidence of damages, he is nonetheless entitled to nominal damages. Catoe v. Helms Constr. & Concrete Co., 91 N.C. App. 492, 497-98, 372 S.E.2d 331, 335 (1988); see also Bowen v. Bank, 209 N.C. 140, 144, 183 S.E. 266, 268 (1936); Shalford v. Shelley's Jewelry, Inc., 127 F. Supp. 2d 779, 789 (W.D.N.C. 2000). Therefore, the trial court did not err in denying defendants' motion to dismiss. Kinnard v. Mecklenburg Fair, 46 N.C. App. 725, 730, 266 S.E.2d 14, 17-18 (1980) (holding “'where plaintiff's evidence . . . makes out a prima facie case of breach of contract, a motion to nonsuit is properly denied irrespective of the evidence of damage, since breach of contract entitles the injured party to nominal damages at least.'” (quoting Cook v. Lawson, 3 N.C. App. 104, 107, 164 S.E.2d 29, 32 (1968))); see also Bowen, 209 N.C. at 144, 183 S.E. at 268; Delta Envtl. Consultants of N.C. v. Wysong & Miles Co., 132 N.C. App. 160, 172-73, 510 S.E.2d 690, 698 (1999).

    Next, defendants argue plaintiff failed to present sufficient evidence of lost profits or other damages to sustain an award of actual damages. For a plaintiff to recover damages of lostprofits, he must show such losses with “reasonable certainty.” Olivetti Corp. v. Ames Business Systems, Inc., 319 N.C. 534, 546, 356 S.E.2d 578, 585, reh'g denied, 320 N.C. 639, 360 S.E.2d 92 (1987). Although lost profits shall not be awarded based upon pure speculation or conjecture, absolute certainty is not required. Mosley & Mosley Builders v. Landin Ltd., 87 N.C. App. 438, 446, 361 S.E.2d 608, 613 (1987).
    During plaintiff's case-in-chief, it failed to present any evidence of damages, but on cross-examination of defendant Verna Smalley thereafter it elicited testimony concerning income, expenses, and profits on the properties subject to the joint venture. Concerning defendants' profit on the three properties for which plaintiff brought this action, the following exchange took place between plaintiff's counsel and defendant Verna Smalley:
        Q. How much money did you make from these three lots?

            MR. ELLER: Objection.

            THE COURT: Overruled. You may answer it.

        A. How much total? Off the top of my head I could not give you a figure. I would have to go back and add up all the expenses.

        Q. Is it that you can't, or you won't.

            MR. ELLER: Objection.

            THE COURT: Overruled.

        A. It is that I can't off the top of my head. I could not give you an exact figure. I can give you a ballpark.

        Q. What is the ballpark?

        A. Fifty Five to Sixty Thousand Dollars.
        Q. On all three lots?

        A. Yes.

The following thirty-five pages of transcript further detail defendants' income, expenses, and profits. Additionally, plaintiff introduced nineteen separate exhibits tending to show the same.
    Although prior to rendering its judgment the trial court expressed doubt as to portions of defendant Verna Smalley's testimony, the record reveals it carefully analyzed plaintiff's exhibits and defendant Verna Smalley's testimony concerning lost profits. In its judgment the trial court made thirteen separate findings of fact concerning defendants' expenses, income, and profits. Ultimately it found defendants realized a total profit on all converted properties in the amount of $58,800.00 (an amount consistent with defendant Verna Smalley's own testimony) of which pursuant to the parties' agreement plaintiff was entitled to half ($29,400.00). We hold there was sufficient evidence to affix the amount of plaintiff's lost profits with the requisite degree of certainty and accuracy.
    Affirmed.
    Judges McGEE and MCCULLOUGH concur.
    Report per Rule 30(e).

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