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All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative.
ATLANTIC AND EAST CAROLINA RAILWAY COMPANY, Plaintiff, v. WHEATLY
OIL CO., INC., Defendant
Filed: 20 April 2004
Parties_real party in interest_property leased and subleased
There was no issue of fact as to whether plaintiff was a real party in interest, and
summary judgment was correctly granted for plaintiff, where plaintiff (Railway) had leased the
property in question; Railway subleased the property to SOA, which sublet it to defendant; SOA
obtained a judgment of possession against defendant; SOA's lease with Railway was terminated;
and Railway demanded possession from defendant. Although defendant contended that
Railway's original lease had expired and that it had no interest in the property, there was an
agreement allowing Railway to continue in possession indefinitely. A tenant is estopped to deny
title when the landlord's right to possession has not ceased.
Landlord and Tenant_ejectment_sublease rather than assignment_language of
Plaintiff was not estopped from bringing a summary ejectment action based on defendant
being an assignee rather than sublessor. Plaintiff (Railway) was the original long-term lessor,
SOA was the original sublessee, and defendant (Wheatly) was the second sublessee. The plain
language of the consent to sublease signed by Railway, SOA, and Wheatly states that Wheatly's
right to use the property terminated upon the termination of the Railway/SOA lease, which
happened before this action was brought. Moreover, SOA had obtained a judgment giving it the
right of possession before its sublease was terminated.
3. Unjust Enrichment_termination of sublease agreement_no implied contract
The trial court correctly granted summary judgment for plaintiff on defendant's
counterclaim for unjust enrichment in a summary judgment action. Unjust enrichment is based
on an implied contract theory and does not apply if there is a contract between the parties, as
4. Landlord and Tenant_betterments_claim of title required
The trial court correctly granted summary judgment for plaintiff on defendant-tenant's
counterclaim for betterments in a summary ejectment action. Defendant did not make a claim or
showing of a reasonable belief of good title to the property, as required by N.C.G.S. § 1-340.
5. Continuances_denied--discovery not material to claim
A motion for a continuance for further discovery in an ejectment action was properly
denied where the matter to be investigated did not affect defendant's right to the property.
6. Appeal and Error_preservation of issues_failure to appeal order_cross_appeal
Plaintiff's failure to appeal the trial court's order setting an appeal bond and staying
execution waived the issue. A cross-assignment of error on this issue was not properly before
the court; a cross-appeal would have been the proper method to raise these issues.
Appeal by defendant from order and judgment entered 2 December
2002 by Judge Benjamin G. Alford in the Superior Court in Carteret
County. Heard in the Court of Appeals 17 March 2004.
Sumrell, Sugg, Carmichael, Hicks & Hart, P.A., by James R.
Sugg and Arey W. Grady, III, for the plaintiff-appellee.
Wheatly, Wheatly, Nobles, Weeks, Valentine & Lupton, P.A., by
C. R. Wheatly, Jr. and C. R. Wheatly, III, for defendant-
Ward and Smith, P.A., by Frank H. Sheffield, Jr., for North
Carolina Railroad Company, amicus curiae.
On 24 May 2002, Atlantic and East Carolina Railway (Railway)
filed a complaint seeking summary ejectment of Wheatly Oil Company,
Inc. (Wheatly) from property located at 2506 Arendall Street in
Morehead City. Railway alleged that it owned a leasehold interest
in the property, which it had sublet to Southern Outdoor
Advertising, Inc. (SOA), which in turn had sublet the property to
Wheatly. Railway alleged that as a result of the termination of
the lease between it and SOA, and by virtue of a judgment entered
in litigation between Wheatly and SOA, Railway was entitled to be
put in immediate possession of the property and Wheatly should be
On 18 July 2002, after Wheatly filed its answer and raised
various defenses and counterclaims, Railway moved for summary
judgment, filing supporting affidavits and memoranda of law. The
court heard the motion 29 July 2002, and granted summary judgment
to Railway 2 December 2002. Wheatly appeals. For the reasons
discussed below, we affirm.
The property at issue here was originally leased by Railway's
predecessor in interest under a lease which expired in 1994. On
expiration of that lease, however, the owner of the property, the
North Carolina Railroad Company (NCRR), specifically negotiated
Railway's continued use and occupation of the property for an
indefinite time. Railway then leased the property to SOA on 15
November 1984, with terms allowing SOA to renew the lease through
14 November 2014. Also on 15 November 1984, SOA sublet the
property to Wheatly, with provisions that also extended through 14
November 2014. A Consent to Sublease (consent contract) executed
among Railway, SOA and Wheatly specified that Wheatly's right to
use [the property] shall terminate at all events upon the
termination in any manner of [the Railway/SOA lease].
In 1999, SOA sued Wheatly regarding the property, resulting in
a judgment entered 17 October 2001 providing that Wheatly pay
damages to SOA for unpaid rent, that SOA pay damages to Wheatly for
unfair trade practices, and that SOA be put in possession of the
property and Wheatly be removed from it. Neither party appealed.
In late 2001, SOA terminated its lease with Railway, who
subsequently demanded possession of the property. In November
2001, Wheatly tendered a rental payment to Railway, as specified
under the lease between SOA and Railway. Railway refused payment,
stating that SOA was a holdover tenant and that there was no
privity between Wheatly and Railway. This action ensued.
The standard of review on appeal of a grant of summary
judgment is well established:
Summary judgment is proper 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. Gen.
Stat. § 1A-1, Rule 56(c) (2003) (emphasis
added). A party moving for summary judgment
satisfies its burden of proof (1) by showing
an essential element of the opposing party's
claim is nonexistent or cannot be proven, or
(2) by showing through discovery that the
opposing party cannot produce evidence to
support an essential element of his or her
claim. Once the movant satisfies its burden
of proof, the burden then shifts to the
non-movant to set forth specific facts showing
there is a genuine issue of material fact as
to that essential element.
Belcher v. Fleetwood Enters., 162 N.C. App. 80, 84-85, 590 S.E.2d
15, 18 (2004) (internal citations omitted).
 Wheatly first contends that the court erred in granting
summary judgment because there was a genuine issue of material fact
as to whether Railway was the real party in interest. We disagree.
Wheatly contends that Railway had no leasehold interest in the
property because Railway's original lease with NCRR had expired in
1994. However, [t]he general rule denies a tenant in possession
any right to challenge his landlord's title to the property . . .
. Turner v. Weber, 16 N.C. App. 574, 579, 192 S.E.2d 601, 605
(1972), cert. denied 282 N.C. 584, 193 S.E.2d 747 (1974). Wheatly
cites case law discussing an exception when a landlord's own title
has ceased. See Lassiter v. Stell, 214 N.C. 391, 392, 199 S.E.
409, 410 (1938) (While the rule that a tenant is estopped to deny
the title of his landlord is too well settled to require citationof authority, this rule applies to the title of the landlord as it
existed at the time he entered into the lease with the tenant under
which the tenant entered the premises, and does not preclude the
tenant from showing that during the tenancy the landlord's title
had terminated or had been extinguished, and the former landlord
was therefore without authority to maintain a proceeding in summary
ejectment against his former tenant.) However, the record here
contains affidavits filed by Railway's counsel and by the president
of NCRR, stating that, by agreement of NCRR, Railway was entitled
to continue in possession of the property indefinitely, until NCRR
demanded its return. Thus, Railway's right to possession had not
ceased and Wheatly was estopped from challenging its title.
 Wheatly next argues that it should have been granted
summary judgment because it was an assignee rather than a
sublessor, and that Railway was thus estopped from bringing this
ejectment action. For the reasons discussed below, we disagree.
Wheatly contends in its brief that because its sublease from
SOA was co-terminus with the sublease between Railway and SOA,
Wheatly was actually an assignee. Krider v. Ramsay, 79 N.C. 354,
357 (1878). Where a lessee for a term of years parts with his
whole term to a third party, it is called an assignment, and the
assignee thereby becomes the tenant of the original lessor and
subject to all the covenants in the lease, which run with the land,
just as the lessee was. The privity of estate and privity of
contract still subsist between the lessor and assignee, as it did
between the lessor and lessee. Id. In Krider, the lessee
surrendered its lease to the lessor (as here SOA surrendered itslease to Railway) and then the lessor attempted to take possession
of the property from the sublessee. Id. at 356. The court held
that the lessor could not, in these circumstances, eject the
sublessee from the property. A surrender is never allowed to
operate injuriously upon the right of third parties, or to affect
the estate of the underlessee. Id. at 358. The facts here,
however, differ from those in Krider in two important respects
which make that case inapplicable.
First, the Consent to Sublease signed by Railway, SOA and
Wheatly clearly and explicitly states that Wheatly's right to use
[the property] shall terminate at all events upon the termination
in any manner of [the Railway/SOA lease]. Thus, the plain
language of the consent contract specifies that Wheatly's right to
the property cannot continue after SOA's lease is ended for any
reason. At the moment that SOA surrendered its lease, Wheatly's
right to possession of the property ended. In Knight, the Court
stated, [i]t was the fault of the lessor in making the lease to
Dyson that he did not insert a covenant against underletting, and
in accepting the surrender of the lease; it was again his fault
that he made no provision to meet a contingency like this. Id. at
359 (emphasis added). In the consent contract here, however,
Railway did provide to meet the contingency in which SOA terminated
its sublease before the end of SOA's sublease to Wheatly. When
the language of a written contract is plain and unambiguous, the
contract must be interpreted as written and the parties are bound
by its terms. Five Oaks Homeowners Asso. v. Efirds Pest Control
Co., 75 N.C. App. 635, 637, 331 S.E.2d 296, 298 (1985). Second, before SOA surrendered its sublease to Railway, the
property had already been the subject of a lawsuit between SOA and
Wheatly, in which SOA had obtained a final judgment entitling it to
possession of the property. See Southern Outdoor Advertising, Inc.
v. Wheatly Oil Co., No. 99 CVS 748 (Carteret County Superior Court)
(17 October 2001) (the Court, having determined that [SOA] were
entitled to a directed verdict in its favor in which [SOA] were
entitled to recover from [Wheatly] possession [of the property]. .
. . [Thus, it is ordered that Wheatly] be removed from and [SOA]
be put in possession of the [property].) Wheatly asserts that the
judgment is somehow ambiguous because it awarded possession of the
property and arrearages in rent to SOA, and also awarded money
damages to Wheatly in excess of the rental arrearages amount.
Wheatly contends that this purported ambiguity would allow this
Court to construe the judgment in a manner which would allow
Wheatly to maintain possession of the property. We disagree,
finding nothing ambiguous about the judgment and its award of
possession of the property to SOA over Wheatly.
 Wheatly next argues that the court erred in failing to
allow its counterclaim for betterments and unjust enrichment
against Railway. We disagree, finding no error in the court's
The doctrine of unjust enrichment is based on quasi-contract
or contract implied in law and thus will not apply here where a
contract exists between two parties. Delta Envtl. Consultants,
Inc. v. Wysong & Miles Co., 132 N.C. App. 160, 165, 510 S.E.2d 690,
694, disc. review denied 350 N.C. 379, 536 S.E.2d 70 (1999) (It iswell established that if there is a contract between the parties,
the contract governs the claim and the law will not imply a
contract. . . . [in such cases] an action for breach of contract,
rather than unjust enrichment, is the proper cause of action)
(internal citations and quotation marks omitted). The Consent to
Sublease signed by all parties states that Wheatly agrees to be
bound by any and all provisions contained in the sublease between
SOA and Railway. The agreement between SOA and Railway
specifically provides that if SOA's lease were terminated for any
reason, it would remove any and all improvements placed on the
property. Thus, SOA would not be permitted to receive compensation
for any improvements made to property, and Wheatly, in turn, is
also barred from seeking any such compensation.
 Wheatly's claim for betterments likewise fails based on
its status as a tenant. To be entitled to compensation for
betterments under N.C. Gen. Stat. § 1-340, defendant must show that
he made permanent improvements on the property under a bona fide,
reasonable belief of good title. Hackett v. Hackett, 31 N.C. App.
217, 220, 228 S.E.2d 758, 760, cert. denied 291 N.C. 448, 230
S.E.2d 765 (1976). Here, Wheatly is a tenant, and has made no
claim or showing of a reasonable belief that it had good title to
 Wheatly also argues that the court erred in denying its
motion for a continuance to allow for further discovery. Because
we find no abuse of discretion by the court, we disagree and
overrule these assignments of error. [C]ontinuances are not favored and the party seeking [one]
has the burden of showing sufficient grounds for it. Peace River
Elec. Coop. v. Ward Transformer Co., 116 N.C. App. 493, 511, 449
S.E.2d 202, 215 (1994), disc. review denied 339 N.C. 739, 454
S.E.2d 655 (1995). [T]he question of whether or not to grant a
continuance is a matter solely within the discretion of the trial
court; absent a manifest abuse of discretion, this Court will not
disturb the decision made below. Id. Wheatly sought a
continuance in order to further investigate the relationship
between Railway and NCRR. As discussed previously, the
relationship between Railway and NCRR does not effect Wheatly's
right or lack of right to the property. Thus, we find no manifest
abuse of discretion.
 Railway cross assigns as error the setting of an appeal
bond in this matter, in an order entered 2 January 2003, which also
stayed execution pending appeal. Railway did not appeal from this
order. Thus, this cross-assignment is not properly before the
Court. See Capitola, LLC v. Triangle Labs., Inc., 144 N.C. App.
212, 219, 550 S.E.2d 31, 36 (2001) (Plaintiff cross-assigns error
to the trial court's order staying execution of the judgment
pending appeal. Plaintiff's arguments concerning its
cross-assignment of error are reasons the trial court erred in
staying execution of the judgment and those reasons do not provide
an alternative basis in law for supporting the judgment. The
proper method to raise these arguments would have been a
cross-appeal. Accordingly, Plaintiff's failure to appeal the trial
court's order waives this Court's consideration of the matter onappeal) (internal quotation marks and citations omitted). Based
on Capitola, we conclude that Railway has waived this issue by not
appealing the order.
For the reasons stated above, we find no error in the grant of
summary judgment in favor of Railway, and overrule as waived the
cross-assignment of error brought by Railway.
Judges MARTIN and GEER concur.
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