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An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
NORTH CAROLINA COURT OF APPEALS
Filed: 15 July 2008
THOMAS A. SMITH,
v. Stanly County
No. 05 CVS 1751
MELISSA PAGE MAULDIN,
Individually and as
Executrix of the Estate
of Sue Nell Smith Page,
Appeal by plaintiff from judgment entered 13 July 2007 by
Judge Michael E. Beale in Stanly County Superior Court. Heard in
the Court of Appeals 30 April 2008.
Knox, Brotherton, Knox & Godfrey, by C. Ashley Lamm, for
Bahner & Medlin, by R. Ward Medlin, for defendant-appellee.
The trial court acted within its discretion when it granted
defendant's Rule 41(b) motion for involuntary dismissal at the
close of plaintiff's evidence. The trial court's conclusions of
law were supported by its findings of fact, which were in turn
supported by competent evidence that the note and deed of trust
executed by plaintiff were valid and enforceable.
I. Factual and Procedural Background
During 2000, plaintiff Thomas Smith executed and delivered to
his sister, Sue Page, a $50,000 promissory note secured by a deed
of trust on real estate located in Holden Beach. Both documentswere dated 29 May 2000 and were executed by Smith under seal.
Following the death of Sue Page (hereinafter decedent), the two
documents were discovered by her daughter, Melisa Page Mauldin.
Mauldin then notified Smith that she was executrix of her mother's
estate and, as sole heir, she was also the successor beneficiary to
Smith responded to his niece by letter, demanding the return
of the documents and asserting that the loan had never been funded.
On 21 October 2005, Smith (hereinafter plaintiff) filed a complaint
seeking damages and possession of the documents. On 22 December
2005, Mauldin (defendant) filed an answer, and on 17 January 2006,
she recorded the deed of trust.
The matter was heard by the court, sitting without a jury, on
29 May 2007. At the close of plaintiff's evidence, the court
granted defendant's motion to dismiss under Rule 41(b), finding
that plaintiff failed to present any written or competent oral
evidence that there was a failure of consideration for the note and
deed of trust. Plaintiff appeals.
II. Standard of Review
A Rule 41(b) motion challenges the sufficiency of plaintiff's
evidence to establish plaintiff's right to relief. Lumbee River
Electric Corp. v. City of Fayetteville, 309 N.C. 726, 741, 309
S.E.2d 209, 218 (1983)(citation omitted).
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 offacts 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.
The function of the trial judge as trier of
the facts is to evaluate the evidence without
any limitation as to inferences favorable to
plaintiff. The findings of fact made by the
trial judge are conclusive on appeal if
supported by competent evidence, even if,
arguendo, there is evidence to the contrary.
The trial court's judgment therefore must be
granted the same deference as a jury verdict.
Id., 309 S.E.2d at 218-19 (internal citations omitted). Dismissal
under Rule 41(b) is left to the sound discretion of the trial
court. In re Oghenekevebe, 123 N.C. App. 434, 437, 473 S.E.2d
393, 396 (1996) (citation omitted).
Because the central issue in this case was whether plaintiff
met his burden of proving a failure of consideration in a contract,
we first review the governing legal principles where, as here, one
of the parties to the agreement is deceased. First, the presence
of a seal creates a presumption of consideration. Loman-Garrett
Supply Co. v. E. C. Dudney & Dudney, Inc., 56 N.C. App. 622, 624,
289 S.E.2d 600, 602 (1982)(the effect of a seal is not to preclude
the court's consideration of the issue entirely as plaintiff
suggests, but only to raise a presumption of consideration which
must be rebutted by clear and convincing evidence.). Second, the
parol evidence rule does not bar the admission of parol evidence toprove failure of consideration. Mills v. Bonin, 239 N.C. 498, 501,
80 S.E.2d 365, 367 (1954). However, Rule 601 of the North Carolina
Rules of Evidence bars testimony by an interested party in court
proceedings concerning any oral communication between the witness
and the deceased person. Almond v. Rhyne, 108 N.C. App. 605, 609,
424 S.E.2d 231, 233 (1993)(citation omitted); N.C. Gen. Stat. §
8C-1, Rule 601(c).
Plaintiff does not challenge findings of fact 1-13, which are
binding on appeal. Koufman v. Koufman, 330 N.C. 93, 97, 408 S.E.2d
729, 731 (1991). Consequently, it is uncontroverted that:
plaintiff, a former bail bondsman who had executed numerous
promissory notes in his work, executed a $50,000 promissory note in
his sister's name, and an accompanying deed of trust securing the
note, in May 2000. He mailed these to his sister in October 2000.
In March 2001, plaintiff was involved in an equitable distribution
case in Mecklenburg County in which he made an interim distribution
to his former wife in the amount of $50,000. In May 2001,
plaintiff listed the note and the lien against the Holden Beach
property in affidavits filed in the equitable distribution
proceeding. The note was listed in a schedule entitled Debts and
Liabilities at Present Time.
A. The Parol Evidence Rule
In his first argument, plaintiff challenges two of the court's
conclusions of law, asserting that parol evidence was admissible to
contradict the terms of the promissory note and deed of trust
because the documents were ambiguous in their terms and alsobecause such evidence is admissible to prove failure of
consideration. We disagree.
The challenged conclusions are:
5. That parol evidence is not admissible to
contradict to [sic] or add terms to a clear
and unambiguous promissory note.
6. That there is no evidence of mutual
mistake, fact, fraud, influence, or lack of
mental capacity that would warrant the
consideration of parol evidence.
Plaintiff asserts that these conclusions are flawed because parol
evidence is admissible to prove failure of consideration. In the
alternative, plaintiff also asserts that the terms of the note were
ambiguous and therefore the parol evidence rule should not apply to
bar evidence that would prove his claims. We address each portion
of plaintiff's argument separately.
The parol evidence rule prohibits 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.
Bell v. Chadwick, 226 N.C. 598, 600, 39 S.E.2d 743, 744 (1946).
The rule is, that parol evidence will not be
heard to contradict, add to, take from or in
any way vary the terms of a contract put in
writing . . . for the reason that the parties,
when they reduce their contract to writing,
are presumed to have inserted in it all the
provisions by which they intended to be
bound. Ray v. Blackwell, 94 N. C., 10. As
against the recollection of the parties, whose
memories may fail them, the written word
abides. Walker v. Venters, 148 N. C., 388, 62
S. E., 510.
Id. Thus, conclusion of law 5 is an accurate statement of the law. However, a total failure of consideration for a note under
seal renders it unenforceable in the hands of any person other than
a holder in due course. Mills v. Bonin, 239 N.C. at 502, 80
S.E.2d at 367 (citations omitted). Consequently, the rule is not
violated by the admission of parol evidence to demonstrate a total
failure of consideration, where, as here, the note is held by a
testamentary beneficiary. See id.; N.C. Gen. Stat. § 25-3-302
(excluding successors in interest to an estate from the definition
of a holder in due course). We agree with plaintiff that parol
evidence was admissible to demonstrate a total failure of
consideration. However, we have reviewed the transcript of the
hearing and there is no indication that the court applied the parol
evidence rule to bar testimony or other evidence for this purpose.
The court instead ruled that:
16. . . . the Plaintiff, Thomas A. Smith, is
prohibited by law from introducing any oral
communication that he may have had with Sue
Smith Page by Rule 601.
Although the trial court classified this ruling as a finding of
fact, it is more properly considered a conclusion of law because it
states the legal principle upon which the ruling was made. Coble
v. Coble, 300 N.C. 708, 713, 268 S.E.2d 185, 189 (1980). As such,
it must itself be based upon supporting factual findings; in this
instance, findings of fact 1-13 support the trial court's ruling.
Plaintiff does not challenge this ruling, but rather attempts to
blend the principles of Rule 601, the Dead Man's Statute, into his
arguments that the parol evidence rule was improperly applied to
his evidence. A review of the record clearly shows that the courtsustained objections to plaintiff's testimony regarding his
understanding with the decedent only on the basis of Rule 601.
Having thus reviewed the record, we hold that the trial court did
not err in its application of Rule 601 or regarding the admission
of evidence related to plaintiff's claim that there was a failure
Plaintiff also contends that the court erred in its conclusion
that there was no evidence warranting consideration of parol
evidence to vary the terms of the contract. Plaintiff asserts that
a delay in delivery, from the 29 May 2000 date of execution to the
30 October 2000 date of mailing, creates ambiguity in the terms of
the promissory note and the deed of trust. We fail to discern how
a delay in delivery of a document bears in any manner upon whether
that document is ambiguous on its face. Plaintiff cites no
authority for this proposition. Further, a review of the written
terms of the note and deed of trust reveals no ambiguity on their
faces. Having reviewed plaintiff's arguments, the plain language
of the note, and the transcript, we hold that the record is devoid
of any competent evidence of mutual mistake, fact, fraud,
influence, or lack of mental capacity that would warrant the
consideration of parol evidence to vary the terms of a promissory
note that is unambiguous on its face. Consequently, we further
hold that conclusion of law 6 properly applied the parol evidence
rule to exclude evidence of agreements outside of the note or deed
of trust that purported to vary the terms of those documents. Bell
v. Chadwick, 226 N.C. at 600, 39 S.E.2d at 744. This argument is without merit.
B. Rule 41(b) Motion to Dismiss
In his second argument, plaintiff contends that the trial
court erred in granting defendant's motion to dismiss because his
evidence at trial rebutted the presumption that valid consideration
was given in exchange for the execution and delivery of the
promissory note and deed of trust. We disagree.
1. Findings of Fact
Plaintiff specifically assigns error to findings of fact 14,
15, and 17, which read as follows:
14. That the Plaintiff, Thomas A. Smith, took
no action against Sue Smith Page during her
lifetime to secure recovery of the documents
or cancellation of same based upon any failure
15. That the Plaintiff, Thomas A. Smith, has
offered no written evidence, any written
document or any other admissible evidence that
contradict the fact that the Promissory Note
was made with valid consideration.
. . .
17. That the Plaintiff, Thomas A. Smith,
failed to offer any competent oral testimony
from any uninterested person that the Notes
[sic] and Deed of Trust was without
When a motion to dismiss pursuant to Rule 41(b) is made, the
judge becomes both the judge and the jury; he must consider and
weigh all competent evidence before him; and he passes upon the
credibility of the witnesses and the weight to be given to their
testimony. Miles v. Carolina Forest Ass'n, 167 N.C. App. 28, 34,
604 S.E.2d 327, 332 (2004) (citing Dealers Specialties, Inc. v.Housing Services, 305 N.C. 633, 636, 291 S.E.2d 137, 139 (1982)).
It is not our role to disturb a trial court's finding even though
there may be evidence to support a contrary one. Lumbee River, 309
N.C. at 741, 309 S.E.2d at 219.
In the instant case, plaintiff made a $50,000 payment, the
identical amount of the secured loan from his sister, to his ex-
wife several months after the note and deed of trust were delivered
to Ms. Page. Plaintiff introduced no documentary evidence to
support his contentions that the loan was never funded and that he
paid the interim distribution from other funds. The only evidence
from a non-family member that tended to support plaintiff's version
of events was a statement by a former employee that plaintiff's
business accounts contained sufficient funds from which the
distribution could have been made. Testimony of what could have
happened may form the basis for inference by the factfinder, but it
does not establish that such an event occurred. Consequently,
there was conflicting evidence of consideration before the court at
the close of plaintiff's evidence. This evidence included
plaintiff's affidavits from the Mecklenburg County equitable
distribution proceeding in which plaintiff acknowledged the $50,000
note as a debt. In ruling on the 41(b) motion, the judge bec[ame]
both the judge and the jury, considered and weighed the evidence,
passe[d] upon the credibility of the witnesses and the weight to
be given to their testimony[,] Carolina Forest Ass'n, 167 N.C.
App. at 34, 604 S.E.2d at 332, and resolved the conflict in favor
of defendant. We conclude that the trial court acted within its role as
factfinder, Lumbee River, 309 N.C. at 741, 309 S.E.2d at 219, when
it determined that plaintiff did not rebut the presumption of
consideration by clear and convincing evidence. Loman-Garrett
Supply Co., 56 N.C. App. at 624, 289 S.E.2d at 602. We hold that
findings of fact 14, 15, and 17 are supported by the record before
this Court and are thus binding on appeal.
2. Conclusions of Law
Within this argument, plaintiff also challenges the following
conclusions of law:
2. That in the Promissory Note the Plaintiff
promised to pay Sue S. Page the principle
[sic] sum of $50,000.00.
3. That the Note was given to secure a loan
from Sue S. Page and was secured by a Deed of
Trust, also signed on or about May 29, 2000.
4. That the Plaintiff, Thomas A. Smith, as
Grantor stated that he was indebted to the
Beneficiary in the principle [sic] sum of
$50,000.00 as evidenced by the Promissory
. . .
7. That the Promissory Note was made under
seal and therefore presumed that it was based
upon good and adequate consideration under the
8. That the Plaintiff, Thomas A. Smith, has
failed to come forward with clear and
convincing evidence that the Promissory Note
and Deed of Trust executed by him was done so
without consideration as stated in those
9. That as fact-finder in a non-jury trial,
this Court may evaluate the evidence at the
close of Plaintiff's case without inference
and concludes that the Defendant . . . isentitled to an order granting their [sic]
motion for involuntary dismissal under Rule
We review the trial court's conclusions of law de novo, but afford
deference to those conclusions where they are supported by the
court's findings of fact. Lumbee River, 309 N.C. at 741, 309
S.E.2d at 219.
Conclusions of law 2-4 are supported by findings of fact 2-6
and 16. Conclusion of law 7 accurately states the rule of law,
discussed supra, that a seal creates a presumption of
consideration. Loman-Garrett Supply Co., 56 N.C. App. at 624, 289
S.E.2d at 602. Conclusion of law 8, which is supported by findings
of fact 14, 15, and 17, discussed supra, finding of fact 16, and
conclusions of law 5-7, accurately states plaintiff's burden of
proving his assertion that there was a failure of consideration and
overcoming the presumption created by the seal. Id.
Conclusion of law 9 is supported by the findings of fact and
conclusions of law discussed supra and properly states the law
under Lumbee River. 309 N.C. at 741, 309 S.E.2d at 218 (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.).
This argument is without merit.
Because the trial court's conclusions of law accurately state
the law and are supported by its findings of fact, we hold that the
trial court did not err in granting defendant's Rule 41(b) motion
at the close of plaintiff's evidence. We do not reach plaintiff's
arguments under the Uniform Commercial Code as we find them
Judges HUNTER and STEPHENS concur.
Report per Rule 30(e).
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