BURNS v. McFARLAND, N.C., Judgment, Law, casemine.com

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Attorney(S)

Merrimon Merrimon for plaintiff. Glenn Sale for defendant.

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Smart Summary

Factual and Procedural Background

The plaintiff alleged that the defendant agreed to sell him certain furniture located in the Stoner Hotel in Asheville, with the price to be determined after an inventory and invoice review. The defendant was also to assign to the plaintiff an unexpired lease and procure a new lease from the hotel owner, Stoner, for the following year. On June 10, 1907, the defendant gave the plaintiff a receipt for $1 "on account of the sale of the Stoner Hotel." However, the plaintiff failed to comply with his contractual obligations and by his conduct clearly abandoned the contract. Subsequently, the defendant sold a one-third interest in the furniture to a third party, J. L. Page, who had no notice of the prior contract with the plaintiff. The plaintiff sought an injunction to prevent the defendant from controlling or operating the hotel and prayed for specific performance of the contract. The defendant and Page, as partners, continued operating the hotel. The lease contained a clause prohibiting assignment without the written consent of Stoner, which was never obtained by either party. The trial court denied the plaintiff’s motion to continue the injunction and to appoint a receiver, prompting this appeal.

Legal Issues Presented

Whether the Supreme Court may review findings of fact made by the lower court on appeal from an order refusing or continuing an injunction to the hearing.
Whether specific performance of a contract for the sale of hotel furniture and assignment of a lease should be enforced when the lease is only assignable with the written consent of the owner, which was never obtained, and when the plaintiff has abandoned the contract.
Whether the plaintiff is entitled to an injunction or appointment of a receiver under these circumstances, or whether the defendant’s sale of an interest to a bona fide purchaser without notice bars specific performance.
Whether the plaintiff is estopped from pursuing damages for breach of contract after abandonment.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Jones v. Boyd, 80 N.C. 258	Review of findings of fact on appeal from injunction orders	The Court confirmed it may review findings of fact made by the lower court on appeal from injunction orders.
Evans v. R. R., 96 N.C. 47	Review of injunction orders	Supported the Court’s authority to review interlocutory orders concerning injunctions.
Roberts v. Lewald, 107 N.C. 305	Review of injunction orders	Confirmed appellate review of findings in injunction cases.
Sprinkle v. Wellborn, 140 N.C. 163	Specific performance not enforceable when title cannot be conveyed	Applied to hold that defendant could not specifically perform the contract as he lacked authority to convey title.
Winders v. Hill, 141 N.C. 694	Remedy for breach of contract is damages when specific performance unavailable	Supported the conclusion that plaintiff’s remedy was damages rather than specific performance.
Falls v. Carpenter, 21 N.C. 237	Contractual rights may be abandoned by conduct indicating such intent	Used to establish that plaintiff’s conduct showed abandonment of contract rights.
Faw v. Whittington, 72 N.C. 321	Abandonment of contract rights by conduct	Reinforced the principle that rights can be relinquished by conduct.
Redding v. Vogt, 140 N.C. 567	Abandonment and relinquishment of contractual rights	Cited for the principle that contract rights may be abandoned by conduct.
Carter v. White, 134 N.C. 466	Review of interlocutory orders on injunction motions	Supported appellate review of interlocutory injunction orders based on affidavits.
Solomon v. Sewerage Co., 142 N.C. 439	Review of interlocutory injunction orders	Confirmed appellate authority to review interlocutory injunction rulings.

Court's Reasoning and Analysis

The Court reviewed the facts ascertained from the pleadings and affidavits and determined that the plaintiff failed to perform his contractual obligations and by his conduct clearly abandoned the contract. The lease at issue contained a restriction against assignment without the written consent of the owner, which was never sought or obtained. The defendant sold an interest in the hotel furniture to a bona fide purchaser without notice of the plaintiff’s contract, thereby extinguishing the defendant’s ability to convey title to the plaintiff. Consequently, specific performance was not an available remedy. The Court emphasized that while the trial judge’s reasons for denying the injunction were not binding, the appellate court found sufficient grounds in the record to affirm the denial. The Court further held that the plaintiff was not estopped from pursuing damages for breach of contract if he could show a valid contract and no prior breach on his part. The ruling was confined to the interlocutory order denying the injunction and appointment of a receiver.

Holding and Implications

Affirmed.

The Court affirmed the interlocutory order refusing to continue the injunction and to appoint a receiver, holding that specific performance was not warranted due to the plaintiff’s abandonment and the defendant’s sale to a bona fide purchaser without notice. The plaintiff’s remedy lies in an action for damages rather than injunctive relief or specific performance. This decision directly affects the parties by denying the plaintiff’s requested equitable relief but does not establish new precedent beyond affirming existing principles regarding contract abandonment, specific performance, and bona fide purchasers.

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ERNEST S. BURNS v. JOHN F. McFARLAND.

1. Appeal and Error — Injunction — Findings of Fact — Review.

The Supreme Court may review the findings of fact made by the court below, on appeal from an order refusing or continuing an injunction to the hearing, and is not concluded by reason there given by the court for its decision.

2. Contracts — Specific Performance — Abandonment.

Specific performance will not be enforced under a contract respecting the sale of hotel furniture and the assignment of a lease on the hotel, when it appears that the lease was only assignable with the written consent of the owner, that the plaintiff has never applied to him for such consent, and in other ways, by his conduct, has clearly indicated the purpose of abandonment.

3. Same — Specific Performance — Abandonment — Injunction — Receiver — Damages.

When it appears that the defendant had contracted to sell to plaintiff certain hotel furniture and assign a lease on the hotel, that the plaintiff had, by his conduct, clearly indicated the purpose of abandonment of his right, and that defendant had sold a part interest to another, who, with him, was conducting the hotel in question, specific performance will not be decreed, and an interlocutory order refusing to continue an injunction to the hearing and appoint a receiver will be affirmed; but plaintiff will not be estopped from proceeding to recover damages in proper instances.

Judgment for defendant. Plaintiff appealed.

The facts sufficiently appear in the opinion.

WALKER, J.

The plaintiff alleged in his complaint that the defendant agreed to sell him certain furniture in the Stoner Hotel, situated in Asheville, the price to be ascertained as soon as an inventory could be taken and the invoices examined, and that when this was done the defendant would assign to him an unexpired lease he then had of (383) said hotel and a new lease which the defendant would get from Stoner, the owner of the hotel, for the next year. On 10 June, 1907, the defendant gave the plaintiff a receipt for $1 "on account of the sale of the Stoner Hotel." Without setting out the evidence, it appears to us therefrom that the plaintiff failed to comply with his part of the contract and clearly abandoned the same, and that thereafter the defendant sold a one-third interest in the furniture to one J. L. Page for a valuable consideration, Page having no notice of the prior contract between the defendant and the plaintiff. The latter applied for an injunction to restrain the defendant from exercising any control over the premises and from conducting the business of a hotel thereon, and also prayed for a specific performance of the contract. The defendant and Page are now partners, engaged in conducting the hotel business in the Stoner building. The lease by Stoner to the defendant contained a stipulation that it should not be assigned or transferred without the written consent of Stoner, and he has never consented in writing to any assignment or transfer of the same, nor has the plaintiff ever applied to him for one. The motion, upon the pleadings and affidavits, was denied, and plaintiff appealed.

This Court, on appeal from an order refusing or continuing an injunction to the hearing, can review the findings of fact made by the court below. Jones v. Boyd, 80 N.C. 258; Evans v. R. R., 96 N.C. 47; Roberts v. Lewald, 107 N.C. 305. His Honor held that Page was a purchaser for value and without notice, and, therefore, acquired a good title as against the plaintiff, and that, consequently, the defendant could not be compelled to specifically perform his contract, as he could not convey the title ( Sprinkle v. Wellborn, 140 N.C. 163), and that the (384) plaintiff's remedy was by an action for damages for a breach of his contract. Winders v. Hill, 141 N.C. 694; Sprinkle v. Wellborn, supra. Without reciting the facts in detail, we are convinced by the clear weight of the evidence that the plaintiff not only failed to comply with his contract, if he had one, but that he abandoned and intended to abandon the same. Rights acquired by contract may be relinquished or abandoned either by agreement or by conduct clearly indicating such a purpose. Falls v. Carpenter, 21 N.C. 237; Faw v. Whittington, 72 N.C. 321; see, also, Redding v. Vogt, 140 N.C. at p. 567, and cases there cited. We are not concluded here by the reason given in the court below for its decision. If there is any valid and sufficient ground supporting the judgment and appearing in the record, we will adopt it and affirm the judgment. The order of the court below was right, upon the facts of the case, and we approve it. The plaintiff is not estopped by this decision from proceeding against the defendant to recover damages for any breach of the contract, if he can show that he made one and has not disabled himself from performing it, or otherwise committed a breach of it. We are only passing on the facts ascertained from ex parte affidavits, for the purpose of reviewing the interlocutory order of the judge upon the motion of the plaintiff to continue the injunction to the hearing and to appoint a receiver. Carter v. White, 134 N.C. 466; Solomon v. Sewerage Co., 142 N.C. 439. It is not necessary to examine the reason assigned by the learned judge who presided at the hearing for the purpose of passing upon its correctness, as we find abundant reasons, apart from it, for approving the ruling.

Affirmed.

Cited: Faust v. Rohr, 166 N.C. 201.

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BURNS v. McFARLAND