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Docket Number

No. 8510SC1268

Attorney(S)

William A. Bason, for plaintiff appellants. Howard, Howard, Morelock From, P.A., by Fred M. Morelock and John N. Hutson, Jr., for defendant appellees.

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Smart Summary

Case Summary: W. Staley Hilliard, Edward Gaskins, and Daniel C. Lynn v. William L. Thompson and Mae P. Thompson

Factual and Procedural Background

This action arises from an alleged contract to convey real estate executed on January 7, 1985. Defendant William L. Thompson signed an "offer to purchase and contract" to convey a tract of real property in Durham County to WH G Realty, Inc. (a corporation that did not yet exist but which plaintiffs intended to form). The plaintiffs delivered a $500 check to Thompson. Thompson took the contract home to be signed by his wife; that night he informed the plaintiffs his wife would not sign unless the price was increased from $70,000 to $75,000, and the plaintiffs agreed. The next day Thompson told the plaintiffs he had an offer of $84,600 and returned the $500 check; he agreed to give plaintiffs a chance to meet any offer, but the property was sold to a third party before plaintiffs could meet that offer.

The defendants moved for summary judgment. The trial court (Read, Judge) entered judgment on June 10, 1985 in favor of both defendants. The plaintiffs appealed; the Court of Appeals heard the matter on May 6, 1986 and filed its opinion June 17, 1986.

Legal Issues Presented

Whether summary judgment was properly entered against the plaintiffs on the wife's liability where there was no evidence that William L. Thompson was acting as agent for his wife when he signed the contract.
Whether the plaintiffs could enforce the contract against William L. Thompson when Thompson could not have enforced the contract against the plaintiffs (i.e., whether there was mutuality of obligation such that the purchasers could enforce the contract despite the vendor's inability to obtain a warranty deed conveying fee simple marketable title because his wife refused to sign).

Arguments of the Parties

Appellants' (Plaintiffs') Arguments

There was evidence from which a jury could conclude that William L. Thompson was acting for his wife — including evidence that Thompson approached Daniel C. Lynn offering $5,000 if Lynn would sell the property, that the property was not owned as tenants by the entirety but was wholly owned by William L. Thompson, and that Thompson was selling because his wife wanted a mobile home.
Implicitly, plaintiffs contended these facts supported submission of the agency question to a jury and liability on the contract against the wife or enforceability of the contract against Thompson.

The opinion does not detail specific, developed arguments advanced by the defendants beyond that they moved for summary judgment and the record lacked evidence that William L. Thompson was acting as agent for his wife.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Moore v. Fieldcrest Mills, Inc., 296 N.C. 467, 251 S.E.2d 419 (1979)	Authority referenced in connection with summary judgment and agency issues.	The court cited Moore in support of the conclusion that summary judgment was proper on the claim against the wife where the pleadings and papers did not show evidence that the husband was acting as her agent.
Albertson v. Jones, 42 N.C. App. 716, 257 S.E.2d 656 (1979)	Principle that the marital relationship does not create a presumption that a husband is agent for his wife.	The court relied on Albertson to reject the plaintiffs' contention that the marital relationship alone supported a finding of agency.
Reichler v. Tillman, 21 N.C. App. 38, 203 S.E.2d 68 (1974)	Discussed in relation to the type of pleading and proof that permit proving a husband's agency for his wife.	The court explained Reichler concerns a judgment on the pleadings where the plaintiff pled the wife was bound and thus could later prove the husband was her agent; it found Reichler not helpful to the present summary judgment context.
Lawing v. Jaynes, 20 N.C. App. 528, 202 S.E.2d 334, modified, 285 N.C. 418, 206 S.E.2d 162 (1974)	Statements regarding evidence that would prove agency and insufficiency of findings of fact to resolve agency issue.	The court noted Lawing held the superior court had not made sufficient findings on agency; the Court of Appeals found those statements not inconsistent with its decision to grant summary judgment here.
Wellington-Sears Co. v. Dize Awning Tent Co., 196 N.C. 748, 147 S.E. 13 (1929)	Principle that there must be mutuality of obligation but recognition that sufficient consideration may exist when promises are enforceable against one party.	The court relied on Wellington as part of precedent suggesting that when one party cannot be bound the contract may not be enforceable against the other absent mutual obligations.
Rankin v. Mitchem, 141 N.C. 277, 53 S.E. 854 (1906)	Statement that to make an agreement valid and binding the promises must be mutual.	The court cited Rankin for the proposition that promises must be mutual and used it to support the holding that because Thompson could not have enforced the contract against plaintiffs, plaintiffs could not enforce it against him.
Mezzanotte v. Freeland, 20 N.C. App. 11, 200 S.E.2d 410, cert. denied, 284 N.C. 616, 201 S.E.2d 689 (1974)	Cases addressing mutuality of obligation and enforceability of contracts under North Carolina law.	The court referenced Mezzanotte as an example where mutuality of obligation was found and cited the line of cases to conclude the contract here was unenforceable by plaintiffs because Thompson himself could not enforce it.

Court's Reasoning and Analysis

The Court of Appeals' analysis proceeded in two principal parts: (1) agency as to the wife; and (2) mutuality of obligation/enforceability of the contract.

On agency: The court examined the pleadings and the materials submitted on the motion for summary judgment and determined there was no evidence that William L. Thompson was acting as agent for his wife when he signed the contract. The court rejected plaintiffs' proffered facts (e.g., prior approaches to a third party, alleged sole ownership by Thompson, and the wife's desire for a mobile home) as insufficient to create a jury question on agency, particularly given the undisputed fact that the parties agreed Thompson would take the contract home to be signed by his wife. The court emphasized that the marital relationship alone does not give rise to a presumption of agency, citing Albertson v. Jones, and concluded summary judgment was proper as to the wife.

On mutuality and enforceability: The court observed that the contract required Thompson to deliver a general warranty deed conveying fee simple marketable title. Without the wife's signature Thompson could not deliver such a deed. Because Thompson could not have enforced the contract against the plaintiffs (i.e., he lacked capacity to deliver the promised title), the court concluded there was no mutuality of obligation. The court discussed the Restatement (Second) of Contracts §79 but noted a lack of North Carolina cases addressing precisely whether an agreement unenforceable against one party may nevertheless be enforced against the other. The court surveyed older North Carolina decisions (including Rankin, Wellington, and Mezzanotte) that assume contracts lacking mutual enforceability are not enforceable by either party, and concluded it was bound by those cases to hold plaintiffs could not enforce the contract against Thompson. Accordingly, summary judgment for Thompson was affirmed.

Holding and Implications

HOLDING: The Court of Appeals affirmed the trial court's grant of summary judgment in favor of both defendants.

Direct effects: The court held the plaintiffs could not recover on the alleged contract because (1) there was no evidence William L. Thompson was acting as agent for his wife, so the wife was not bound by the contract; and (2) because Thompson could not have delivered a general warranty deed conveying fee simple marketable title (owing to his wife's refusal to sign), there was no mutuality of obligation and the plaintiffs could not enforce the contract against Thompson. The judgment in favor of the defendants was affirmed.

Broader implications: The opinion does not announce a new rule of law beyond applying existing North Carolina precedent on mutuality of obligation and agency. It relies on existing case law to conclude that a contract unenforceable against one party because that party cannot perform (here, deliver marketable title) is not enforceable by the other party.

Decision filed June 17, 1986 — Judges WebB (author), Whichard (concurring in the result), and Johnson (concurring in the result and joining a concurring opinion).

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W. STALEY HILLIARD, EDWARD GASKINS, AND DANIEL C. LYNN v. WILLIAM L. THOMPSON AND MAE P. THOMPSON

Contracts 2.4; Vendor and Purchaser 1 — contract to convey realty — no mutuality of obligation Where a vendor could not have delivered a warranty deed conveying fee simple marketable title as required by the contract to convey realty because his wife refused to sign the deed, the vendor could not have enforced the contract against the purchasers; therefore there was no mutuality of obligation and the purchasers could not enforce the contract against the vendor.

Judge WHICHARD concurs in the result.

Judge JOHNSON concurs in the result and joins in the concurring opinion.

This is an action for breach of contract. The defendants moved for summary judgment and the pleadings and materials introduced in opposition to and in support of the motion for summary judgment showed that the following matters are not in dispute. On 7 January 1985 an "offer to purchase and contract" was signed by the defendant William L. Thompson and WH G Realty, Inc. WH G Realty was not an extant corporation but the plaintiffs intended to organize such a corporation to take the title to a tract of real estate which was the subject of the contract.

Under the terms of the contract the defendant William L. Thompson agreed to convey a tract of real estate in Durham County to the WH G Realty, Inc. for $70,000.00. William L. Thompson owned the real property and it was agreed by the parties that he would take the contract home to be signed by his wife that night. The plaintiffs at that time delivered to Mr. Thompson a check for $500.00. On the night of 7 January 1985 William L. Thompson called one of the plaintiffs and told him his wife would not sign the contract unless the price was raised to $75,000.00. The plaintiffs agreed to this price. It was agreed that the parties would meet at Mr. Thompson's office the next morning and change the contract to reflect the new price. The next day Mr. Thompson advised the plaintiffs that he had been offered $84,600.00 for the property and returned the check for $500.00. William L. Thompson agreed to give the plaintiffs a chance to meet any offer which was made for the property. The property was sold to a third party before the plaintiffs could meet the third party's offer.

The court granted the motion for summary judgment in favor of both defendants and the plaintiffs appealed.

WEBB, Judge.

The pleadings and the papers filed in support of and in opposition to the motion for summary judgment do not contain any evidence that William L. Thompson was acting as agent for his wife at the time he signed the contract to sell the property. Summary judgment was properly entered on the claim against her. See Moore v. Fieldcrest Mills, Inc., 296 N.C. 467, 251 S.E.2d 419 (1979). The plaintiffs argue that there was evidence that William L. Thompson approached Daniel C. Lynn and offered him $5,000.00 if he would sell the property, that the property was not owned by the defendants as tenants by the entirety but was wholly owned by the defendant William L. Thompson, and that he was selling the property because his wife wanted a double wide mobile home. The plaintiffs argue that this is evidence from which a jury could conclude William L. Thompson was acting for his wife. We do not believe this is evidence sufficient to submit to a jury on the question of agency. This is particularly true when all the evidence shows the parties agreed Mr. Thompson would take the contract home to be signed by his wife. The marital relationship does not raise a presumption that the husband is acting as an agent for his wife. Albertson v. Jones, 42 N.C. App. 716, 257 S.E.2d 656 (1979).

Reichler v. Tillman, 21 N.C. App. 38, 203 S.E.2d 68 (1974) and Lawing v. Jaynes, 20 N.C. App. 528, 202 S.E.2d 334, modified, 285 N.C. 418, 206 S.E.2d 162 (1974), relied on by the plaintiffs, are not helpful to them. Reichler deals with a question of judgment on the pleadings. The plaintiff had pled that the wife was bound by the contract and this Court held the plaintiff had the right to prove the husband was acting as her agent. In this case we deal with a motion for summary judgment. The parties have forecast what the evidence will be. In Lawing this Court held that the superior court had not made findings of fact sufficient to determine whether a husband was acting for his wife. This Court made some statements as to evidence which would prove agency, which statements are not inconsistent with our decision in this case.

One of the terms of the alleged contract provided that William L. Thompson deliver to the plaintiffs a general warranty deed which would contain a fee simple marketable title. Without the signature of his wife Mr. Thompson could not have delivered such a deed. The plaintiffs would not have been liable on the contract if Mr. Thompson had sued them. There was not a mutuality of obligation. The Restatement (Second) of Contracts 79 (1981) says that if the requirement of consideration is met there is no additional requirement of mutuality of obligation. It justifies this rule by saying that the value of a promise is not necessarily affected by the fact that no legal remedy will be available in the event of a breach. We have not been able to find a case in North Carolina dealing with the precise question of whether an agreement which may not be enforceable against one party may nevertheless be enforced against the other. We believe there are cases which assume that such contracts are not enforceable against either party. See Wellington-Sears Co. v. Dize Awning Tent Co., 196 N.C. 748, 147 S.E. 13 (1929); Rankin v. Mitchem, 141 N.C. 277, 53 S.E. 854 (1906); and Mezzanotte v. Freeland, 20 N.C. App. 11, 200 S.E.2d 410, cert. denied, 284 N.C. 616, 201 S.E.2d 689 (1974). In Rankin the Court held that a promise was not enforceable because both sides were not bound by it. The Court said, "[i]n order to make an agreement valid and binding, the promises must be mutual, . . . ." 141 N.C. at 283, 53 S.E. at 856. In Wellington the Court recognized the principle that there must be mutuality of obligation but held that in that case there was sufficient consideration because there were promises enforceable against the plaintiff. In Mezzanotte it was held there was a mutuality of obligation. We believe we are bound by these cases to hold that because the defendant William L. Thompson could not have enforced the contract against the plaintiffs, the plaintiffs cannot enforce the contract against William L. Thompson. It was not error to grant the motion for summary judgment in favor of William L. Thompson.

Affirmed.