Britt v. Britt, 359 S.E.2d 467

North Carolina Supreme Court

1987

Chapter

21

Title

Misrepresentation

Page

837

Topic

Defendants State Of Mind

Quick Notes

Mere proof of nonperformance is not sufficient to establish the necessary fraudulent intent

Book Name

Torts Cases, Problems, And Exercises.  Weaver, Third Edition.  ISBN:  978-1-4224-7220-0.

Issue

o         Whether Billys non-performance is enough to establish fraudulent misrepresentation?  No.

Procedure

Trial

o         Against Pl - for Parol, For Pl - for unjust enrichment, and for Pls for Fraud.

Appellant

o         Reversed.  There was not sufficient evidence to support a claim of unjust enrichment or fraud.

Supreme

o         Affirmed in part, Reversed in Part, And Remanded In Part.

Facts

Reasoning

Rules

Pl Betsy & Robert (Bobby)

Df Billy

What happened?

Suit

o         Betsy Britt brought action, seeking to impose a parol trust (this is an oral trust that is created verbally by a settlor) on certain real property or for restitution for benefits bestowed by her on the defendants and for damages, including punitive damages, for fraud.

o         Robert Dixon Britt was made a party plaintiff after the action was filed.

Amway Distributors

o         In 1977 the two Pl - were working as Amway distributors for Billy Britt.

o         Robert or Bobby Britt and Billy Britt are brothers.

Bought Horse Farm

o         In August 1977, Billy Britt purchased a farm in Orange County known as Magnolia Hill Farm which had been operated as a horse farm since 1972.

Agreement

o         Bobby and Betsy Britt would occupy the farm.

o         Billy Britt promised Betsy and Bobby that when they "hit the diamond level" of Amway sales, he would convey the farm to them if they would repay to him his investment in the farm.

Maintenance & Operation

o         It was agreed that Bobby and Betsy would "repair and maintain the farm . . . and operate the stable business to carry the farm."

o         They were to live on the farm and retain any surplus income as compensation.

Payment Book Delivered

o         Billy Britt delivered to Betsy Britt a payment book for monthly payments of $378.63

o         Payments on this debt were to be paid from the income from the farm.

o         He also told her that she was to pay from the farm income $1,033.63 per month on a purchase money note secured by a second deed of trust on the farm.

Betsy Wanted Agreement in Writing

o         He said it wasnt necessary.

o         He was a man of his word

o         Betsy said "I'm putting so much money in the farm and all and I'd like some kind of protection."

o         First offered her to be an employee and Betsy said no.

o         Britt said how would you feel about having accruing stock in the corporation each time you made a mortgage payment, then you would be accruing more stock?"

Result of Conversation

o         Betsy kept making mortgage payments.

Marriage fell apart, Kicked Out

o         Britt kicked her off the frame.

No Stock Issued

Oddity Notes (Not Part Of Case)

o         It is me, or does Betsy where the pants in the relationship?

o         Its odd that Betsy does all the paying.

o         Its odd that Betsys bother-in-law kicks of off of the farm.

Betsys Evidence

o         Mortgage - $ 98,126.00.

o         Repairs - $ 40,469.95 in repairs and maintenance of the property.

o         Personal Labor Expert testified that Betsy performed for the business ranged from $ 224,415.00 to $ 338,833.00.

Jurys Verdict Parol Trust Claim

o         Against the plaintiffs on their claim for a parol trust.

Jurys Verdict Unjust Enrichment Claim

o         Awarded her $ 363,616.00.

Jurys Verdict Fraud Claim

o         $1.00 in compensatory and $ 400,000.00 in punitive damages.

Defendant Appealed

Court Of Appeals

o         Reversed

o         There was not sufficient evidence to support a claim of unjust enrichment or fraud.

o         It ordered the superior court to enter a judgment dismissing the case.

o         This Court allowed discretionary review.

Fraudulent Misrepresentation Elements

1.   the defendant's false representation of a past or existing fact,

2.   defendant's knowledge that the representation was false when made or it was made recklessly without any knowledge of its truth and as a positive assertion,

3.   defendant made the false representation with the intent it be relied on by the plaintiff, and

4.   the plaintiff was injured by reasonably relying on the false representation. Evidence of a promise which is not fulfilled is not sufficient to support a finding of a false representation unless the evidence shows the promisor made the promise with no intention of fulfilling it.

Note

o         Evidence of a promise which is not fulfilled is not sufficient to support a finding of a false representation unless the evidence shows the promisor made the promise with no intention of fulfilling it.

Betsy Contends

o         Says there was a phone conversation in which Billy said he would not keep the promise and he made the promise to keep her working on the farm and making mortgage payments.

o         Billy had not intention of forming a corporation and she reasonably relied on this false representation.

Courts Misrepresentation Discussion

o         The jury could infer a promise the stock agreement by the statement how would your feel about accruing stock in the corporation each time your made a mortgage payment?

o         If the defendant did not intend to keep this promise at the time it was made, this would be the misrepresentation of a material fact.

Courts Conclusion

o         The only evidence that he did not intend to keep the promise is that no stock was issued to Betsy Britt.

o         Mere proof of nonperformance is not sufficient to establish the necessary fraudulent intent.

o         The evidence fails to show that the promise by Billy Britt was a misrepresentation of a material fact.

o         All Betsy has shown is nonperformance.

Affirmed in part, Reversed in Part, And Remanded In Part.

Rules

Fraudulent Misrepresentation Elements

1.         the defendant's false representation of a past or existing fact,

2.         defendant's knowledge that the representation was false when made or it was made recklessly without any knowledge of its truth and as a positive assertion,

3.         defendant made the false representation with the intent it be relied on by the plaintiff, and

4.         the plaintiff was injured by reasonably relying on the false representation. Evidence of a promise which is not fulfilled is not sufficient to support a finding of a false representation unless the evidence shows the promisor made the promise with no intention of fulfilling it.

Note

o         Evidence of a promise which is not fulfilled is not sufficient to support a finding of a false representation unless the evidence shows the promisor made the promise with no intention of fulfilling it.

Possibly Test Phrase

o         Mere proof of nonperformance is not sufficient to establish the necessary fraudulent intent.

Class Notes