Taking the facts alleged in the complaint to be true, as is done in this State when considering the sufficiency of a pleading in a civil action to withstand the challenge of demurrer, and applying applicable principles of law, this Court is of opinion and holds that the action of the judge of Superior Court in overruling the demurrer filed by defendants was proper.
At the outset it is appropriate to say that in the light of the allegations of the complaint now before the Court, the decision in the former action of Lamm v. Crumpler, 233 N.C. 717, 65 S.E.2d 336, has no bearing on the decision now made.
The former action had for its purpose the reformation of a written agreement of date 2 July, 1949. It was heard in Superior Court upon written demurrer to the complaint. But in this Court defendants interposed demurrer ore tenus on the ground that the contract sought to be reformed had as its purpose the suppression of bidding at a public sale. And decision of this Court rested solely on the point so made. Among the cases cited in support of the principle applied is Owens v. Wright, 161 N.C. 127, 76 S.E. 735, 736.
In Owens v. Wright, supra, after stating that the enforcement of an agreement by which bidding at public sale is suppressed "is contra bonos mores, and the law will not assist either party to enforce such an agreement, the Court, quoting from opinion of Chief Justice Marshall in Armstrong v. Toler, 11 Wheat 258, 24 U.S. 258, 6 L.Ed. 468, said: "`A new contract, founded on a new consideration, although in relation to property respecting which there had been unlawful transaction between the parties, is not itself unlawful.'"
No such point was made in the hearing on the appeal in the former action.
However, plaintiff, in brief filed presently, invokes the principle just stated, —contending that the transactions between plaintiff and defendants reveal a second contract which is not tainted with the unlawful phase of the transaction relating to suppression of bidding at a public sale.
And it is provided by statute, G.S. § 1-151, that "in the construction of a pleading for the purpose of determining its effect its allegations shall be liberally construed with a view to substantial justice between the parties." And decisions of this Court interpreting and applying the provisions of this statute require that every reasonable intendment must be in favor of the pleader. The pleading must be fatally defective before it will be rejected as insufficient. See Commerce Ins. Co. v. McCraw, 215 N.C. 105, 1 S.E.2d 369; Bumgardner v. Allison Fence Co., 236 N.C. 698, 74 S.E.2d 32.
Therefore, do the facts alleged, liberally construed in favor of the pleader, constitute a cause of action for fraud? This Court holds that they do.
In this connection the essential elements of fraud, as recently restated in Cofield v. Griffin, 238 N.C. 377, 78 S.E.2d 131, 133, in opinion by Ervin, J., are these: "(1) That defendant made a representation relating to some material past or existing fact; (2) that the representation was false; (3) that when he made it, defendant knew that the representation was false, or made it recklessly, without any knowledge of its truth and as a positive assertion; (4) that defendant made the representation with intention that it should be acted upon by plaintiff; (5) that plaintiff reasonably relied upon the representation, and acted upon it; and (6) that plaintiff thereby suffered injury."
Indeed, in Roberson v. Swain, 235 N.C. 50, 69 S.E.2d 15, 19, in opinion by Valentine, J., we find it said that in this jurisdiction it is well established "that parol evidence may be used to show that an obligation is assumed only upon certain contingencies"; that "this is certainly true when the delivery of a paper writing is induced by fraudulent representations". And the Court, continuing, declared: "When a representation contains all the elements of fraud except that it is not a representation of an existing fact but is promissory in nature, the `state of mind' of the promissor is material. If he made the promissory representations merely to mislead the promisee with no intent to comply with the promise, and the other elements of fraud are made to appear, such representations will support an action in fraud notwithstanding the promissory nature of the representation, for the `state of mind' of the promissor is a subsisting fact. What his condition of mind was at the time and his intent in respect to the fulfillment of the promise presents a question for the jury."
And in the Cofield case, supra, it is stated that "The state of any person's mind at a given moment is as much a fact as the existence of any other thing. * * * As a consequence, it may be fraudulent to misrepresent the present intention of a third person to do a future act. * * * One who fraudulently makes a misrepresentation to another that a third person intends to do or not to do a particular thing for the purpose of inducing the other to act or refrain from acting in reliance thereon in a business transaction is liable to the other for the harm caused to him by his justifiable reliance upon the misrepresentation."
In the light of these principles, and liberally construing the allegations contained in paragraphs 5, 6 and 7, culminating in 7 (c) as hereinabove related, it appears plaintiff has stated a cause of action sufficient to repel a demurrer.
On the other hand, appellants contend that plaintiff, having joined with the Commissioner in the execution of the deed to the defendants, may not engraft a parol trust in favor of himself. Gaylord v. Gaylord,
These decisions hold that a grantor, in a deed, except in cases of fraud, mistake or undue influence, will not be permitted to contradict the terms of his written deed.
It would seem, however, that the allegations of the complaint are sufficient to bring the instant case within the exception.
The defendants may answer, and issues be drawn upon the pleadings and the factual situation may be fully developed upon the trial in Superior Court. Then the court may consider the case in the light of the evidence offered. And such consideration will not be foreclosed by decision now made on the demurrer. See Bumgardner v. Allison Fence Co., supra; Montgomery v. Blades, 222 N.C. 463, at page 469, 23 S.E.2d 844; Lewis v. Shaver, 236 N.C. 510, 73 S.E.2d 320, and cases therein cited.
Hence, judgment overruling the demurrer of defendants is
BOBBITT, J., took no part in the consideration or decision of this case.