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  "name": "PRESTON POWELL and RICHARD POWELL, Plaintiffs v. ALLAN T. OMLI, Defendant and Third-Party Plaintiff v. PEACHTREE FASTENERS, INC. and SIMPLEX NAILS, INC., Third-Party Defendants",
  "name_abbreviation": "Powell v. Peachtree Fasteners, Inc.",
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    "judges": [
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    "parties": [
      "PRESTON POWELL and RICHARD POWELL, Plaintiffs v. ALLAN T. OMLI, Defendant and Third-Party Plaintiff v. PEACHTREE FASTENERS, INC. and SIMPLEX NAILS, INC., Third-Party Defendants"
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        "text": "EAGLES, Judge.\nDefendant brings forward three assignments of error. We reverse the entry of directed verdict against defendant on the promissory note. Plaintiffs bring forward seven assignments of error. As to plaintiffs\u2019 appeal, we affirm. Accordingly, we affirm in part, reverse in part, and remand for a new trial to determine the issue of defendant\u2019s alleged liability on the promissory note.\nDefendant\u2019s Appeal\nI.\nIn his first assignment of error, defendant contends that the trial court erred by granting plaintiffs\u2019 motion for directed verdict on the promissory note. We agree.\nDefendant argues that in the determination of his liability on the promissory note \u201c[t]here was a material issue of fact on whether defendant had proven his defense that, because plaintiffs had breached their fiduciary duty to defendant as majority shareholders, there had been a failure of consideration.\u201d Defendant gave a $100,000.00 promissory note to plaintiffs. This note read in pertinent part as follows:\nFOR Value Received the undersigned, jointly and severally, promise to pay to Richard Powell and Preston Powell of Americus, Georgia or order, the principal sum of One Hundred Thousand and no/100ths DOLLARS ($100,000.00), with interest from the date hereof at the rate of Prime plus One per cent (prime +1.0% based on 1st National Bank of Atlanta as the same fluctuates from time to time) per annum/on the unpaid balance until paid or until default, both principal and interest payable in lawful money of the United States of America, at the office of Simplex Nail Company, Americus, Georgia or at such place as the legal holder hereof may designate in writing.\nPlaintiffs argue that although \u201cdefendant never actually held the money, he did receive the benefit from the money. Defendant authorized plaintiffs to use this borrowed $100,000.00 as capital for Peachtree. ... As defendant received the benefit of the money promised him, he received full consideration in accordance with the terms of the note.\u201d Plaintiffs further argue that \u201ctheir fiduciary duty to him [defendant] was not bargained for, nor made part of their agreement to loan defendant $100,000.00.\u201d However, plaintiffs\u2019 argument, supra, is not evident from the face of the note. The promissory note simply stated that \u201cfor value received\u201d defendant promised to pay plaintiffs $100,000.00; the note did not specify exactly what \u201cvalue\u201d defendant had \u201creceived\u201d nor did it specify whether there were or were not any other agreements. Accordingly, we hold that this question should have been submitted to the jury.\nIn Whitehurst v. Corey, 88 N.C. App. 746, 748-49, 364 S.E.2d 728, 730 (1988), this Court, in overturning a trial court\u2019s award of summary judgment in a similar case, stated:\n\u201c[I]t is rather common for a promissory note to be intended as only a partial integration of the agreement in pursuance of which it was given, and parol evidence as between the original parties may well be admissible so far as it is not inconsistent with the express terms of the note.\u201d Borden, Inc. v. Brower, 284 N.C. 54, 61, 199 S.E.2d 414, 419-20 (1973).\nConstruing defendants\u2019 verified pleadings in their favor as non-movant reveals a material fact dispute concerning the alleged existence and effect of a fiduciary relationship between plaintiff and defendants. These alleged facts are clearly \u201cmaterial\u201d since plaintiff\u2019s performance of the alleged fiduciary duties was allegedly part of the consideration for defendants\u2019 execution of the promissory note. We also reject plaintiff\u2019s argument that defendants have alleged no facts showing detrimental reliance in support of their apparent fraud claim. Defendants\u2019 purchase of plaintiff\u2019s stock may well evidence their detrimental reliance on plaintiff\u2019s alleged representations concerning his intended fiduciary obligations.\nSimilarly, we conclude that when the evidence presented at trial is viewed in the light most favorable to the non-movant (defendant), a question of fact existed which could only be resolved by a jury. Accordingly, we reverse the trial court\u2019s entry of directed verdict on this issue.\nII.\nNext, defendant argues that \u201c[plaintiffs are not entitled to a new trial on their note claim because the jury has already found that plaintiffs breached their fiduciary duties to defendant, and that finding is the same as a finding that there was a failure of consideration, which nullifies the agreement under which defendant gave plaintiffs his note.\u201d We disagree.\nAlthough defendant correctly points out that the jury found that plaintiffs breached their fiduciary duty, defendant fails to recognize that contrary evidence exists as to this issue; namely, that plaintiffs have brought forth testimony showing that this fiduciary duty did not serve as consideration for defendant\u2019s note. Contrary to defendant\u2019s assertion, the jury\u2019s verdict finding plaintiffs\u2019 breach of fiduciary duty does not necessarily infer that the parties had a contemporaneous oral agreement establishing plaintiffs\u2019 fiduciary duty to defendant as consideration for defendant\u2019s note. Accordingly, we remand for a new trial on this issue.\nIII.\nFinally, defendant argues that \u201c[t]he trial court erred in refusing to submit to the jury the issue of plaintiffs\u2019 liability to defendant for punitive damages for breach of fiduciary duty.\u201d We disagree.\nDefendant failed to object to the trial court\u2019s denial of his request for a punitive damages charge and accordingly cannot contest this issue on appeal. N.C.R. App. P. 10(b)(2). Furthermore, defendant concedes that Georgia law controls his counterclaim. Ga. Code Ann. 51-12-5.1(b) (Michie Cum. Supp. 1992) provides that punitive damages may only be awarded when \u201cit is proven by clear and convincing evidence that the defendant\u2019s actions showed willful misconduct, malice, fraud, wantonness, oppression, or that entire want of care which would raise the presumption of conscious indifference to consequences.\u201d Here, defendant has failed to show the \u201cclear and convincing evidence\u201d required by Ga. Code Ann. 51-12-5.1(b) (Michie Cum. Supp. 1992). Accordingly, this assignment of error fails. We note that in \u201cdefendant\u2019s requests for jury instructions\u201d filed 16 May 1991 defendant did not request an instruction for his fraud counterclaim.\nPlaintiffs\u2019 Appeal\nIV.\nPlaintiffs argue that the trial court committed prejudicial error by presenting an erroneous view of the law regarding breach of fiduciary duty in its instruction to the jury by basing the instruction on Meiselman v. Meiselman, 309 N.C. 279, 307 S.E.2d 551 (1983) rather than on several Georgia cases cited in plaintiffs\u2019 brief. We disagree.\nDefendant argues that \u201cplaintiffs did not object specifically to this part of the charge, as required by Rule 10(b)(2), N.C.R. App. P-, and therefore did not give Judge Cornelius a chance to consider the point plaintiffs now raise on appeal.\u201d After hearing the proposed instructions read to counsel for both parties, plaintiffs objected as follows:\nMr. SURRATT [plaintiffs\u2019 counsel]: Your Honor, we object and except the instructions.\nTHE COURT: What are you excepting to?\nMR. Gerber [plaintiffs\u2019 counsel]: Your Honor, I don\u2019t believe under Georgia law\u2014\nTHE COURT: We\u2019re not talking about Georgia law. It\u2019s North Carolina law.\nMr. GERBER: It\u2019s our contention Georgia law would apply and there\u2019s no unreasonable frustration in this matter.\nTHE COURT: You already made that argument. The Court\u2019s ruled on that. Any others? What other exception do you note for the record?\nMr. GERBER: That\u2019s all, Your Honor.\nN.C.R. App. P. 10(b)(2) provides that \u201cA party may not assign as error any portion of the jury charge or omission therefrom unless he objects thereto before the jury retires to consider its verdict, stating distinctly that to which he objects and the grounds of his objection.\u201d (Emphasis added.) By failing to call the trial court\u2019s attention to the specific alleged errors in the jury charge, plaintiffs have waived their right to appellate review. N.C.R. App. P. 10(b)(2); Donavant v. Hudspeth, 318 N.C. 1, 347 S.E.2d 797 (1986); Durham v. Quincy Mutual Fire Ins. Co., 311 N.C. 361, 317 S.E.2d 372 (1984). Assuming arguendo that the instruction should have more closely reflected the exact language of the Georgia cases, we find any error to be harmless under G.S. 1A-1, Rule 61 since there is no substantial difference between the Georgia and North Carolina cases regarding the treatment of minority stockholders in a close corporation in this context. See Meiselman, 309 N.C. 279, 307 S.E.2d 551; Comolli v. Comolli, 241 Ga. 471, 246 S.E.2d 278 (1978). Plaintiffs have failed to show that the alleged error in the instruction was likely, in light of the entire charge, to mislead the jury. Robinson v. Seaboard System Railroad, 87 N.C. App. 512, 361 S.E.2d 909 (1987), disc. rev. denied, 321 N.C. 474, 364 S.E.2d 924 (1988). Accordingly, this assignment of error fails.\nV.\nPlaintiffs contend that the trial court committed reversible error by denying their motion for a directed verdict on defendant\u2019s breach of fiduciary duty claim at the close of defendant\u2019s evidence. We disagree.\nIn Tin Originals, Inc. v. Colonial Tin Works, Inc., 98 N.C. App. 663, 665, 391 S.E.2d 831, 832 (1990), this Court stated:\nA motion for directed verdict pursuant to Rule 50(a) of the North Carolina Rules of Civil Procedure presents the question of whether plaintiff\u2019s evidence is sufficient to submit to the jury. The trial court must consider the evidence in the light most favorable to the non-movant and conflicts in the evidence must be resolved in favor of the non-movant. Whether a fiduciary relationship exists is determined by the specific facts and circumstances of the case. Generally, \u201c[t]he existence or nonexistence of a fiduciary duty [is] a question of fact for the jury.\u201d\n(Emphasis in original.) (Alterations in original.) (Citations omitted.) Defendant presented ample evidence of plaintiffs\u2019 breach of fiduciary duty. Accordingly, the trial court did not err in denying plaintiffs\u2019 motion for a directed verdict on this claim at the close of defendant\u2019s evidence.\nVI.\nPlaintiffs\u2019 third assignment of error provides \u201c[plaintiffs assign as error: (3) The court\u2019s denial of plaintiffs\u2019 Motion for lack of subject matter jurisdiction, pursuant to N.C.R. Civ. P. 12(b)(1), on the ground that the proper parties were not before the court.\u201d Plaintiffs failed to make a motion to dismiss for lack of subject matter jurisdiction pursuant to G.S. 1A-1, 12(b)(1). Accordingly, the trial court was denied the opportunity to make a ruling on that motion. This assignment of error fails.\nThis Court\u2019s review of the proceedings below is limited to the assignments of error set forth in the record on appeal. N.C.R. App. P. 10(a). Within their third assignment of error, supra, plaintiffs in their brief attempt to bring forth the issue that \u201c[t]he trial court committed reversible error by denying plaintiffs\u2019 motion to dismiss defendant\u2019s counterclaim for failure to join a necessary party.\u201d The record reflects that after stipulating in the \u201corder on final pre-trial conference\u201d that \u201c[tjhere are no pending motions,\u201d plaintiffs orally moved at trial to dismiss the action pursuant to G.S. 1A-1, Rule 17 and G.S. 1A-1, Rule 19 for defendant\u2019s failure to join Peachtree as a necessary party. The trial court\u2019s denial of these motions was not assigned as error and is not encompassed within plaintiffs\u2019 third assignment of error.\nVII.\nPlaintiffs contend that \u201c[t]he trial court committed prejudicial error by admitting defendant\u2019s exhibit 16 into evidence.\u201d We disagree.\nDefendant\u2019s exhibit 16 was a report written by J. Kevin Foster, a consultant hired by defendant Richard Powell to evaluate Simplex in July 1988. Mr. Foster\u2019s 29 July 1988 report included an evaluation of \u201coffice personnel job procedures, efficiency and work-load, general ledger closing procedures, financial reporting requirements, inventory valuation and management and to determine procedures for setting-up' Sun-Supply as a separate entity from Peachtree Fasteners, Inc.\u201d\nMr. Foster testified for defendant at trial. Earlier in the trial, plaintiff Richard Powell testified about Mr. Foster\u2019s report during cross-examination without objection. During this time, he was given a copy of the report and admitted that the report\u2019s recommendations were not implemented. Later, Mr. Foster testified as to his report\u2019s preparation and contents. The report was offered into evidence at the end of Mr. Foster\u2019s testimony. The trial court admitted the report without objection from plaintiffs at that time. Mary Jane Whitaker, the next witness, was called to the stand. After Ms. Whitaker had been asked four questions, plaintiffs made a general objection to the admission of defendant\u2019s exhibit 16.\nPlaintiffs argue that the report should have been excluded pursuant to G.S. 8C-1, Rule 402 and G.S. 8C-1, Rule 701. Initially, we note that \u201ca general objection, if overruled, is ordinarily not effective on appeal.\u201d State v. Hamilton, 77 N.C. App. 506, 509, 335 S.E.2d 506, 508 (1985), disc. rev. denied, 315 N.C. 593, 341 S.E.2d 33 (1986); G.S. 8C-1, Rule 103(a); see H. Brandis, 1 Brandis on North Carolina Evidence \u00a7 27 (3rd ed. 1988). Absent some exceptional situation, error may not be predicated upon the admission of evidence unless a timely objection appears of record. Forsyth Co. Hospital Authority, Inc. v. Sales, 82 N.C. App. 265, 269, 346 S.E.2d 212, 215, disc. rev. denied, 318 N.C. 415, 349 S.E.2d 594 (1986). Here, plaintiffs failed to timely object to the admission of defendant\u2019s exhibit 16. We note that this exhibit was listed by defendant in the \u201corder on final pre-trial conference\u201d filed 16 May 1991, thus affording plaintiffs ample time to prepare for a timely objection to the introduction of the exhibit at trial. Furthermore, \u201c[i]f the witness\u2019 evidence indicates that he is in fact qualified to give the challenged opinion, even a timely specific objection will not likely be sustained on appeal.\u201d Hamilton, 77 N.C. App. at 509, 335 S.E.2d at 509 (citations omitted). Here, Mr. Foster had testified at the beginning of his testimony that he was a self-employed financial consultant and that his training and background for that position included a degree in accounting, his experience with a Big Eight accounting firm for five years, his experience as a chief financial officer for a personal consulting firm, and his experience as general manager of the accounting department of a national soft drink company. These qualifications indicate sufficient expertise to allow us to conclude that the trial court did not err in admitting Mr. Foster\u2019s report. Finally, we note that the report was relevant since it tended to show the interconnected operations of Peachtree and Simplex, the inadequacies of the financial record keeping, and the degree of control that plaintiffs exercised over Peachtree. Accordingly, this assignment of error fails.\nVIII.\nPlaintiffs argue that \u201c[t]he trial court' committed prejudicial error by admitting defendant\u2019s exhibit 26 and testimony relating to it into evidence.\u201d We disagree.\nDefendant\u2019s exhibit 26 was a compilation of defendant\u2019s papers used to value Peachtree in the fall of 1988. According to defendant\u2019s testimony, these papers included inter alia an \u201cevaluation of the financial statements, trying to see what monies were misapplied that should have been applied to Simplex but were applied to Peachtree,\u201d \u201ca scratch pad . . . looking at liabilities, assets and so forth trying to figure out what the real worth of the company was,\u201d \u201ca scratch mainly looking at the assets of the corporation,\u201d \u201ckind of a semiproforma that I worked on that would lay out what the balance sheet would look like and so forth if it was purchased and ... a Sun Supply Company 1989 proforma .... We used some of this information with prospective investors.\u201d Plaintiffs objected to the exhibit on the specific grounds that, \u201cThis is pure speculation, self-serving.\u201d After the objection was overruled, defendant was permitted to testify that \u201cthe numbers we worked on gave us an idea of what we could offer [for Peachtree], but we did need \u2014 and that was so general because we needed a current statement. We needed information that was accurate so to come up with exact numbers was impossible until we had those.\u201d\nA specific objection that is overruled is effective only to the extent of the grounds specified. Love v. Mewborn, 79 N.C. App. 465, 339 S.E.2d 487, disc. rev. denied, 317 N.C. 704, 347 S.E.2d 43 (1986). See H. Brandis, 1 Brandis on North Carolina Evidence \u00a7 27 (3rd ed. 1988). Here, plaintiffs objected at trial on the basis of the exhibit and testimony being \u201cpure speculation, self-serving.\u201d However, these grounds are not argued in plaintiffs\u2019 brief. Plaintiffs argue in their brief that the exhibit and testimony constituted the \u201cimproper opinion of a lay witness\u201d admitted into evidence in violation of G.S. 8C-1, Rule 701. Since plaintiffs made a specific objection at trial based upon the allegedly speculative and self-serving nature of defendant\u2019s exhibit and testimony, plaintiffs may not argue defendant\u2019s qualifications on appeal. Love, 79 N.C. App. 465, 339 S.E.2d 487.\nIX.\nPlaintiffs argue that \u201c[t]he trial court committed prejudicial error by permitting defendant to testify from personal notes not admitted into evidence.\u201d We disagree.\nDefendant testified that the stockholders\u2019 equity in Peachtree was higher than the $181,932.32 reflected in the 31 October 1988 balance sheet. In calculating the amount by which Peachtree was undervalued, defendant testified as follows:\nA [Defendant]: The number that I feel needed to be added back in is one hundred and forty-six thousand seven hundred and fifty-nine dollars. When added to the one eighty-one nine thirty-two, the net worth of the company when I left would be three hundred and twenty-eight thousand six hundred ninety-one dollars.\nQ [Mr. Walker, Defendant\u2019s counsel]: All right. Now, let\u2019s \u2014 let me walk you through that and how you came up with it. . . . Now, what did you say that figure was?\nMR. SURRATT [Plaintiffs\u2019 counsel]: I object, Your Honor. He seems to be testifying and reading from something that\u2019s not identified.\nTHE COURT: Sustained.\nQ [Mr. Walker, Defendant\u2019s counsel]: Mr. Omli [defendant], what items go into the figure you\u2019ve testified to?\nA: The items that go into that are the salary that needed to be put back into and charged to Simplex.\nQ: What else?\nA: The heat, light, water.\nQ: What else?\nA: Rent.\nQ: What else?\nA: There was a charge for freight that was received back from the Holz-Her company on the material moved to Americus [Georgia].\nQ: What else?\nA: Because the collators were sold at their value, the depreciation on those collators needs to go back in there.\nQ: What else?\nA: Some travel expenses that were for Simplex.\nQ: All right. What else? Let me ask you if you included the Bostitch deal in this.\nA: That needs to be put in there as well.\nQ: All right. Again, what \u2014 -what was the amount of salary?\nMr. Surratt [Plaintiffs\u2019 counsel]: Object to reading something that hasn\u2019t been identified.\nTHE COURT: Sustained.\nMr. WALKER [Defendant\u2019s counsel]: All right. Well, fine. Your Honor, I do think that Mr. Omli has testified and I am entitled to put the number on the board that he did testify to. Will you allow me to do that?\nThe COURT: Yes.\n(Mr. Walker writing on the board.)\nMR. SURRATT: Your Honor, he didn\u2019t testify to those numbers and he\u2019s read them from something that\u2019s not in evidence.\nTHE COURT: You may cross-examine him as to those figures.\nMR. SURRATT: We objected and you sustained it.\nTHE COURT: Overruled. Proceed.\nQ [Mr. Walker, Defendant\u2019s counsel]: So, Mr. Omli, what do you \u2014 is your \u2014 what do you contend this figure represents, this three hundred twenty-eight thousand six hundred ninety-one dollars?\nA: That is the true net worth, stockholders\u2019 equity of the company, when I was fired.\nMR. WALKER: I don\u2019t have any other questions, Your Honor.\nG.S. 8C-1, Rule 612(a) provides that \u201cIf, while testifying, a witness uses a writing or object to refresh his memory, an adverse party is entitled to have the writing or object produced at the trial ... in which the witness is testifying.\u201d In State v. Peacock, 236 N.C. 137, 139-40, 72 S.E.2d 612, 615 (1952), our Supreme Court stated that\nThe use of notes to quicken the memory is well recognized procedure in this jurisdiction, if the memorandum is one which had been made by the witness, or in his presence, or under his direction. Story v. Stokes, 178 N.C. 409, 100 S.E. 689; S. v. Coffey, 210 N.C. 561, 187 S.E. 754; S. v. Smith, 223 N.C. 457, 27 S.E.2d 114. . . . \u201cIt is quite immaterial by what means the memory is quickened; it may be a song, or a face, or a newspaper item, or a writing of some character. It is sufficient that by some mental operation, however, mysterious, the memory is stimulated to recall the event, for when so set in motion it functions quite independently of the actuating cause.\u201d Jewett v. U.S., 15 F.2d 955 (1926).\nIt is customary for such notes to be made available to the opposing counsel so that he may examine and cross-examine relative thereto, but in this case the record fails to disclose any effort on the part of defendant to obtain the notes or to use them in cross-examination. In the absence of a request for an examination of the notes or some other effort to make them available, defendant\u2019s exceptions based upon this phase of the examination are without merit; Manufacturing Co. v. R. R., 222 N.C. 330, 23 S.E.2d 32; Stansbury, paragraph 32, page 48.\nHere, plaintiffs did not request to see the notes nor did plaintiffs cross-examine defendant regarding the notes. Additionally, plaintiffs failed to have the notes marked at trial for preservation in the record. Plaintiffs failed to include these notes in the record on appeal.\nAssuming arguendo that the trial court erred by allowing defendant to testify as to the precise dollar figure of stockholders\u2019 equity, that error was harmless in light of defendant\u2019s earlier testimony and exhibits admitted into evidence without objection. Earlier in the trial, defendant testified and introduced evidence (defendant\u2019s exhibit 15) of those items which he felt had been subtracted from the stockholders\u2019 equity reflected on the 31 October 1988 balance sheet. Defendant testified at that time as follows:\nI had looked at the statements and it was very obvious that there were things like the half of my salary that was discussed earlier, travel expenses, some things like the bill for the rent where they collated the nails. There were a number of expenses that should have been charged to Simplex Nails because they belonged there that had been charged to Peachtree and Richard [Powell, plaintiff] agreed that was so. In fact, there were some remarks wrote on that sheet that he wrote and then also in agreement had a computer sheet run showing some of those that would be taken out of \u2014 as expenses out of Peachtree and put where they belonged, over to Simplex. It was very substantial. It was a lot of money and it would make a big difference on the net worth of the company.\nQ [Defendant\u2019s counsel]: . . . This is Defendant\u2019s Exhibit 15. What is that, please?\nA: This is a computer run and it says that it\u2019s adjustments by R.F. Powell. This is some of the adjustments that should be made \u2014 including officers\u2019 salaries, heat, light and water, building rent and so forth \u2014 that should be adjusted to where they belong, which is at Simplex, and they should be taken off the books of Peachtree.\n(Emphasis added.) Defendant\u2019s exhibit 15 was then admitted into evidence without objection, defendant read some of the specific dollar amounts that were next to each of the expenditure categories on the sheet, and defendant testified that he \u201cnever could find them [the adjustments] as being made on the statements whatsoever.\u201d Similarly, defendant\u2019s exhibit 29, a check register showing a check to Stanley Bostitch, was admitted into evidence without objection. Defendant was permitted to testify without objection that this expense should not have been paid for by Peachtree. Since the components largely constituting the figure that defendant allegedly read into evidence from an unidentified note had already been introduced into evidence, we conclude that any error that occurred was harmless. See State v. Whitley, 311 N.C. 656, 661, 319 S.E.2d 584, 588 (1984) (\u201cWhere evidence is admitted over objection, and the same evidence has been previously admitted or is later admitted without objection, the benefit of the objection is lost.\u201d); State v. Brooks, 83 N.C. App. 179, 349 S.E.2d 630 (1986); H. Brandis, 1 Brandis on North Carolina Evidence \u00a7 30 (3rd ed. 1988).\n\u2019 X.\nFinally, plaintiffs argue that \u201c[t]he trial court committed prejudicial error by permitting Ronald Stevens\u2019 speculative testimony.\u201d We disagree.\nMr. Stevens testified that if he had received an \u201cup-to-date\u201d financial statement in 1988, he would have invested two hundred and fifty thousand dollars in Peachtree. Plaintiffs waived this objection later by allowing Mr; Stevens to testify without objection that \u201cI committed to the fact that if we had an up-to-date financial statement from Peachtree then I would be there with the money\u201d and by asking Mr. Stevens on cross-examination that \u201cif the finan-cials from \u2014 from this business in Georgia had turned out to be a lot worse than those projections that Mr. Omli made, that would affect your thinking about buying it, wouldn\u2019t it?\u201d Mr. Stevens\u2019 testimony was admissible pursuant to G.S. 8C-1, Rule 701 since it was based on Mr. Stevens\u2019 perceptions and was helpful to the jury. The evidence was relevant to defendant\u2019s earlier testimony regarding his difficulty in obtaining current financial statements and to show defendant\u2019s attempts to mitigate his losses from Peachtree by showing his efforts to save the company by bringing in investors.\nXI.\nIn conclusion, we reverse and remand for a new trial as to defendant\u2019s liability on the $100,000.00 promissory note. The remaining issues are affirmed.\nAffirmed in part; reversed and remanded in part.\nJudges ORR and JOHN concur.",
        "type": "majority",
        "author": "EAGLES, Judge."
      }
    ],
    "attorneys": [
      "John R. Surratt, P.A., by John R. Surratt and Andrew J. Gerber, for plaintiffs.",
      "Craige, Brawley, Liipfert & Ross, by William W. Walker, for defendant."
    ],
    "corrections": "",
    "head_matter": "PRESTON POWELL and RICHARD POWELL, Plaintiffs v. ALLAN T. OMLI, Defendant and Third-Party Plaintiff v. PEACHTREE FASTENERS, INC. and SIMPLEX NAILS, INC., Third-Party Defendants\nNo. 9121SC1157\n(Filed 1 June 1993)\n1. Negotiable Instruments and Other Commercial Paper \u00a7 117 (NCI4th)\u2014 action on a note \u2014breach of fiduciary duty \u2014failure of consideration \u2014 issue of fact\nThe trial court erred by granting a directed verdict for plaintiffs in an action on a promissory note where defendant contended that there had been a failure of consideration in plaintiffs\u2019 breach of fiduciary duty to defendant, plaintiffs argued that defendant had received full consideration in that he received the benefit of the money even though he never actually held the money, the note stated that \u201cfor value received\u201d defendant promised to pay plaintiffs $100,000, and the note did not specify exactly what value defendant had received nor whether there were or were not any other agreements. This question should have been submitted to the jury.\nAm Jur 2d, Bills and Notes \u00a7\u00a7 1296 et seq.\n2. Negotiable Instruments and Other Commercial Paper \u00a7 117 (NCI4th)\u2014 action on a note \u2014 breach of fiduciary duty\u2014 consideration \u2014new trial\nAn action on a note was remanded for a new trial where the trial court had erroneously granted a directed verdict for plaintiffs, defendant contended that plaintiffs were not entitled to a new trial because the jury had found that plaintiffs had breached their fiduciary duties to defendant and defendant argued that this breach was the same as a finding of a failure of consideration, but there was evidence that the fiduciary duty did not serve as consideration for defendant\u2019s note.\nAm Jur 2d, Bills and Notes \u00a7\u00a7 1296 et seq.\n3. Appeal and Error \u00a7 147 (NCI4th); Damages \u00a7 127 (NCI4th) \u2014 breach of fiduciary duty \u2014 punitive damages \u2014refusal to submit to jury\nThe trial court did not err in an action on a note by refusing to submit to the jury the issue of plaintiffs\u2019 liability to defendant for punitive damages for breach of fiduciary duty. Defendant failed to object at trial, and, under controlling Georgia law, defendant failed to show clear and convincing evidence that defendant\u2019s actions showed willful misconduct, malice, fraud, wantonness, oppression, or that entire want of care which would raise the presumption of conscious indifference to consequences.\nAm Jur 2d, Appeal and Error \u00a7\u00a7 545 et seq.; Damages \u00a7\u00a7 994, 995.\n4. Appeal and Error \u00a7 147 (NCI4th)\u2014 breach of fiduciary duty-instructions \u2014 failure to object to specific errors \u2014appellate review waived \u2014harmless error\nPlaintiffs waived appellate review of an alleged error in instructions to the jury on breach of fiduciary duty by failing to call the trial court\u2019s attention to the specific alleged errors in the jury charge. However, assuming as plaintiffs contended that the charge should have more closely reflected the language of Georgia cases, any error was harmless because there is no substantial difference between the Georgia and North Carolina cases regarding the treatment of minority stockholders in a close corporation in this context.\nAm Jur 2d, Appeal and Error \u00a7\u00a7 545 et seq.\n5. Fiduciaries \u00a7 1 (NCI4th)\u2014 breach of fiduciary duty \u2014 motion for directed verdict denied \u2014no error\nThe trial court did not err in a breach of fiduciary duty counterclaim by denying plaintiffs\u2019 motion for a directed verdict at the close of defendant\u2019s evidence where defendant presented ample evidence of plaintiffs\u2019 breach of fiduciary duty.\nAm Jur 2d, Appeal and Error \u00a7 849.\n6. Appeal and Error \u00a7 156 (NCI4th)\u2014 subject matter jurisdiction \u2014lack of proper party \u2014no motion to dismiss\nAn assignment of error to the denial of a motion to dismiss for lack of subject matter jurisdiction in that proper parties were not joined failed where plaintiffs failed to make a motion to dismiss for lack of subject matter jurisdiction pursuant to N.C.G.S. \u00a7 1A-1, Rule 12(b)(1) and the trial court was denied the opportunity to rule on that motion. The record reflects that, after stipulating in the order on final pretrial conference that there were no pending motions, plaintiffs moved at trial to dismiss the action pursuant to N.C.G.S. \u00a7 1A-1, Rule 17 and N.C.G.S. \u00a7 1A-1, Rule 19 for failure to join a necessary party. The denial of those motions was not assigned as error.\nAm Jur 2d, Appeal and Error \u00a7\u00a7 562 et seq.\n7. Appeal and Error \u00a7 147 (NCI4th); Evidence and Witnesses \u00a7\u00a7 2154, 2148 (NCI4th)\u2014 breach of fiduciary duty \u2014report of financial consultant \u2014admitted without timely objection \u2014 consultant qualified \u2014report relevant\nThere was no prejudicial error in the admission of a report from a financial consultant in an action arising from the failure of a company where defendants counterclaimed for breach of fiduciary duty where the report was listed in the order on final pretrial conference, one of the plaintiffs testified about the report during cross-examination, the consultant testified as to the report\u2019s preparation and contents, the report was admitted into evidence, the next witness was asked four questions, and plaintiffs made a general objection to the admission of the report. A general objection which is overruled is generally not effective on appeal, plaintiffs failed to make a timely objection, the qualifications of the witness indicate that the court did not err in admitting the report, and the report was relevant.\nAm Jur 2d, Appeal and Error \u00a7\u00a7 545 et seq.; Expert and Opinion Evidence \u00a7\u00a7 5 et seq., 32-38, 55 et seq.\n8. Appeal and Error \u00a7 421 (NCI4th)\u2014 admission of evidence \u2014 objection that exhibit and testimony speculative and self-serving \u2014 different grounds argued in brief\nPlaintiffs could not argue on appeal that testimony and an exhibit constituted the improper opinion of a lay witness where they had made a specific objection at trial based upon the allegedly speculative and self-serving nature of defendant\u2019s exhibit and testimony.\nAm Jur 2d, Appeal and Error \u00a7\u00a7 691 et seq.\n9. Evidence and Witnesses \u00a7 761 (NCI4th)\u2014 testimony from notes not admitted into evidence \u2014substance already admitted \u2014no prejudicial error\nAny error was harmless where a defendant in an action arising from the failure of a business testified from personal notes not introduced where plaintiffs did not request to see the notes, plaintiffs did not cross-examine defendant regarding the notes, plaintiffs failed to have the notes marked at trial for preservation in the record, plaintiffs failed to include the notes in the record on appeal, and the components largely constituting the figure allegedly read into evidence from an unidentified note had already been introduced into evidence.\nAm Jur 2d, Appeal and Error \u00a7 806.\n10. Evidence and Witnesses \u00a7 2047 (NCI4th)\u2014 failure of business \u2014 testimony of potential investor \u2014 allegedly speculative \u2014 admissible\nThere was no error in an action arising from the failure of a business in allowing a witness to testify that he would have invested in the business if he had received an up-to-date financial statement. Although plaintiffs contend that the testimony was speculative, it was admissible under N.C.G.S. \u00a7 8C-1, Rule 701 since it was based on the witness\u2019s perceptions and was helpful to the jury. It was relevant to defendant\u2019s earlier testimony regarding his difficulty in obtaining current financial statements and to show defendant\u2019s attempts to mitigate his losses by showing his efforts to bring in investors.\nAm Jur 2d, Expert and Opinion Evidence \u00a7\u00a7 26 et seq., 53, 54, 362.\nAppeal by plaintiffs and defendant from judgment filed 10 June 1991 by Judge Preston Cornelius in Forsyth County Superior Court. Heard in the Court of Appeals 22 October 1992.\nPlaintiffs, Georgia residents, are the owners of Simplex Nails, Inc., a Georgia corporation which manufactures nails. After negotiations in Winston-Salem, plaintiffs and defendant, a North Carolina resident, entered into an agreement to form Peachtree Fasteners, Inc., (hereinafter \u201cPeachtree\u201d) which would produce and sell collated nails. Peachtree was incorporated under Georgia law on 3 August 1987, with headquarters in Americus, Georgia. Defendant and each plaintiff agreed to contribute $100,000.00 in exchange for each receiving a one-third ownership interest in Peachtree. Since defendant did not have $100,000.00 in cash, defendant gave plaintiffs a $100,000.00 promissory note payable to plaintiffs upon demand \u201csecured by a security interest in the undersigned\u2019s [defendant\u2019s] partnership interest in FY-OM Partnership, a North Carolina general partnership.\u201d The security interest was properly perfected under North Carolina law. Of the initial $300,000.00 in capital, $250,000.00 was used to buy equipment and $50,000.00 was used as working capital. In addition to being a stockholder and director, defendant was hired as president of Peachtree.\nPeachtree eventually failed. Each party alleged different reasons for the failure. Plaintiffs\u2019 evidence tended to show the following: Peachtree struggled because wholesalers would not purchase the collated nails. Peachtree established two subsidiaries, Advanced Fasteners in Waycross, Georgia, and Sun Supply in Doraville, Georgia, in an attempt to sell the collated nails directly to subcontractors. Plaintiffs contended that Peachtree was not profitable because it was unable to produce a competitive product. Plaintiffs also introduced evidence that defendant previously had been a minority shareholder in another corporation, Federal Fasteners, which also sold collated nails and experienced financial difficulties.\nPlaintiffs offered to sell Peachtree to defendant, but defendant was unable to secure the necessary funds. Plaintiffs\u2019 evidence further showed that Simplex had to loan money to Peachtree so that Peachtree could pay its debts. Additionally, plaintiff Richard Powell had to personally guarantee a loan to Peachtree, secured by the collator equipment, to provide additional funds for Peachtree to pay its debts. Eventually, the collator equipment had to be sold to pay creditors.\nDefendant\u2019s evidence tended to show the following: plaintiffs agreed that Peachtree and Simplex would be operated as separate businesses, that defendant would be treated fairly, and that plaintiffs would make Peachtree prosper. Although he was hired as Peachtree\u2019s president, defendant\u2019s decisions were not followed because plaintiff Richard Powell controlled decisions regarding Peachtree\u2019s operations and finances. For example, the creation of Advanced Fasteners, against defendant\u2019s judgment, caused financial losses. Loans from Simplex, the corporation owned by plaintiffs, were made to Peachtree at plaintiff Richard Powell\u2019s direction without the formal approval of either corporation, without appropriate accounting records, and without defendant\u2019s consent or knowledge. Simplex\u2019s expenses were often charged to Peachtree and when common customers paid their bills, Simplex was paid first. Funds from Sun Supply, Peachtree\u2019s subsidiary, were withdrawn by plaintiffs without appropriate accounting records. Despite their offer to sell Peachtree to defendant and defendant\u2019s efforts to attract investors, plaintiffs refused to give defendant current financial information regarding Peachtree\u2019s true net worth.\nWhen defendant was fired as president in October 1988, Peachtree\u2019s balance sheet showed a stockholders\u2019 equity of $181,932.32. Defendant offered evidence that the balance sheet was inaccurate. Defendant\u2019s evidence tended to show that the figure on the balance sheet was incorrect largely because Peachtree had paid for many of Simplex\u2019s expenses. Thereafter, defendant remained a shareholder and director of Peachtree. Approximately one month after defendant was fired and without defendant\u2019s knowledge or consent, plaintiffs caused Peachtree to borrow $250,000.00 and to encumber the collators as security. The $250,000.00 was paid either to Simplex or to plaintiffs directly. Additionally, in December 1988 plaintiffs, without defendant\u2019s knowledge or consent, caused Peachtree to sell the collators for $255,000.00 to pay off the Simplex debts. When Peachtree\u2019s operations ceased in July 1990, the stockholders\u2019 equity had a deficit of $114,171.40.\nOn 28 November 1988, plaintiffs made a formal demand upon defendant for payment of the $100,000.00 promissory note. Defendant refused payment. Plaintiffs sued on the note by filing a verified complaint in Forsyth County Superior Court on 3 May 1989. On 7 July 1989, defendant answered alleging inter alia failure of consideration. Additionally, defendant counterclaimed alleging inter alia the claims of fraud and a breach of fiduciary duty by plaintiffs. A jury trial was held on 13 May 1991. The trial court entered a directed verdict against defendant on the promissory note. The value of plaintiffs\u2019 claim on the note, including principal, interest, and attorney\u2019s fees, was $170,488.46. On 16 May 1991, the jury found that plaintiffs breached a fiduciary duty to defendant, awarding defendant an offset of $60,250.00 against plaintiffs\u2019 note claim. After the offset (and its prejudgment interest), plaintiffs received an award of $101,238.46. On 10 June 1991, the trial court denied defendant\u2019s motion for a new trial. Plaintiffs and defendant each appeal.\nJohn R. Surratt, P.A., by John R. Surratt and Andrew J. Gerber, for plaintiffs.\nCraige, Brawley, Liipfert & Ross, by William W. Walker, for defendant."
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  "file_name": "0336-01",
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