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  "name": "VANITA B. STANBACK v. FRED J. STANBACK, JR.",
  "name_abbreviation": "Stanback v. Stanback",
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    "judges": [
      "Judges BRITT and ERWIN concur."
    ],
    "parties": [
      "VANITA B. STANBACK v. FRED J. STANBACK, JR."
    ],
    "opinions": [
      {
        "text": "CLARK, Judge.\nThe trial court did not dismiss plaintiff\u2019s claim for actual compensatory damages for breach of contract. The measure of such damages is the amount which will compensate the injured party for the loss which fulfillment of the promise could have prevented or which breach of it entailed. 3 Strong\u2019s N.C. Index, Contracts, \u00a7 29.2, p. 442. The traditional goal is to award a sum that will put the non-breaching party in as good a position as he would have been had the contract been performed. Restatement, Contracts, \u00a7 329 (1932); Dobbs, Remedies, \u00a7 12.1, p. 786. A plaintiff is, of course, entitled to nominal damages automatically, upon proof of breach but may recover general compensatory damages as above measured upon proof by the greater weight of the evidence that such damages were incurred and were naturally and proximately caused by the breach of contract. Builders Supply v. Midyette, 274 N.C. 264, 162 S.E. 2d 507 (1968); 3 Strong\u2019s N.C. Index, Contracts, \u00a7 29, p. 440. Plaintiff Stanback may proceed to trial on her claim for actual compensatory damages incurred in the alleged breach of contract.\nThe issue raised by this appeal is whether the trial court erred in dismissing plaintiff\u2019s claims for special or consequential damages and for punitive damages. Such damages will sometimes be awarded, but such additional award has always been subject to rather stringent limitations. Proper pleading is crucial to such award. Perkins v. Langdon, 237 N.C. 159, 74 S.E. 2d 634 (1953); 3 Strong\u2019s N.C. Index, Contracts', \u00a7 29.3, p. 444.\nPlaintiff\u2019s claim for consequential or special damages amounting to $250,000.00 rests on the allegation that defendant\u2019s alleged breach of their separation agreement, which led to the lien on her home, and its advertisement for sale, with the concommitant publicity, caused her mental anguish, and damaged her reputation in the community. Plaintiff was permitted to amend her complaint to allege that such special mental anguish damages were within the contemplation of the parties at the time they contracted. It is well established that, to recover special or consequential damages in a contract action, plaintiff must prove that these damages were in fact caused by the breach, that the amount of such damages can be proved with a reasonable degree of certainty, and that the damages were within the \u201ccontemplation of the parties\u201d at the time they contracted. Dobbs, Remedies, \u00a7 12.3, p. 798. The \u201ccontemplation of the parties\u201d rule was established in the English case of Hadley v. Baxendale, 9 Exch. 341, 156 Eng. Rep. 145 (1854) and is a rule which is generally applied to preclude an award of special damages unless there is some evidence that the parties had not only \u201ccontemplated\u201d them but had actually allocated the risk of breach to include them either implicitly or explicitly, or unless the breach is also a tort.. Dobbs, Remedies, \u00a7 12.3, pp. 805-807; Iron Works Co. v. Cotton Oil Co., 192 N.C. 442, 135 S.E. 343 (1926); Builders v. Gadd, 183 N.C. 447, 111 S.E. 771 (1922). Mere allegation that the parties contemplated the damages, as in the case sub judice, is clearly insufficient, absent allegation of facts to support the conclusional allegations. Plaintiff alleged no such facts but argues in her brief that the very nature of a separation agreement contemplates the mental anguish of the innocent party should breach occur. Plaintiff correctly argues the general law that the nature of the contract is an important key to determining when non-commercial special damages may be awarded. Determination of the nature of the contract, of course, is a generalization of the \u201ccontemplation of the parties\u201d rule and includes an analysis of allocation of risk. Carroll v. Rountree, 34 N.C. App. 167, 174, 237 S.E. 2d 566, 571 (1977), states:\n\u201c. . . The usual contract is commercial in nature and the pecuniary interests of the parties is the primary factor, since they relate to property, or to services to be rendered in connection with business, or to services to be rendered in professional operations. Damages for mental anguish are, therefore, generally not recoverable. . . .\u201d\nBut, Lamm v. Shingleton, 231 N.C. 10, 14, 55 S.E. 2d 810, 813 (1949), a case essentially involving an action for mental anguish special damages for breach of contract to furnish a casket and watertight vault, and to conduct the funeral and inter the body, listed the exceptions to the rule disallowing special damages for non-commercial injury in contract cases:\n\u201c. . . [A]s a general rule, damages for mental anguish suffered by reason of the breach thereof are not recoverable. Some type of mental anguish, anxiety, or distress is apt to result from the breach of any contract which causes pecuniary loss. Yet damages therefor are deemed to be too remote to have been in the contemplation of the parties at the time the contract was entered into to be considered as an element of compensatory damages. . . .\nThe rule is not absolute. Indeed, the trend of modern decisions tends to leave it in a state of flux. Some courts qualify the rule by holding that such damages are recoverable when the breach amounts in substance to a willful or independent tort or is accompanied by physical injury. . . . Still others treat the breach as an act of negligence and decide the question as though the action were cast in tort, and thus confuse the issue. Thus, to some extent the courts have modified the common law rule.\nIn this process of modification a definite exception to the doctrine has developed. Where the contract is personal in nature and the contractual duty or obligation is so coupled with matters of mental concern or solicitude, or with the sensibilities of the party to whom the duty is owed, that a breach of that duty will necessarily or reasonably result in mental anguish or suffering, and it should be known to the parties from the nature of the contract that such suffering will result from its breach, compensatory damages therefor may be recovered. ... In such case the party sought to be charged is presumed to have contracted with reference to the payment of damages of that character in the event such damages should accrue on account of his breach of the contract. . . .\u201d [Emphasis added.]\nThe Lamm decision noted that such damages had been held recoverable in an action for breach of contract of marriage and for breach of contract to transmit a death message. It held mental anguish damages recoverable in its own case because \u201c[t]he contract was predominantly personal in nature and no substantial pecuniary loss would follow its breach.\u201d The Lamm decision continued:\n\u201c. . . Her [the widow-plaintiff\u2019s] mental concern, her sensibilities, and her solicitude were the prime considerations for the contract, and the contract itself was such as to put the defendants on notice that a failure on their part to inter the body properly would probably produce mental suffering on her part. It cannot be said, therefore, that such damages were not within the contemplation of the parties at the time the contract was made. . . .\u201d 231 N.C. at 15, 55 S.E. 2d at 813-814.\nThe Carroll decision applied the Lamm test of the \u201cper-sonalness\u201d of the contract in refusing to grant mental anguish damages in a case alleging that defendant\u2019s actions breached an implied contract he had with his client by releasing certain monies to plaintiff\u2019s former wife without receiving specified signed documents in return. The court stated:\n. . While we readily concede that there could be contracts between attorney and client so personal in nature that the attorney could be assumed to have entered the contract with the knowledge that a failure to fulfill the obligation thereunder in the manner contemplated by the parties would naturally and probably result in the client\u2019s suffering mental anguish, we do not think the contract which is the subject of this action falls in that category. We do not regard this contract as predominantly personal in nature. It was necessary that plaintiff obtain his wife\u2019s signature to a deed in order that a farm inherited by him and other members of his family could be sold. Plaintiff\u2019s wife had brought an action against him for alimony. The fulfilling of the obligations under the contract in the manner agreed as alleged by plaintiff would have resulted in the sale of the farm and obtaining funds with which to settle the alimony action and obtain its dismissal and settle other property and marital rights of the parties. We agree that plaintiff is not entitled to recover damages for mental anguish.\u201d 34 N.C. App. at 174, 237 S.E. 2d at 572.\nIn the case sub judice, the alleged promise to pay for increased tax was not a personal contract provision, but a regular, \u201ccommercial\u201d one, a promise to pay monies to compensate for extra taxes paid. \u201cThe measure of damages for breach of a promise to pay a debt or a tax owed by the promisee personally, or charged upon his property, is the amount of such debt or tax, with interest. . . .\u201d 22 Am. Jur. 2d, Damages, \u00a7 67, p. 101. The compensatory damages are limited to the actual \u201cexpectation\u201d measure. We echo the Carroll court in making clear that we are not holding that a separation agreement provision may never be \u201cpersonal\u201d in nature, clearly impliedly contemplating special mental anguish damage in the event of breach. We hold that in the case sub judice the breach of a tax arrangement is not \u201cpersonal.\u201d It is also clear that plaintiff could not recover special damage for non-commercial, non-tortious loss of reputation in the community. Such recovery is not allowed, absent special contract relationship such as that binding employers and employees. 22 Am. Jur. 2d, Damages, \u00a7 156, p. 225.\nPlaintiff\u2019s claim for punitive damages rests on her allegation that\n\u201cThe acts and conduct of the defendant in failing to pay the amount of taxes assessed against the plaintiff has been wilful, malicious, calculated, deliberate, and purposeful, and with full knowledge of the consequences which would result, and was recklessly and irresponsibly done; and as a result of the acts and conduct of the defendant, the plaintiff is entitled to recover punitive damages . . . [of] $100,000.00.\u201d\nCarroll, supra, reaffirms the general rule that punitive damages are never awarded as compensation but as punishment inflicted for intentional wrongdoing. Allred v. Graves, 261 N.C. 31, 134 S.E. 2d 186 (1964). Such intentional wrongdoing clearly must be something other than intentional breach of contract, for breaching must be permitted as a legitimate business risk, the breacher compensating for the breach by putting the other party in as good a position as he would have been had the breach not occurred. Although courts will force a breacher to compensate, the breaching itself is not \u201cwrongful.\u201d \u201cWrongful\u201d breach, such as permits a jury consideration of punitive dmages, is limited to breach of promise to marry, such a \u201cpersonal\u201d contract as would permit mental anguish damages, and breach of duty to serve the public imposed by law upon a public utility. King v. Insurance Co., 273 N.C. 396, 159 S.E. 2d 891 (1968). If the breach is the result of tortious conduct, punitive damages may be awarded to punish the tortious conduct, but even then the conduct must be aggravated beyond that necessary to be merely tortious. Newton v. Insurance Co., 291 N.C. 105, 229 S.E. 2d 297 (1976); Oestreicher v. Stores, Inc., 290 N.C. 118, 225 S.E. 2d 797 (1976). Such aggravated tortious conduct was early defined to include fraud, malice, gross negligence, oppression, insult, rudeness, caprice or wilfulness. Baker v. Winslow, 184 N.C. 1, 113 S.E. 570 (1922). In the case sub judice plaintiff alleges no separate identifiable tor-tious conduct but merely alleges that the contract breach was wilful wrongful conduct, which allegation is insufficient as a base for punitive damages.\nPlaintiff\u2019s third argument attacks the trial court\u2019s dismissal of her second cause of action. It is clear that plaintiff\u2019s classification of this cause as \u201cabuse of process\u201d is erroneous. To allege satisfactorily abuse of process, plaintiff must allege facts tending to show (1) an ulterior purpose and (2) a wilful act in the use of the process not proper in the regular conduct of the proceeding. Prosser, Torts (1971 ed.), \u00a7 121, p. 857; Edwards v. Jenkins, 247 N.C. 565, 101 S.E. 2d 410 (1958). Plaintiffs complaint alleges sufficient ulterior purpose, but nowhere alleges any bent or inappropriate act in an otherwise proper proceeding. But plaintiff\u2019s complaint does allege elements of malicious prosecution. Under our liberal pleading rules, a misclassification would not be fatal, provided the complaint put the defendant on notice as to the nature of the action against him. Sutton v. Duke, 277 N.C. 94, 176 S.E. 2d 161 (1970). Both malicious prosecution and abuse of process have the common element of an improper purpose in the use of the legal process, and there are many cases in which they overlap. Prosser, \u00a7 121, p. 857. In the leading English \u201cabuse of process\u201d case, the court denied the action of malicious prosecution, as the underlying case had not been terminated in the plaintiff\u2019s favor, but refused to permit its process to be misused to a bad end and found the defendant liable. Grainger v. Hill, 4 Bing. N.C. 212, 132 Eng. Rep. 769 (1838). Mere misclassifying is not herein fatal.\nHowever, a malicious prosecution complaint must allege sufficient facts to show that the proceeding was initiated without probable cause, that the proceeding was terminated in the plaintiff\u2019s favor on the merits, that defendant brought the former action out of \u201cmalice,\u201d generally defined as improper purpose. Prosser, \u00a7 120, pp. 853-855. The complaint alleges malice, lack of probable cause, and ulterior purpose, although we note that the \u201cfacts\u201d alleged to support these allegations are arguably insufficient. It does not allege termination in the plaintiff\u2019s favor, but only that \u201cthe action of the defendant against the plaintiff was dismissed by the court.\u201d Plaintiff includes in the record defendant\u2019s complaint in the federal case but enters nothing as to the nature of the dismissal. It is clear that the dismissal could have been granted for reasons other than a judgment for plaintiff on the merits and plaintiff\u2019s complaint is therefore deficient. Even though the complaint could have established a good cause of action for malicious prosecution regardless of its misclassification as \u201cabuse of process,\u201d it did not do so, and the trial court correctly dismissed this second count. As the court is deemed to have examined the federal court complaint, a matter outside the pleading, the dismissal turns from a Rule 12(b)(6) to a Rule 56 dismissal, and is with prejudice.\nThe trial court order is\nAffirmed.\nJudges BRITT and ERWIN concur.",
        "type": "majority",
        "author": "CLARK, Judge."
      }
    ],
    "attorneys": [
      "Brinkley, Walser, McGirt & Miller by Walter F. Brinkley for plaintiff appellant.",
      "Hudson, Petree, Stockton, Stockton & Robinson by Norwood Robinson and George L. Little, Jr.; and Kluttz & Hamlin by Clarence Kluttz for defendant appellee."
    ],
    "corrections": "",
    "head_matter": "VANITA B. STANBACK v. FRED J. STANBACK, JR.\nNo. 7719SC610\n(Filed 1 August 1978)\n1. Contracts \u00a7 29.3\u2014 breach of contract \u2014 special or consequential damages\nTo recover special or consequential damages in a breach of contract action, plaintiff must prove that such damages were in fact caused by the breach, that the amount of such damages can be proved with a reasonable degree of certainty, and that the damages were within the contemplation of the parties at the time they contracted.\n2. Contracts \u00a7 29.3\u2014 breach of separation agreement provision for payment of taxes \u2014 no special damages\nDefendant husband\u2019s breach of a provision of a separation agreement that he would pay any difference in the plaintiff wife\u2019s income taxes resulting from her inability to deduct counsel fees paid to her attorneys, which led to a lien on her home and its advertisement for sale, was not the breach of a \u201cpersonal\u201d contract provision for which the wife could recover special damages for mental anguish; nor could the wife recover special damages for loss of reputation in the community allegedly resulting from such breach.\n3. Contracts \u00a7 29.3; Damages \u00a7 12.1\u2014 breach of contract \u2014 punitive damages\nPlaintiff\u2019s allegation that defendant wrongfully and willfully breached a provision of a separation agreement requiring him to pay any increase in plaintiff\u2019s income taxes resulting from her inability to deduct counsel fees paid to her attorneys was insufficient as a basis for punitive damages.\n4. Process \u00a7 19\u2014 abuse of process \u2014 insufficient allegations\nPlaintiff\u2019s complaint was insufficient to allege abuse of process where it sufficiently alleged ulterior purpose but failed to allege any bent or inappropriate act in an otherwise proper proceeding.\n5. Malicious Prosecution \u00a7 8\u2014 termination in plaintiff\u2019s favor \u2014 insufficient allegation\nPlaintiff\u2019s complaint was insufficient to state a claim for relief for malicious prosecution where it failed to allege termination of the prior action in plaintiff\u2019s favor but alleged only that \u201cthe action of the defendant against the plaintiff was dismissed by the court.\u201d\nAPPEAL by plaintiff from Rousseau, Judge. Order entered 15 April 1977, in Superior Court, ROWAN County. Heard in the Court of Appeals 26 April 1978.\nPlaintiff-wife initiated this contract action to recover actual, consequential and punitive damages from defendant. The complaint alleges that defendant-husband breached part of their separation agreement, a supplementary letter-agreement given in consideration of the formal separation agreement\u2019s provision allocating the burden of payment to wife\u2019s counsel to the wife and increasing husband\u2019s periodic payments of 25% of the wife\u2019s attorneys\u2019 fees. The supplementary agreement was an agreement between husband\u2019s and wife\u2019s attorneys, and reads as follows:\n\u201cWe agree that if Vanita Stanback is unable to deduct the fees she is required to pay . . . during 1968 that Fred Stanback will pay to her . . . the difference in the federal and state income tax that she is required to pay by virtue of being unable to make this deduction for attorneys\u2019 fees.\nIt is understood that a valid effort will be made by Mrs. Stanback to claim such deductions and that the tax returns for 1968, both federal and state, will be prepared under the supervision of [the attorneys].\u201d\nPlaintiff paid her attorneys the $31,000.00 fee set by the court and claimed both federal and state income tax deductions. The I.R.S. audited her 1968 tax return and disallowed $28,500.00 of the $31,000.00 deduction, as did the North Carolina Department of Revenue. Defendant refused to pay her tax deficiency. As a result of this alleged breach of their agreement, plaintiff was unable to pay her deficiency, and the United States filed a lien against her property. In 1974 she borrowed $18,099.51, secured by deed of trust, to pay off her deficiency, plus interest, and avoid foreclosure. As she has been unable to pay off the loan, the lender is in the process of foreclosing on her home. The State of North Carolina, as a means of collecting her state income deficiency, issued a garnishment against defendant and, as a result of the garnishment, defendant paid $2,989.00, plus interest \u201cusing funds which he had agreed under the deed of separation between the parties to pay to the . . . [plaintiff] for support and maintenance.\u201d Plaintiff requested $250,000.00 consequential (special) damages to compensate for mental anguish and loss of reputation in the community, $100,000.00 punitive damages and some $18,000.00 actual general damages for defendant\u2019s breach.\nPlaintiff joined in her complaint a second cause of action, alleging that defendant had initiated a federal suit against the I.R.S. and had joined her as codefendant for no legitimate reason but rather \u201cto harass, embarrass and annoy the plaintiff . . . and to cause her to incur expenses for the defense of said action and to cause her to forego her legal rights and remedies.\u201d This second count labeled the action \u201cabuse of process\u201d but summed up the action as follows:\n\u201c4. The action of the defendant was malicious, wrongful and unjustified and without probable cause since his claim, if any, against the United States was unrelated to this separate obligation to the plaintiff herein and the defendant instituted the said action for an ulterior and wrongful purpose of restraining the plaintiff from exercising her rights.\u201d\nThe complaint further alleged that this action had been dismissed. The defendant moved for a G.S. 1A-1, Rule 12(b)(6) dismissal of both counts, and a Rule 37 dismissal for wilful failure to answer Rule 33 interrogatories. Plaintiff was permitted to amend the first count of her complaint to allege:\n\u201c15(a). The special and consequential damages alleged in the preceding paragraphs of this complaint were within the contemplation of both parties at the time they made the contract as the probable result of the breach of it.\u201d\nThe trial court denied defendant\u2019s Rule 37 motion but granted his Rule 12(b)(6) motion to dismiss all of plaintiff\u2019s second count and to dismiss the first count\u2019s claims for consequential and punitive damages. From this order plaintiff appeals.\nBrinkley, Walser, McGirt & Miller by Walter F. Brinkley for plaintiff appellant.\nHudson, Petree, Stockton, Stockton & Robinson by Norwood Robinson and George L. Little, Jr.; and Kluttz & Hamlin by Clarence Kluttz for defendant appellee."
  },
  "file_name": "0324-01",
  "first_page_order": 352,
  "last_page_order": 361
}
