{ "id": 8523262, "name": "COLONY ASSOCIATES, A Virginia Limited Partnership, By Its General Partners, NORMAN V. WATSON, KAREN G. WATSON, G. COPE STEWART, III, ELIZABETH B. STEWART, THOMAS D. WEBB, III, CAROL B. WEBB, GLADE M. KNIGHT, KATHLEEN KNIGHT, And HERITAGE ASSOCIATES, INC., A Virginia Corporation, d/b/a COLONY APARTMENTS, And QUADEL MANAGEMENT CORPORATION, A Maryland Corporation, d/b/a COLONY APARTMENTS v. FRED L. CLAPP & CO., A North Carolina Corporation", "name_abbreviation": "Colony Associates ex rel. Watson v. Fred L. Clapp & Co.", "decision_date": "1983-02-15", "docket_number": "No. 8218SC191", "first_page": "634", "last_page": "642", "citations": [ { "type": "official", "cite": "60 N.C. App. 634" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "404 F. 2d 634", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 2125231 ], "year": 1968, "opinion_index": 0, "case_paths": [ "/f2d/404/0634-01" ] }, { "cite": "669 F. 2d 341", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1161772 ], "year": 1982, "opinion_index": 0, "case_paths": [ "/f2d/669/0341-01" ] }, { "cite": "174 S.E. 2d 820", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1970, "opinion_index": 0 }, { "cite": "8 N.C. App. 385", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8552313 ], "year": 1970, "opinion_index": 0, "case_paths": [ "/nc-app/8/0385-01" ] }, { "cite": "121 S.E. 2d 726", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1961, "opinion_index": 0 }, { "cite": "255 N.C. 374", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8569674 ], "year": 1961, "opinion_index": 0, "case_paths": [ "/nc/255/0374-01" ] }, { "cite": "181 S.E. 2d 124", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1971, "opinion_index": 0 }, { "cite": "11 N.C. App. 310", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8554615 ], "weight": 2, "year": 1971, "pin_cites": [ { "page": "314" } ], "opinion_index": 0, "case_paths": [ "/nc-app/11/0310-01" ] }, { "cite": "68 S.E. 2d 852", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1952, "pin_cites": [ { "page": "855" } ], "opinion_index": 0 }, { "cite": "235 N.C. 100", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8621323 ], "year": 1952, "pin_cites": [ { "page": "103" } ], "opinion_index": 0, "case_paths": [ "/nc/235/0100-01" ] }, { "cite": "15 S.E. 2d 375", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1941, "opinion_index": 0 }, { "cite": "219 N.C. 850", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8626847 ], "year": 1941, "opinion_index": 0, "case_paths": [ "/nc/219/0850-01" ] }, { "cite": "12 S.E. 2d 693", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1941, "pin_cites": [ { "page": "698" } ], "opinion_index": 0 }, { "cite": "218 N.C. 758", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8624753 ], "year": 1941, "pin_cites": [ { "page": "765" } ], "opinion_index": 0, "case_paths": [ "/nc/218/0758-01" ] }, { "cite": "245 S.E. 2d 892", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1978, "pin_cites": [ { "page": "895" } ], "opinion_index": 0 }, { "cite": "37 N.C. App. 86", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8550705 ], "year": 1978, "pin_cites": [ { "page": "91" } ], "opinion_index": 0, "case_paths": [ "/nc-app/37/0086-01" ] }, { "cite": "5 Wake Forest L. Rev. 1", "category": "journals:journal", "reporter": "Wake Forest L. Rev.", "year": 1969, "pin_cites": [ { "page": "41" } ], "opinion_index": 0 }, { "cite": "256 S.E. 2d 388", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1979, "opinion_index": 0 }, { "cite": "297 N.C. 524", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8571941 ], "year": 1979, "opinion_index": 0, "case_paths": [ "/nc/297/0524-01" ] }, { "cite": "179 S.E. 2d 396", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1971, "pin_cites": [ { "page": "398" } ], "opinion_index": 0 }, { "cite": "278 N.C. 153", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8559876 ], "year": 1971, "pin_cites": [ { "page": "158" } ], "opinion_index": 0, "case_paths": [ "/nc/278/0153-01" ] }, { "cite": "275 S.E. 2d 485", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1981, "opinion_index": 0 }, { "cite": "302 N.C. 332", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8565508 ], "year": 1981, "opinion_index": 0, "case_paths": [ "/nc/302/0332-01" ] } ], "analysis": { "cardinality": 793, "char_count": 17209, "ocr_confidence": 0.799, "pagerank": { "raw": 2.5978595615549266e-07, "percentile": 0.819217645507518 }, "sha256": "745bd2016f640cb6917a2f94c7e196fdaddda480418a05dc735927d50071c32d", "simhash": "1:c3612d3b8acc5c58", "word_count": 2924 }, "last_updated": "2023-07-14T17:52:46.639047+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges Hill and Whichard concur." ], "parties": [ "COLONY ASSOCIATES, A Virginia Limited Partnership, By Its General Partners, NORMAN V. WATSON, KAREN G. WATSON, G. COPE STEWART, III, ELIZABETH B. STEWART, THOMAS D. WEBB, III, CAROL B. WEBB, GLADE M. KNIGHT, KATHLEEN KNIGHT, And HERITAGE ASSOCIATES, INC., A Virginia Corporation, d/b/a COLONY APARTMENTS, And QUADEL MANAGEMENT CORPORATION, A Maryland Corporation, d/b/a COLONY APARTMENTS v. FRED L. CLAPP & CO., A North Carolina Corporation" ], "opinions": [ { "text": "ARNOLD, Judge.\nWe determine that defendant\u2019s motion for directed verdict was improperly granted and that judgment notwithstanding the verdict [hereinafter j.n.o.v.] was improper.\nG.S. 1A-1, Rule 50(b)(1) allows the grant of a j.n.o.v. in favor of a party who has previously moved for a directed verdict. Graves v. Walston, 302 N.C. 332, 275 S.E. 2d 485 (1981). The defendant twice moved for a directed verdict at trial, including at the close of all the evidence. Thus, he met this requirement.\nThe standard to be used in deciding if a directed verdict was properly granted in a case like the one sub judice has been stated by our Supreme Court as follows: \u201cOn a motion by a defendant for a directed verdict in a jury case, the court must consider all the evidence in the light most favorable to the plaintiff and may grant the motion only if, as a matter of law, the evidence is insufficient to justify a verdict for the plaintiff.\u201d Kelly v. Harvester Co., 278 N.C. 153, 158, 179 S.E. 2d 396, 398 (1971).\nThe same factors are considered in determining if a j.n.o.v. should be granted as in the directed verdict decision. N.C. Nat\u2019l Bank v. Burnette, 297 N.C. 524, 256 S.E. 2d 388 (1979). See Sizemore, General Scope and Philosophy of the New Rules, 5 Wake Forest L. Rev. 1, 41 (1969); W. Shuford, N.C. Civil Practice and Procedure \u00a7 50-8 (2d ed. 1981).\nPlaintiffs argue that they presented enough evidence of an agency relationship between them and defendant to withstand a directed verdict motion and a j.n.o.v. If an agency relationship is established, plaintiffs contend, the defendant would be liable for all of the $11,000 good faith deposit because Global did not act properly in its role as subagent. An agent may be liable for acts of a subagent.\nTwo essentials are present in a principal-agent relationship: \u201c(1) Authority, either express or implied, of the agent to act for the principal, and (2) the principal\u2019s control over the agent.\u201d Vaughn v. Dept. of Human Resources, 37 N.C. App. 86, 91, 245 S.E. 2d 892, 895 (1978). \u201cAgency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.\u201d Restatement (Second) of Agency \u00a7 1(1) (1957).\nAn agency can be proved \u201cgenerally, by any fact or circumstance with which the alleged principal can be connected and having a legitimate tendency to establish that the person in question was his agent for the performance of the act in controversy. . . .\u201d Smith v. Kappas, 218 N.C. 758, 765, 12 S.E. 2d 693, 698, modified on other grounds, 219 N.C. 850, 15 S.E. 2d 375 (1941).\nThe evidence of an agency in this case, when considered in the light most favorable to the plaintiff, is not so insufficient as to justify entry of a j.n.o.v. for the defendant and grant of its directed verdict motion. It cannot be said as a matter of law that a jury could not find for the plaintiffs.\nThe record shows six instances on which the jury could have based its finding of an agency. First, plaintiffs contacted the defendant to begin the process of obtaining the loan refinancing. Second, Ward made changes in the loan application agreement with Webb\u2019s approval. Third, Ward instructed Webb to make the deposit check payable to Global. Webb followed these instructions and delivered the check to Ward, who forwarded it to Global.\nFourth, Ward described himself as Quadel\u2019s agent in the 15 October 1975 letter requesting return of the deposit. Although the labeling of this relationship by Ward does not determine if an agency existed, see Lindsey v. Leonard, 235 N.C. 100, 103, 68 S.E. 2d 852, 855 (1952), it is one factor to be considered.\nFifth, Ward asked National Appraisal on 18 November 1975 to direct all future contacts about the matter to his attention, \u201cso that I can be kept up-to-date until Mr. Webb has received his check and complete file.\u201d Finally, there was no direct contact between the plaintiffs and Global or National Appraisal before Ward\u2019s demand on Smith for a refund proved futile. Before that point, the chain of contact was Colony to Clapp to Global to National Appraisal.\nAfter finding evidence that an agency relationship existed between the plaintiffs and the defendants, we must now decide if the defendant is responsible to the plaintiffs for the acts of Global. Is the defendant agent liable to the plaintiff principals for the acts of its subagent?\nThe Restatement (Second) of Agency \u00a7 5(1) (1957) defines a subagent as \u201ca person appointed by an agent empowered to do so, to perform functions undertaken by the agent for the principal, but for whose conduct the agent agrees with the principal to be primarily responsible.\u201d Global fits this definition although the defendants did not explicitly agree to be liable for them. However, such liability can be implied.\n\u201cUnless otherwise agreed, an agent is responsible to the principal for the conduct of a . . . subagent with reference to the principal\u2019s affairs entrusted to the subagent . . . .\u201d Id. at \u00a7 406. Comment \u201cb\u201d to this section adds \u201cThus the agent is subject to liability to the principal for harm to the principal\u2019s property or business caused by the subagent\u2019s negligence or other wrong to the principal\u2019s interests.\u201d\nAlthough there was no specific permission from the plaintiffs to the defendant agent to employ a subagent, such consent by the principal can be implied \u201cfrom the nature of the agency, the work to be done, and the particular circumstances.\u201d 3 C.J.S. Agency \u00a7 261 (1973). The facts here show that the defendant needed Global to obtain the refinancing and acted within the scope of its agency in employing it.\nEvidence supports a finding that the defendant agent is liable for the deposit that went to the subagent Global in this case.\n[I]f the agent, having undertaken to transact the business of the principal, employs a subagent on his own account to assist him in what he has undertaken to do, even though he does so with the consent of the principal he does so at his own risk, and there is no privity between such subagent and the principal. The subagent is, therefore, the agent of the agent only.\n1 F. Mechem, A Treatise on the Law of Agency \u00a7 333 (2d ed. 1914) (emphasis added).\nThe facts here show that the defendant hired Global to carry out the plaintiffs\u2019 request. This is to be distinguished from the case where the subagent becomes the agent of the principal because the principal directed, either expressly or impliedly, the agent to hire the subagent. See W. Seavey, Handbook on the Law of Agency \u00a7 156B (1964); P. Mechem, Outlines on the Law of Agency \u00a7\u00a7 79-80 (4th ed. 1952); R. Lee, N.C. Law of Agency and Partnership \u00a7 47 (6th ed. 1977).\nHaving found that the defendant may be held accountable for the acts of the subagent, we must then determine the amount of its liability. Plaintiffs argue that they should recover the entire $11,000 deposit and attack the jury verdict of $5,500 plus interest as the result of an erroneous instruction by the trial judge. In its instructions on damages, the trial judge in part stated:\n[I]f you find by the greater weight of the evidence that the plaintiffs have sustained an amount of damages under the rules which I have explained to you; that is, that they are entitled to recover the return of the funds advanced pursuant to the contract ... it would be your duty to answer the third issue in that amount; specifically, $11,000.00.\nPlaintiffs contend that this quoted portion of the instruction was correct but they attack the statement that followed as erroneous:\nNow, members of the jury, if you fail to so find or if you have a doubt concerning those things which the plaintiffs must prove or if you are unable to tell where the truth lies, it would be your duty to answer the third issue in the amount which properly reflects your findings.\nThis instruction is attacked by the plaintiffs as encouraging a compromise verdict by the jury. Defendants argue that even if there were error, it was beneficial to the plaintiffs because it permitted the jury to consider the issue even if plaintiffs did not prove their case.\nWe find that the portion of the instruction that allowed the jury to find damages in an amount other than $11,000 was reversible error. There is no relevant evidence to support the amount of the jury verdict here.\nBecause the defendant is the plaintiffs\u2019 agent it is either liable for the entire amount of the check or none of it. Evidence of the fifty-fifty fee-splitting arrangement between the defendant and Global is relevant only between those two parties. It has no bearing on defendant\u2019s liability to the plaintiffs.\nAs a result, the trial judge should have stopped his instruction to the jury after he stated that plaintiff should recover $11,000 if the jury found that an agency existed. This case is similar to Terrell v. Chevrolet Co., 11 N.C. App. 310, 181 S.E. 2d 124 (1971), where the court commented that peremptory instructions should be given in certain cases. \u201cWhen all the evidence offered suffices, if true, to establish the controverted fact, the court may give a peremptory instruction \u2014 that is, if the jury find the facts to be as all the evidence tends to show, it will answer the inquiry in an indicated manner.\u201d 11 N.C. App. at 314, 181 S.E. 2d at 127 quoting Chisholm v. Hall, 255 N.C. 374, 121 S.E. 2d 726 (1961). Once the agency relationship was established, there was no conflict in the evidence as to the amount of damages. See 12 Strong\u2019s N.C. Index 3d Trial \u00a7 31 (1978).\nPlaintiffs raise as an alternative ground of recovery that the defendant was engaged in a joint venture with Global and as a result they should recover from the defendant because Global did not return the $11,000 check. Because of our resolution of the case, we find it unnecessary to discuss this contention.\nBecause we find that the j.n.o.v. was improperly entered, we reverse and remand for a new trial. Although there is authority in North Carolina that would require us to reinstate the jury\u2019s verdict, e.g., Musgrave v. Savings and Loan, 8 N.C. App. 385, 174 S.E. 2d 820 (1970), we find those cases to be distinguishable on the facts.\nIn the case sub judice, an erroneous jury instruction was given. This is unlike Musgrave and other cases that would reinstate the jury verdict. The grant of j.n.o.v. was reversed in those cases only because there was sufficient evidence to justify the jury verdict.\nThere is substantial authority for our grant of a new trial, even though neither party made a motion for it. A leading treatise on civil procedure states: \u201cWhere no motion for a new trial was made, the appellate court, reversing a judgment n.o.v., may order entry of judgment on the verdict, order a new trial, or remand for consideration in light of the court of appeals\u2019 disposition of the judgment n.o.v.\u201d 5A Moore\u2019s Federal Practice \u00b6 50.14 (2d ed. 1982) (emphasis added). See also Kendrick v. Ill. Cent. Gulf R.R. Co., 669 F. 2d 341 (5th Cir. 1982); Derr v. Safeway Stores, Inc., 404 F. 2d 634 (10th Cir. 1968).\nReversed and remanded for a new trial.\nJudges Hill and Whichard concur.", "type": "majority", "author": "ARNOLD, Judge." } ], "attorneys": [ "Newsom, Graham, Hedrick, Murray, Bryson, Kennon & Faison, by Josiah S. Murray, III and Joel M. Craig, for plaintiff-appellants.", "Dees, Johnson, Tart, Giles & Tedder, by Charles M. Tate and Julius Dees, Jr., for defendant-appellee." ], "corrections": "", "head_matter": "COLONY ASSOCIATES, A Virginia Limited Partnership, By Its General Partners, NORMAN V. WATSON, KAREN G. WATSON, G. COPE STEWART, III, ELIZABETH B. STEWART, THOMAS D. WEBB, III, CAROL B. WEBB, GLADE M. KNIGHT, KATHLEEN KNIGHT, And HERITAGE ASSOCIATES, INC., A Virginia Corporation, d/b/a COLONY APARTMENTS, And QUADEL MANAGEMENT CORPORATION, A Maryland Corporation, d/b/a COLONY APARTMENTS v. FRED L. CLAPP & CO., A North Carolina Corporation\nNo. 8218SC191\n(Filed 15 February 1983)\n1. Principal and Agent \u00a7 4\u2014 proof of agency sufficient\nIn an action to recover a deposit made on an unsuccessful loan commitment application, the trial judge erred in entering judgment notwithstanding the verdict for defendant since plaintiffs presented enough evidence of an agency relationship between them and defendant to withstand a directed verdict motion.\n2. Principal and Agent \u00a7 5\u2014 agent responsible for acts of subagent\nIn an action to recover a deposit made on an unsuccessful loan commitment application, defendant agent was liable to plaintiff principals for the acts of its subagent where the defendant hired the subagent to carry out plaintiffs\u2019 request and where the facts showed that the defendant needed the subagent to obtain the refinancing and acted within the scope of its agency in employing the subagent. Although there was no specific permission from the plaintiffs to the defendant agent to employ a subagent, such consent by the principals could be implied \u201cfrom the nature of the agency, the work to be done, and the particular circumstances.\u201d\n3. Contracts \u00a7 28.2\u2014 jury instructions concerning damages \u2014error\nIn an action to recover a deposit made on an unsuccessful loan commitment application, the trial judge erred in its instructions on damages where after stating that plaintiff should recover the amount of the deposit if the jury found that an agency existed, the trial court further stated that \u201cif you fail to so find or if you have a doubt concerning those things which the plaintiffs must prove ... it would be your duty to answer the third issue in the amount which properly reflects your findings.\u201d The instruction allowed the jury to find damages in an amount other than the full deposit, and there was no relevant evidence to support the amount of the jury verdict.\n4. Rules of Civil Procedure \u00a7 50\u2014 j.n.o.v. improperly entered \u2014 remand for a new trial\nWhere the appellate court found that j.n.o.v. was improperly entered by the trial court, it reversed and remanded the case for a new trial rather than reinstating the jury\u2019s verdict since an erroneous jury instruction on damages was given.\nAPPEAL by plaintiffs from Seay, Judge. Judgment entered 1 October 1981 in Superior Court, GUILFORD County. Heard in the Court of Appeals 11 January 1983.\nThis is an action to recover a deposit made on an unsuccessful loan commitment application.\nPlaintiff Colony, acting through its controlled corporation Quadel, issued a check for $11,000, payable to Global Mortgage Company on 21 July 1975. The draft was drawn on Quadel\u2019s escrow account.\nDefendant Clapp had been contacted by Thomas B. Webb, III, Quadel\u2019s vice-president, about obtaining refinancing for the Colony Apartments complex in Chapel Hill. Clapp instructed Webb that the check was necessary as a good faith deposit on the permanent loan application with National Appraisal Associates, Inc., which was represented by John Davis d/b/a Global Mortgage Company.\nWebb delivered the check to Clapp and its associate 0. Larry Ward in July, 1975. They forwarded it and an executed loan application to Davis of Global. The check was paid upon presentment.\nGlobal and Clapp agreed in July, 1975 to work on a \u201cfifty-fifty net split fee basis on any package\u201d which Clapp originated. The fee splitting arrangement applied to the loan in this case.\nAfter a number of inquiries by Ward to Davis about the status of the loan, Davis wrote Ward on 14 October 1975 that the plaintiffs should seek refund of their $11,000 deposit from National Appraisal. Ward answered this letter on the following day with a request that Global return the deposit. Ward\u2019s 15 October 1975 letter to Davis provided:\nYour letter to me dated June 30, 1975, which enclosed the application, requested that we make the good faith deposit payable to Global Mortgage Company and not payable to National Appraisal Association. You told us the reason for this was so that if anything went wrong, you could refund the deposit quickly. Well, everything has gone wrong and you should refund the good faith deposit because we had \u201cgood faith\u201d in Mr. John Davis.\nAs I told you on the phone this morning, as agent for Quadel and by writing to you October 1, 1975, we complied with Paragraph 4.1 of the application.\nThe plaintiffs received a copy of the 15 October 1975 letter.\nPlaintiffs moved before trial to amend their complaint. They sought to allege as an alternative ground of recovery that the defendant Clapp was engaged in a joint venture with Davis d/b/a Global Mortgage Company. The motion was denied on 1 December 1976. The same motion was denied at the close of plaintiff\u2019s evidence at trial.\nThe defendant\u2019s motion for a directed verdict was denied at the close of all the evidence. The trial judge had reserved a ruling on the same motion when defendant made it at the close of the plaintiffs evidence.\nThe jury found for the plaintiffs on the three issues that were submitted to them. They decided that Clapp acted as Quadel\u2019s agent in obtaining the loan commitment and, as a result, Clapp owed Quadel $5,500 plus interest.\nFollowing the jury verdict the trial judge allowed the defendant\u2019s directed verdict motion and entered a judgment notwithstanding the verdict for the defendant, pursuant to G.S. 1A-1, Rule 50. The plaintiffs then appealed to this Court.\nNewsom, Graham, Hedrick, Murray, Bryson, Kennon & Faison, by Josiah S. Murray, III and Joel M. Craig, for plaintiff-appellants.\nDees, Johnson, Tart, Giles & Tedder, by Charles M. Tate and Julius Dees, Jr., for defendant-appellee." }, "file_name": "0634-01", "first_page_order": 666, "last_page_order": 674 }