{ "id": 8625850, "name": "THE GENERAL TIRE & RUBBER COMPANY, a Corporation v. DISTRIBUTORS, INC., a Corporation", "name_abbreviation": "General Tire & Rubber Co. v. Distributors, Inc.", "decision_date": "1959-12-16", "docket_number": "", "first_page": "406", "last_page": "412", "citations": [ { "type": "official", "cite": "251 N.C. 406" } ], "court": { "name_abbreviation": "N.C.", "id": 9292, "name": "Supreme Court of North Carolina" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "72 S.E. 2d 843", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "236 N.C. 299", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8625169, 8625083 ], "opinion_index": 0, "case_paths": [ "/nc/236/0299-02", "/nc/236/0299-01" ] }, { "cite": "22 S.E. 2d 555", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "222 N.C. 228", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8629620 ], "opinion_index": 0, "case_paths": [ "/nc/222/0228-01" ] }, { "cite": "101 S.E. 2d 398", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "247 N.C. 444", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8627369 ], "opinion_index": 0, "case_paths": [ "/nc/247/0444-01" ] }, { "cite": "47 S.E. 2d 614", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "229 N.C. 52", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 12164609 ], "opinion_index": 0, "case_paths": [ "/nc/229/0052-01" ] }, { "cite": "90 S.E. 2d 886", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "243 N.C. 326", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8624703 ], "pin_cites": [ { "page": "334" } ], "opinion_index": 0, "case_paths": [ "/nc/243/0326-01" ] }, { "cite": "53 S.E. 435", "category": "reporters:state_regional", "reporter": "S.E.", "opinion_index": 0 }, { "cite": "141 N.C. 1", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 11251954 ], "pin_cites": [ { "page": "7" } ], "opinion_index": 0, "case_paths": [ "/nc/141/0001-01" ] }, { "cite": "68 S.E. 2d 272", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "234 N.C. 644", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8625393 ], "pin_cites": [ { "page": "646" } ], "opinion_index": 0, "case_paths": [ "/nc/234/0644-01" ] }, { "cite": "98 S.E. 2d 339", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "246 N.C. 266", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8625879 ], "opinion_index": 0, "case_paths": [ "/nc/246/0266-01" ] }, { "cite": "82 S.E. 2d 104", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "240 N.C. 303", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8598018 ], "pin_cites": [ { "page": "306" } ], "opinion_index": 0, "case_paths": [ "/nc/240/0303-01" ] } ], "analysis": { "cardinality": 690, "char_count": 16605, "ocr_confidence": 0.406, "pagerank": { "raw": 1.6817371679223104e-07, "percentile": 0.69767310758272 }, "sha256": "1d9f39e52c33a7090af8f1a9f0ef8f2186f0e391cbb1ac7a9b824398f2567a2e", "simhash": "1:23619cdfc6cafee9", "word_count": 2583 }, "last_updated": "2023-07-14T17:26:21.126874+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "HiggiNS, J., took no part in the consideration or decision of this case." ], "parties": [ "THE GENERAL TIRE & RUBBER COMPANY, a Corporation v. DISTRIBUTORS, INC., a Corporation." ], "opinions": [ { "text": "Bobbitt, J.\nThe demurrer does not challenge defendant\u2019s counterclaim on the ground that it fails to state facts sufficient to constitute a cause of \u2022aotion against plaintiff. Nor does it challenge defendant\u2019s counterclaim on the ground that it united, but did not separately state, two causes of action. G.S. 1-123; Heath v. Kirkman, 240 N.C. 303, 306, 82 S.E. 2d 104. The phrase \u201cmisjoinder of causes of action,\u201d as used in the demurrer, refers to plaintiff\u2019s contention that \u201cthe matters alleged in defendant\u2019s counterclaim are foreign to the subject action in time and substance . . .\u201d\nPlaintiff\u2019s contention is that the cause of action alleged by defendant is for the alleged breach on July 2, 1958, of a contract entered into between plaintiff and defendant on May 1, 1958, all occurring subsequent to the commencement of this action; and upon this premise, plaintiff asserts that the counterclaim is not permissible under G.S. 1-137(2).\nIn determining whether the counterclaim is permissible under G.S. 1-137, we 'accept as true the facts alleged by defendant. Burns v. Oil Co., 246 N.C. 266, 98 S.E. 2d 339. \u201cIn the construction of a pleading for the purpose of deteamining its effect its allegations shall be liberally construed with a view to substantial justice between the parties.\u201d G.S. 1-151.\n\u201cA pleading must be fatally and wholly defective before it will be rejected as insufficient.\u201d Guerry v. Trust Co., 234 N.C. 644, 646, 68 S.E. 2d 272, and oases cited. Plaintiff\u2019s demurrer is directed to defendant\u2019s said pleading in its entirety, not to specific portions thereof. Whether particular allegations thereof should be stricken is not presented. Thus, if defendant\u2019s said pleading includes a permissible counterclaim, it was error to sustain plaintiff\u2019s demurrer.\nUnder G.S. 1-137(1), it is permissible to allege as a counterclaim \u201cA cause of aotion arising out of the contract or transaction set forth in the complaint as the foundation of the plaintiff\u2019s claim, or connected with the subject of the action.\u201d\nIn addition to counterclaims permissible under G.S. 1-137 (1), G.S. 1-137 (2) permits a defendant to allege as a counterclaim in an aotion arising on contract, \u201cany other cause of aotion arising also on contract, and existing at the commencement of the action.\u201d Thus, G.S. 1-137 (2) is applicable \u201cwhere, in an action on a contract, the breach of 'an entirely different and distinct contract is set up by defendant.\u201d Smith v. French, 141 N.C. 1, 7, 53 S.E. 435. A counterclaim permissible under G.S. 1-137(2) need not relate to the contract or transaction set forth in the complaint \u201cas the foundation of the plaintiff\u2019s claim or (that it be) connected with the subject of the action.\u201d Credit Corp. v. Motors, 243 N.C. 326, 334, 90 S.E. 2d 886.\nThe purpose and intent of G.S. 1-137 (1) \u201cis to permit the trial in one action of all causes of action arising out of any one contract or transaction.\u201d Hancammon v. Carr, 229 N.C. 52, 47 S.E. 2d 614; Amusement Co. v. Tarkington, 247 N.C. 444, 101 S.E. 2d 398. While it authorizes \u201cthe litigation \u00a1of all questions arising out of any one transaction, or series of transactions concerning the same subject matter, in one and the same action,\u201d and so does not permit multifariousness, \"it must appear that there is 'but une subject of controversy.\u201d Hancammon v. Carr, supra, and \u00a1cases cited. \u201cThe cross action must have such relation to the plaintiffs\u2019 claim that the adjustment of both is necessary to a full and final determination of the controversy. Schnepp v. Richardson, 222 N.C. 228, 22 S.E. 2d 555. This means that it must be so interwoven in plaintiffs\u2019 cause of action that a full and complete story as to the one cannot be told without relating the essential facts as to the other.\u201d Hancammon v. Carr, supra, where Barnhill, J. (later C.J.), quotes with approval definitions of the phrases \u201cconnected with\u201d 'and \u201csubject of the .action.\u201d Also, see Garrett v. Rose, 236 N.C. 299, 72 S.E. 2d 843.\nWhen considered in the light most favorable to it, defendant alleged: That the \u201cWarehouse Agreement\u201d was an integral part of a distributorship agreement entered into between plaintiff \u00a1and defendant in July, 1956, which, by agreement of July 31, 1957, was extended until July 31,1960; that defendant had fully performed its obligations; and that plaintiff breached their agreement on March 6, 1958, by then demanding, and thereafter by seizing under claim and delivery proceedings herein, all inventory then in defendant\u2019s possession, thus depriving defendant of its distributorship. Allegations of defendant to this effect suffice to allege .a breach by plaintiff of its contract with defendant that occurred prior to the commencement of this action. Thus, the premise upon which plaintiff bases its aforesaid contention is untenable.\nTrue, plaintiff\u2019s action is based solely on the \u201cWarehouse Agreement\u201d and defendant\u2019s failure, upon demand, to deliver to plaintiff the consigned merchandise. Even so, if the facts are as alleged by defendant, plaintiff may not deprive defendant of \u00a1its right to recover by counterclaim for plaintiff\u2019s breach of contract simply by treating the \u201cWarehouse Agreement\u201d as if it were the entire contract between the parties.\nThe subject \u00a1of plaintiff\u2019s action is its \u00a1alleged right to the immediate possession of the consigned merchandise. (Plaintiff seeks to recover the consigned merchandise, \u201cor so much thereof \u00a1as is available,\u201d and to recover judgment for such portion thereof \u201cas has \u00a1been disposed of and is not now recoverable \u00a1by this action.\u201d) It did not have such right, notwithstanding title thereto was in plaintiff until disposed of in accordance with the provisions of the \u201cWarehouse Agreement,\u201d if it was agreed that the \u201cWarehouse\u2019 Agreement\u201d and the distributorship were to continue until July 31, 1960. Hence, defendant's counterclaim relates to a controversy directly \u201cconnected with the subject of plaintiff\u2019s action.\u201d It is \u201cso interwoven in (.plaintiff\u2019s) cause of action that a full .and complete story as to the -one cannot be told without relating the essential facts as to the others.\u201d Indeed, if .it were determined in this action that plaintiff is entitled to the immediate possession of the consigned merchandise, it would appear that such finding, .and a judgment .predicated thereon, would preclude defendant from thereafter asserting -in an independent action the alleged contract and breach thereof now asserted .a,s the basis of its counterclaim.\nOur conclusion is that defendant has alleged a counterclaim permissible under both G.S. 1-137(1) and G.S. 1-137(2). Hence, the court erred in sustaining plaintiff\u2019s demurrer.\nSince defendant has alleged a cause of action permissible as a. counterclaim, it is unnecessary to consider in detail defendant\u2019s allegations as to what occurred subsequent to the .commencement of this action. Suffice to say, such allegations are not inconsistent with defendant\u2019s \u25a0allegations to the effect that plaintiff had breached its contract with defendant prior to the commencement of this action. Too, without determining whether these allegations should have been .separately stated as a second cause of action, a question not presented by this \u25a0appeal, these allegations are germane to the \u201cone subject of controversy,\u201d namely, the contractual relations between plaintiff -and defendant with reference to the \u201cWarehouse Agreement\u201d and the distributorship agreement and whether plaintiff or defendant breached their contractual obligations.\nIt appears that the answer, inclusive of the counterclaim, were served on plaintiff. Hence, plaintiff will reply thereto. G.S. 1-140.\nReversed.\nHiggiNS, J., took no part in the consideration or decision of this case.", "type": "majority", "author": "Bobbitt, J." } ], "attorneys": [ "Orr, Osborne & Hubbard for plaintiff, appellee.", "Ralph C. Clontz, Jr., for defendant, appellant." ], "corrections": "", "head_matter": "THE GENERAL TIRE & RUBBER COMPANY, a Corporation v. DISTRIBUTORS, INC., a Corporation.\n(Filed 16 December, 1959.)\n1. Pleadings \u00a7 15\u2014\nUpon demurrer, the allegations of the pleading are to be taken as true and liberally construed with a view to substantial justice between ithe parties. G.S. 1-151.\nS. Same\u2014\nA pleading will mot be rejected upon demurrer unless it is wholly insufficient and if the pleaiddng in 'any part alleges facts sufficient to constitute a maintainable action the demurrer must be overruled, nor does a demurrer present whether a particular allegation should be stricken.\n3. Pleadings \u00a7 10\u2014\n,In \u2018an action on contract, the defendant may, under G.'S. 1-137 (1), set up as a counterclaim, a cause of action arising out of the contract sued on \u25a0and may, under G.S. 1-137 (2), also set up the breach of an entirely different and distinct contract existing at the commencement of the action.\n4. Same: Claim and Delivery \u00a7 3\u2014\nIn plaintiff\u2019s action to recover certain goods sold under consignment, with ancillary proceedings in claim and delivery, defendant may set up as a counterclaim a separate contract existing at the time under which defendant was given exclusive night to act os distributor for the goods of \u00a1plaintiff until a specified future date, and that \u00a1plaintiff\u2019s seizure of the goods was in violation of the distributor agreement and was wrongful.\n5. Pleadings \u00a7 13\u2014\nWhere an answer setting up a counterclaim is served on plaintiff, (plaintiff must reply (thereto. \u00a1G-.S. 1-140.\nHigsiNs, J., took no part in the consideration or decision of this case.\nAppeal by defendant from Sharp, Special J., May 4, 1959 Special Term, of MecKleNburg.\nPlaintiff\u2019s action is to recover specific personal property, \u00a1to wit, certain cartons of Bolta-Floor Vinyl Flooring described in schedule attached to complaint as Exhibit A, in possession \u00a1o\u00ed defendant as plaintiff\u2019s consignee under terms of \u201cWarehouse Agreement\u201d dated July 30, 1956, \u201cor so much thereof as is available,\u201d and to recover judgment for such portion thereof \u201cas has been disposed of and is not now recoverable by this action.\u201d\nUnder the \u201cWarehouse Agreement,\u201d a copy of which is \u00a1attached to complaint as Exhibit B, plaintiff retained title to the merchandise consigned to defendant as \u2018Warehouseman\u201d until disposed of by defendant in accordance with the terms thereof. The \u201cWarehouse Agreement\u201d provided, inter alia, for .the withdrawal of merchandise \u201c(b) On order of Distributors, Inc. (defendant), in its capacity as Distributor, within \u00a1the limit established by the Credit Department of the Company (plaintiff) provided said merchandise is withdrawn for Warehouseman\u2019s (defendant\u2019s) use in the ordinary course of 'business.\u201d It contains provisions as to reports, invoices, payments, etc., in respect of all merchandise stored in or withdrawn from \u201cthe Warehouse.\u201d\nIn respect of \u201cTERMINATION,\u201d the \u201cWarehouse Agreement\u201d provides: \u201cBreach of this agreement by either party will be considered just cause for immediate termination. This agreement may also be canceled by either party at any time upon three days\u2019 written notice. In either event, Warehouseman agrees to deliver immediately thereafter to location designated by Company and without expense or commission of any nature to Company, all consigned stock in his possession.\u201d\nPlaintiff alleged that, notwithstanding its demand therefor, defendant refused to deliver to plaintiff the \u00a1consigned merchandise, and that plaintiff was the owner and entitled to the immediate possession thereof.\nThe action \u00a1and ancillary proceedings in claim and delivery were commenced March 24, 1958. Upon failure of defendant to retain possession 'pendente lite by filing replevy -'bond, G.S. 1-478, plaintiff, on March 28, 1958, obtained possession of all except sixty-four cantons \u201cmot found.\u201d\nDefendant answered. It admitted plaintiff's ownership of the personal property seized in claim and delivery proceedings, but denied that plaintiff was entitled to the immediate possession thereof.\nPlaintiff demurred to the portion of defendant\u2019s 'answer entitled \u201cFOR FURTHER ANSWER AND DEFENSE TO PLAINTIFF\u2019S COMPLAINT, AND IN BAR OF ITS RIGHT TO RECOVER HEREUNDER, AND AS A COUNTERCLAIM.\u201d (Note: Prior to the filing of \u00a9aid demurrer, the count, allowing in part plaintiff\u2019s motion, had stricken all or part of twenty-three of the thirty paragraphs of defendant\u2019s said pleading. Neither party excepted to this order.)\nAs ground\u00a9 for demurrer, plaintiff asserted: 1. In any event, defendant cannot recover from plaintiff more than the value of the merchandise obtained by plaintiff by virtue of plaintiff\u2019s undertaking in claim and delivery proceedings. 2. Defendant cannot set up by counterclaim a cause of action for alleged breach of contract occurring July 2,1958, more than three months after this action was commenced. 3. Defendant\u2019s .alleged counterclaim constitutes a misjoinder of causes of .action in that the matters alleged therein \u201care foreign to the .subject action in time and substance . .\nThis is the gist of defendant\u2019s allegations:\nIn July, 1956, plaintiff and defendant agreed, orally, that from July 30, 1956, defendant was to be the .sole and exclusive distributor of plaintiff\u2019s products 'in North and South Carolina. Defendant agreed (1) to \u201c.give up\u201d the competitive line it had been handling, and (2) to promote, in particulars .stated, at defendant\u2019s expense, the sale of plaintiff\u2019s products in the Carolinas. It was agreed that, to avoid \u201cencumbering\u201d defendant\u2019s working capital, plaintiff would make available to defendant an adequate stock of its merchandise; and the \u201cWarehouse Agreement\u201d was executed as a means of implementing this part of their agreement. It was contemplated the defendant would remain the distributor of plaintiff\u2019s products \u201cfor many years in the future,\u201d but no period .of duration was specified. However, .on July 31, 1957, plaintiff agreed, in writing, that the \u201cWarehouse Agreement\u201d would continue in effect \u201cuntil at least July 31, 1960.\u201d\nAlthough defendant performed iall of its obligations \u201cright up until the time of this action,\u201d plaintiff, during the latter part of 1957, \u201cknowingly, wilfully and wantonly, get out upon .a studied plan to deprive defendant of the benefits of said Distributorship Agreement and to damage the defendant through illegally canceling the defendant\u2019s appointment as sole and exclusive distributor for plaintiff corporation in North and South Carolina.\u201d On March 6, 1958, plaintiff, by Western Union telegram, \u201cpurported to cancel WAREHOUSE AGREEMENT, and did demand of defendant that it deliver unto plaintiff\u2019s agent .all inventory being stored by defendant for its use 'as plaintiff\u2019s distributor.\u201d Thereafter, on March 24, 1958, plaintiff instituted this action and \u201cthus illegally seize(d) Inventory lawfully in the possession of the defendant.\u201d\nAfter this action was commenced, to wit, on May 1, 1958, plaintiff and defendant entered into \u201canother agreement.\u201d Plaintiff then \u25a0agreed \u201cthat credit arrangements would again be extended to defendant corporation, which the parties agreed were necessary in order for defendant to continue functioning as \u00a1a Distributorship, if the defendant corporation would cause its President .and Vice-President to execute personal guaranties up to the maximum amount of credit plaintiff would extend defendant, to protect plaintiff corporation from any possible loss\u201d; and, \u201cIn consideration of plaintiff\u2019s promise to honor its distributorship agreement and to resume its warehousing arrangement with defendant, as aforesaid, defendant agreed that it would pay to the plaintiff approximately $5,500 then currently due \u25a0for goodis sold on open account.\u201d Thereafter, on May 26, 1958, in compliance with plaintiff\u2019s demand, defendant\u2019s President and Vice-President, and their respective wives, executed and furnished to plaintiff such good and adequate personal guaranties; and on June 4, 1958, defendant \u201cpaid plaintiff oorporation $1,500 of the aforementioned Open Account fund.\u201d\nNotwithstanding defendant complied with .all of plaintiff\u2019s requirements under said agreement of May 1,1958, \u201cplaintiff, on July 2,1958, did notify the defendant, in writing, of its refusal to extend any credit whatsoever to defendant, and of its refusal to make available to the defendant any warehouse stock,\u201d all in breach of their agreement and in \u201cwilful, wanton and callous disregard of the defendant\u2019s rights and well being under the terms of the agreement between the parties.\u201d\nOn account of plaintiff\u2019s 'breach of contract as alleged, defendant is entitled to recover $50,000.00 as compensatory damages and $100,-000.00 as punitive damages.\nThe court entered judgment sustaining plaintiff\u2019s said demurrer. Defendant excepted and appealed.\nOrr, Osborne & Hubbard for plaintiff, appellee.\nRalph C. Clontz, Jr., for defendant, appellant." }, "file_name": "0406-01", "first_page_order": 450, "last_page_order": 456 }