Clontz v. Clontz

261 S.E.2d 695, 44 N.C. App. 573, 1980 N.C. App. LEXIS 2499

• Court: Court of Appeals of North Carolina
• Decided: January 15, 1980
• Docket: 7920DC78
• Status: Published

Opinion

MORRIS, Chief Judge.

The only question presented on this appeal is whether the trial court erred in denying defendants’ motion for judgment notwithstanding the jury’s verdict awarding compensation for improvements made by plaintiff on defendants’ property.

By G.S. 1-340, the betterments statute, North Carolina provides for recovery of the value of improvements made upon another’s property. However, this section does not create an independent cause of action. Rather, it embodies only a defensive right, declaring that an owner of land who seeks and obtains the aid of the court to enforce his right to possession has no just claim to anything but the land itself and a fair compensation for being kept out of possession. Further, if the land has been improved by another under the belief that he was the owner, the true owner ought not to take the increased value without some compensation to the ousted occupant. Beacon Homes, Inc. v. Holt, 266 N.C. 467, 146 S.E. 2d 434 (1966); Board of Commissioners v. Bumpass, 237 N.C. 143, 74 S.E. 2d 436 (1953). It is clear that plaintiff has no right to recover under this statute.

Defendants erroneously contend that plaintiff bases his right to recovery upon the theory of improvements under the bet-terments statute. Plaintiff bases his action to recover the value of improvements on the common law theory of unjust enrichment. “The rule of unjust enrichment is based upon the equitable principle that a person should not be permitted to enrich himself unjustly at the expense of another.” Stauffer v. Owens, 25 N.C. App. 650, 652, 214 S.E. 2d 240, 241 (1975). Thus, where services are rendered and expenditures are made by one party to or for the benefit of another without an express contract to pay, the law will imply a promise to pay a fair compensation therefor. See R.R. v. Highway Commission, 268 N.C. 92, 150 S.E. 2d 70 (1966); Beacon Homes, Inc. v. Holt, supra.

The theory of unjust enrichment has been specifically applied in situations such as this involving the making of improvements based on an alleged parol contract to convey real property. Aside from the right to setoff used as a quasi-contract remedy at common law and under G.S. 1-340, the law has recognized the theory of unjust enrichment as the basis for an independent action to recovery for improvements. In Rhyne v. Sheppard, 224 N.C. 734, 32 S.E. 2d 316 (1944), the Court stated that while no independent action to recover for improvements could be maintained at common law, the plaintiff may pursue his remedy in equity:

“Plaintiff is not confined to a common law action for improvements, if indeed such right may be enforced by inde pendent action. G.S. 1-340. He may resort to the equitable doctrine of unjust enrichment frequently enforced under the doctrine of estoppel.” 224 N.C. at 736-37, 32 S.E. 2d at 317-18.

Early decisions recognized that under equity principles, a party entering into possession of real property under a parol contract to convey and who in good faith makes improvements in reliance on the promise to convey is entitled to compensation therefor. In Pitt v. Moore, 99 N.C. 85, 5 S.E. 389 (1888), the Supreme Court enunciated the following rule:

“[W]here the labor or money of a person has been expended in the permanent improvement and enrichment of the property of another by a parol contract or agreement which cannot be enforced because, and only because, it is not in writing, the party repudiating the contract, as he may do, will not be allowed to take and hold the property thus improved and enriched, ‘without compensation for the additional value which these improvements have conferred upon the property,’ and it rests upon the broad principle that it is against conscience that one man shall be enriched to the injury and cost of another, induced by his own act.” 99 N.C. at 91, 5 S.E. at 392.

Similarly, in Jones v. Sandlin, 160 N.C. 150, 75 S.E. 1075, (1912), the Court stated as follows:

“The general rule is that if one is induced to improve land under a promise to convey the same to him, which promise is void or voidable, and after the improvements are made he refuses to convey, the party thus disappointed shall have the benefit of the improvements to the extent that they increased the value of the land. (Citations omitted.)” 160 N.C. at 154, 75 S.E. at 1077.

Application of this principle has been broad and quite liberal in an attempt to do justice upon the facts of the particular case in which applied. See, e.g., Insurance Co. v. Cordon, 208 N.C. 723, 182 S.E. 496 (1935); Jones v. Sandlin, supra; Eaton v. Doub, 190 N.C. 14, 128 S.E. 494 (1925). This independent action was recognized and approved in the more recent decision of Beacon Homes, Inc. v. Holt, supra.

We now consider the propriety of the trial court’s denial of defendants’ motion for judgment notwithstanding the verdict. In Brokers, Inc. v. Board of Education, 33 N.C. App. 24, 234 S.E. 2d 56, cert. denied, 293 N.C. 159, 236 S.E. 2d 702 (1977), this Court stated the standard appropriate for review of an order denying a motion for judgment non obstante veredicto:

“When passing on a motion for judgment notwithstanding the verdict, the same standards applicable to a motion for directed verdict are to be applied. Thus, the court must consider 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 support a verdict for plaintiff. Hargett v. Air Service and Lewis v. Air Service, 23 N.C. App. 636, 209 S.E. 2d 518 (1974).” 33 N.C. App. at 28, 234 S.E. 2d at 59.

Applying this rule, it is reasonable to infer from the evidence presented in this case that defendants did promise to convey a life estate in the property. It is apparent from the record that defendants told plaintiff he could stay on the property as long as he lived. Defendants contend, however, that plaintiff’s rights in the property were conditioned upon the requirement that he conduct himself properly, thereby limiting plaintiff to a tenancy at will. Although such a construction is possible, it is not the only reasonable interpretation possible. Having heard the testimony and observed the demeanor of each of the witnesses, the jury found that defendants orally promised to convey a life estate to the plaintiff and that plaintiff made permanent improvements upon the land pursuant to the oral promise. The evidence presented certainly supports such findings. We conclude that the evidence in this case was sufficient to withstand defendants’ motion for directed verdict and so hold.

Plaintiff’s recovery in this action is based on the jury’s finding that an oral contract to convey real property existed between the parties. It is important, we think, to note that plaintiff’s recovery does not necessarily depend on such an agreement. In Stauffer v. Owens, supra, this Court affirmed an award for improvements made by plaintiff inuring to the benefit of defendant, irrespective of contractual agreement. The Court stated:

“Even though the court found that no partnership existed between the parties, in our opinion it properly allowed plaintiff to recover for those goods and services which benefited defendant .... The mere ineffectiveness of a partnership agreement between the parties would not prevent plaintiff’s recovery.” 25 N.C. App. at 652, 214 S.E. 2d at 241.

Such a recovery is founded on the equitable theory of estoppel and not on principles of quasi or implied contract. In this case, the fact that plaintiff made improvements on defendants’ property upon the good faith belief that a life estate in such property was promised him, and that such improvements inured to defendants’ benefit, is sufficient to support recovery under the unjust enrichment doctrine.

No error.

Judges PARKER and Martin (Robert M.) concur.