Marcoin, Inc. v. McDaniel

320 S.E.2d 892, 70 N.C. App. 498, 1984 N.C. App. LEXIS 3724
CourtCourt of Appeals of North Carolina
DecidedOctober 2, 1984
Docket8328SC1142
StatusPublished
Cited by29 cases

This text of 320 S.E.2d 892 (Marcoin, Inc. v. McDaniel) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Marcoin, Inc. v. McDaniel, 320 S.E.2d 892, 70 N.C. App. 498, 1984 N.C. App. LEXIS 3724 (N.C. Ct. App. 1984).

Opinion

VAUGHN, Chief Judge.

Defendant’s first argument is that the court committed error in directing verdicts against defendant’s counterclaims for fraud in the inducement and for breach of the license agreements. We address first the question of fraud in the inducement.

In support of his claim of fraud, defendant presented the following evidence: In January 1975, defendant and his wife met with Mr. David Hinze, an employee of plaintiff corporation, to discuss the benefits and responsibilities of becoming plaintiffs licensee. Defendant was interested in becoming a licensee of two of plaintiffs services, Marcoin Management Services (MMS) and Busco Business Services (BUSCO). He had an opportunity to examine the blank license agreements for both services. Paragraph 11 of both agreements reads, in pertinent part:

This Agreement shall automatically be reopened every five (5) years for review by First Party [Plaintiff] and if covenants and undertakings assumed by Second Party in this Agreement are truly and faithfully being performed, the con *501 tract will automatically be continued for a term of five (5) years on the same terms and conditions except that the prevailing fee schedule as established by First Party at the time of review shall apply for the next five (5) year term.

Paragraph 4 of these agreements reads, again in pertinent part:

4. First Party’s Fees:
When Gross Billings Are Monthly Base Plus This At Least But less Than Fee Is Percentage On All Gross Billings Over
$ -0-$1,500.00 $ -0-12% $ -0-
1,500.00 2,000.00 180.00 10% 1,500.00
2,000.00 2,500.00 230.00 8% 2,000.00
2,500.00 3,000.00 270.00 6% 2,500.00
3,000.00 300.00 4%
and Over * To Maximum of $500.00

Defendant was uncertain as to how paragraph 4 would be interpreted in light of paragraph 11. He expressed his uncertainty to Mr. Hinze. Defendant has presented no evidence showing what Mr. Hinze said as to how these paragraphs were to be interpreted. Mr. Hinze did, however, provide defendant with a “Fact Sheet” for MMS and BUSCO. The section of the BUSCO fact sheet which discussed fees read:

[R]ange is from 12% (less than $1,000/month billing) to 4% (over $3,000). Has maximum of $500/month. Maximum is subject to cost-of-living adjustment every five years.

The MMS fact sheet said essentially the same thing.

After reading the fact sheets, defendant stated that he was satisfied as to how the contracts were to be interpreted. Defendant asked Mr. Hinze about the maximum fees. Mr. Hinze responded that the fact sheets accurately reflected the company’s policy.

On 1 March 1975, defendant signed both the MMS and the BUSCO license agreements. On 29 February 1980, near the end of *502 the first five year term, defendant received a letter from plaintiff stating that effective April 1980, and in accordance with paragraph 11 of the license agreements, a new fee schedule for both MMS and BUSCO would apply. The new schedule provided for a $100 base fee plus seven percent of client billings.

Defendant contends that when this evidence is considered in a light most favorable to him, it demonstrates a clear case of fraud. His argument is that Mr. Hinze led him to believe that the only item subject to modification every five years was the maximum fee and that the fee schedule itself would remain constant over the 25 year life of the contract.

To make out a case of actionable fraud, defendant must show that Mr. Hinze made a representation relating to some material past or existing fact; that the representation was false; that Mr. Hinze knew the representation was false when it was made or made it recklessly without any knowledge of its truth and as a positive assertion; that Mr. Hinze made the false representation with the intention that it should be relied upon by defendant; that defendant reasonably relied upon the representation and acted upon it; and that defendant suffered injury. See, e.g., Johnson v. Insurance Co., 300 N.C. 247, 266 S.E. 2d 610 (1980).

The only representation that defendant shows Mr. Hinze made was that the $500 maximum monthly fee was subject to a cost-of-living increase every five years. This representation was true, and thus cannot be the basis for an action in fraud. Nor can defendant argue that Mr. Hinze’s statement served to conceal the plaintiffs right to modify the fee schedule. Paragraph 11 of the license agreements clearly states that a new fee schedule can be established every five years. Defendant admits that he read paragraph 11. Additionally, he presents no evidence that Mr. Hinze implied that because the contracts also stated that the maximum fee was subject to change the rest of the fees were not. Having truthfully and fully answered all questions asked of him by defendant, Mr. Hinze had no duty to initiate additional discussion as to the construction of clearly stated terms. Since no false representation was made and there was no concealment of any material fact, the trial court was correct in directing a verdict against defendant on the question of fraud.

*503 We next consider whether it was appropriate to direct a verdict against defendant on his breach of contract counterclaim. Defendant contends the directed verdict was improper for four reasons. We will address these contentions serially.

Defendant claims the MMS and BUSCO contracts are ambiguous because paragraphs 4 and 11 are unclear as to what future changes can be made in the fee schedules and that their construction should have been a question for the jury. Further, he maintains that it was error to invoke the parol evidence rule to exclude the fact sheets from consideration since they served to clarify and explain the unclear provisions.

We find no ambiguity in the language of the contracts’ fee provisions. The provisions of paragraphs 4 and 11 are completely consistent with one another. Paragraph 11 establishes a 25 year contractual term which is subject to the substitution of a new fee schedule every five years. Paragraph 4 establishes the fee schedule for the first five year period. It also establishes a maximum monthly fee and, by way of clarification, notes that the maximum is not unalterable; it too is subject to change every five years. When a contested provision is not ambiguous its construction is a matter of law for the court. See Lowe v. Jackson, 263 N.C. 634, 140 S.E. 2d 1 (1965); MAS Corp. v. Thompson, 62 N.C. App. 31, 302 S.E. 2d 271 (1983). The trial court was therefore correct in removing the question of construction from the jury’s consideration. Further, since the contracts were unambiguous, it was not error to invoke the parol evidence rule to exclude consideration of the fact sheets. See Lineberry v. Lineberry, 59 N.C. App. 204, 296 S.E. 2d 332 (1982).

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Cite This Page — Counsel Stack

Bluebook (online)
320 S.E.2d 892, 70 N.C. App. 498, 1984 N.C. App. LEXIS 3724, Counsel Stack Legal Research, https://law.counselstack.com/opinion/marcoin-inc-v-mcdaniel-ncctapp-1984.