UNITED STATES LEASING CORPORATION, a corporation,
v.
Fred Thomas HALL t/a Hall Supply Company and Mathias Business Equipment Company, Inc., Additional Party Defendant.
No. 290.
Supreme Court of North Carolina.
March 24, 1965.*32 Fairley, Hamrick, Hamilton & Monteith, Laurence A. Cobb, Charlotte, for plaintiff appellant.
James A. Carson, Jr., for additional defendant appellant.
Richard M. Welling, Charlotte, for defendant appellee.
DENNY, Chief Justice.
The plaintiff and the additional defendant assign as error the finding of the court below that the contract between the plaintiff and defendant Hall is a chattel mortgage agreement and not a lease.
The evidence, in our opinion, is insufficient to support such a finding. While defendant Hall alleged in his counterclaim and cross action that R. W. Mathias brought to him for execution the "papers * * * for their finance of conditional sale agreement for payment in equal monthly installments of the $1,500.00, together with interest and carrying charges, over a five-year period, 60 months," the defendant Hall did not allege that he was induced to sign said lease agreement because of misrepresentations made by the plaintiff or the additional defendant, or that he was unfamiliar with the terms and conditions of said lease, or that by reason of fraud the lease agreement did not express the true intention of the parties.
Conceding that the additional defendant agreed to sell to defendant Hall the equipment involved herein for $1,500.00, the evidence, we think, tends to show that after Hall had received the equipment and when he came to consider the method to be used in financing the purchase price of $1,500.00, he expressed a preference to rent the equipment rather than purchase it, and that the additional defendant, in accord with such expressed preference, proceeded to arrange the sale to plaintiff with the understanding that plaintiff would lease the equipment to Hall. Such arrangement was *33 perfected and Hall executed the lease agreement. This assignment of error is sustained.
The plaintiff likewise assigns as error the admission of parol evidence to contradict the terms of the aforesaid lease. It is a well established principle of law that all negotiations leading up to the execution of a written instrument are considered to be merged into the written instrument. Parol evidence is not admissible to contradict, add to, take from, or vary the terms of a written contract. Bank of Varina v. Slaughter, 250 N.C. 355, 108 S.E.2d 594; Neal v. Marrone, 239 N.C. 73, 79 S.E.2d 239; Wilkins v. Commercial Finance Co., 237 N.C. 396, 75 S.E.2d 118; Bost v. Bost, 234 N.C. 554, 67 S.E.2d 745.
In Wilkins v. Commercial Finance Co., supra, the written agreement required the plaintiff to carry collision insurance on the automobile purchased from C. W. Myers Trading Post, Inc., so long as any indebtedness on the note given by the plaintiff for the balance of the purchase price remained unpaid. Such note was secured by a chattel mortgage on the car involved. The note was assigned to defendant Finance Company. The plaintiff contended he had a parol agreement with the Motor Company to carry collision insurance on said car which had been involved in a collision, and the court permitted him to introduce parol testimony to that effect. The purchaser had obtained no insurance on the car. This Court said: "This case is much simplified when the judicial gaze is focused steadily on the crucial circumstance that the pleadings of the plaintiffs do not allege that the execution of these documents was procured by fraud, or that, by reason of fraud, they do not express the true intentions of the parties. Willett v. [National Acc. & Health] Insurance Co., 208 N.C. 344, 180 S.E. 580; Hill v. [Star] Insurance Co. [of America], 200 N.C. 502, 157 S.E. 599; [F. L. Voliva] Hardware Co. v. Kinion, 191 N.C. 218, 131 S.E. 579. * * *
"The pleadings of the plaintiffs do not attack the written instruments for fraud or other invalidating cause. This being true, it must be conclusively presumed under the evidence and pleadings in this particular case that the writings supersede the oral agreements of the parties and express their actual engagements. * * *"
This assignment of error is sustained.
The appellants further assign as error the allowance of Hall's counterclaim in the sum of $477.97, based on misrepresentations of the plaintiff and the additional defendant.
There are certainly no misrepresentations or fraudulent conduct alleged with respect to the execution of the lease agreement, nor are there any misrepresentations as to the condition of the equipment except as to the additional defendant.
In the lease agreement between the plaintiff and the defendant Hall there is no provision that gives defendant Hall any right to recover from the plaintiff for damages because of any defect in the leased equipment at the time of its delivery. The lease agreement expressly provides: "Unless lessee gives lessor written notice of each defect or other proper objection to an item of equipment within five (5) business days after receipt thereof, it shall be conclusively presumed, as between the lessee and lessor, that the item was delivered in good repair and that lessee accepts it as an item of equipment described in this lease." The defendant Hall testified that he never at any time gave the plaintiff written notice of any defect in the equipment described in the lease.
The defendant Hall further testified that in April 1962, about six months after delivery of the equipment to him, he told Mr. Mathias that he had decided not to make any further payments on the machine, and had not used the machine since that time. Even so, on 14 April 1962 he paid plaintiff $107.62 as rent under the terms of the lease; on 15 August 1962 he made *34 another payment to the plaintiff under the terms of the lease in the sum of $109.50; and on 5 February 1963 he made an additional payment to the plaintiff in the sum of $106.62. Therefore, while the defendant Hall had paid only $106.62 on the machine before he stated that he would make no more payments, he did, in fact, pay to the lessor $323.74 after his refusal to make any more payments.
Moreover, the court below included in its judgment in favor of Hall the sum of $47.61, the amount which defendant Hall had paid to the American Guaranty Corporation, lessor, on 5 July 1961, as rent on the Gestetner duplicator, covering rent therefor for a period of three months, which machine defendant Hall had leased from the American Guaranty Corporation on 2 March 1961 for a period of three years at a rental of $47.61 per quarter. The supplier of that equipment is the additional defendant in this action.
It appears from the evidence that defendant Hall had possession of the Gestetner machine between seven and eight months, but paid only three months' rent thereon, although he testified that he was satisfied with the Gestetner equipment. However, this rental item, paid to the American Guaranty Corporation, lessor, on 5 July 1961, in the sum of $47.61, is included in the judgment against the plaintiff and the additional defendant. We find no evidence which, in our opinion, justified the inclusion of this item in the judgment entered below against these appellants.
There is sufficient evidence to support the finding that the equipment supplied by the additional defendant and leased to defendant Hall had not been reconditioned as represented to Hall by the additional defendant. Even so, in our opinion, the allegations in defendant Hall's cross action to the effect that R. W. Mathias was the agent of plaintiff as well as the agent of the additional defendant, are not supported by the evidence.
There are other assignments of error, but in our opinion it is unnecessary to discuss them since they may not arise on another hearing.
Therefore, we have reached the conclusion that the nonsuit entered as to the plaintiff should be reversed, and that the additional defendant is entitled to a new trial, and it is so ordered.
As to plaintiffreversed.
As to additional defendantnew trial.