Odom v. Little Rock & I-85 Corp. , 40 N.C. App. 242 ( 1979 )

ARNOLD, Judge.

Plaintiffs argue that the trial court erred in granting summary judgment for defendants, as there were material issues of fact as to (1) whether NCNB breached the option agreement upon which the closing was based and (2) whether NCNB defrauded plaintiffs at the closing by falsely representing to them that the loan funds were to be used for improvements on the property. As will appear, we have concluded that summary judgment was correctly entered.

NCNB could not have breached the option agreement, because it was not a party to that contract. The option was entered into by plaintiffs’ testator and Little Rock’s assignor. NCNB was never made a party to the option between plaintiffs and Little Rock, or any other contract with the plaintiffs. As lender its only dealings were with Little Rock and McConnell. On this point there is no genuine issue of material fact, as is required to avoid summary judgment. G.S. 1A-1, Rule 56(c).

The record reveals that plaintiffs Odom and Henry Rhyne were present at the closing. Neither plaintiffs nor anyone else present at the closing recall specifically what was said, however. The construction loan agreement and deed of trust were available for inspection by plaintiffs. The deed of trust refers throughout to a “Construction Loan Agreement” incorporated into the deed of trust by reference. The loan agreement, in turn, refers to the “Commitment,” stating that “in the event there be a conflict between the terms and provisions of this Agreement and the terms and provisions of the Commitment . . . said Commitment shall be deemed to control. . . .” The commitment, although entitled “Real Estate Loan Commitment,” says clearly that NCNB “shall disperse the total loan amount at closing” and that “the draw, upon closing, for land acquisition is to be limited to $150,000.”

Plaintiff Odom, an attorney, “was not shown, nor did [he] ask to see, any loan documents.” Plaintiff Rhyne likewise failed to read the construction loan deed of trust. They were thus unaware of the actual situation when their deed of trust was subordinated to the deed of trust in favor of NCNB.

It appears that all of the possible evidence relevant to plaintiff’s contention that NCNB defrauded them by misrepresenting that the loan funds were to be used for improvements was before the trial court. The burden is of course on the party alleging fraud to show that the essential elements exist. Foster v. Snead, 235 N.C. 338, 69 S.E. 2d 604 (1952). The essential elements of fraud are:

(1) That defendant made a representation relating to some material past or existing fact; (2) that the representation was false; (3) that when he made it, defendant knew that the representation was false, or made it recklessly, without any knowledge of its truth and as a positive assertion; (4) that defendant made the representation with intention that it should be acted upon by plaintiff; (5) that plaintiff reasonably relied upon the representation, and acted upon it; and (6) that plaintiff thereby suffered injury.

Cofield v. Griffin, 238 N.C. 377, 379, 78 S.E. 2d 131, 133 (1953).

Plaintiffs have made no showing of any representation on the part of NCNB, no showing of any reasonable reliance upon a representation, or any of the remaining elements essential to make out a case of fraud against NCNB. Summary judgment was appropriate.

Moreover, while we might agree with plaintiffs that it was misleading for the deed of trust to be labeled “Construction Loan” and to refer to improvements to be constructed on the land when the deed of trust was actually intended to secure a land acquisition loan, we must recognize that a party is required to exercise some diligence in protecting his own interests.

‘Where ordinary care and prudence are sufficient for full protection, it is the duty of the party to make use of them, and . . . , therefore, if false representations are made regarding matters of fact, and the means of knowledge are at hand and equally available to both parties, and the party, instead of resorting to them, sees fit to trust himself in the hands of one whose interest it is to mislead him, the law, in general, will leave him where he has been placed by his own imprudent confidence.’ (cite omitted)

McLain v. Shenandoah Life Insurance Co., 224 N.C. 837, 840, 32 S.E. 2d 592, 594 (1945). Assuming there were misrepresentations by defendants, they could have been counteracted had the plaintiffs taken the trouble to read the documents involved.

For the reasons given, summary judgment was properly granted.

Affirmed.

Judges PARKER and WEBB concur.