Parrish Tire Co. v. Morefield ( 1978 )

241 S.E.2d 353 (1978) 35 N.C. App. 385

PARRISH TIRE COMPANY
v.
Robert E. Lee MOREFIELD, III.

No. 7721DC210.

Court of Appeals of North Carolina.

February 21, 1978.

House & Blanco by Robert Talley, Winston-Salem, for plaintiff-appellant.

Yeager & Powell by Edward L. Powell, Winston-Salem, for defendant-appellee.

PARKER, Judge.

The note in suit was never transferred or negotiated, and we are here concerned only with the rights and obligations of the original parties. In determining these, we apply principles of law applicable to the interpretation and effect of contracts generally.

"Whenever a court is called upon to interpret a contract its primary purpose is to ascertain the intention of the parties at the moment of its execution." Lane v. Scarborough, 284 N.C. 407, 409-10, 200 S.E.2d 622, 624 (1973). "The court will give legal effect to the words of a contract in accordance with the meaning actually given to them by one of the parties, if the other knew or had reason to know that he did so." 3 Corbin, Contracts § 543, at 140 (1960). In the present case plaintiff's evidence establishes that defendant gave the words which he wrote on the face of the note before signing it, "Upon condition of no maturity date at all," the meaning that defendant "would not pay until he had the money to afford it and would if he could." Plaintiff's evidence also establishes that plaintiff knew, at the time the contract was made, that defendant was giving this meaning to his words. Therefore, for purposes of passing on the trial court's ruling granting defendant's motion for a directed verdict, we accept plaintiff's evidence as establishing that the agreement between the parties at the time the contract was made was that defendant was not required to pay "until he had the money to afford it," at which time he "would if he could."

The parties have cited no decision of the appellate courts of this State, and our own research has disclosed none, which determines the legal effect of contract language requiring a party to pay only when "he had the money to afford it" or words of similar import. Courts of other jurisdictions, however, have been confronted with this problem. "In a majority of the states in which the question has arisen, and in Canada, it is held that a promise to pay when the promisor `is able' is not an absolute but a conditional promise to pay; and that therefore the promisee, in order that he may recover on such a promise, must allege and prove ability of the promisor to pay the debt." Annot., 94 A.L.R. 721, 721 (1935). Contra, Sanford v. Luce, 245 Iowa 74, 60 N.W.2d 885 (1953); see 5 Williston on Contracts, § 804 (3d ed. 1961). In our opinion the majority view more accurately reflects the actual intent expressed in such a promise. Defendant here did not agree to pay in any and all events; he agreed to pay only conditionally, the condition being that he should have the money to afford it. Such a condition became a condition precedent to his obligation to perform.

A condition precedent is a fact or event, "`occurring subsequently to the making of a valid contract, that must exist or occur before there is a right to immediate performance, before there is a breach of contract duty, before the usual judicial remedies are available.'" Cargill, Inc. v. Credit Assoc., Inc., 26 N.C.App. 720, 722-23, 217 S.E.2d 105, 107 (1975), quoting 3A Corbin, Contracts § 628 at 16 (1960). The burden was on the plaintiff in this case to offer evidence in support of all essential elements to establish his claim. The occurrence of the condition precedent was an essential element of plaintiff's case, and it was therefore incumbent upon plaintiff to offer proof of defendant's ability to pay. Thomas v. American Radio and Television, 228 Ark. 1050, 312 S.W.2d 183 (1958); Smith v. Graham Refrigeration Products Company, 333 Mass. 181, 129 N.E.2d 884 (1955); American University v. Todd, 39 Del. 449, 1 A.2d 595 (Super.Ct.1938).

No such proof was offered. Therefore, the trial court correctly granted defendant's motion for a directed verdict.

Affirmed.

VAUGHN and ERWIN, JJ., concur.