Opinion
No. 9229SC763 9229SC765
Filed 17 August 1993
1. Negotiable Instruments and Other Commercial Paper 29 (NCI4th) — promissory note in exchange for release of judgment lien — consideration The execution of a promissory note is supported by consideration if given in exchange for the release of a lien on real property.
Am.Jur.2d, Bills and Notes 215 et seq.
2. Interest and Usury 5 (NCI4th) — promissory notes in exchange for release of judgment liens — proper date for computing interest Where defendants executed promissory notes on 14 January 1986 in exchange for releases of judgment liens on real property which defendants wanted to sell, and they agreed to pay the face amount of the notes "with interest from date" at the rate of six percent, the trial court erred in awarding interest from 2 January 1976, the date from which the original judgments calculated interest.
Am.Jur.2d, Interest and Usury 87-98.
Appeal by defendants from orders filed 23 April 1992 in McDowell County Superior Court by Judge Julia Jones. Heard in the Court of Appeals 10 June 1993.
Dameron and Burgin, by Anthony Lynch, for plaintiff-appellee Sam Stockton Grading Company, Inc.
No brief filed for plaintiff-appellee Johnson Paving Company, Inc.
Carnes and Franklin, P.A., by Everette C. Carnes, for defendant-appellants.
Judge WYNN dissenting.
William C. Hall and Frank J. Hall (the Halls), defendants in these consolidated cases, see N.C. R. App. P. 40 (1993) (this Court may, on its own initiative, consolidate cases which involve common issues of law), appeal from the trial court's grant of summary judgment for Sam Stockton Grading Company, Inc. (Stockton) and Johnson Paving Company, Inc. (Johnson), on their separate claims to recover on notes.
Stockton and Johnson's predecessor in interest, R.L. Johnson and Son Paving Company, obtained separate judgments against the Halls, both of which were filed 28 September 1978, in McDowell County. Stockton's judgment was in the amount of $37,163.00 and Johnson's predecessor's judgment in the amount of $11,476.13. Both judgments recited that the judgment amounts were to be paid "together with interest . . . from the 2nd day of January, 1976."
In early 1986, the Halls had the opportunity to sell certain real property which was subject to the liens of the judgments held by Stockton and Johnson. On 14 January 1986, the Halls entered into written agreements with Stockton and Johnson. Under the agreement with Stockton, the Halls made a $20,000.00 payment on the judgment and Stockton released the judgment lien on the real property which the Halls wanted to sell. Under the agreement with Johnson, the Halls made a $5,000.00 payment on the judgment and Johnson released the lien held by it on the real property. Both agreements recite that they are "secured by" promissory notes incorporated by reference into the agreement. The Stockton promissory note, dated 14 January 1986, required the Halls to pay Stockton, on demand, the sum of $46,553.30, together with interest "from date" at the rate of six percent. The Johnson promissory note, also dated 14 January 1986, required the Halls to pay Johnson, on demand, the sum of $15,552.00, together with interest "from date" at the rate of six percent. Both notes recite that they are "executed for the sole and limited purpose of reaffirming the balance due on the . . . outstanding judgment."
On 16 May 1991, Stockton and Johnson filed complaints seeking payment of the notes. The Halls answered, denying that they were obligated on the notes. All parties subsequently moved for summary judgment, and each filed an affidavit. The trial court granted Stockton and Johnson's motions for summary judgment in separate decrees on 23 April 1992, awarding each the amount of their notes, plus interest accrued from 2 January 1976.
The issues presented are whether (I) the execution of a promissory note is supported by consideration if given in exchange for the release of a lien on real property; and, if so, (II) the trial court erred in granting interest on the notes from 2 January 1976.
I
In order to recover on the notes it was necessary for Stockton and Johnson to show execution, delivery, consideration, demand and nonpayment. See Royster v. Hancock, 235 N.C. 110, 112, 69 S.E.2d 29, 30-31 (1952). There is no dispute that the notes were properly executed and delivered, that they are not paid and that timely demands were made. The parties do dispute whether the notes were given for consideration.
The evidence reveals that on the same day the parties executed the notes, they executed agreements wherein it was agreed that upon payment of specified sums by the Halls, $20,000.00 to Stockton and $5,000.00 to Johnson, and upon execution of the notes, Stockton and Johnson would release, from their 1978 judgment liens, the real property owned by the Halls. The property was released and later sold by the Halls.
A new promise to perform an act the promisor is otherwise legally bound to perform is not supported by consideration. Penn Compression Moulding, Inc. v. Mar-Bal, Inc., 73 N.C. App. 291, 294, 326 S.E.2d 280, 282, aff'd per curiam, 314 N.C. 528, 334 S.E.2d 391 (1985); 17 C.J.S. Contracts 111 (1963) (no consideration for promise to pay valid judgment). When, however, the new promise entails some additional benefit to be received by the party making the promise or some detriment to the promisee, the new promise is supported by consideration. See Penn, 73 N.C. App. at 293-94, 326 S.E.2d at 282 (consideration to support a contract "defined as some benefit or advantage to the promisor or some loss or detriment to the promisee"); Anthony Tile and Marble Co., Inc. v. H.L. Coble Constr. Co., 16 N.C. App. 740, 744, 193 S.E.2d 338, 341 (1972).
In this case, although executed for the purpose of "reaffirming" a debt due on a recorded judgment, the notes were also executed on the condition that Stockton and Johnson would release from the liens created by their judgments certain properties owned by the Halls. The release of the liens was not only a benefit to the Halls, in that they were allowed to sell the property free of the liens, but also a detriment to Stockton and Johnson, in that their security for the debts was diminished. Therefore, there existed sufficient consideration for the execution of the notes.
Because there is no genuine issue of fact presented in these cases, and because there was consideration for the execution of the notes, Stockton and Johnson are entitled to judgment as a matter of law. See Parks Chevrolet, Inc. v. Watkins, 74 N.C. App. 719, 721, 329 S.E.2d 728, 729 (1985) (summary judgment proper for party with burden of proof where no genuine issue of fact, no inferences inconsistent with recovery, and no standard to be applied to facts by jury).
II
The Halls also argue that the trial court incorrectly awarded interest on the notes. We agree.
The promissory notes recite that the Halls agreed to pay the face amount of the note, "with interest from date" at the rate of six percent. The date of the promissory notes is 14 January 1986. Therefore, under the terms of the notes, the trial court's award of interest from 2 January 1976 was error.
Accordingly, the portion of the trial court's order granting interest on the notes from 2 January 1976 is reversed, and the matter is remanded for the entry of orders reflecting interest from the date of the promissory notes.
Affirmed in part, reversed in part, and remanded.
Judge JOHNSON concurs.
Judge WYNN dissents.