Carefree Carolina Communities, Inc. v. Cilley
Carefree Carolina Communities, Inc. v. Cilley
Opinion of the Court
We note at the outset that an appeal from an order granting or denying a preliminary injunction is interlocutory. Pruitt v. Williams, 288 N.C. 368, 218 S.E. 2d 348 (1975). Absent a showing that a substantial right will be lost unless the order is reviewed
The sole issue on this appeal is whether the trial court erred in denying plaintiffs’ motion for preliminary injunction and allowing foreclosure to proceed. Ordinarily, to justify issuing a preliminary injunction, the movant must show (1) there is probable cause to believe that plaintiff will be able to establish the right he asserts, and (2) there is reasonable apprehension of irreparable loss unless interlocutory injunctive relief is granted or unless interlocutory injunctive relief appears reasonably necessary to protect plaintiffs rights during the litigation. Setzer v. Annas, 286 N.C. 534, 212 S.E. 2d 154 (1975). The decision to issue or not to issue a preliminary injunction is usually a matter of discretion to be exercised by the trial judge and will not be overturned absent a showing of an abuse of discretion. Pruitt v. Williams, 288 N.C. 368, 218 S.E. 2d 348 (1975).
Plaintiffs contend that the agreements between plaintiffs and defendants create a partnership and that therefore defendants may not foreclose on plaintiffs. We disagree.
“A partnership is an association of two or more persons to carry on as co-owners a business for profit.” G.S. 59-36. As our Supreme Court has stated:
“A contract express or implied, is essential to the formation of a partnership. . . . Partnership is a legal concept but the determination of the existence or not of a partnership, as in the case of a trust, involves inferences drawn from an analysis of ‘all the circumstances attendant on its creation and operation.’ ”
Not only may a partnership be formed orally, but “it may be created by the agreement or conduct of the parties, either express or implied. . . .”
Eggleston v. Eggleston, 228 N.C. 668, 674, 47 S.E. 2d 243, 247 (1948) (citations omitted).
The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but no such inference shall be drawn if such profits were received in payment:
d. As interest on a loan, though the amount of payment vary with the profits of the business.
The profit sharing provisions of the relationship between plaintiffs and defendants fit squarely within G.S. 59-37(4)(d). See McGurk v. Moore, 234 N.C. 248, 67 S.E. 2d 53 (1951). The other unusual contract provisions plaintiffs rely upon merely help secure defendants’ $1,942,500.00 loan exposure. Furthermore, the “Option to Purchase and Contract to Purchase” explicitly states that:
The parties mutually agree, understand and covenant that this contract and the sale of the property and the attendant financing, purchase, development and construction does not constitute a partnership between the Parties of the first part, their successors and assigns, and Parties of the second part, their heirs, successors and assigns, as Parties of the first part are acting only as financiers and lenders and the Parties of the second part are acting as purchasers and developers and any phraseology and terminology in any portion of this contract which might tend to indicate to the contrary is not intended nor shall it be interpreted as such as no partnership was ever contemplated and will ever exist within the law or in equity. . . .
The plaintiffs failed to show probable cause to believe that they will be able to establish the partnership rights they assert. Therefore, the trial court did not err in denying a preliminary injunction and allowing foreclosure to proceed. The order appealed from is affirmed.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.