Lynn v. Cotton Mills, 130 N.C. 621 (1902)

June 10, 1902 · Supreme Court of North Carolina

130 N.C. 621

LYNN v. COTTON MILLS.

(Filed June 10, 1902.)

1. COUNTER-CLAIM — &et-off—Recoupment—The Code, Sec. Wt,-Subsec. 8.

In an action to recover for services of minor children, a counter-' claim of a store account against plaintiff which had been assigned to defendant,'is proper under The Code, See. 244,. Shbsec. 2.

2. EXEMPTIONS — Homestead—Constitution, Art. X, Secs. 1 and 8.

Under Constitution, Art. X, Secs. 1 and 2, a defendant in an action is precluded thereby from availing himself of a counterclaim, though plaintiff aoes not own $500 worth of personal-property, including the debt sue’d on.

3. CORPORATIONS — Ultra Vires.

The purchase of a claim against an employee by a corporation, not authorized by its charter, is not ultra vires.

ActioN by D. B. Lynn against tbe Stanly Creek Cotton Mills, beard by Judge Henry B. Btarbuck, at May (Special) Term, 1901, of tbe Superior Court of Gaston County. From-a judgment for the plaintiff, tbe defendant appealed.

No counsel for tbe plaintiff.

O. F. Mason, for tbe defendant.

Clark, J.

Tbis is an action begun before a Justice of tbe Peace for $27.89, for work and labor done by plaintiff’s minor children. Before tbe action was instituted tbe defendant bought and took an assignment of a store account for $36.52' due by plaintiff to a firm, of wbicb one of its officials was a member. Tbe plaintiff is a resident of tbe State and is not owner of $500 personal property, including tbe debt for wbicb tbis action is brought. On appeal tbe above facts were agreed, tbe only defense being tbat tbe defendant could not avail itself of tbe counter-claim set up, because :

1. Tbe plaintiff was entitled to- take advantage of bis personal property exemption by claiming said $27.89 as a part thereof. 2. Tbe purchase of tbe claim by defendant, a manufacturing corporation, was ultra vires, and, therefore, null and void, and nothing passed by virtue of the assignment to' it of said claim.

As to tbe first point, tbe counter-claim, comes within tbe definition in second subsection of Tbe Code, Sec. 244. “In an action on contract, any other cause of action also arising on contract and existing at tbe commencement of tbe action.” Tbe homestead and personal property exemptions are, under the terms of tbe Constitution, Art. X, Secs. 1 and 2, exemptions “from sale under execution, or other final process,” issued upon judgment recovered on any debt. Tbe exemption is not available before judgment, SO' as to destroy tbe right of counter-claim or set-off. Otherwise, one could recover judgment when, on a balance struck, nothing is due him. Tbe homestead and personal property exemption can only be claimed by tbe defendant in an execution. Curlee v. Thomas, 74 N. C., 51, and cases there cited; Commissioners v. Riley. 75 N. C., 144.

As to tbe second point, tbe purchase of tbe claim against plaintiff was not “carrying on a business” not authorized by its charter, and hence was not ultra vires. It was simply an incidental act in tbe legitimate exercise of its functions. Upon tbe facts agreed judgment should have been rendered in favor of defendant for tbe excess of its counter-claim, to-wit, $8.63 and costs.

Neversed.