Dailey v. Southern Lime & Fertilizer Works, 165 N.C. 60 (1914)

Feb. 18, 1914 · Supreme Court of North Carolina

165 N.C. 60

J. W. DAILEY v. SOUTHERN LIME AND FERTILIZER WORKS and Dr. JOHN L. PRITCHARD.

(Filed 18 February, 1914.)

Corporations — Insolvency—Parties Defendant — Demurrer—Interpretation of Statutes. *■

For one to’be made a proper party defendant under Revisal, sec. 410, in an action to appoint a receiver for an insolvent corporation and administer its assets, be must claim an adverse interest to tbe plaintiff in tbe action and necessary to 'tbe com-píete determination or settlement of tiie questions therein involved; and Ms demurrer is good to a complaint which alleges that he wrongfully claims that the plaintiff is liable to him for some shares of stock he had sold him upon authority of the corporation, under an agreement to take hack the stock and repay the purchase price in the event of dissatisfaction on the defendant’s part; for such allegations negative the idea that the defendant has a cause of action either against the plaintiff or the corporation, and states no cause of action against the defendant.

Appeal by plaintiff from Bragaw, J., at December Term, 1913, of Beaufort.

This is án action by tbe .plaintiff, as stockholder and creditor of tbe defendant fertilizer company, a corporation, for tbe appointment of a receiver and tbe collection and distribution of its assets.

Tbe defendant Pritchard was made a party, and tbe plaintiff alleges as against bim:

“(4) Tbat heretofore, on tbe .... day of January, 1911, tbe plaintiff having authority from said corporation to sell stock, .negotiated tbe sale of ten shares of stock of pár value of $100 to the defendant Pritchard at Windsor, N. C., and at the time of said sale entered into agreement, together with one George T. Hardy, who is now a nonresident of this State and without property in tbe State, with bim, tbe said Pritchard, that if be, said Pritchard, was dissatisfied with'bis stock within one year from date thereof they, tbe plaintiff and Hardy, would take1 back said stock and reimburse bim, said Pritchard, tbe amount paid therefor, towit, $1,000.

“(5) Tbat said Pritchard made no expression either to tbe plaintiff, said Hardy, or tbe defendant corporation of any dissatisfaction with said purchase during tbe period of one year from said sale, and never made any claim or demand thereon until 26 November, 1913, at which time said defendant Pritch-ard made demand on this plaintiff for $1,000 and interest thereon, basing bis claim upon the agreement aforesaid, and claiming and asserting tbat this plaintiff at tbe time of Said sale had represented that said stock was to be issued by a certain corporation known as tbe Southern Lime Company, and not by the Southern Lime and Fertilizer Works, Inc., which plaintiff denies and hereby alleges to be untrue, and that the sale of said stock in said last named corporation was a fraud on him, the said Pritchard, which he also denies and alleges to be untrue, and said defendant Pritchard is now claiming and demanding against plaintiff payment as aforesaid: which said demand, for the reasons above set out, is wrongful and unlawful, and he is advised and believes, and so alleges, that said Pritchard proposes and intends to attempt to enforce his demand against .plaintiff through the courts.

“(6) That the plaintiff was expressly authorized and empowered by the defendant corporation to malee the agreement with defendant Pritchard, and made same on behalf of said corporation, and if there be any liability in favor of defendant Pritchard in said agreement, which is denied,'the defendant corporation is primarily and solely liable, and not this plaintiff; and if said Pritchard is allowed to attempt to enforce his claim and demand against this plaintiff and not against said corporation, this plaintiff will be irreparably damaged.

“(7) That for the reasons and upon the facts above set out the plaintiff is not indebted to defendant Pritchard, and owes him nothing, and any liability on said stock and the condition of sale thereof exists between said Pritchard and said Southern Lime and Fertilizer Works, Inc.”

His Honor dismissed the action as against Pritchard, and the plaintiff excepted and appealed.

■ Ward & Grimes for plaintiff.

Winston & Matthews for defendant Pritchardv

AlleN, J.

This action is for the appointment of a receiver of the defendant corporation, to the end that its assets may be collected and administered, and the statute (Revisal, sec. 410) provides that any person may be made a defendant “who has or claims an interest in the controversy advérselo the plaintiff, or who is a necessary party to the complete determination or settlement of the questions involved therein.”

Accepting tbe allegations of tbe complaint to be true, and applying tbe test prescribed by tbe statute, it not only appears tbat tbe defendant Pritchard bas no interest in tbe assets of tbe corporation, but tbat be claims none, and tbat, tbe corporation bas incurred no liability .to bim; and it is expressly alleged tbat bis demand against tbe plaintiff is spurious, and tbat tbe plaintiff owes bim nothing.

There is therefore no cause of action stated against bim, and tbe complaint negatives tbe idea tbat be bas a cause of-action against tbe plaintiff.

Tbe principle involved in Spruill v. Bank, 163 N. C., 43, is closely related to tbe one under consideration. In tbat case tbe plaintiff brought bis action against tbe bank and its cashier for wronglully paying a check to one Jackson, who was also made a party defendant, upon tbe theory tbat if there was a recovery against tbe bank it could recover against Jackson.

Tbe plaintiff alleged no cause of action against Jackson, and tbe bank and Latham denied tbat they bad wrongfully paid tbe check to bim, and it was held tbat tbe action was properly dismissed as to Jackson.

"We therefore conclude there is no error.

Affirmed.