Caldlaw, Inc. v. Caldwell

Annotate this Case

102 S.E.2d 829 (1958)

248 N.C. 235

CALDLAW, Inc., a North Carolina corporation, by S. W. Hinson, t/a Charlotte Heating & Air Conditioning Company, v. Harold J. CALDWELL.

No. 248.

Supreme Court of North Carolina.

April 16, 1958.

*830 Robinson, Jones & Hewson, Charlotte, for plaintiff, appellant.

Porter B. Byrum, Charlotte, for defendant, appellee.

HIGGINS, Justice.

At the threshold of this case we are confronted with the question whether a judgment creditor can maintain an action in the name of the judgment debtor corporation against one of its officers upon the ground that he committed a breach of trust in the use of corporate credit and assets for his own private gain. The plaintiff states in his brief: "This is not a creditor's bill but is brought under G.S. § 55-143 in effect at the time of the transaction * * * to collect debts owed the corporation by a third person."

Assuming the appellant's allegations are true, and that the evidence is sufficient to establish them, the defendant's obligation to the corporation is ex delicto, in tort. It arises, if at all, by operation of law because of the fiduciary relationship of the parties. Is an undetermined, unlitigated cause of action for breach of trust a debt within the meaning of G.S. § 55-143? "* * * he (sheriff) or the judgment creditor may elect to satisfy such execution * * * out of any debts due the corporation; and it is the duty of any agent or person having custody of any evidence of such debt to deliver it to the officer, * * * with a transfer to the officer in writing, * * * and notice to the debtor, shall be a valid assignment thereof, * * *." (Emphasis added.)

*831 "Ordinarily the term `debt' does not include the obligation arising on account of a tort committed, although the term has been construed in certain connections as including a claim based on tort; and it has been held that when a claim in tort is reduced to, or liquidated by, a judgment it becomes fixed and certain, and is as much a debt as if it had been recovered on a promise. On the other hand, in some jurisdictions, the courts have made a distinction between liability ex contractu and liability ex delicto, or in tort, and have held that a claim arising from a wrong, or ex delicto, is not a debt even when it has been reduced to judgment, the question depending largely upon the context in which the word is used." 26 C.J.S. p. 6.

An action based on a claim for unliquidated damages. Until reduced to judgment liquidating the amount of the claim, is not a debt under this section (G.S. § 28-61). Suskin v. Maryland Trust Co., 214 N.C. 347, 199 S.E. 276.

In a stockholder's derivative suit to recover from the directors and officers the damages which they caused a corporation to suffer by unlawfully distributing a portion of the corporation's profits under a by-law alleged to be illegal, the action for unliquidated damages was not a debt within this section. Healey v. R. J. Reynolds Tobacco Co., D.C., 48 F. Supp. 207.

"A `debt' is something due from one person, the debtor, to another called the creditor, and may be created by simple contract, or evidenced by specialty or judgment, according to the nature of the obligation giving rise to it." Summit Silk Co. v. Kinston Spinning Co., 154 N.C. 421, 422, 70 S.E. 820, 823.

"While breach of a duty imposed by statute or by express contract is ex contractu, the breach of a duty imposed by law arising upon a given state of facts is a tort. Hodges v. Wilmington R. Co., 105 N.C. 170, 10 S.E. 917. An action for damages for breach of duty in the latter case is an action for tort. Bond v. Hilton, 44 N.C. 308; Williamson v. Dickens, 27 N.C. 259." Solomon v. Bates, 118 N.C. 311, 24 S.E. 478, 479.

Careful examination of G.S. § 55-143 discloses the term "debts" is used in a restricted sense. Any agent or person having custody must deliver any evidence of such debt to the officer with a transfer to the officer in writing and notice to the creditor shall be a valid assignment thereof. Nothing in the statute gives authority to a creditor to maintain an action in the name of the corporation for the recovery of damages for tortious breach of trust by officers in their dealings with the corporation. If one creditor can maintain such an action, so can another, and one suit would not terminate or settle the full liability. A single creditor's interest would extend no further than the recovery of a sufficient amount to satisfy his judgment. The law provides a different method of settling the corporation's differences with its officers resulting from a breach of trust. Hence the complaint shows on its face that in no view of the case can the plaintiff maintain this action.

"When * * * the complaint fails to state a cause of action, that is a defect upon the face of the record proper, of which the Supreme Court on appeal will take notice, and when such defects appear the court will ex mero motu dismiss the action." Town of Fuquay Springs v. Rowland, 239 N.C. 299, 79 S.E.2d 774, 776; Aikan v. Sanderford, 236 N.C. 760, 73 S.E.2d 911; Dare County v. Mater, 235 N.C. 179, 69 S.E.2d 244; Hopkins v. Barnhardt, 223 N.C. 617, 27 S.E.2d 644.

"`We have repeatedly held that, where a complaint states no cause of action, such a defect is not waived by answering. The defendant may demur ore tenus, and furthermore this court may take notice, ex mero motu, of the insufficiency *832 of the complaint in this respect. If the cause of action, as stated by the plaintiff, is inherently bad, why permit him to proceed further in the case, for, if he proves everything that he alleges, he must eventually fail in the action.' Garrison v. Williams, 150 N.C. 674, 64 S.E. 783, 784; Watson v. Lee County, 224 N. C. 508, 31 S.E.2d 535; Aiken v. Sanderford, 236 N.C. 760, 73 S.E.2d 911; where the cases are cited." Maola Ice Cream Co. of North Carolina, Inc., v. Maola Milk & Ice Cream Co., 238 N.C. 317, 77 S.E.2d 910, 916.

This disposition makes is unnecessary to consider any other questions raised by the appeal. S. W. Hinson, t/a Charlotte Heating & Air Conditioning Co., will pay the costs of this appeal.

Action dismissed.