Dowd v. Charlotte Pipe & Foundry Co.

Annotate this Case

139 S.E.2d 10 (1964)

263 N.C. 101

Sidney M. DOWD v. CHARLOTTE PIPE & FOUNDRY COMPANY, a Corporation, and W. Frank Dowd and wife, Elizabeth Roddey Dowd, Frank Dowd, Jr., Roddey Dowd, W. C. Thompson, F. Dwight Stephens, Robert C. Stephens, and E. H. Hardison, said individuals constituting the Board of Directors and also the Officers of the Defendant Corporation.

No. 257.

Supreme Court of North Carolina.

November 25, 1964.

*13 Warren C. Stack, James L. Cole, Charlotte, for plaintiff appellee.

Blakeney, Alexander & Machen, Whiteford S. Blakeney, Ernest W. Machen, Jr., Charlotte, for defendant appellants.

HIGGINS, Justice.

The appeal involves the question whether the complaint shows a misjoinder of parties and causes. The demurrer was based solely upon that ground. May a stockholder in a corporation sue the corporation, and join its directors as defendants, for failure to declare adequate dividends from the corporation's earnings; and may he join therewith a second cause of action for liquidation and involuntary dissolution of the corporation based upon bad faith management in suppressing dividends and in deflating the value of the corporation's assets, thus precluding the plaintiff from obtaining either a fair dividend or a fair market for his stock?

The Business Corporation Act, G.S. § 55-50(k) provides: "Any action by a shareholder to compel the payment of dividends may be brought against the directors, or against the corporation with or without joining the directors as parties." Hence the inclusion of the directors as defendants is not a misjoinder of parties to the first cause of action. When the power of the court in the exercise of its equitable jurisdiction is invoked to liquidate and decree involuntary dissolution under G.S. § 55-125(a)(4), there must be a showing that the liquidation is reasonably necessary for the protection of the rights or interests of the complaining shareholder. Subsection (3) provides that it shall not be necessary to make shareholders parties unless relief is sought against them personally. Clearly, directors would seem to be proper parties to a suit to dissolve the corporation upon the complaint of one shareholder, even though no relief is sought against them personally. We are not required, at this stage, to determine to what extent the interests of other shareholders may be balanced against those of one complaining shareholder who seeks liquidation and dissolution. The implication in the statute is that directors and other interested shareholders may be made, or, on their own application, may become parties to a complaining shareholder's action to liquidate and dissolve the corporation. Certainly the directors are not improper parties.

The two causes of action arose out of the same controversy and involve the same subject-matterthe transaction of the corporate business. G.S. § 1-123 permits such joinder. Conger v. Travelers Ins. Co., 260 N.C. 112, 131 S.E.2d 889; Hancammon v. Carr, 229 N.C. 52, 47 S.E.2d 614; Pressley v. Great Atlantic & Pacific Tea Co., 226 N.C. 518, 39 S.E.2d 382.

We have difficulty in following the manifold ramifications of the complaint. As originally drafted, it contained 160 paragraphs covering more than 40 pages of the record. Thirty-nine paragraphs were stricken by the court. In preparing the complaint the draftsman evidently at all times stood far from and kept his back turned on G.S. § 1-122. The requirement is: the complaint must give the title, the court, the county, the parties, and "[a] *14 plain and concise statement of the facts constituting a cause of action, without unnecessary repetition; and each material allegation must be distinctly numbered." The plaintiff should state the relief to which his allegations of fact entitle him. In a few simple words the pleadings should pinpoint the controversy and disclose the proper issues for its determination. It is the duty of plaintiff's counsel to follow the statutory requirement in preparing the complaint.

The trial judge, on motion, should strike from a complaint the embellishments and banjowork inserted for their effect upon the jury. If a plaintiff wants admissions or factual details, he should get them by interrogatories or by adverse examination. The reasons against pleading evidentiary details were stated by Merrimon, J., in McLaurin v. Cronly, 90 N.C. 50, 51: "Reason and common justice, as well as THE CODE, require that the plaintiff shall state in a plain, strong, intelligible manner his grounds of action, and that the defendant shall in like manner state the grounds of his defense, and any counterclaims or demands he may have and desires to set up. This is not mere matter of form. It is of the essential substance of the litigation. It is necessary to the end the contending parties may understand and prepare to meet, each the other's contention, and prepare himself for the trial of issues of law or fact presented, that the court may have a proper, just and thorough apprehension of the controversy, and that the same may go into the record and stand as a perpetual memorial of the litigation and all that it embraces. Any other course of procedure would lead to endless confusion and litigation. If this were not done, it would be difficult to show what any litigation embraced or that it had been settled and ended, and when and how." See also, Parker v. White, 237 N.C. 607, 75 S.E.2d 615.

While the two causes of action relate to the same controversy, we wonder what will become of the cause for dividends if the plaintiff is successful in having the corporation liquidated and dissolved. The liquidation and dissolution would render moot any question involving dividends.

In view of the repetitious and evidentiary details in which the complaint was originally drawn, and even in which it was left as the result of the order to strike, the plaintiff will be well advised to draft a new complaint more in keeping with G.S. § 1-122. He may obviate the apparent inconsistencies in his position by alleging the cause of action for dividends as an alternative in the event he fails in his efforts to liquidate and dissolve the corporation.

The complaint is objectionable for the reasons indicated, but it is sufficient to survive the demurrer for misjoinder of parties and causes.

Affirmed.