Goodwin v. Whitener

138 S.E.2d 232, 262 N.C. 582, 1964 N.C. LEXIS 700

• Court: Supreme Court of North Carolina
• Decided: October 14, 1964
• Docket: 451
• Status: Published

Opinion

Higgins, J.

The complaint is the foundation document in this civil action. Hence, it is before the Court as a part of the record proper, of which we take notice. Skinner v. Transformadora, 252 N.C. 320, 113 S.E. 2d 717, citing many cases. The complaint alleges that two directors of the corporation were guilty of such mismanagement of the corporate affairs as caused the company to become insolvent and unable to pay the plaintiff’s judgment. A claim of mismanagement exists in favor of the corporation. The duties which have been breached by this mismanagement are duties primarily to the corporation. Before a creditor or stockholder may sue those guilty of mismanagement, he must allege a demand on the corporation, or its receiver if insolvent, to bring the suit and a refusal to do so. Even then the corporation must be made a party defendant; and any recovery must be held for the benefit of the corporation. Coble v. Beall, 130 N.C. 533, 41 S.E. 794; McIver v. Hardware Co., 144 N.C. 478, 57 S.E. 169; Douglass v. Dawson, 190 N.C. 458, 130 S.E. 195; Corporation Commission v. Bank, 193 N.C. 113, 136 S.E. 362. “Where, however, an officer of a corporation so utilizes his authority as to benefit himself to the detriment of the corporation, a right of action accrues to the corporation.” Fulton v. Talbert, 255 N.C. 183, 120 S.E. 2d 410.

Under the authority of the cases cited, we hold the plaintiff's complaint fails to state a cause of action. For the reasons assigned in Transformadora, supra, and the many cases therein cited, we remand the case to the Superior Court for the entry of judgment dismissing the action. This disposition makes unnecessary any discussion of the questions discussed in the appellant’s brief.

Remanded.