North Carolina Equipment Company v. DeBruhl

220 S.E.2d 867, 28 N.C. App. 330, 18 U.C.C. Rep. Serv. (West) 1011, 1976 N.C. App. LEXIS 2678

• Court: Court of Appeals of North Carolina
• Decided: January 7, 1976
• Docket: 7510SC602
• Status: Published

Opinion

ARNOLD, Judge.

The question presented by this appeal is whether the trial court erred in its holding that defendant was not liable on the note.

G.S. 25-3-403(2) provides as follows:

“An authorized representative who signs his own name to an instrument

(b) except as otherwise established between the immediate parties, is personally obligated if the instrument names the person represented but does not show that the representative signed in a representative capacity, or if the instrument does not name the person represented but does show that the representative signed in a representative capacity.” [Emphasis added.]

This action involves the immediate parties to the transaction. The exception to the above general principle [“except as otherwise established between immediate parties”] allows the introduction of parol evidence to establish the requisite agency status to avoid personal liability.

“When the plaintiff who sues the agent personally is one who dealt directly with the agent, and the signature either names the principal or indicates the representative capacity, section 3-403(2) (b) permits the agent to introduce parol evidence of his agency status to avoid personal liability.” J. J. White and Robert S. Summers, Uniform Commercial Code § 13-5, p. 406.

The defendant in the instant case introduced parol evidence of his agency status and the trial judge, as trier of fact, made findings substantially consistent with defendant’s evidence. The trial judge concluded that plaintiff “knew or should have known that James L. DeBruhl was acting for and as President of Lafayette Transportation Service, Inc.” He further concluded that “James L. DeBruhl did not intend to sign and did not sign the note and Security Agreement as an individual but as President of Lafayette Transportation Service, Inc.” Defendant presented ample competent evidence upon which the trial court could base its findings and conclusions.

Furthermore, we do not see merit in plaintiff’s contention that LaFayette Transportation Service is merely defendant’s alter ego. Plaintiff’s evidence establishes that defendant’s den is the corporate office, that defendant has not read the corporate by-laws, and that he is not familiar with the corporation’s tax matters. This is not sufficient evidence to show that the corporation was “ignored as a separate entity,” and it is insufficient to apply the alter ego doctrine and hold defendant personally liable.

We find no prejudicial error, and the judgment of the trial court is

Affirmed.

Judges Britt and Vaughn concur.