Palomino Mills, Inc. v. Davidson Mills Corp.

52 S.E.2d 915, 230 N.C. 286, 1949 N.C. LEXIS 622

• Court: Supreme Court of North Carolina
• Decided: April 20, 1949
• Status: Published

Opinion

WinbobNE, J.

The rule by which petitions to remove an action from the State court to the District Court of the United States for trial on the ground of an alleged fraudulent joinder of a resident defendant is aptly stated in the case of Crisp v. Fibre Co., 193 N.C. 77, 136 S.E. 238. It is there held “that when the motion to remove is made on the ground of an alleged fraudulent joinder, the petitioner is entitled to have the State Court decide the question on the face of the record, taking, for this purpose, the allegations of the petition to be true. To warrant a removal in such case, however, the facts alleged in the petition must lead unerringly to the conclusion, or rightly engender and compel the conclusion, as a matter of law, aside from the deductions of the pleader, that the joinder is a fraudulent one in law and made without right,” citing Fore v. Tanning Co., 175 N.C. 583, 96 S.E. 48.

In this connection, in treating the subject in the Crisp case, it is also declared that “if the plaintiff has a right to sue one or more resident defendants jointly with the non-resident defendant, and, even though such' resident defendant be joined solely for the purpose of defeating a removal, still such joinder cannot be said to be fraudulent, for the law will not give an absolute right and then declare its use or exercise a fraud. When th’é liability of the defendants is joint, as well as several, the plaintiff may/, at his election, sue both, and no motive can make his choice a fraud,” citing R. R. v. Sheegog, 215 U.S. 308. See also Chesapeake & Ohio R. Co. v. Dixon, 179 U.S. 131, 45 L. Ed., 121, 21 S. Ct. 67, and Annotation 98 A.L.R. 1057.

In the light of these principles, does it appear on the face of the record in the case in hand, taking, for this purpose, the allegations of the petition to be true, that the facts so alleged “lead unerringly to the conclusion, or rightly engender and compel the conclusion, as a matter of law, aside from the deductions of the pleader,” that the joinder of C. W. Byrd, a resident of this State, as a defendant, is a fraudulent one in law and made without right \ The effect of the ruling of the court below is that such joinder was not fraudulent in law and was not made without right. With this ruling we are in agreement. It appears upon the face of the record that plaintiff’s alleged cause of action arose out of a transaction between it and petitioner corporation by which petitioner sold to plaintiff certain personal property specifically described in an exhibit to a certain bill of sale, dated 5 March, 1947, executed in the name of petitioner corporation by C. W. Byrd, president, attested by its secretary and under its corporate seal; and that plaintiff alleges that on 5 March, 1947, defendants, C.W. Byrd and two others, in order to induce it -tp purchase the bill of goods set out in the said exhibit, made false and fraudulent representations in respect to certain items of the personal property, upon which representations it relied to its damage. This states a cause of action in tort against O. W. Byrd, as well as against the corporate defendant. See Minnis v. Sharpe, 198 N.C. 364, 151 S.E. 735.

■ In the Minnis case, quoting from Fletcher, Cyc. Oorp., this Court declared that “it is thoroughly well settled that a man is personally liable for all torts committed by him, consisting in misfeasance, as fraud,.conversion, acts done negligently, etc., notwithstanding he may have acted as the agent or under directions of another”; that “this is true to the full extent as to torts committed by officers or agents of a corporation in the management of its affairs”; that “the fact that the circumstances are such as to render the corporation liable is altogether immaterial”; that “the person injured may hold either liable, and generally he may hold both as joint tort-feasors”; that “corporate officers are liable for their torts, although committed when acting officially”; and that the officers “are liable for their torts regardless of whether the corporation is liable.” But that in order to make an officer liable for the wrong of the corporation, he must be a participant in the wrongful act.

Moreover, taking the facts alleged in the petition to be true, that is, that all the negotiations leading up to the sales agreement of 31 January, 1947, were conducted by someone other than C. W. Bryd, and that he knew nothing of the proposed sale until the board of directors of the petitioner corporation directed him, in his capacity as its president, to sign the bill of sale, it apears from the petition that Byrd was both a director and the president of petitioner corporation, and that at the closing of the transaction he, as such president, signed the bill of sale in which there appeared the specific item of personal property as to which plaintiff alleges there was a false and fraudulent representation.' Thus it appears that he as president actually participated in the closing of the transaction. And, since it is the law in this State that ordinarily the president of a corporation is ex vi termini its head and general agent, Phillips v. Land Co., 176 N.C. 514, 97 S.E. 417; Banking & Trust Go. v. Transit Lines, 198 N.C. 675, 153 S.E. 158; Warren v. Bottling Co., 204 N.C. 288, 168 S.E. 226, it would seem to follow that at the time Byrd signed the bill of sale he must have had knowledge of what the merchandise inventories of the petitioner corporation consisted at the close of business five days prior thereto.

Indeed, for the establishment of actionable fraud it is not always required that a false representation should be knowingly made. It is recognized in this State that, under certain conditions and circumstances, if a party to a bargain avers the existence of a material fact recklessly, or affirms its existence positively, when he is consciously ignorant whether it be true or false, he may be held responsible for a falsehood; and this doctrine is especially applicable when the parties to a bargain are not upon equal terms with reference to the representation, the one, for instance, being under a duty to investigate, and in a position to know the truth, and the other relying and having reasonable ground to rely upon the statements as imparting verity. Whitehurst v. Ins. Co., 149 N.C. 273, 62 S.E. 1067, and authorities there cited. See also Unitype Co. v. Ashcraft, 155 N.C. 63, 71 S.E. 61; Robertson v. Halton, 156 N.C. 215, 72 S.E. 316; Ward v. Heath, 222 N.C. 470, 24 S.E. 2d 5.

For reasons here stated, the record in the case in hand fails to disclose a right of removal. Hence the judgment below is

Affirmed.