State Ex Rel. North Carolina Corp. Commission v. Harnett County Trust Co.

134 S.E. 656, 192 N.C. 246, 1926 N.C. LEXIS 272

• Court: Supreme Court of North Carolina
• Decided: October 6, 1926
• Status: Published

Opinion

BeogdeN, J.

Does the complaint state a cause of action against the defendant ?

It is an accepted rule of law and one established by the overwhelming weight of authority that “it is the purpose of The Code system of pleading, which prevails with us, to have actions tried upon their merits, and to that end pleadings are construed liberally, every intendment is adopted in behalf of the pleader, and a complaint cannot be overthrown by a demurrer unless it be wholly insufficient. If in any portion of it, or to any extent, it presents facts sufficient to constitute a cause of action, or if facts sufficient for that purpose can be fairly gathered from it, the pleading will stand, however inartificially it may have been drawn or however uncertain, defective, or redundant may be its statements, for, contrary to the common-law rule, every reasonable intendment and presumption must be made in favor of the pleader. It must be fatally defective before it will be rejected as insufficient.” Hoke v. Glenn, 167 N. C., 594; Brewer v. Wynne, 154 N. C., 472.

It is also universally held in this jurisdiction that a defendant by demurring admits as true every material fact alleged in the complaint properly pleaded. Trust Co. v. Wilson, 182 N. C., 166.

It was alleged in the complaint that the defendant was the solicitor of the bank at the time it was closed by the Corporation Commission. There is no allegation as to what authority he had as solicitor or what duties were imposed by said relationship, but there is further allegation as follows: “That the said B. P. Gentry, O. L. Johnson, W. L. Sutton, E. L. Steele, J. M. Shaw, B. A. Parker, J. 0. Sutton and J. E. Baggett, were at said date and at the times hereinafter set out the active officers, loan and finance committee of said trust company, controlling and operating said hank and dominating the affairs thereof.”

It was further alleged, among other things that “said officers having from time to time used the funds and property of the said Harnett County Trust Company in negligently and wrongfully making financial transactions with other banks and individuals under such circumstances as amounted to bad faith and misfeasance and malfeasance of their duty which they owed to the Harnett County Trust Company, its creditors, depositors and stockholders.”

It is further alleged that “the aforesaid B. P. Gentry, W. L. Sutton, J. M. Shaw, O. L. Johnson, H. L. Steele, J. E. Baggett, J. 0. Sutton and B. A. Parker, while acting as officers and directors, and the loan and finance committee of tbe Harnett County Trust Company, participated in and bad knowledge of tbe aforesaid wrongful, unlawful and negligent conduct of tbe business affairs of tbe aforesaid Harnett County Trust Co.”

Tbe demurrer therefore admits :

1. Tbat tbe defendant was one of tbe active officers controlling and operating said bank and dominating tbe affairs thereof.

2. Tbat said officers participated in making financial transactions with other banks and individuals under circumstances amounting to bad faith.

3. Tbat tbe defendants were acting as officers and directors in tbe invalid transactions complained of.

Directors and managing officers of a corporation are deemed by tbe law to be trustees, or quasi trustees, in respect to tbe performance of their official duties incident to corporate management and are therefore liable for either wilful or negligent failure to perform their official duties. Therefore, if there is a loss of tbe corporation’s assets, caused and brought about by tbe negligent failure of its officers to perform their duties, tbe corporation, or its receiver, in case of insolvency, can maintain an action therefor. McIver v. Hardware Co., 144 N. C., 478; Whitlock v. Alexander, 160 N. C., 465; Besseliew v. Brown, 177 N. C., 65. However, tbe officers of a corporation are not, as a rule, responsible for mere errors of judgment, nor for slight omissions from which tbe loss complained of could not have reasonably resulted. Fisher v. Fisher, 170 N. C., 378; Patton v. Farmer, 87 N. C., 337.

Upon tbe whole record, we are of tbe opinion tbat tbe demurrer should have been overruled.

Reversed.