Case Name: C. F. HARVEY v. C. OETTINGER et al.
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1927-11-09
Citations: 194 N.C. 483
Docket Number: 
Parties: C. F. HARVEY v. C. OETTINGER et al.
Judges: 
Reporter: North Carolina Reports
Volume: 194
Pages: 483–488

Head Matter:
C. F. HARVEY v. C. OETTINGER et al.
(Filed 9 November, 1927.)
1. Equity — Contribution—Bills and Notes — Endorsement.
Where one of several endorsers on a note has been legally required to pay, and does pay the same, he is entitled to contribution from the other endorsers under the principle that equality is equity, among those standing in the same situation.
2. Bills and Notes — Negotiable Instruments — Corporations—Contribution —Endorsers—Equity—Receivers—Parties.
Where one of the endorsers of a note of a corporation taking over the business of another has been legally required to pay the note, and sues his coendorsers for contribution, and the answer alleges that the plaintiff had knowingly and fraudulently concealed the financial condition of the purchased corporation, and that he had failed under his agreement to properly attend to the financing of the purchasing corporation, and that the defendant’s endorsement was thus procured by the plaintiff’s fraud: SelA, a sufficient defense is alleged to raise the issue for the jury, and overthrow the plaintiff’s demurrer; and the position is untenable that the receiver of the corporation making the note and since declared insolvent can only maintain the action in his representative capacity.
Connor, J., dissenting.
Appeal by defendants, H. E. Moseley, L. L. Oettinger, F. 0. Dunn and Mrs. Myrtie A. Tull, executrix, from Sinclair, J., at May Term, 1927, of LeNOie.
Civil action for contribution. Plaintiff and defendants, being stock-Folders in tbe Kinston Knitting Company, endorsed for accommodation, certain notes of said company, wbicb were paid by plaintiff after default on tbe part of tbe principal and demand for payment refused by eacb of tbe defendants, coendorsers witb plaintiff. Plaintiff sues for contribution.
Tbe defendants, H. E. Moseley, L. L. Oettinger, F. 0. Dunn and Mrs. Myrtie A. Tull, executrix of tbe estate of Henry Tull, deceased, demurred ore tenus to tbe complaint, but tbis was overruled. Tbey tben answered, setting out in detail tbe circumstances under wbicb tbe transactions occurred, and alleging tbat tbe defendants were induced to endorse tbe notes in question under a misapprehension of tbe facts and because of tbe plaintiff’s promise “to take charge of and manage all tbe affairs of the’Kinston Knitting Company, and by express agreement to see tbat it was supplied witb credit in order to carry on its operations,” wbicb said promise and agreement tbe plaintiff wrongfully, wilfully and negligently refused to carry out; and further, it is alleged, tbat at tbe time of tbe endorsement of said notes tbe plaintiff wrongfully and in violation of tbe duty wbicb be owed to tbe defendants, withheld from them material and important facts bearing upon tbe condition of tbe Orion Knitting Mills, wbicb tbe Kinston Knitting Company was organized to take over, and that tbe suppression of such facts amounted to a legal fraud upon tbe rights of tbe defendants. This alleged wrongful and fraudulent conduct of plaintiff is pleaded in bar of bis right to recover in tbe present action.
Tbe trial court, being of opinion that tbe matters set up by tbe answering defendants were not sufficient to defeat a recovery, rendered judgment in favor of tbe plaintiff on tbe pleadings. Tbe answering defendants appeal, assigning errors.
Cowper, WhitcJcer & Allen'and Connor & Hill for plaintiff.
Bouse & Bouse for defendants.

Opinion:
Staoy, C. J.,
after stating tbe case: Tbe demurrer, interposed by tbe appealing defendants was properly overruled. But from a careful perusal of tbe record, we are convinced that issuable matters have been set up by tbe answering defendants in their pleadings, and that appropriate issues should be submitted to a jury for a proper determination of tbe controversy. Barnes v. Trust Co., ante, 371.
If tbe answering defendants have evidence to support tbe allegation that they endorsed tbe notes in question under a misapprehension of tbe facts, caused by a wrongful suppression of information on tbe part of tbe plaintiff, this would carry tbe case to tbe jury. Contribution arises out of tbe principle that "equality is equity" among those standing in tbe same situation. Moore v. Moore, 11 N. C., 358. Tbe defendants, by their allegations, deny that they stand in tbe same legal position with tbe plaintiff.
Again, equity will not aid tbe plaintiff, if tbe losses in question, as alleged by tbe defendants, were occasioned by bis own wrongful act in wilfully refusing to carry out bis promise to finance tbe corporation, and such promise was a material inducement to tbe defendants to endorse tbe notes of tbe Kinston Knitting Company. But this is only an allegation, and it is denied. Tbe truth of tbe matter can be determined by a jury.
We do not regard tbe principle announced in Douglass v. Dawson, 190 N. C., 458, with respect to tbe right of tbe receiver of an insolvent corporation to maintain an action for a wrong done tbe corporation as distinguished from tbe right of a creditor to maintain an action for a wrong done to him personally, controlling on tbe facts of tbe present record. Tbe action is for contribution, wbicb could arise only upon payment by tbe plaintiff, and tbis seems to bave been made after tbe appointment of tbe receiver. 6 R. C. L., 1036; 13 C. J., 821. But however tbis may be, tbe defendants plead personal losses directly induced by plaintiff's alleged wrongs, irrespective of tbe injuries alleged to bave been sustained by tbe corporation. These allegations, if sustained, would seem to be sufficient at least to defeat plaintiff's action for contribution.
There was error in rendering judgment on tbe pleadings as against tbe answering defendants.
Error.