Court Opinion

ID: 9851564
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:15:03.688007+00
Date Added: 2024-06-11T09:21:50.366623
License: Public Domain

HiggiNS, J.
The only question in the case is the individual liability of the defendant Pope. The plaintiff sought to have him held liable for the whole account because of the alleged fraudulent acts on his part. The •court found the plaintiff did not rely on the false statements in extending credit. This finding is supported by the evidence. The court’s conclusion that Pope is not individually liable on the ground of fraud follows as a matter of course.
However, as to the three purchases made subsequent to November 4, 1954, another question arises. After that date the corporation had only two stockholders, Pope and Darnell. Under the existing law, the two could not function as a corporation. “Thus the concept that a corporation is a combination of three or more persons who may operate as a legal entity when chartered so to dio threads its way through the cited and practically every other section of our law on corporations.” Park Terrace, Inc. v. Indemnity Co., 243 N.C. 595, 91 S.E. 2d 584. When Pope and Darnell became the only stockholders and directors they could no longer operate as a corporation, but only as individuals. They were each, therefore, individually liable for the debts incurred 'by them in the business. Consequently both Pope and Darnell were jointly and severally liable for the three package deliveries made subsequent to November 4, 1954. Under the court’s findings of fact, it should have been concluded as a matter of law that the plaintiff is entitled to recover from Charles A. Pope, Jr., individually, as follows: $5,085.82, with interest from August 5, 1955; $385.68, with interest from June 1, 1955; and $295.98, with interest from May 1, 1955. The legal liability of Pope to the plaintiff .attached at the time of the purchase and delivery of the three items above described.
Since the decision in the Park Terrace case, the General Assembly has made sweeping changes in the business corporation law of the State. The changes are now codified in Chapter 55 of the 1957 Cumulative Supplement. Section G.S. 55-3.1 provides, among other things, that fewer than three persons may acquire all the capital stock of a corporation without impairing its capacity to act as a corporation: “(d) If any corporation or purported corporation might have been considered dormant or inactive solely in consequence of the acquisi*568tion heretofore of all its shares by one or by two persons, such-, corporation or purported corporation is hereby declared to have had uninterrupted existence and to have possessed uninterrupted capacity to act as a corporation.”
The defendant Pope contends the foregoing statute relieves him from individual liability for the purchases which he made for the corporation when he and Darnell were its only stockholders. The answer is that when plaintiff dealt with Pope the law of this State as declared in the Park Terrace case made him individually liable for the debts he thus created. The plaintiff had a vested right in that liability. The liability attached in 1955. The Legislature, in 1957, could not take it away without violating the obligation of the contract. U. S. Constitution, Article I, Section 10; N. C. Constitution, Article I, Section 17. “Indeed, in this State a statute will not be given-retroactive effect when such construction would interfere with vested rights, or with judgments already entered.” Wilson v. Anderson, 232 N.C. 212, 59 S.E. 2d 836.
■“Indeed, upon reading and analyzing the statutes relied on by the defendants as authority for the corporate amendment - - - and reading therewith the pertinent -provisions of the charter, we find nothing in either inconsistent with the view that they are intended to be prospective with respect to dividends to be earned upon the stock. Whether the law itself makes the amendment, or as now, confers the power of amendment to the corporation, it will not be construed to operate retrospectively to the detriment of rights already vested under the old charter. ... A contrary construction of the statute, giving authority to retrospective provisions of the charter amendment under consideration, would do violence to the Constitution and would compel us to view the proposed action as the taking of property without due process of law.” Patterson v. Hosiery Mills, 214 N.C. 806, 200 S.E. 906.
“It is settled, that the Legislature cannot pass any declaratory law or act declaring what the law was before its passage, so as to give it any binding weight with the courts. A retrospective statute, affecting or changing vested rights, is founded on unconstitutional principles and consequently void.” Bank v. Derby, 218 N.C. 653, 12 S.E. 2d 260; Booth v. Hairston, 193 N.C. 278, 136 S.E. 879; Houston v. Bogle, 32 N.C. 496; Arnett v. Wanett, 28 N.C. 41.
The cause will be remanded to the Superior Court of Durham County where judgment will be entered upon the findings of fact already in the record, charging the defendant Charles A. Pope, Jr., with individual liability for the three purchases made from the plaintiff *569during the time the Pope Realty & Insurance Company had only two stockholders and directors.
Remanded for Modification of Judgment.