Court Opinion

ID: 9851565
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:15:03.691678+00
Date Added: 2024-06-11T09:21:50.367540
License: Public Domain

Bobbitt, J.,
dissenting. The 'basis of my dissenting opinion, in which Justice Johnson concurred, in Terrace, Inc., v. Indemnity Co., 241 N.C. 473, 480, 85 S.E. 2d 677, is indicated by these quotations therefrom: (1) “A corporation is an entity, distinct from its stockholders, although one individual owns its entire stock, or all but qualifying shares held 'by directors. 1 Fletcher, Cyc. of Corporations, sec. 25; 18 C.J.S., Corporations, sec. 4.” (2) “But a corporation should not be permitted to serve as a device, instrument or agency to enable its beneficial owners, the stockholders, to accomplish by indirection that which their solemn covenant forbids.”
Upon rehearing, Terrace, Inc., v. Indemnity Co., 243 N.C. 595, 91 S.E. 2d 584, Justice Johnson and I concurred in result. The result was in accord with our original view. However, we did not agree that a corporation’s capacity to function as such in dealings with third parties automatically ceased when one or two individuals acquired all of the capital stock
The.present decision, as I understand it, is that the Pope Realty and Insurance Company could not function as a corporation after November 5,1954, the date on which the corporation purchased Mont-joy’s share; that from then until October 4, 1955, when Pope purchased Darnell’s stock, both Darnell and Pope were liable individually for obligations incurred in the corporate name; and that from October 4, 1955, Pope was individually liable for obligations incurred in the corporate name.
Plaintiff alleged that Pope Realty and Insurance Company was a duly chartered corporation; that, within its authorized corporate powers, it made the purchases from plaintiff; and that, because of its insolvency, a receiver for Pope Realty and Insurance Company was appointed March 19, 1956.
There is no question but that plaintiff understood its dealings were with Pope Realty and Insurance Company, a corporation. The discovery, upon the insolvency of the corporation, that it was in fact dealing with Pope as an individual, must come as a pleasant surprise.
In my opinion, (prior to G.S. 55-3.1 (d), 1957 Cumulative Supplement,) where a person deals with a duly chartered corporation which, in its dealings with third parties, conducts affairs as a corporation, the corporate status is at least that of de facto corporation, notwith*570standing less than three individuals acquire ownership of all of its corporate stock; and.such creditor should not be permitted to hold liable individuals with whom he has had no dealings as individuals. Surely, the corporate status as to third parties does not fade and revive from time to time by reason of transfers of stock reflecting stock ownership at times by three individuals and at other times by less than three individuals.
These further questions arise: If Pope Realty and Insurance Company is not a corporation, why the receivership? What are .the corporate assets? Who are the corporate creditors?