Court Opinion

ID: 9781273
Source: CourtListenerOpinion
Date Created: 2023-08-30 16:27:53.813116+00
Date Added: 2024-06-11T07:34:23.149490
License: Public Domain

THIGPEN, Judge

dissenting.

I dissent from the majority’s determination that in this case there is no genuine issue of material fact because Frances Diffee acted in a defacto capacity as Plaintiff corporation’s president when she terminated Defendant’s lease.
The majority opinion holds that Frances Diffee was a de facto officer of Plaintiff corporation. While I agree with this conclusion, I do not believe this holding is dispositive of the case. I believe the analysis involves a two-step process, and the majority opinion only resolves one issue in the analysis. The first issue is whether Frances Diffee is an officer of Plaintiff corporation. This issue has been resolved. However, the second issue is whether Frances Diffee was authorized as an officer of Plaintiff corporation to terminate Defendant’s lease. On this issue, I believe there continues to be an issue of material fact.
*158Moreover, I am concerned that the use of the language in the opinion that the “validity of an act [of a de facto officer] cannot be collaterally impeached” is language inapplicable to the facts of this case and should not be read for the general proposition that the acts of a defacto officer of a corporation cannot be contested.
Lastly, I believe the affidavit of Frances Diffee and the Articles of Incorporation of Plaintiff corporation are contradictory and thus create a genuine issue of material fact on the issue of whether Frances Diffee had the authority to terminate Defendant’s lease.
“It is axiomatic that the party moving for summary judgment has the burden of establishing the absence of any triable issue of fact.” Henderson v. Provident Life & Acci. Ins. Co., 62 N.C. App. 476, 479, 303 S.E.2d 211, 213 (1983). Plaintiff corporation moved for summary judgment in the present case. Defendant contended “[t]here have been no ... directors meetings and no appointment of officers to conduct the business of the corporation^]” ultimately arguing Francis Diffee was without authority to act on behalf of Plaintiff corporation to terminate Defendant’s lease.
“A corporation can act only through its agents, which include its corporate officers.” Ellison v. Alexander, _ N.C. App. _, _, 700 S.E.2d 102, 111 (2010) (quotation omitted); see also Raper v. McCrory-McLellan Corp., 259 N.C. 199, 205, 130 S.E.2d 281, 285 (1963) (stating, “ [i]t is elementary knowledge that a corporation in its relations to the public is represented and can act only by and through its duly authorized officers and agents”). It has been established that officers of private corporations may be defacto officers. See Lowder v. All Star Mills, Inc., 75 N.C. App. 233, 241, 330 S.E.2d 649, 654 (1985); Kinesis Adver., Inc. v. Hill, 187 N.C. App. 1, 16, 652 S.E.2d 284, 295 (2007). Arguably, officers of nonprofit corporations may also be de facto officers. Russell M. Robinson, II, Robinson on North Carolina Corporation Law § 33.06 (2009) (stating “the statutory provisions relating to the identity, appointment, functions, resignation, removal, and contract rights of officers are virtually identical” to the statutes governing for profit corporations).
In the present case, even though Frances Diffee is a defacto officer, Frances Diffee does not thereby necessarily have the authority to terminate Defendant’s lease. With regard to officers of a nonprofit corporation, N.C. Gen. Stat. § 55A-8-41 states “[e]ach officer has the authority and duties set forth in the bylaws or, to the extent consistent with the bylaws, the authority and duties prescribed by the board *159of directors or by direction of an officer authorized by the board of directors to prescribe the authority and duties of other officers.” In this case, the bylaws are not part of the evidence of record, the Articles of Incorporation shed no light on the authority of the office of president, and the record is devoid of evidence that any board of directors or officer of Plaintiff corporation assigned certain duties and authorities to the office of president. Moreover, there is no evidence of record that Frances Diffee has ever, in the past, terminated a lease on behalf of Plaintiff corporation in her de facto capacity. In these circumstances, a party should be able to contest the authority of an officer to act on behalf of the corporation. However, the majority’s holding that the “validity of an act cannot be collaterally impeached,” if applied in the context of this case, could be read for the proposition that the authority of a de facto officer to take an action on behalf of a corporation could never be contested. This, I believe, is incorrect.
Secondly, I believe the majority’s reliance on A. A. v. Johnston, 70 N.C. 348, 350 (1874) for the proposition that “validity of the acts of de facto officers cannot be collaterally impeached” is misplaced because Johnston is distinguishable from the present case. In Johnston, one Board of Directors of a corporation filed suit against another Board of Directors, which claimed to be the legally appointed Directors of the same corporation. The holding in Johnston applies to cases in which the validity of an election or appointment is being challenged — essentially, the “right to an office,” Johnston, 70 N.C. at 350 (Emphasis in original). However, here, Defendant does not “deny[] the rightful existence of the corporation” or “impeachf] the title” of Frances Diffee as de jure or de facto president. See id. Rather, Defendant challenges Frances Diffee’s authority to terminate their lease on behalf of Plaintiff corporation. This, I believe Defendant may do, not via a proceeding of quo warranto, but pursuant to N.C. Gen. Stat. § 1A-1, Rule 9(a), which provides the following:
Any party suing in any representative capacity shall make an affirmative averment showing his capacity and authority to sue. When a party desires to raise an issue as to the legal existence of any party or the capacity of any party to sue or be sued or the authority of a party to sue or be sued in a representative capacity, he shall do so by specific negative averment, which shall include such supporting particulars as are peculiarly within the pleader’s knowledge.
N.C. Gen. Stat. § 1A-1, Rule 9(a) (2009) (Emphasis added).
*160Finally, I believe a contradiction between the affidavit of Frances Diffee and Plaintiff corporation’s Articles of Incorporation creates a genuine issue of material fact. Frances Diffee averred that “as President of [Plaintiff corporation] she is authorized to conduct banking business and to carry on the everyday business of [Plaintiff corporation] pursuant to its Articles of Incorporation^]” This authorization, Frances Diffee avers, includes the authority to “initiate the termination of the lease to [Defendant].” However, the Articles of Incorporation make no mention of the authority of particular members, officers or agents to perform “banking business” or “everyday business” on behalf of Plaintiff corporation. Neither do the Articles of Incorporation mention the office of president.1 See Gilreath v. N.C. HHS, 177 N.C. App. 499, 501, 629 S.E.2d 293, 295 (2006) (Exhibits submitted in support of affidavits may be considered on summary judgment). Since the affidavit of Frances Diffee and the attached Articles of Incorporation were the only evidence offered by Plaintiff corporation on the issue of the authority of Frances Diffee to terminate Defendant’s lease,2 I do not believe such contradictory evidence satisfied Plaintiff corporation’s burden of establishing the absence of a triable issue of fact.
For the foregoing reasons, I respectfully dissent.

. Although “a nonmovant may not generate a conflict simply by filing an affidavit contradicting his own sworn testimony where the only issue raised is credibility],]” Allstate Ins. Co. v. Lahoud, 167 N.C. App. 205, 211, 605 S.E.2d 180, 185 (2004), aff’d per curiam, 359 N.C. 628, 614 S.E.2d 304 (2005), “[t]he party moving for summary judgment has the burden of showing the lack of any triable issue of fact; his papers are carefully scrutinized and those of the non-movant are indulgently regarded.” Lessard v. Lessard, 77 N.C. App. 97, 99, 334 S.E.2d 475, 476 (1985). “If the evidentiary materials filed by the parties disclose the existence of a genuine issue of material fact, summary judgment must be denied.” Id.

. I recognize that the affidavit of Roberta F. Justice, a notary public at First Citizens Bank and Trust Company, provided evidence that Frances Diffee was an “officer!]” of Plaintiff corporation and had “signing authority . . . according to bank records.” However, evidence of “signing authority” for banking purposes does not equate authority to terminate Defendant’s lease.