William M. Lloyd & Co. v. Poythress

116 S.E. 584 | N.C. | 1923

Lead Opinion

*182Stacy, J.

Defendant objected to the introduction of the account and affidavit chiefly upon the ground that the affiant, being treasurer of the plaintiff corporation was disqualified to testify to the matters stated in the affidavit under C. S., 1795. In an action brought by a corporation against the executor or administrator of a deceased person, it has been held with us that an officer and stockholder of the plaintiff corporation is debarred from giving evidence of personal transactions or communications with the deceased, under the provisions of our statute disqualifying parties and persons interested in the event from being examined as witnesses in their own behalf. Banking Co. v. Walker, 121 N. C., 115. And this is in accord with the great weight of authority in other jurisdictions. 28 R. C. L., 508. See, also, note 9, Ann. Cas., p. 183, which contains a valuable collection of the authorities on the subject. At common law, a stockholder, being interested in the évent of the litigation, was not allowed to testify generally in favor of the corporation. C. H. Albers Commission Co. v. Sessel, 87 Ill. App., 378, affirmed 193 Ill., 153; 61 N. E., 1075.

The defendant contends that under our statutes a treasurer of a business corporation is presumably a stockholder, and therefore interested in the result of an action to which the corporation is a party. C. S., 1144, provides that the directors of every corporation issuing stock shall be, at all times, bona fide stockholders of said corporation. C. S., 1145, provides that every corporation shall have a president, secretary, and treasurer, to be chosen either by the directors or by the stockholders as the by-laws may direct. It is further provided that the president shall be chosen from among the directors. From this it follows that the president must necessarily be a stockholder. This latter section also provides: “Any two of these offices may be held by the same person, if the body electing so determine.” If any two of these offices may be held by the same person, it is the defendant’s contention that presumably each officer possesses the necessary qualifications to fill any two of said offices. A treasurer or a secretary could not be elected to the office of president unless he be a stockholder. Hence, a treasurer, who is not a stockholder, could not hold the two offices of president and treasurer of the corporation. Defendant says “any two” means an indeterminate number of combinations that may be made from all, with none excluded. If a treasurer be not a stockholder, he would not be qualified to hold the office of president, and while he might be elected secretary and treasurer, yet he would not be qualified to hold any two of said offices. For the same person to be able to hold any two of these offices at one and the same time apparently requires that each officer shall be qualified to hold any one or more of said offices. It is conceded by the defendant that this does not follow as an absolute necessity — only as a presumption or as a *183It was admitted on the bearing that the judgment of L. W. Moore against William Wimes was regular in all respects; that the execution sale was properly and regularly made; that the deeds from the sheriff to William Struthers and from William Struthers and wife to Eena Peterson were properly executed, delivered, and registered; and that said deeds purport to convey the property described in the complaint by proper metes and bounds. Upon this admission, and under all the evidence, we think bis Honor should have instructed the jury that Eena Peterson was the rightful owner of the property and entitled to a dereasonable inference is ber contention — for the statute may be construed to mean tbat the offices of president and secretary, or the offices of president and treasurer, may be beld by the same person if the electing body so direct, provided be be a stockholder, while the office of secretary, or the office of treasurer, or the offices of secretary and treasurer may be beld by one other than a stockholder. In electing a secretary, or a treasurer, the directors or the stockholders need not then be concerned with the qualifications of a president, but if they later wish to combine the offices of president and secretary, or the offices- of president and treasurer, the same person then occupying the office of secretary, or the office of treasurer, could not be given the additional office of president unless be be a stockholder. It is the contention of the defendant tbat the treasurer or the secretary of a corporation, in order to be able to bold any two of the offices mentioned in the statute, should be qualified to bold the office of president. To do this, be must be a stockholder. Hence, the defendant concludes tbat, under our decisions, such an officer is presumably interested in the event of the action. "Without deciding or expressing any opinion as to the merits of this contention, which is recited to show the basis of defendant’s argument, we pass to the defendant’s next position which we are constrained to believe should be resolved in ber favor.ree

It was held in Nall v. Kelly, 169 N. C., 717, tbat an affiant who verifies an account which is to be received on the bearing and taken as prima facie evidence of its correctness under the provisions of C. S., 1789, must be regarded and dealt with as a witness fro tanto, and, to such an extent said affiant is subject to the qualifications and restrictions of other witnesses. If the person who makes the affidavit be not qualified as a witness to testify to the matters and things contained therein, in such case the account and affidavit, in the form as offered, should not be received in evidence.

The statute permits an ex forte affidavit to be offered as prima facie evidence, of the correctness of the account, but we do not think it was the intention of the Legislature to permit one to speak by affidavit who otherwise would be incompetent to testify. Nor do we think it-was the purpose of the Legislature to deprive the adverse party of bis right to question the admissibility of such evidence. When the competency of a witness, or the admissibility of evidence, is in question, ordinarily the party opposing is entitled, as a matter of right, to a preliminary cross-examination of the witness whose competency is challenged or the admissibility of whose testimony is in dispute. Woodworth et al. v. Brooklyn Elevated Railroad Co., 48 N. Y. S., 80; Trussell v. Scarlett, 18 Fed., 214, and note; Abb. Tr. Brief, pp. 126 and 245. Here the defendant is deprived of this privilege; no notice is given as to whose affidavit will be *184offered and no opportunity is afforded tbe defendant for investigation. But it is said that the burden is on the party objecting to the competency of a witness, or to the admissibility of his testimony, to show his incompetency or the inadmissibility of his evidence. This is so, as a general rule, where the validity of the objection is not apparent (Standley v. Moss, 114 Ill. App., 612; 1 Greenleaf on Evidence, p. 435, sec. 390); but the basis of the present objection, to wit, the affiant’s alleged interest in the event of the action, is a matter peculiarly within the knowledge of the plaintiff, and the defendant has had no opportunity to cross-examine the witness or to offer evidence of his incompetency or the inadmissibility of his affidavit. Indeed, it would be well-nigh impossible for the defendant to obtain such information except from the plaintiff or its witnesses; and it is a rule of practically universal acceptance that where a particular fact, necessary to be proved, rests peculiarly within the knowledge of a party, upon him the law casts the burden of proving such fact. Hosiery Co. v. Express Co., 184 N. C., 478.

We have held that C. S., 1789, appearing as a section on the law of evidence, should be construed in subordination to C. S., 1795, under the principle announced in Cecil v. High Point, 165 N. C., 431, and other similar decisions; and in cases presenting the question, however meritorious a particular demand may be, when it involves a personal transaction or communication with a deceased person, the account must be established by proper evidence; and under the statute, as now drawn, an ex parte affidavit of the living should not be admitted over objection, unless it appear upon the face of the affidavit itself, or by evidence aliunde, that the person making the affidavit is not debarred from doing so by'the provisions of C. S., 1795. Nall v. Kelly, 169 N. C., 717. Yiewing the case in its larger aspect, we think this position is in keeping with a wise public policy and the intent of the Legislature as expressed in the two statutes now under consideration. The defendant’s objection to the proof of account as offered should have been sustained.

We will not go farther and allow the defendant’s motion for judgment as of nonsuit, at the present time; because, upon another hearing, the plaintiff may be able to make good all the allegations of its complaint. But for the error, as indicated, a new trial must be awarded, and it is so ordered.

New trial.

Adams, J., concurs in result only.





Dissenting Opinion

WalKbb, J.,

dissenting: Being unable to concur in the opinion of the Court in this case, I will state briefly the reasons and grounds of my dissent. It does not appear in this case that A. J. Evans, who made the *185affidavit as to tbe correctness of the account upon which the suit was brought, had any interest therein, or could in the least be affected by the result of the action. He is not within the terms or intent of the statute disqualifying persons as witnesses from testifying against the estate of deceased parties, that is, against executors or administrators of such parties, as to personal transactions or communications with them. So far as appears, Evans will not lose or gain anything however the .action may terminate. He is but treasurer of the company bringing this action, and I know of no legal principle by which if the plaintiff prevails and gets a judgment he will be entitled to any part of the recovery, or how, if the plaintiff is cast in the suit, he will lose anything. He would certainly not be liable as treasurer, or otherwise, even for any part of the cost.

The case cited by the Court in its opinion (Banking Co. v. Walker, 121 N. C., 115) does not begin to sustain the contrary view of The Code, sec. 590. In that case Justice Montgomery, who delivered the opinion of the Court, is careful to state and to repeat that the witness, who was the cashier of the plaintiff bank, and whose testimony was excluded because of his interest in the event of the action, was not only cashier of the plaintiff bank, hut a stockholder, and it is perfectly apparent that the ruling of the Court excluding his testimony was based on the latter fact alone. So that Banking Co. v. Walker, supra, so much relied on by the Court to support its position, wholly fails to do so.

The reasoning by which the Court comes to the conclusion that because the president of a corporation is required to be a stockholder, and that any two offices of the corporation may be held by the same person, it follows that a treasurer may be a stockholder, and this being so, it follows that the presumption must be that he is one, but this is a complete non sequitior. Such assertion does not logically or legally lead to the conclusion reached by the Court. The president must be a stockholder in order to hold that office, but this does not mean, or begin to prove, that if the company consolidates two offices, president and treasurer, the latter must also be a stockholder, because there is no restriction on the company to associate a nonstockholding officer with one who owns no stock, and is not required to own any. It seems to be conceded, or, at least, should be, that the officer making the affidavit of the correctness of the account must be a stockholder in order to be interested in the event within the meaning of the statute. The mere fact that he is an officer does not in any sense make him interested in the event of the action, for no judgment can be entered for him or against him that will in the least affect his personal interests, but that is not enough. He may have a sort of sentimental interest, if that; but that is not enough, and •that is certainly all that he can have. And,'again, I am compelled to *186say that the argument by wbicb the Court reaches the conclusion that tbis power to unite two offices disqualifies the treasurer, wbo bas no stock,, wben joined witb the president, is also a complete non sequitur, and surely the conclusion cannot be warranted on the ground assumed. I bave referred above to the conclusion of the Court in tbis branch of the case as being a non sequitur, and it is rightly so denominated, wben tbis part of the opinion is considered witb what immediately follows, because the last part and the conclusion are inseparably connected witb the first part, and, in fact, are unmistakably based upon it, but neither can stand without the help and assistance of the other.

The last proposition is clearly untenable. the Court says: “the statute permits an ex parte affidavit to be offered as prima facie evidence of the correctness of the account, but we do not think it was the intention of the Legislature to permit one to speak by affidavit wbo otherwise would be incompetent to testify. Nor do we think it was the purpose-of the Legislature to deprive the adverse x>arty of bis right to question the admissibility of such evidence.” In tbis connection we may safely concede the correctness of the proposition stated there, that the Legislature did not intend to permit one to speak by affidavit wbo is incompetent to testify, nor to withdraw the right of the adverse party to make proper objection to the admission of incompetent evidence. But one of the conclusive answers is that the Legislature bas done no such thing. the defendant bas the right and the opportunity, by proper procedure, to-make due objection to any incompetent testimony. But that does not mean that be bas the right, or should bave it, to place the burden on the party wbo offers testimony to show primarily that it is competent, for tbis would violate every rule of evidence we bave ever beard of, as testimony offered, at least such as is apparently competent, must be admitted unless proper objection is made to it and supported by the facts, wbicb every rule as to the burden of proof requires should rest upon the objector, be wbo is the actor and affirms and not be wbo refutes, denies,, or is silent, and occupies merely a defensive position. If it be true that' the objector is entitled to demand the presence of the witness so that be may conduct a preliminary inquiry and cross-examine him, as to his competency, it is perfectly clear that the statute would be practically nullified, or come to naught, as that was what the law was intended to avoid. the extreme position taken by the Court in tbis respect would require all persons having knowledge of the facts, or likely to bave such knowledge, to be present wben the affidavit is offered, that they be examined as to its admissibility. Tbis would, of course, be in violation of the spirit and purpose of the statute, and entirely destroy the benefits intended to be conferred by it, besides, ignoring every known rule of *187evidence upon tbe subject. It would, besides, require tbe party offering tbe evidence to do precisely wbat the statute was intended to prevent.

The principle of Hosiery Co. v. Express Co., 184 N. C., 478, may be easily conceded, and yet the argument and conclusion drawn from tbat principle is this, tbat wben a particular fact, necessary to be proved, lies peculiarly witbin the knowledge of one of the parties to the controversy, upon him is cast the burden of proving such fact. But I do not believe it will be asserted, at least not successfully so, nor tbat we have ever been taught, tbat where one party offers evidence, be must go further and show tbat bis evidence is competent before it will be beard. Tbat is going entirely too far, and has no authority to support it.

But tbe statute simply requires tbat an affidavit, such as was made in tbis case, shall be sufficient, without anything else, to constitute a prima facie case, and wben we require more to be done, we are simply legislating and not construing tbe statute, or declaring wbat tbe law is. If tbe law is wrong or unjust, or inadequate to protect rights, let tbe Legislature correct by amendment, and not we by forced construction or arbitrary doctrine, having no legitimate reason to justify it. I do not contend, of course, tbat incompetent testimony should be admitted, and there is a sufficient remedy for its exclusion if it is offered. If defendant bad objected and alleged tbat tbe evidence proposed to be introduced was incompetent as a transaction by an interested witness with a deceased party, and also alleged tbat be was not able to show it for lack of time and opportunity to do so, tio court would deny bis (or her) request for reasonable time and opportunity to make tbe objection good, and, if it did, I may safely assert tbat tbis Court would not sustain any such ruling. But to sustain tbe objection in its present form would be simply to refuse enforcement of tbe law as written (ita, lex scripta est), and tbe mandate of tbe Legislature, which would be wrong and an invasion of tbe legitimate function of tbe legislative department. Whether tbe law is just or not, or needs' amendment or reformation, is not our concern, and, to speak plainly of it and in common parlance, “is none of our business.” We can only inquire wbat tbe law is, and not wbat it should be, and it is our imperative duty to enforce it as we find it.

As has been well said: “It may safely be laid down tbat the less the process of inquiry is fettered by rules and restraints, founded on supposed considerations of policy and convenience, the more certain and efficacious will it be in its operation. Formerly the very means devised for the discovery of truth and advancement of justice were not infrequently perverted to the purposes of injustice, and made the instruments of the most grievous and cruel oppression. It is to be hoped not only tbat those imperfections which still subsist, which have been spared from their antiquity, and exist as a kind of prescriptive evil, will in time be *188removed by legislative, if they be beyond the reach and scope of judicial, authority. ‘The rules of evidence/ said Lord Ellenborough, in Pritt v. Fairclough (3 Campb., 305), ‘must expand according to the exigencies of society.’ The admission of every light which reason and experience can supply for the discovery of truth, and the rejection of that only which serves not to guide, but to bewilder and mislead, is ,the great principle that ought to be the foundation of every system of evidence. Common experience rather than technical rules should be adopted as the test. Mercantile and industrial life, producing, as they do, nearly all the transactions of men that come before the courts of law and equity, are essentially practical. That which is the final basis of action, of calculation, reliance, investment, and general confidence in every business enterprise, may safely, in general, be resorted to to prove the main fact. The courts need not discredit what the common experience of mankind relies upon. Judge- Cooley once said that ‘courts would justly be the subject of ridicule if they should deliberately shut their eyes to the sources of information which the rest of the world relies upon.’ Lastly, wherever there is any serious doubt in the law as to whether certain proof is or is not permissible, a safe rule to pursue is to permit the testimony to go to the jury.” 10 R. C. L., pp. 861-862. It has also been said that “in assailing a prima facie right, the party must aver and prove facts sufficient to overcome it; otherwise, he cannot ordinarily put the defendant to the proof of a perfect indefeasible title or right. And it makes no difference as to the point of burden of proof that the evidence to rebut the demandant’s prima facie right comes in part or wholly from the defendant’s witnesses on cross-examination.” 10 R. C. L., p. 899, sec. 48; Foster v. Hall, 12 Pick. (Mass.), 89 (22 Am. Dec., 400); Hardman v. Cabot, 60 W. Va., 664; 9 Ann. Cases, 1030; 7 L. R. Anno. (N. S.), 506.

The cases cited by the Court (Cecil v. High Point, 165 N. C., 431, and Nall v. Kelly, 169 N. C., 717) have, I must most respectfully say, no bearing upon or relevancy to the points in this case. It is a very “far cry” from them to this case, or from this case to them. They are all altogether different, and no legitimate deduction, or inference, can be drawn from them that would in any aspect support the contention as stated in the Court’s opinion. The statute, and its meaning, are so plain and simple that he who runs may read and know what the law is, as enacted by the Legislature. Our duty is also simple, and demands faithful obedience to its plain mandate. It was passed so as to abolish what was deemed to be a great injustice imposed upon a creditor in collecting his just debt, when he was required, at undue cost and expense, to establish his case before a justice or court. It makes the affidavit only prima facie evidence, and requires more proof when it is seriously con*189tested, unless tbe plaintiff is willing to take tbe risk of losing bis case. To adopt tbe rule and procedure I bave suggested would fully protect tbe debtor and work no injustice to tbe creditor, and I believe that it should be declared as tbe law and tbe rule of decision in tbis case.

For tbe reasons given by me, I dissent from tbe opinion and judgment of tbis Court.

Clare, O. J., concurs in tbe foregoing dissenting opinion of Walker, J.





Lead Opinion

ADAMS, J., concurs in result; WALKER J., dissents; CLARK, C. J., concurs in the dissenting opinion. Defendant objected to the introduction of the account and affidavit chiefly upon the ground that the affiant, (182) being treasurer of the plaintiff corporation was disqualified to testify to the matters stated in the affidavit under C.S. 1795. In an action brought by a corporation against the executor or administrator of a deceased person, it has been held with us that an officer and *192 stockholder of the plaintiff corporation is debarred from giving evidence of personal transactions or communications with the deceased, under the provisions of our statute disqualifying parties and persons interested in the event from being examined as witnesses in their own behalf. Banking Co.v. Walker, 121 N.C. 115. And this is in accord with the great weight of authority in other jurisdictions. 28 R. C. L. 508. See, also, note 9, Ann. Cas., p. 183, which contains a valuable collection of the authorities on the subject. At common law, a stockholder, being interested in the event of the litigation, was not allowed to testify generally in favor of the corporation. C. H. Albers Commission Co. v. Sessel, 87 Ill. App. 378, affirmed 193 Ill. 153; 61 N.E. 1075.

The defendant contends that under our statutes a treasurer of a business corporation is presumably a stockholder, and therefore interested in the result of an action to which the corporation is a party. C.S. 1144, provides that the directors of every corporation issuing stock shall be, at all times, bona fide stockholders of said corporation. C.S. 1145, provides that every corporation shall have a president, secretary, and treasurer, to be chosen either by the directors or by the stockholders as the by-laws may direct. It is further provided that the president shall be chosen from among the directors. From this it follows that the president must necessarily be a stockholder. This latter section also provides: "Any two of these offices may be held by the same person, if the body electing so determine." If any two of these offices may be held by the same person, it is the defendant's contention that presumably each officer possesses the necessary qualifications to fill any two of said offices. A treasurer or a secretary could not be elected to the office of president unless he be a stockholder. Hence, a treasurer, who is not a stockholder, could not hold the two offices of president and treasurer of the corporation. Defendant says "any two" means an indeterminate number of combinations that may be made from all, with none excluded. If a treasurer be not a stockholder, he would not be qualified to hold the office of president, and while he might be elected secretary and treasurer, yet he would not be qualified to hold any two of said offices. For the same person to be able to hold any two of these offices at one and the same time apparently requires that each officer shall be qualified to hold any one or more of said offices. It is conceded by the defendant that this does not follow as an absolute necessity — only as a presumption or as a reasonable inference is her contention — for the statute may (183) be construed to mean that the offices of president and secretary, or the offices of president and treasurer, may be held by the same person if the electing body so direct, provided he be a stockholder, while the office of secretary, or the office of treasurer, or the offices of *193 secretary and treasurer may be held by one other than a stockholder. In electing a secretary, or a treasurer, the directors or the stockholders need not then be concerned with the qualifications of a president, but if they later wish to combine the offices of president and secretary, or the offices of president and treasurer, the same person then occupying the office of secretary, or the office of treasurer, could not be given the additional office of president unless he be a stockholder. It is the contention of the defendant that the treasurer or the secretary of a corporation, in order to be able to hold any two of the offices mentioned in the statute, should be qualified to hold the office of president. To do this, he must be a stockholder. Hence, the defendant concludes that, under our decisions, such an officer is presumably interested in the event of the action. Without deciding or expressing any opinion as to the merits of this contention, which is recited to show the basis of defendant's argument, we pass to the defendant's next position which we are constrained to believe should be resolved in her favor.

It was held in Nall v. Kelly, 169 N.C. 717, that an affiant who verifies an account which is to be received on the hearing and taken as prima facie evidence of its correctness under the provisions of C.S. 1789, must be regarded and dealt with as a witness pro tanto, and, to such an extent said affiant is subject to the qualifications and restrictions of other witnesses. If the person who makes the affidavit be not qualified as a witness to testify to the matters and things contained therein, in such case the account and affidavit, in the form as offered, should not be received in evidence.

The statute permits an ex parte affidavit to be offered as prima facie evidence of the correctness of the account, but we do not think it was the intention of the Legislature to permit one to speak by affidavit who otherwise would be incompetent to testify. Nor do we think it was the purpose of the Legislature to deprive the adverse party of his right to question the admissibility of such evidence. When the competency of a witness, or the admissibility of evidence, is in question, ordinarily the party opposing is entitled, as a matter of right, to a preliminary cross-examination of the witness whose competency is challenged or the admissibility of whose testimony is in dispute. Woodworth et al. v.Brooklyn Elevated Railroad Co., 48 N.Y.S. 80; Trussell v. Scarlett, 18 Feb. 214, and note; Abb. Tr. Brief, pp. 126 and 245. Here the defendant is deprived of this privilege; no notice is given as to whose affidavit will be offered and no opportunity is afforded the defendant for investigation. But it is said that the burden is on the party (184) objecting to the competency of a witness, or to the admissibility of his testimony, to show his incompetency or the inadmissibility of his *194 evidence. This is so, as a general rule, where the validity of the objection is not apparent (Standley v. Moss, 114 Ill. App. 612; 1 Greenleaf on Evidence, p. 435, sec. 390); but the basis of the present objection, to wit, the affiant's alleged interest in the event of the action, is a matter peculiarly within the knowledge of the plaintiff, and the defendant has had no opportunity to cross-examine the witness or to offer evidence of his incompetency or the inadmissibility of his affidavit. Indeed, it would be well-nigh impossible for the defendant to obtain such information except from the plaintiff or its witnesses; and it is a rule of practically universal acceptance that where a particular fact, necessary to be proved, rests peculiarly within the knowledge of a party, upon him the law casts the burden of providing such fact. Hosiery Co. v. Express Co., 184 N.C. 478.

We have held that C.S. 1789, appearing as a section on the law of evidence, should be construed in subordination to C.S. 1795, under the principle announced in Cecil v. High Point, 165 N.C. 431, and other similar decisions; and in cases presenting the question, however, meritorious a particular demand may be, when it involves a personal transaction or communication with a deceased person, the account must be established by proper evidence; and under the statute, as now drawn, an exparte affidavit of the living should not be admitted over objection, unless it appear upon the face of the affidavit itself, or by evidence aliunde, that the person making the affidavit is not debarred from doing so by the provisions of C.S. 1795. Nall v. Kelly, 169 N.C. 717. Viewing the case in its larger aspect, we think this position is in keeping with a wise public policy and the intent of the Legislature as expressed in the two statutes now under consideration. The defendant's objection to the proof of account as offered should have been sustained.

We will not go farther and allow the defendant's motion for judgment as of nonsuit, at the present time; because, upon another hearing, the plaintiff may be able to make good all the allegations of its complaint. But for the error, as indicated, a new trial must be awarded, and it is so ordered.

New trial.

ADAMS, J., concurs in result only.