William M. Lloyd & Co. v. Poythress ( 1923 )

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 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 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 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.