Opinion
No. COA10-1481
Filed 16 August 2011
Appeal by defendant from order entered 19 August 2010 by Judge Paul M. Quinn in Craven County District Court. Heard in the Court of Appeals 28 April 2011.
Stubbs Perdue, P.A., by John W. King, Jr., for plaintiff-appellee. McAfee Law, P.A., by Robert J. McAfee, for defendant-appellant.
Craven County No. 10 CVD 830.
Crystal Lake Yacht Club, Inc. ("defendant") appeals the trial court's order granting summary judgment in favor of Havelock Yacht Club, Inc. ("plaintiff"), in plaintiff's summary ejectment appeal. We affirm.
On 1 April 1983, plaintiff leased property in Havelock, North Carolina, to defendant ("the lease"). The lease was for a term of five years, with the option to renew the lease for an additional five years. The lease was executed on plaintiff's
behalf by its president, J.R. Shelton ("Shelton"), and on defendant's behalf by Commodore Gene Ruder. The parties ultimately agreed to renew the lease for three additional five-year terms, with the final renewal term expiring in 2003. Upon the expiration of the final renewal term, the lease converted to a month-to-month tenancy.
On 28 September 2009, plaintiff's attorney notified defendant in writing that plaintiff was terminating the lease, effective 31 December 2009. Defendant's attorney negotiated an extension of that deadline until 1 March 2010. Nevertheless, defendant failed to vacate the property after that date. As a result, plaintiff filed a summary ejectment action in small claims court on 9 April 2010. On 13 May 2010, the magistrate ordered that defendant "be removed from and the plaintiff be put in possession of the premises. . . ."
Defendant filed a notice of appeal to the Craven County District Court. On 26 May 2010, plaintiff filed a motion for summary judgment. In support of its motion, plaintiff filed two affidavits. The first affidavit was from Frances Diffee ("Diffee"), who averred that she was plaintiff's president and was authorized by its membership to terminate the lease. In the second affidavit, an employee of First Citizens Bank averred that Diffee was listed as an officer of plaintiff according to bank records and had signing authority over plaintiff's account.
On 2 July 2010, defendant filed an answer and an affidavit from Bryan Scoggins ("Scoggins"). Scoggins averred that he was attorney-in-fact for his mother, Bonn Lynn Scoggins, who had inherited an interest in plaintiff through her husband. Scoggins further averred that his mother knew of no election of directors or appointment of officers by plaintiff, and that she desired to extend the lease between plaintiff and defendant. On 6 August 2010, defendant filed a similar affidavit from Harold Frank Craig ("Craig"), who averred that he had acquired an interest in plaintiff through his parents, that to his knowledge there was no election of directors or appointment of officers by plaintiff, and that he wished to continue the lease between plaintiff and defendant.
Plaintiff's motion for summary judgment was heard on 10 August 2010. The trial court granted summary judgment in favor of plaintiff on 19 August 2010. Defendant appeals.
Defendant's sole argument on appeal is that the trial court erred in granting summary judgment to plaintiff. Specifically, defendant contends that the affidavits from Scoggins and Craig created a genuine issue of material fact as to whether Diffee had the authority to terminate the lease with defendant. We disagree.
"Summary judgment is appropriate `if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.'" Craig v. New Hanover Cty. Bd. of Educ., 363 N.C. 334, 337, 678 S.E.2d 351, 353 (2009) (quoting N.C. Gen. Stat. § 1A-1, Rule 56(c) (2007)). "A trial court's grant of summary judgment receives de novo review on appeal, and evidence is viewed in the light most favorable to the non-moving party." Sturgill v. Ashe Mem'l Hosp., Inc., 186 N.C. App. 624, 626, 652 S.E.2d 302, 304 (2007).
Any tenant or lessee of any house or land, and the assigns under the tenant or legal representatives of such tenant or lessee, who holds over and continues in the possession of the demised premises, or any part thereof, without the permission of the landlord, and after demand made for its surrender, may be removed from such premises in the manner hereinafter prescribed in any of the following cases:
(1) When a tenant in possession of real estate holds over after his term has expired.
N.C. Gen. Stat. § 42-26(a) (2009). A month-to-month tenancy may be terminated by a notice to quit given seven days or more before the end of the current month of the tenancy. N.C. Gen. Stat. § 42-14 (2009). In the instant case, defendant does not dispute receiving timely notice from plaintiff's attorney regarding the termination of defendant's lease or that defendant held over after the lease was terminated.
Nevertheless, defendant argues in its brief that "due to a lack of by-laws governing membership and property rights of the plaintiff corporation, and the questions raised by the two affidavits it filed by persons claiming to be members of the plaintiff corporation, the trial court erred" by granting summary judgment to plaintiff. Defendant further contends that summary judgment was inappropriate because plaintiff failed to provide the trial court with a copy of its by-laws or the minutes of an organizational meeting that would have supported Diffee's claim that she had the authority to terminate the lease.
Defendant's arguments are misplaced. Diffee's actual authority to act was immaterial to the validity of the termination of the lease. "North Carolina recognizes that one may be a de facto officer or director of a corporation." Lowder v. All Star Mills, Inc., 75 N.C. App. 233, 241, 330 S.E.2d 649, 654 (1985).
While plaintiff is a nonprofit corporation, "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. Russell M. Robinson, II, Robinson on North Carolina Corporation Law § 33.06 (2009).
To constitute one a de facto officer or director, one must:
. hold office under some degree of notoriety or color of title — the mere assumption of title to office on one occasion cannot clothe a person with the title of a de facto officer
. continuously exercise the functions of the office
. appear to hold an actual office — there can be no de facto officer where, for want of an office, there can be no de jure officer
18B Am. Jur. 2d Corporations § 1229 (footnotes omitted).
A corporation in its corporate name, can maintain any action respecting its corporate property that an individual can. The persons claiming to be the officers of the corporation, and being de facto in possession of the corporate franchises and property, may use the corporate name and seal, in the prosecution of such actions. It is settled upon authority, that a defendant in such actions, cannot defend himself by denying the rightful existence of the corporation, if it have a de facto existence; or by impeaching the title of the de facto officers by showing some irregularity in their election, if they have a colorable right. The only way in which the right to an office can be tried, is by an action of quo warranto.
R. R. v. Johnston, 70 N.C. 348, 349-50 (1874). Moreover, "the validity of the acts of de facto officers cannot be collaterally impeached." Id. at 350.
In the instant case, there was no genuine issue of material fact that Diffee was acting in at least a de facto capacity as plaintiff's president when she terminated defendant's lease. In her affidavit, Diffee averred that she was validly elected as president by plaintiff's members and was acting in that capacity when she terminated the lease. Plaintiff also provided an affidavit that averred that Diffee was listed as an officer of plaintiff on plaintiff's bank account and had signing authority over that account.
Moreover, there was no genuine issue of material fact that plaintiff, as a corporation, has an officer with the title of president. The original lease between plaintiff and defendant was executed on plaintiff's behalf by Shelton, who was identified on the lease as plaintiff's president. Defendant does not dispute the validity of this lease. In addition, defendant's affidavits do not aver that plaintiff does not have an officer with the title of president; rather, defendant's affiants state their belief that "any officer acting on behalf of the corporation has been without authority of the Board of Directors to do so." Thus, these affidavits do not create a genuine issue of material fact regarding whether Diffee was acting in at least a de facto capacity in terminating the lease.
Since "the validity of the acts of de facto officers cannot be collaterally impeached," Johnston, 70 N.C. at 350, defendant's affidavits failed to create a genuine issue of material fact regarding the validity of plaintiff's termination of the lease. As a result, the trial court correctly granted summary judgment in favor of plaintiff. The trial court's order is affirmed.
Affirmed.
Judge ERVIN concurs.
Judge THIGPEN dissents by a separate opinion.