Austin v. Tire Treads, Inc.

VAUGHN, Judge. Defendant argues that his motion for a directed verdict should have been granted. We agree. Although personal liability may be imposed on a corporate officer for fraudulently misrepresenting a company’s financial condition to one dealing with the company provided that party suffers a loss as a result of reliance on the misrepresentation involved, see Mills Co. v. Earle, 233 N.C. 74, 62 S.E. 2d 492, plaintiff failed to establish a prima facie case. Actionable misrepresentation consists of (1) a representation of a material fact, (2) which was false, (3) which was either known to be so by the defendant when it was made or which was made recklessly without any knowledge of its truth, (4) which was intended to induce reliance, and (5) which did induce reasonable reliance, (6) reliance which resulted in injury to plaintiff. Cofield v. Griffin, 238 N.C. 377, 78 S.E. 2d 131. In writing the checks, defendant, in effect, represented that his funds on deposit at the drawee bank (First National Bank in Georgia) were adequate to cover them. See Nunn v. Smith, *740 270 N.C. 374, 154 S.E. 2d 497; Auto Supply Co., Inc. v. Equipment Co., Inc., 2 N.C. App. 531, 163 S.E. 2d 510; 37 Am. Jur. 2d, “Fraud and Deceit,” § 142, p. 194. It was thus incumbent upon plaintiff to offer, among other things, evidence from which it could be inferred that defendant issued the checks with insufficient funds to cover them, that is, plaintiff had to prove the falsity of defendant’s representations. Ordinarily, falsity is evaluated at the time a representation is made or when it is acted upon by the plaintiff. Childress v. Nordman, 238 N.C. 708, 78 S.E. 2d 757. Plaintiff presented no evidence that, when issued, the checks were not covered by adequate deposits. In fact plaintiff introduced records of the drawee bank which demonstrate that on the dates the checks were issued to and accepted by plaintiff, sufficient funds were in defendant’s Georgia bank account and that sufficient funds were on hand so that the checks could have been honored on almost any day during the period covered by the transactions between the parties. The record is silent as to when the checks were presented to the drawee bank in Georgia, showing only that they were returned for “insufficient funds.” Plaintiff failed to show that the checks were not good when issued or collectable for a reasonable time after issuance. Defendant’s motion for a directed verdict should have been allowed. Reversed. Judges Campbell and Morris concur.