Zimmerman v. Hogg & Allen

207 S.E.2d 267 (1974) 22 N.C. App. 544 Sam ZIMMERMAN v. HOGG & ALLEN, Professional Association, Successor to Greene, Hogg & Allen, Professional Association, and Glenn L. Greene, Jr. No. 7423SC291. Court of Appeals of North Carolina. August 7, 1974. *269 McElwee & Hall by W. H. McElwee and T. V. Adams, North Wilkesboro, for plaintiff-appellant. Hudson, Petree, Stockton, Stockton & Robinson by Ralph M. Stockton, Jr., and James H. Kelly, Jr., Winston-Salem, for defendant-appellee, Hogg and Allen. CARSON, Judge. At the outset, we note the fact that Hogg and Allen is a professional association neither enlarges nor diminishes their professional responsibility. Under North Carolina law, professional corporations are liable to the same extent as if they were a partnership. G.S. § 55B-9. The general rule in this jurisdiction is that a partner or officer cannot bind the partnership or corporation beyond the normal scope of his authority. Moore v. WOOW, Inc., 253 N.C. 1, 116 S.E.2d 186 (1960); Edgewood Knoll Apartments v. Braswell, 239 N.C. 560, 80 S.E.2d 653 (1954). While our courts have not decided a case where a partner in a law firm receives money to invest, and appropriates it to his own use, this problem has arisen in other jurisdictions. In the case of Rouse v. Pollard, 130 N.J.Eq. 204, 21 A.2d 801 (1941), the plaintiff was represented by a partner in the law firm. The plaintiff sold some securities and presented a check made to one of the partners to invest for her. The partner sent her several checks of his which purportedly were interest from the investment. However, the plaintiff discovered that the partner had appropriated the funds. The New Jersey court held that the placing of money for the purposes named was not a function of the practice of law, and it was not a part of the practice of the defendants. The partnership, therefore, was not liable. A similar case is Riley v. Laroucque, 163 Misc. 423, 297 N.Y.S. 756 (1937), in which a partner accepted $6,000.00 from the plaintiff for the purpose of investment. Again, it was held that this was not a part of the practice of law, and the remaining partners were not liable for the criminal conduct of the one. In the recent case of Jackson v. Jackson, 20 N.C. App. 406, 201 S.E.2d 722 (1974), the plaintiff alleged that his wife and her attorney had conspired to institute criminal proceedings against him maliciously and without cause. He sought to hold the law firm responsible for the conduct of his wife's attorney. This court held that a lawyer who engages in malicious prosecution is not acting in the ordinary course of his firm's business even though counseling concerning the advisability of bringing such a suit was a part of the firm's business. The matter was distinguished by the fact that the partner allegedly was acting maliciously and this took him outside the scope of the firm's business. The instant case is clearer than that of Jackson v. Jackson. Here, counseling concerning investments was not a part of the firm's business, especially since the firm limited its practice to labor law. Furthermore, the criminal conduct on the part of the defendant Greene was not a part of his anticipated services. The conduct of Greene was in violation of the standards of his profession, as well as the criminal laws. The conduct of Greene was not a part of his professional affairs and consequently summary judgment was properly granted. No error. PARKER, J., concurs in result. VAUGHN, J., dissents. VAUGHN, Judge (dissenting): In my opinion conflicting inferences arise from the evidence before the Court on defendant's *270 motion for summary judgment. Defendant has failed to carry its burden to show (1) the absence of any question of material fact and (2) that plaintiff, as a matter of law, cannot recover on his claim.