Armstrong, Cator & Co. v. E. M. Asbury & Co.

AlleN, J. The defendant corporation, E. M. Asbury & Co., bought goods from the plaintiff and was the original debtor, and there was then no personal liability on the defendant McRae, a stockholder of the corporation. The only claim of the plaintiff against McRae is that he and the other stockholders, in order to obtain indulgence from the plaintiff for the corporation, entered into an agreement by which they agreed to sell the corporate property and apply the proceeds to the debts, and to pay ratably any part of the debts remaining unpaid. In other words, the cause of action alleged against the defendant McRae is his liability upon the agreement between the stockholders, and his complaint is that he was not permitted to prove that he was not a party to the agreement. This he could not do, because he is precluded by the judgment by' default and inquiry, which establishes the cause of action, that is, that he was a party to the agreement, and only leaves open the amount of the recovery. Banks v. Mfg. Co., 108 N. C., 282; Blow v. Joyner, 156 N. C., 142; Graves v. Cameron, 161 N. C., 549. The concluding sentence of the authority relied on by the defendant (Allen v. McPherson, 168 N. C., 436) is that “it (a judgment by default and inquiry) establishes merely that the plaintiff has a cause of action,” and this brings it in harmony with the other cases. No error.