Investors Corp. of South Carolina v. Field Financial Corp.

Campbell, J. When the case was called for oral arguments in this Court, the defendants demurred ore terns to the complaint for failure to state a cause of action on the grounds of fraud. However, we find it unnecessary to rule on this demurrer because the complaint alleges that the corporate seal of Fields was not affixed to the conveyance in question. In his findings of fact, Judge Collier found that the corporate seal of Field was not affixed to the deed of conveyance and that there was no corporate seal on said conveyance. The parties stipulated “that the deed recorded in Iredell County Registry in Book 404, at Page 243, from Field . . . to . . . Development . . . may be admitted in evidence and that it did not contain a corporate seal of the grantor nor any revenue stamps”. This stipulation supported the findings of fact by Judge Collier, and the findings of fact supported the conclusions of law and the judgment setting aside the deed of conveyance. A corporate seal is a necessary prerequisite to a valid conveyance of real estate by a corporation. Caldwell v. Mfg. Co., 121 N.C. 339, 28 S.E. 475. G.S. 47-41 sets out the forms of probate for a deed and other conveyances executed by a corporation and reveals the necessity of having a corporate seal. In Withrell v. Murphy, 154 N.C. 82, 69 S.E. 748, the corporate seal had been affixed to a deed of conveyance, but the acknowledgment by the corporate officers failed to acknowledge that the seal so affixed was the seal of the corporation. The Supreme Court held that this conveyance was, therefore, ineffectual as to the corporation’s creditors. There have been curative statutes validating corporate conveyances where the corporate seal has been omitted. The last such statute was enacted in 1963 and provides: “Any corporate deed, or conveyance of land in this State, made prior to January 1, 1963, which is defective only because the corporate seal is omitted therefrom is hereby declared to be a good and valid conveyance by such corporation for all purposes and shall be sufficient to pass title to the property therein conveyed as fully as if the said conveyance were executed according to the provisions and forms of law in force in this State at the date of the execution of such conveyance.” G.S. 47-71.1. [159] This statute, however, only serves to accentuate the necessity of a corporate seal in order to make a corporate conveyance of real estate valid and effectual. Another curative act is contained in G.S. 55-158 which provides: “Certain corporate conveyances validated. — All deeds and conveyances of land in this State, made by any corporation of this State prior to January first, one thousand nine hundred fifty-seven, executed in its corporate name and signed and attested by its proper officers, from which the corporate seal was omitted, shall be good and valid, notwithstanding the failure to attach said corporate seal.” Since the deed in the instant case was executed on 23 December 1964 and since the corporate seal was omitted and no curative act has made this conveyance effective without the corporate seal, we hold that the judgment of Judge Collier setting this conveyance aside was correct. Development seeks to have the deed of conveyance in question construed to be an effective instrument under an equitable doctrine enunciated in Willis v. Anderson, 188 N.C. 479, 124 S.E. 834. In other words, Development takes the position that it purchased the land from Field; it paid a valuable consideration for the land; therefore, it should be permitted to retain the land even as against the creditors of Field. However, in order to sustain this position, it would be incumbent upon Development to establish that it was an innocent purchaser for value from Field without any notice that Field was seeking to conceal assets from creditors. The burden of establishing this would fall upon Development. Judge Collier found, however, .that the transaction between Field and Development was not an arms length transaction; A. H. Field served as president of each corporation and represented both Field and Development in this transaction; Field was attempting to protect its assets from its creditors; and, in short, Development was not an innocent purchaser for value from Field. Therefore, regardless of whether the complaint properly alleged fraud, Development fails to sustain its position as an innocent purchaser for value. The conveyance from Field to Development did not have a corporate seal and it was proper for Judge Collier to set it aside. In view of this holding it is unnecessary to discuss the other assignments of error. Affirmed. BkocK and Morris, JJ., concur.