{ "id": 11216862, "name": "SWAN QUARTER FARMS, INC., Plaintiff v. ROGER A. SPENCER and wife, DOROTHY C. SPENCER; BENJAMIN CAHOON and wife, MELANIE S. CAHOON; and JEFFREY D. GIBBS and wife, JENNIFER S. GIBBS", "name_abbreviation": "Swan Quarter Farms, Inc. v. Spencer", "decision_date": "1999-05-04", "docket_number": "No. COA98-740", "first_page": "106", "last_page": "116", "citations": [ { "type": "official", "cite": "133 N.C. App. 106" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "389 S.E.2d 93", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1990, "opinion_index": -1 }, { "cite": "326 N.C. 50", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 5304327, 5304790, 5307961, 5306044, 5309630 ], "year": 1990, "opinion_index": -1, "case_paths": [ "/nc/326/0050-02", "/nc/326/0050-03", "/nc/326/0050-01", "/nc/326/0050-05", "/nc/326/0050-04" ] }, { "cite": "382 S.E.2d 835", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1989, "pin_cites": [ { "page": "836" }, { "page": "836", "parenthetical": "emphasis added" } ], "opinion_index": -1 }, { "cite": "95 N.C. App. 449", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8521440 ], "year": 1989, "pin_cites": [ { "page": "450" } ], "opinion_index": -1, "case_paths": [ "/nc-app/95/0449-01" ] }, { "cite": "162 S.E.2d 143", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1968, "pin_cites": [ { "page": "144" } ], "opinion_index": 0 }, { "cite": "1 N.C. App. 587", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8554784 ], "year": 1968, "pin_cites": [ { "page": "588" } ], "opinion_index": 0, "case_paths": [ "/nc-app/1/0587-01" ] }, { "cite": "53 S.E.2d 845", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1906, "opinion_index": 0 }, { "cite": "141 N.C. 232", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 11252664 ], "year": 1906, "opinion_index": 0, "case_paths": [ "/nc/141/0232-01" ] }, { "cite": "248 S.E.2d 862", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1978, "opinion_index": 0 }, { "cite": "295 N.C. 733", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8568801, 8568681, 8568761, 8568637, 8568734 ], "year": 1978, "opinion_index": 0, "case_paths": [ "/nc/295/0733-05", "/nc/295/0733-02", "/nc/295/0733-04", "/nc/295/0733-01", "/nc/295/0733-03" ] }, { "cite": "247 S.E.2d 252", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1978, "opinion_index": 0 }, { "cite": "37 N.C. App. 686", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8554594 ], "year": 1978, "opinion_index": 0, "case_paths": [ "/nc-app/37/0686-01" ] }, { "cite": "380 S.E.2d 577", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1989, "opinion_index": 0 }, { "cite": "94 N.C. App. 530", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527521 ], "year": 1989, "opinion_index": 0, "case_paths": [ "/nc-app/94/0530-01" ] }, { "cite": "434 S.E.2d 251", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1993, "pin_cites": [ { "parenthetical": "unpublished" }, { "page": "251", "parenthetical": "unpublished" } ], "opinion_index": 0 }, { "cite": "459 S.E.2d 52", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1995, "pin_cites": [ { "page": "54", "parenthetical": "citing Poore v. Swan Quarter Farms, Inc., Ill N.C. App. 546, 434 S.E.2d 251 (1993) (unpublished)" } ], "opinion_index": 0 }, { "cite": "119 N.C. App. 546", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11916395 ], "weight": 2, "year": 1995, "pin_cites": [ { "page": "550", "parenthetical": "citing Poore v. Swan Quarter Farms, Inc., Ill N.C. App. 546, 434 S.E.2d 251 (1993) (unpublished)" }, { "page": "550" } ], "opinion_index": 0, "case_paths": [ "/nc-app/119/0546-01" ] }, { "cite": "389 S.E.2d 94", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1990, "opinion_index": 0 }, { "cite": "338 S.E.2d 817", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1986, "pin_cites": [ { "page": "820" }, { "page": "818" } ], "opinion_index": 0 }, { "cite": "79 N.C. App. 286", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8520392 ], "weight": 2, "year": 1986, "pin_cites": [ { "page": "291" }, { "page": "287" } ], "opinion_index": 0, "case_paths": [ "/nc-app/79/0286-01" ] }, { "cite": "199 S.E.2d 1", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1973, "opinion_index": 0 }, { "cite": "283 N.C. 714", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8560241 ], "year": 1973, "opinion_index": 0, "case_paths": [ "/nc/283/0714-01" ] }, { "cite": "312 S.E.2d 428", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1984, "pin_cites": [ { "page": "432", "parenthetical": "citing Hensley v. Ramsey, 283 N.C. 714,199 S.E.2d 1 (1973)" } ], "opinion_index": 0 }, { "cite": "310 N.C. 438", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2393664 ], "year": 1984, "pin_cites": [ { "page": "442", "parenthetical": "citing Hensley v. Ramsey, 283 N.C. 714,199 S.E.2d 1 (1973)" } ], "opinion_index": 0, "case_paths": [ "/nc/310/0438-01" ] }, { "cite": "202 S.E.2d 498", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1974, "pin_cites": [ { "page": "500", "parenthetical": "citing 19 C.J.S. Corporations \u00a7 775, p. 137" } ], "opinion_index": 0 }, { "cite": "20 N.C. App. 694", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8555086 ], "year": 1974, "pin_cites": [ { "page": "697", "parenthetical": "citing 19 C.J.S. Corporations \u00a7 775, p. 137" } ], "opinion_index": 0, "case_paths": [ "/nc-app/20/0694-01" ] }, { "cite": "19 S.E. 351", "category": "reporters:state_regional", "reporter": "S.E.", "year": 1894, "opinion_index": 0 }, { "cite": "114 N.C. 151", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8649543 ], "year": 1894, "opinion_index": 0, "case_paths": [ "/nc/114/0151-01" ] }, { "cite": "137 S.E.2d 174", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1964, "pin_cites": [ { "page": "185", "parenthetical": "citing Arrington v. Arrington, 114 N.C. 151, 19 S.E. 351 (1894)" } ], "opinion_index": 0 }, { "cite": "262 N.C. 330", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8567516 ], "year": 1964, "pin_cites": [ { "page": "342", "parenthetical": "citing Arrington v. Arrington, 114 N.C. 151, 19 S.E. 351 (1894)" } ], "opinion_index": 0, "case_paths": [ "/nc/262/0330-01" ] }, { "cite": "157 S.E.2d 215", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1967, "pin_cites": [ { "page": "224" } ], "opinion_index": 0 }, { "cite": "271 N.C. 509", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8565195 ], "year": 1967, "pin_cites": [ { "page": "520" } ], "opinion_index": 0, "case_paths": [ "/nc/271/0509-01" ] }, { "cite": "139 S.E.2d 353", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1964, "pin_cites": [ { "page": "355", "parenthetical": "only innocent persons may claim the benefit of equitable estoppel" } ], "opinion_index": 0 }, { "cite": "263 N.C. 208", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8568735 ], "year": 1964, "pin_cites": [ { "page": "211", "parenthetical": "only innocent persons may claim the benefit of equitable estoppel" } ], "opinion_index": 0, "case_paths": [ "/nc/263/0208-01" ] }, { "cite": "329 S.E.2d 326", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "pin_cites": [ { "page": "330" } ], "opinion_index": 0 }, { "cite": "313 N.C. 450", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4720084 ], "year": 1985, "pin_cites": [ { "page": "454" } ], "opinion_index": 0, "case_paths": [ "/nc/313/0450-01" ] }, { "cite": "380 S.E.2d 528", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1989, "pin_cites": [ { "page": "531", "parenthetical": "quoting Glenn v. Wagner, 313 N.C. 450, 454, 329 S.E.2d 326, 330 (1985)" } ], "opinion_index": 0 }, { "cite": "94 N.C. App. 557", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527574 ], "year": 1989, "pin_cites": [ { "page": "561", "parenthetical": "quoting Glenn v. Wagner, 313 N.C. 450, 454, 329 S.E.2d 326, 330 (1985)" } ], "opinion_index": 0, "case_paths": [ "/nc-app/94/0557-01" ] }, { "cite": "106 S.E.2d 478", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1959, "opinion_index": 0 }, { "cite": "249 N.C. 308", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8614290 ], "year": 1959, "opinion_index": 0, "case_paths": [ "/nc/249/0308-01" ] }, { "cite": "417 U.S. 703", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 1519949 ], "weight": 2, "year": 1974, "opinion_index": 0, "case_paths": [ "/us/417/0703-01" ] }, { "cite": "326 N.C. 50", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 5304327, 5304790, 5307961, 5306044, 5309630 ], "year": 1990, "opinion_index": 0, "case_paths": [ "/nc/326/0050-02", "/nc/326/0050-03", "/nc/326/0050-01", "/nc/326/0050-05", "/nc/326/0050-04" ] }, { "cite": "382 S.E.2d 835", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1989, "pin_cites": [ { "page": "836" }, { "page": "836" } ], "opinion_index": 0 }, { "cite": "95 N.C. App. 449", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8521440 ], "year": 1989, "pin_cites": [ { "page": "450" } ], "opinion_index": 0, "case_paths": [ "/nc-app/95/0449-01" ] } ], "analysis": { "cardinality": 965, "char_count": 26602, "ocr_confidence": 0.764, "pagerank": { "raw": 2.430685391859704e-07, "percentile": 0.8019921238651365 }, "sha256": "2042f9a48e94a95079e14f50d04481cb343a8192c31510467e78eaa6d44a32b3", "simhash": "1:bf6bd427716d9cea", "word_count": 4396 }, "last_updated": "2023-07-14T19:41:36.377256+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges JOHN and EDMUNDS concur." ], "parties": [ "SWAN QUARTER FARMS, INC., Plaintiff v. ROGER A. SPENCER and wife, DOROTHY C. SPENCER; BENJAMIN CAHOON and wife, MELANIE S. CAHOON; and JEFFREY D. GIBBS and wife, JENNIFER S. GIBBS" ], "opinions": [ { "text": "EAGLES, Chief Judge.\nWe first consider whether the trial court erred in granting plaintiff\u2019s motion for summary judgment because the trial court should have disregarded the plaintiff\u2019s corporate form to determine the true nature of the real parties and their interests. Defendants contend that if the trial court had examined the plaintiff rather than relying on plaintiff\u2019s corporate identity, \u201cthe trial court would have found Mr. Knott seeking to reap an economic windfall as a result of the Van Dorps\u2019 prior self-dealing and breaches of fiduciary duty.\u201d Accordingly, defendants argue that \u201cMr. Knott should be estopped from suing in SQF\u2019s name and using the Van Dorp\u2019s self-dealing and the accompanying statutory presumption to defeat the Spencers\u2019 claims to possession of the Property.\u201d Defendants argue that the Van Dorps would have been estopped from relying on their own improper conduct to maintain this action. Defendants argue that it follows that Mr. Knott, as the Van Dorps\u2019 successor, should not possess any greater right to sue in SQF\u2019s name. Defendants rely on Bangor Punta Operations v. Bangor & A. R. Co., 417 U.S. 703, 41 L.Ed.2d 418 (1974) and Park Terrace, Inc. v. Burge, 249 N.C. 308, 106 S.E.2d 478 (1959) in seeking that the corporate form be disregarded based on equitable principles.\nPlaintiff argues that the Spencers cannot claim the benefit of equitable defenses because of their \u201cunclean hands.\u201d Plaintiff asserts that the Spencers bought the property with their \u201ceyes wide open\u201d and used the \u201clegal problems\u201d related to the property\u2019s title to obtain concessions on purchase price and title insurance. Plaintiff argues that estoppel is for the benefit of innocent persons and that defendants could not create an estoppel by their own actions. Plaintiff also distinguishes the cases relied upon by defendants, arguing that the equitable rules proclaimed in those cases have no application where the corporation is proceeding at law to recover title to its property wrongfully acquired through fraud and overreaching by an officer and shareholder. Plaintiff argues that \u201c[a]ny other rule would countenance the fraudulent acquisition of corporate property.\u201d Plaintiff finally argues that the Spencers\u2019 pleadings procedurally bar the Spencers\u2019 attempts to disregard the corporate entity because the Spencers did not specifically plead an estoppel or alter ego defense in their Answer.\nWe hold that defendants cannot claim the benefit of equitable defenses. \u201c \u2018The corporate veil may be pierced to prevent fraud or to achieve equity.\u2019 \u201d Harrelson v. Soles, 94 N.C. App. 557, 561, 380 S.E.2d 528, 531 (1989) (quoting Glenn v. Wagner, 313 N.C. 450, 454, 329 S.E.2d 326, 330 (1985)). Equity is for the protection of innocent persons and is a tool used by the court to intervene where injustice would otherwise result. See Cunningham v. Brigman, 263 N.C. 208, 211, 139 S.E.2d 353, 355 (1964) (only innocent persons may claim the benefit of equitable estoppel). Here, defendants were aware of the defects in the title when they purchased the property. In fact, the defendants used the defects in the title as leverage in negotiations with Federal to obtain concessions on price and title insurance. The defendants protected themselves in the transaction and they may not resort to equitable principles to protect themselves from any fraud. Accordingly, we hold that the trial court did not err by refusing to pierce the corporate veil. The assignment of error is overruled.\nWe next consider whether defendants\u2019 predecessors in title were bona fide purchasers for value without notice of any defects in the chain of title. Defendants argue that the trial court erred when it determined that Federal was not a bona fide purchaser without notice of the invalidity of Mrs. Van Dorp\u2019s title to the property. Defendants contend that the trial court incorrectly held that the 1969 deed conveying the property to Mrs. Van Dorp charged Federal with actual and constructive notice of a fatal defect in its chain of title. In doing so, defendants argue that the trial court failed to make a critical distinction between a deed that is void on its face and one that is voidable. Defendants contend that a voidable deed is sufficient to pass title to a bona fide purchaser for value, but a void deed is not. Beam v. Almond, 271 N.C. 509, 520, 157 S.E.2d 215, 224 (1967). Defendants assert that Federal had no actual or constructive notice of any imposition, undue advantage or actual or constructive fraud in connection with the 1969 deed. Defendants contend that although this Court correctly held that conveyances of corporate property to corporate officers are subject to a judicial presumption of invalidity, the trial court erred when it determined that the presumption rendered the 1969 deed void rather than merely voidable. Defendants argue that \u201cunless or until an action was commenced challenging the 1969 deed, it was merely voidable, not void, and the judicial presumption against validity had no meaning or application.\u201d Defendants note that no action to void the 1969 deed was taken until 1983, while Federal loaned substantial sums to the Van Dorps in 1972 and 1975. Defendants additionally argue that had Federal conducted a reasonable inquiry, it would not have disclosed any fatal defect in the 1969 deed because \u201cthe corporate records revealed complete shareholder and director approval.\u201d Accordingly, defendants assert that Federal was a bona fide purchaser for value with no notice of any defect in the chain of title, and defendants are entitled to be protected as a grantee to Federal\u2019s innocent purchaser status.\nPlaintiff first argues that as a matter of law, the 1969 deed by which defendants claim title is invalid as a matter of law because \u201cthe undisputed facts and evidence completely and conclusively establish the very basis for the presumptive invalidity of the 1969 deed and the fact that the presumption could not be rebutted under the circumstances surrounding the deed.\u201d Plaintiff asserts that the trial court properly determined that based on the undisputed facts of record, the 1969 deed was invalid as a matter of law and was null and void. Accordingly, plaintiff asserts that defendants have no title to the property unless defendants or their predecessors in interest acquired the property as an innocent or bona fide purchaser for value without notice of the infirmity. Plaintiff next argues that both the Spencers and their predecessor in interest, Federal, had actual and constructive notice of the defect in the deed and neither qualify for protection as bona fide purchasers for value without notice. Plaintiff argues that the \u201cvitiating or corrupting fact appears on the face of the record and the 1969 deed which Mrs. Van Dorp signed to herself as an officer of SQF.\u201d Plaintiff argues that the 1969 deed was presumptively invalid and defendants were charged with notice of the defect appearing on the face of the deed. At the very least, plaintiff argues that the \u201cvitiating fact\u201d appearing on the face of the deed was sufficient to put Federal \u201con notice of all matters which a reasonable inquiry would have disclosed.\u201d Plaintiff asserts that Federal did not undertake a reasonable inquiry. Accordingly, plaintiff argues that the trial court correctly held that Federal was not a bona fide purchaser for value without actual or constructive notice of the defect, and Spencer did not take title free of the defect.\nAfter careful consideration of the record, briefs and contentions of both parties, we affirm. Where \u201can innocent purchaser conveys to one who has notice, the latter is protected by the former\u2019s want of notice and takes free of the equities.\u201d Morehead v. Harris, 262 N.C. 330, 342, 137 S.E.2d 174, 185 (1964) (citing Arrington v. Arrington, 114 N.C. 151, 19 S.E. 351 (1894)). Here, it is not disputed that defendants had notice of the defects in title when it purchased the subject property. The issue is whether their predecessor in title, Federal, was a bona fide purchaser for value without notice of the defect in the title. We find that defendants are not entitled to protection as a bona fide purchaser for value without notice because Federal cannot claim protection as a bona fide purchaser for value without notice.\nDefendants are correct in their contention that the 1969 deed was merely voidable and not void on its face. \u201cThe purchase or lease of the property of a corporation by an officer or director of a corporation renders the transaction voidable, not void, and such transaction will be upheld only when open, fair, and for sufficient consideration.\u201d Youth Camp v. Lyon, 20 N.C. App. 694, 697, 202 S.E.2d 498, 500 (1974) (citing 19 C.J.S. Corporations \u00a7 775, p. 137). This Court has already recognized the \u201cpresumption of invalidity of the deed\u201d in this case. Swan Quarter Farms, 95 N.C. App. at 450, 382 S.E.2d at 836. This Court also determined that \u201cthe plaintiffs were entitled to rely on the presumption of invalidity of the corporate deed, and the defendants\u2019 failure to offer any evidence to rebut the presumption mandates voiding of the 25 March 1969 deed.\u201d Id. at 451, 382 S.E.2d at 836. However, this Court did not void the deed until 1989, and when the deed was conveyed to Federal in 1972, it was still merely voidable. The issue then becomes whether Federal was a bona fide purchaser for value without notice when it acquired the voidable deed in 1972. The key to determining this issue is Federal\u2019s notice. The 1969 deed was presumptively invalid on its face. By law, Federal was charged with \u201cnotice of every fact affecting [its] title which an accurate examination of the title would disclose.\u201d Waters v. Phosphate Corp., 310 N.C. 438, 442, 312 S.E.2d 428, 432 (1984) (citing Hensley v. Ramsey, 283 N.C. 714,199 S.E.2d 1 (1973)). Here, an inquiry by Federal would have disclosed that the 1969 conveyance was not \u201copen and above board.\u201d First, based on undisputed facts in the record, the conveyance of the 1969 deed was for far less than adequate consideration. The recorded deed showed that \u201c[t]he sum of $5.00 in excise tax or stamps was affixed to the deed as recorded. In 1969, this represented consideration of between $4,500 and $5,000 ($0.50 per $500).\u201d However, a bal-anee sheet dated in 1967 in Federal\u2019s loan file for SQF showed the property was worth at least $135,000, and evidence indicates the property may have been worth as much as $282,750 in 1969. Additionally, there was evidence in the record that Mr. Poore was not aware of the 1969 transfer and did not consent to it. The trial court found that the transaction \u201cwas not fairly and openly authorized, was not free from oppression, and lacked full disclosure and fair dealing because of the Van Dorps\u2019 fiduciary relationship as officers of SQF.\u201d Accordingly, we hold that Federal could not claim status as a bona fide purchaser for value without notice and defendants are not protected by any bona fide purchaser without notice status. The assignment of error is overruled.\nWe next consider whether plaintiff\u2019s ejectment claim is barred because the Van Dorps acquired title to the disputed property by adverse possession pursuant to G.S. 1-38. Defendants contend that Mrs. Van Dorp satisfied all the requirements for adverse possession. First, defendants argue that Mrs. Van Dorp entered the property under color of title because she took possession of the property in the good faith belief that she held good title to the property. Defendants assert that Mrs. Van Dorp did not have a fraudulent intent at the time she executed the 1969 deed. Second, defendants contend that Mrs. Van Dorp satisfied all of the other requirements for adverse possession. She took possession on 1 April 1969, and her possession was continuous, adverse, hostile and exclusive. Defendants note that the Van Dorps exclusively determined who would farm the property and collected the rents and profits. Defendants additionally note that Mrs. Van Dorp\u2019s adverse possession was never tolled since no action was filed or pending prior to 31 March 1976. Defendants argue that defendants\u2019 claim of adverse possession was erroneously precluded by the trial court because the issue of adverse possession was never raised in any prior litigation. Additionally, defendants contend that Mrs. Van Dorp\u2019s fiduciary relationship with SQF does not preclude title by adverse possession. Defendants argue that \u201ceven if some quasi-trust relationship existed, it was repudiated by clear and unequivocal acts\u201d by Mrs. Van Dorp, and all shareholders of SQF had actual notice of the adverse claim no later than 1 August 1973.\nPlaintiff argues that the issue of Mrs. Van Dorp\u2019s adverse possession was adjudicated adversely to Mrs. Van Dorp in Poore v. Swan Quarter Farms, Inc., 79 N.C. App. 286, 291, 338 S.E.2d 817, 820 (1986), disc. review denied, 326 N.C. 50, 389 S.E.2d 94 (1990)). In that case, plaintiff contends that Mrs. Van Dorp asserted a claim of superior title to the property by adverse possession. In reversing an order for summary judgment and remanding the case for trial, this Court noted that \u201cthe pleadings also fail to disclose sufficient facts and circumstances to permit judgment on the pleadings based on either estoppel or adverse possession.\u201d Id. Upon remand and after trial on the merits, plaintiff asserts that this Court found that title to the property remained in SQF. The Court stated that its \u201cprevious opinions clearly establish that defendant Swan Quarter Farms, Inc. is the owner in fee simple of the property in dispute. ...\u201d Poore v. Swan Quarter Farms, Inc., 119 N.C. App. 546, 550, 459 S.E.2d 52, 54 (1995) (citing Poore v. Swan Quarter Farms, Inc., Ill N.C. App. 546, 434 S.E.2d 251 (1993) (unpublished)). Plaintiff argues that pursuant to the opinions of this Court, final judgment was entered therein adjudicating SQF as the sole owner in fee simple. Plaintiff argues that even if this were not so, defendants\u2019 claim would still fail as a matter of law. Plaintiff contends that the Van Dorps could not claim color of title because Mrs. Van Dorp could not enter into possession of the land in good faith. Plaintiff cites the presumption of fraud arising from the relationship of Mrs. Van Dorp and SQF, and asserts that good faith demands undivided loyalty to the corporation and prohibits self-dealing to the detriment of the corporation and its shareholders. Plaintiff argues that given the relationship, any possession by Mrs. Van Dorp is deemed the possession by SQF in the absence of an unqualified and unequivocal disavowal. Plaintiff asserts that recording of the 1969 deed is not sufficient to constitute disavowal. Additionally, plaintiff argues that the knowledge of Mrs. Van Dorp, as an officer of SQF, is not imputed to SQF where she was acting for herself and adversely to the interests of SQF. Accordingly, plaintiff argues that the claim of adverse possession fails as a matter of law. We find plaintiffs arguments persuasive.\nThe issue of adverse possession was raised as an affirmative defense by SQF in its answer to Mr. Poore\u2019s complaint in Swan Quarter Farms, 79 N.C. App. at 287, 338 S.E.2d at 818. A final judgment in that action was rendered in Poore v. Swan Quarter Farms, Inc., 94 N.C. App. 530, 380 S.E.2d 577 (1989) in which SQF prevailed. This Court reiterated its determination that SQF held title to the property in fee simple in Swan Quarter Farms, 119 N.C. App. at 550, 459 S.E.2d at 54 (citing Swan Quarter Farms, 111 N.C. App. at 546, 434 S.E.2d at 251 (unpublished)). Accordingly, the trial court did not err in determining that the issue of adverse possession had been \u201craised and argued\u201d and had been determined by this Court. The assignment of error is overruled.\nWe last consider whether the trial court\u2019s order settling the record on appeal incorrectly allowed plaintiff to include cross-assignments of error. Defendants argue that plaintiffs purported cross-assignments of error did not properly preserve for appeal the question of whether the trial court erred in denying plaintiff\u2019s Motion to Strike and granting defendants\u2019 Motion for Leave to File Defense Bond. Defendants argue that at most \u201cthe trial court\u2019s rulings . . . deprived SQF of a basis for obtaining a default judgment against Appellants, not an alternative basis for supporting summary judgment.\u201d Defendants assert that the proper procedure would have been for plaintiff to file a cross-appeal, not cross-assignments of error.\nOn the merits of plaintiff\u2019s cross-assignment of error, defendants argue that the trial court properly exercised its discretion in allowing defendants to file a G.S. 1-111 defense bond. Defendants contend that North Carolina courts have held that the bond requirement may be waived, and that the statute requiring it has been treated with considerable leniency. Defendants additionally argue that in cases where an answer has been filed without bond and has remained on file without objection, it would be improper for the trial judge to strike the answer and render judgment for the plaintiff without notice or without giving defendant the opportunity to file a defense bond. Defendants assert that the trial court\u2019s decision here \u201cavoided exactly the type of forfeiture on technical grounds which the North Carolina Supreme Court\u201d has criticized.\nPlaintiff contends that the cross-assignment of error was proper pursuant to Rule 10(d) of the North Carolina Rules of Appellate Procedure. Plaintiff cites Barbour v. Little, 37 N.C. App. 686, 247 S.E.2d 252, disc. review denied, 295 N.C. 733, 248 S.E.2d 862 (1978). In Barbour, on an appeal from a grant of summary judgment in favor of defendants, this Court held that the trial court\u2019s denial of defendants\u2019 motion to dismiss pursuant to Rule 12(b)(6) was properly preserved for appeal by defendants\u2019 cross-assignment of error. Plaintiff argues that Barbour is indistinguishable from the case here. On the merits, plaintiff argues that \u201cno basis for exercise of the Court\u2019s discretion has been shown\u201d and that defendants\u2019 answer should have been stricken and judgment entered for plaintiff. Plaintiff asserts that posting a G.S. 1-111 defense bond is required as a condition precedent to filing answer and defending the action.\nWe affirm. Plaintiff\u2019s argument that it has properly preserved this issue for appeal by cross-assignment of error is persuasive. Defendants argue that the trial court\u2019s order did not deprive plaintiff of an alternative ground for summary judgment. However, the trial court\u2019s decision may have deprived plaintiff of an alternative basis in law for supporting the judgment. Accordingly, pursuant to Barbour, cross-assignment of error pursuant to Rule 10(c) was sufficient to properly preserve this question for appellate review.\nOn its merits, however, the assignment of error is overruled. A number of cases indicate that the trial court has discretion to extend the time for filing a G.S. 1-111 defense bond and to allow filing of the bond after the answer has been filed. Dunn v. Marks, 141 N.C. 232, 53 S.E.2d 845 (1906). Additionally, \u201cour Supreme Court has held that the requirement [of posting bond] may be waived and has treated the statute with considerable leniency.\u201d Gates v. McDonald, 1 N.C. App. 587, 588, 162 S.E.2d 143, 144 (1968). Accordingly, posting a defense bond is not a condition precedent to filing an answer. Additionally, our research indicates that the requirement of a defense bond was never intended to be used to require forfeiture on technical grounds by a party having merit to its argument. Accordingly, the cross-assignment of error is overruled.\nAffirmed.\nJudges JOHN and EDMUNDS concur.", "type": "majority", "author": "EAGLES, Chief Judge." } ], "attorneys": [ "Homthal, Riley, Ellis and Maland, by L. P. Homthal, Jr. and M. H. Hood Ellis, for plaintiff-appellee.", "Moore & Van Allen, PLLC, by David E. Fox and Christopher J. Blake, for defendant-appellants." ], "corrections": "", "head_matter": "SWAN QUARTER FARMS, INC., Plaintiff v. ROGER A. SPENCER and wife, DOROTHY C. SPENCER; BENJAMIN CAHOON and wife, MELANIE S. CAHOON; and JEFFREY D. GIBBS and wife, JENNIFER S. GIBBS\nNo. COA98-740\n(Filed 4 May 1999)\n1. Estoppel\u2014 piercing corporate veil \u2014 clean hands\nThe trial court did not err by refusing to pierce the corporate veil in an action to determine possession of a tract of land where defendant contended that the trial court should have disregarded plaintiffs corporate form to determine the true nature of the parties and their interests and should not have granted summary judgment for plaintiff. Defendants were aware of the defects in the title when they purchased the property, used the defects in the title as leverage in negotiations, and may not resort to equitable principles. Equity is for the protection of innocent persons and is a tool used by the court to intervene where injustice would otherwise result.\n2. Deeds\u2014 real property \u2014 bona fide purchaser for value\nThe trial court did not err in an action concerning possession of land by determining that one of defendants\u2019 predecessors in title was not a bona fide purchaser for value without notice of any defects in the chain of title where a 1969 deed was presumptively invalid on its face and an inquiry by the purchaser would have disclosed that the conveyance was not open and above board.\n3. Adverse Possession\u2014 ejectment claim \u2014 determined in prior action\nAn ejectment action was not barred by an adverse possession claim where the issue of adverse possession had been raised, argued, and determined by the Court of Appeals in a prior action.\n4. Appeal and Error\u2014 preservation of issues \u2014 cross-assignment of error\nA cross-assignment of error concerning an N.C.G.S. \u00a7 1-111 bond was proper where defendants argued that the trial court\u2019s order did not deprive plaintiff of an alternative ground for summary judgment, but the decision may have deprived plaintiff of an alternative basis in law for supporting the judgment.\n5. Ejectment\u2014 defense bond \u2014 not a condition precedent to filing an answer\nThe trial court did not err in an ejectment action by granting defendants\u2019 motion for leave to file a defense bond. The trial court has discretion to extend the time for filing an N.C.G.S. \u00a7 1-111 bond and to allow filing of the bond after the answer has been filed. Posting a defense bond is not a condition precedent to filing an answer; the requirement of a defense bond was never intended to be used to require forfeiture on technical grounds by a party having merit to its argument.\nAppeal by defendants from order entered 18 February 1998 by Judge Howard E. Manning, Jr. in Hyde County Superior Court. Heard in the Court of Appeals 29 March 1999.\nThis action concerns the possession of a tract of land in Hyde County, North Carolina. In March 1969, the plaintiff, Swan Quarter Farms, Inc. (\u201cSQF\u201d) was the owner of the property. At that time, SQF was owned in equal Vs shares by shareholders A.H. Van Dorp, Mary Van Dorp and Fred Poore. On 31 March 1969 SQF, by and through its President, Mr. Van Dorp, and its Secretary, Mrs. Van Dorp, executed a deed dated 25 March 1969 purporting to convey the property to Mrs. Van Dorp individually.\nOn 18 October 1972, the Van Dorps signed a note and deed of trust to Federal Land Bank (\u201cFederal\u201d) to secure a $100,000 loan to the Van Dorps. On 5 September 1975 the Van Dorps signed another note and deed of trust to Federal, this time to secure a $208,000 loan. On 18 January 1983 Federal made an advancement on the 1975 deed of trust in the amount of $247,000. On 25 July 1988, Federal began foreclosure proceedings on the 1975 deed of trust. The foreclosure sale was held on 2 December 1988 and Federal bid the sum of $470,000. No upset bids were filed and a deed was executed to Federal for the property on 14 December 1988.\nMeanwhile, in 1983, Mr. Poore had filed suit against SQF and the Van Dorps seeking to invalidate the 1969 transfer from SQF to the Van Dorps. In 1989, this Court determined that the 1969 transfer of the deed from SQF to the Van Dorps was presumptively invalid. Poore v. Swan Quarter Farms, Inc., 95 N.C. App. 449, 450, 382 S.E.2d 835, 836 (1989), disc, review denied, 326 N.C. 50, 389 S.E.2d 93 (1990). This Court also determined that \u201cthe plaintiffs were entitled to rely on the presumption of invalidity of the corporate deed, and the defendants\u2019 failure to offer any evidence to rebut the presumption mandates voiding of the 25 March 1969 deed.\u201d Id. at 451, 382 S.E.2d at 836 (emphasis added).\nAt the time of this Court\u2019s 1989 decision, Poore still owned a % share in SQF, and the remaining % shares were owned by the Van Dorps. Mrs. Van Dorp passed away on 28 September 1991. In consideration of legal services, Mr. Van Dorp, acting as executor of Mrs. Van Dorp\u2019s estate and individually, transferred to Lee E. Knott the Van Dorps\u2019 shares in SQF in April of 1992.\nOn 7 May 1992, defendants Roger A. Spencer and family purchased both Poore\u2019s share in SQF as well as Poore\u2019s interest in the land by way of quitclaim deed. The Spencers also purchased Federal\u2019s interest in the land by special warranty deed in which Federal warranted that it had done nothing to impair title in the property since it received it. Lawyers\u2019 Title Insurance Corporation provided an owner\u2019s title insurance policy to the Spencers for the $460,000 purchase price without exceptions to the claims of SQF, the Van Dorps or the Poores.\nOn 27 October 1995 SQF instituted this action to eject the Spencers from the property. On 22 December 1995 the Spencers answered denying SQF\u2019s right to possession. SQF then filed a Motion to Strike the Answer for failure of defendants to post the bond required by G.S. 1-111. Pursuant to a consent order entered without prejudice to SQF\u2019s Motion to Strike the [Spencer\u2019s] Answer, the Spencers filed an amended answer on 12 July 1996. On 2 December 1996 the Spencers moved for summary judgment. On 15 April 1997 the Spencers filed a motion for leave to file defense bond or alternatively for relief from failure to file the G.S. 1-111 defense bond. On 15 May 1997 SQF moved for summary judgment.\nOn 18 February 1998, the trial court denied defendants\u2019 motion for summary judgment and granted summary judgment to SQF, determining that SQF was \u201cthe owner in fee simple of the property which is the subject of this action and entitled to immediate possession of the property.\u201d The trial court also granted defendants\u2019 motion to file a defense bond. Upon posting the defense bond required by G.S. 1-111, defendants appealed. In addition, SQF cross-assigned as error the trial court\u2019s determination allowing defendants to file the defense bond.\nHomthal, Riley, Ellis and Maland, by L. P. Homthal, Jr. and M. H. Hood Ellis, for plaintiff-appellee.\nMoore & Van Allen, PLLC, by David E. Fox and Christopher J. Blake, for defendant-appellants." }, "file_name": "0106-01", "first_page_order": 136, "last_page_order": 146 }