LEXIS-NEXIS, DIVISION OF REED ELSEVIER, INC.,
Plaintiff
v
.
TRAVISHAN CORPORATION,
Defendant
Smith, Debnam, Narron, Wyche, Story & Myers, by Gerald H.
Groon, Jr., and Matthew E. Roehm, for plaintiff cross-
appellant.
Florence Amelia Smith, CEO, President, Chairman of the Board
of Travishan Corporation, for defendant cross-appellee.
CAMPBELL, Judge.
Plaintiff appeals from an order entered 5 June 2000 by Judge
Craig Croom (“Judge Croom”) in Wake County District Court
permitting defendant, TRaviSHan Corporation, to be represented pro
se by its CEO, President, Chairman of the Board and sole
shareholder, Ms. Florence Amelia Smith (“Ms. Smith”). Defendant
appeals from an order entered 11 May 2001 by Judge Donald W.
Stephens in Wake County Superior Court dismissing defendant's
counterclaim.
Plaintiff filed a complaint against defendant on 13 October
1998 for breach of contract seeking damages in the amount of$2,922.26 plus interest. Ms. Smith filed an answer and
counterclaim on behalf of defendant on 7 April 1999. Plaintiff
filed a reply denying the allegations in the counterclaim on 7 June
1999. Thereafter, plaintiff filed an amended complaint and
defendant filed an amended answer.
Plaintiff filed a motion to strike defendant's answer and
counterclaim asserting that Ms. Smith's pro se representation of
defendant violated N.C. Gen. Stat. § 84-5, which provides that a
corporation may not practice law in North Carolina. Defendant
answered this assertion with a motion to permit the appearance of
Ms. Smith on behalf of defendant, citing the constitutions of both
United States and North Carolina. Pursuant to Canon 3(A)(4) of the
Code of Judicial Conduct, which provides that a judge may obtain
the advice of a disinterested expert on the law applicable to a
proceeding before him,” Judge Croom sought advice from the North
Carolina State Bar. A deputy counsel, assigned to answer inquiries
regarding the unauthorized practice of law, advised Judge Croom
that, in the State Bar's opinion, Ms. Smith's appearance on behalf
of defendant would not constitute unauthorized practice of law
because an owner and officer of a corporation may represent her
company to the same extent as an individual pro se party.
Thereupon, Judge Croom issued an order denying plaintiff's motion
to strike and permitting Ms. Smith's representation of defendant.
Plaintiff filed a reply to defendant's amended answer and
counterclaim that included a request for a written statement of
monetary relief and a motion to transfer to Superior Court. Themotion to transfer to Superior Court was permitted on 5 September
2000. Plaintiff then filed a motion to dismiss defendant's
counterclaim, which was granted on 14 February 2001, nunc pro tunc
15 December 2000. Plaintiff voluntarily dismissed its claim on 1
March 2001. Defendant filed multiple motions for rehearing. Judge
Stephens entered, on 11 May 2001, an order reaffirming the prior
dismissal.
Defendant appealed from the Superior Court order dismissing
her counterclaim, and plaintiff cross-appealed the District Court
order permitting Ms. Smith to represent defendant.
Appellate “[r]eview is limited to questions so presented in
the several briefs. Questions raised by assignments of error in
appeals from trial tribunals but not then presented and discussed
in a party's brief, are deemed abandoned.” N.C. R. App. P. 28(a)
(2001). The Court may, however, in its discretion, suspend the
rules of appellate procedure. N.C. R. App. P. 2 (2001). Defendant
appealed from the Superior Court order dismissing her counterclaim,
but failed to argue this issue or any other assignments of error in
her brief. Therefore, pursuant to Rule 28(a), defendant's
assignments of error are deemed abandoned. However, pursuant to
Rule 2, we choose to address the merits of defendant's claim to the
extent implicated in plaintiff's cross-appeal.
The issue presented to the Court on cross-appeal, and argued
by both parties in their briefs, is whether or not the district
court erred by permitting Ms. Smith to represent defendant
TRaviSHan Corporation pro se. Regarding legal representation, North Carolina law provides
that “it shall be unlawful for any person or association of
persons, except active members of the Bar of the State of North
Carolina admitted and licensed to practice as attorneys-at-law, to
appear as attorney or counselor at law in any action or proceeding
before any judicial body . . . except in his own behalf as a party
thereto.” N.C. Gen. Stat. § 84-4 (2001). Moreover, “[a]
corporation cannot lawfully practice law. It is a personal right
of the individual.” Seawell, Attorney General v. Motor Club, 209
N.C. 624, 631, 184 S.E. 540, 544 (1936). With these general rules
in mind, we turn to the issue of whether or not a corporation may
be represented pro se by its agent, even where its agent is the
CEO, president, chairman of the board, and sole shareholder.
Because this is an issue of first impression in our appellate
courts, we find it helpful to consider the law from other
jurisdictions.
“The prevailing rule is that a corporation cannot appear and
represent itself either in proper person or by its officers, but
can do so only by an attorney admitted to practice law.” Oahu
Plumbing & Sheet Metal v. Kona Constr., 590 P.2d 570, 572 (Haw.
1979) (citing numerous cases from other jurisdictions throughout
the United States). “Not only has this principle long been
recognized, it has been almost universally accepted.” Eckles v.
Atlanta Technology Group, Inc., 485 S.E.2d 22, 25 (Ga. 1997). The
rule is often applied only in the context of litigation. For
example, the Restatement of the Law Governing Lawyers, providesthat “a nonlawyer officer of a corporation may permissibly draft
legal documents, [and] negotiate complex transactions.”
Restatement (Third) of the Law Governing Lawyers § 4 cmt. e
(1998). The restatement further explains that “[w]ith respect to
litigation, several jurisdictions except representation in certain
tribunals, such as . . . small-claims courts and in certain
administrative proceedings.” Id.
North Carolina has never expressly adopted the general rule,
but our appellate courts have recognized the most common exceptions
to the rule. The North Carolina Supreme Court held that a
corporate employee, who was not an attorney, could prepare legal
documents. State v. Pledger, 257 N.C. 634, 127 S.E.2d 337 (1962).
The North Carolina Court of Appeals recognized the exception, that
a corporation need not be represented by an attorney in the Small
Claims Division since “in enacting our small claims court system .
. . the General Assembly apparently intended . . . to provide our
citizens, corporate as well as individual, with an expedient,
inexpensive, speedy forum in which they can process litigation
involving small sums without obtaining a lawyer.” Duke Power Co.
v. Daniels, 86 N.C. App. 469, 472, 358 S.E.2d 87, 89 (1987). In
addition to these exceptions, the North Carolina Court of Appeals
also recognized that a corporation may make an appearance in court
through its vice-president and thereby avoid default. Roland v.
Motor Lines, 32 N.C. App. 288, 231 S.E.2d 685 (1977).
Ms. Smith asserts that since a North Carolina corporation may
make an appearance through an officer, it may also represent itselfin the ensuing litigation through an officer. This argument
misapprehends the substantial difference between permitting a
corporation to make an appearance and permitting a corporation to
practice law.
As the Court explained in Roland, “an appearance may arise by
implication when a defendant takes, seeks, or agrees to some step
in the proceedings that is beneficial to himself or detrimental to
the plaintiff.” Id., 32 N.C. App at 289, 231 S.E.2d at 687.
Moreover, “negotiations between parties after the institution of an
action may constitute an appearance.” Webb v. James, 46 N.C. App.
551, 557, 265 S.E.2d 642, 646 (1980) (holding that negotiations
between the parties for a continuance constituted an appearance).
Such negotiations would typically be made through an agent of the
corporation, since “[a] corporation can only act through its
agents.” Godwin v. Walls, 118 N.C. App. 341, 348, 455 S.E.2d 473,
479 (1995). Though an agent may negotiate with an opposing party,
and therefore may make an implied appearance on behalf of a
corporation, it does not follow that the agent may also litigate
for the corporation.
North Carolina has expressly adopted the most common
exceptions to the general rule prohibiting non-attorney
representation of corporations. We now expressly adopt the general
rule, and hold that in North Carolina a corporation must be
represented by a duly admitted and licensed attorney-at-law and
cannot proceed pro se unless doing so in accordance with the
exceptions set forth in this opinion. Accordingly, we hold the District Court erred by permitting
Ms. Smith to represent defendant TRaviSHan Corporation. The
decision of the District Court is reversed. Defendant's appeal
from the Superior Court is dismissed.
Dismissed in part, reversed in part.
Judges WYNN and HUDSON concur.
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