51 S.E. 79 | N.C. | 1905
W. W. Jones, receiver of the Western Carolina Bank, having found the note of defendant, to the amount of $600, among the assets of the bank, instituted this action against defendant, alleging that the note sued on belonged to the bank and was due and unpaid. The defendant answered and denied that the note belonged to the bank, and by way of further defense averred that on or about 22 February, 1897, he was approached by one Lewis Maddox, at that time president of the Western Carolina Bank, who stated to him that J. E. Reed, who was the father-in-law of the defendant and a director of said bank, was largely indebted to said bank and that the bank had been criticised by the public and others interested in the affairs of the bank because of said fact — that is, because said Reed, being such debtor, was also a director of the bank; that he (Maddox) and Reed had agreed together that the defendant should formally take an assignment of the stock which said Reed then held in the bank, to wit, $500 of the same, and the defendant should formally execute his note payable to Reed therefor; "that new stock should be formally issued to the defendant in place of the stock of said Reed, and that said note and said stock should be held by said bank, but that the same, the said note, should (530) never be collected or presented for payment, and that said stock, although issued to the defendant, should be considered and remain the property of the said J. E. Reed; that said Reed should resign as such director in said bank, and that this defendant should formally become a director thereof in his place. *382
"That thereupon this defendant, believing said transaction innocent in itself, and that thereby he would subserve the interest of said bank and of the said J. E. Reed, his father-in-law, he consented to make said note upon said terms and did then and there sign the same and deliver it to said bank through the said Maddox, its president, upon the terms and understanding stated in the first paragraph of this further defense; and the said note was held by said bank and said receiver took the same, if he took at all, and still holds it, upon said terms above set forth.
"Wherefore, this defendant demands judgment that the said note be delivered up for cancellation and that he go hence without day and recover of the plaintiff his reasonable costs in this action behalf incurred."
There was evidence that the defendant's father-in-law, J. E. Reed, now dead, had been a stockholder and director in the bank and had borrowed a large sum of money, which he still owed, and the management of the bank was being criticised by reason of the loan of so much money to one of its directors. It was thereupon determined, at the suggestion of the president, that Reed should sell his stock to defendant, resign as director, and the defendant should become director in his place. In pursuance of this arrangement Reed surrendered his stock and same was canceled and a new certificate was issued in the name of the defendant, and the defendant executed the note sued on to J. E. Reed and both note and stock certificate were left with the bank.
The defendant having thus become a stockholder, was elected (531) director instead of Reed, and qualified as such and served from February, 1897, to October of the same year; then the bank suspended. The defendant took part as director in the bank management, was present at the meetings and received pay for his services as director. This note and stock certificate were found with the assets of the bank, marked as collateral to Reed's indebtedness, and had been reported as part of the bank assets during the year the defendant served as director. The defendant testified that all this was only a formal arrangement, and that it was understood and agreed at the time the note was signed by him and left with the president of the bank that payment of his note should never be enforced, and that the stock was left with the bank as the property of Reed. The president of the bank testified that there was no such arrangement, but that Reed sold his stock to the defendant, who executed the note sued on, pledging the stock issued to him to secure his note, and that both note and stock were placed by Reed with the bank as collateral for Reed's indebtedness. *383
On issues submitted the jury rendered a verdict that the bank was the Owner of the note, and that it agreed at the time the note was executed that the defendant should not be liable thereon, as alleged in the answer. On the rendition of the verdict the plaintiff moved for judgment for the amount of the note and interest, which was refused, and the plaintiff excepted. There was judgment for the defendant, and the plaintiff excepted and appealed.
The Court is unable to perceive anything in the allegations or testimony which shows or tends to show a valid defense to this demand. It appears from the answer and the evidence that the defendant executed the note sued on to his father-in-law, J. E. Reed, for his stock in the bank, and received the consideration. (532) By virtue of his agreement and the note the defendant became a stockholder in the bank, qualified and served as a director, taking part in the bank's management and receiving pay for his services. During that time this note was reported as part of the assets of the bank, and the jury have decided that same belonged to the bank. The only defense attempted amounts in substance to this: That though the defendant executed his note and received a valuable consideration for same, there was an understanding and agreement at the time that payment should never be enforced or demanded. All the authorities are agreed that such a defense is not open to the defendant. In Meekins v. Newberry,
And by Smith, C. J., in Ray v. Blackwell,
The principle is so familar [familiar] that citation of authority is not required, *384 but the decisions are noted by reason Of the marked similarity of some of them to the case before us.
(533) The jury having declared by their verdict on the first issue that plaintiff is the owner of the note sued on, and there being nothing in the further defense or the testimony which tends to establish a legitimate defense, the Court is of opinion that the plaintiff is entitled to a judgment for the note and interest, notwithstanding the verdict on the second issue, and his motion to that effect should have been allowed. Ward v. Phillips,
Let this he certified, to the end that judgment be entered in favor of plaintiff for the note and interest.
Error.
Cited: Mudge v. Varner,