*1 аn permitted proceed pro se, Once accused is to wit- tingly otherwise, a trial without court cause cannot prohibit or representing inhibit an accused himself from conducting adequate defense, course, which, a full and argue deny right jury. includes to his case to the To right fully extending right accused this while State, deny disregard the accused a fair trial protections of the constitutional afforded accused. upon undisputed case, Based facts of this the con- State, foregoing fession error and for the rea- sons, judgment Monongalia Circuit Court County nullity. is a
Reversed. Peoples Bank of Point Pleasant Piper Retreat,
Pied corporation, et al.
(No. 13387) July 23, Decided 1974.
Rehearing Denied November 1974. *2 McDavid, Pleska P. Michael Stone, Bowles, & Kauffelt appellants. for Kingery appellee. Kíngery, Don C. Dean & Sprouse, Justice: judgment of the Circuit appeal from the is an
This plaintiff, Peoples County where of Mason Court Pleasant, $5,073.51 against Bank of Point was awarded Piper Retreat, Curatolo, Pied Frank R. and P. A. Sayre, defendants, promissory in an action on a note. The action sitting was tried the trial court jury. lieu aof appellants, dispute do Curatolo not they signed question, they note but contend
signed They parties. it as accommodation further con- any liability tend that are releasеd from on the provision note under of the Uniform Commercial (Code, 1931, amended), 46-3-606, Code which releases negotiable liability, certain to a instrument impaired when the holder of the instrument has collat- given security. appellee eral bank admits that perfect did given lien with connection note, thereby losing securing note, the collateral but appellants principal contends аre debtors on the and, therefore, *3 provided by note the defense Section 606 is not available to them. The bank also contends that available, even if such a defense would be otherwise it Sayre, should be denied the defendant because as a di- bank, of fiduciary duty rector the he breached his advising previously existing them of a lien by held the Small Business Administration. appellants, Curatolo аnd the were sole stock- Piper Retreat, Inc., of corporation holders Pied a which purchased motel, financing by a purchase money it a loan from the Small Business Administration. The Small Business upon tangi- Administration a retained lien all property resort, ble of including acquired” the “after personal property.
Subsequently April, negotiated the defendants plaintiff loan with purchase thе bank for the of a motel, number of executing television sets the a note $20,060. proceeds in the amount of of the loan were by paid the bank and all of principal the and interest except $5,073.51 repaid had been at the time suit was “* * * note, stating promise we brought. * * Piper Retreat, by pay signed was “Pied Curatolo, signed the Pres.”, and re- Frank R. was Sayre. A. R. and P. verse Frank Curatolo side Sayre Pipеr in Pied Curatolo and sold their stock later took the Business Administration but Small possession property under the 1968 deed of trust. the acquired” property Acting under “after lien the its trust, applied sets the television and deed sold proceeds claim the of the sale to its loan balance. The priority, resulting pur- its plaintiff the bank for money upon sets and lien the television chase per- equipmеnt, it had not business was denied because filing financing by properly lien fected its Secretary with the office of State. concerning sharp
There was conflict evidence signed capacity the note. Mr. in which defendants began negotiations Emil E. for the loan with Curatolo Martin, president vice and cashier executive plaintiff bank. the loan committee recommended
Martin testified аpproved, loan directors be to the board of signed Mr. and Mr. Cura- provided it be both meeting ap- of the board personally. tolo The minutes indicating proving the contained notation loan signed by would must both note be personally responsible. be Fruth, chairman of the executive
Martin Jack committee, personal signatures testified that corporation required appellаnts because had were *4 time; any bank operation extent of the not for been sets; marketing television position in a was money. corporation could not look to testimony was not that the loan stated in his Fruth Piper security signature of Pied upon made security Retreat, involved upon the the collateral but testi- signatures two individuals. Fruth of the and the concerning as fled follows his communication of this to the defendants:
“Q. security Was that loan made on the of Pied Piper Retreat? No,
“A. sir. “Q. you thought Did communicate that to Mr. Sayre? Yes,
“A. sir. “Q. you your security What did base on for that loan? “A. It was based on the collateral involved and signatures of the two individuals.” they advised,
Martin and Fruth both testified were not by Sayre Curatolo, any either or as to the existence of acquired property” “after clause the Small Business security agreement. Administration deed of trust According testimony Curatolo, signed he understanding note with the it would be filled in billing when the were invoices received the bank. He receipt received a which he testified obtained was be- signed cause the instruments were in blank. He stated signed president corporation, that he as note sign and was called in at a later time to еndorser. Sayre testified that he was Hawaii when the loan negotiated, returning County was to Mason after approved. signed loan was He testified he endorser explained why and that he did not if know it was to him signature required. his was He stated that no one at the inquired any negotiations bank ever with the any Small Business Administration or as to liens against corporation. He testified that he told Fruth shortly acquired, аfter the motel was had been purchased from the Small Business Administration mortgage not, would have a first on it. He did acquired” property tell him about the “after clause. *5 rebuttal, Liberatore,
On Mario assistant cashier of plaintiff bank, meeting testified that he attended a be- appellants, tween the Mr. Martin and others. At this time, note, security agreement, he testified that a financing and statement were executed. He stated that they completed were at the time of execution. This testi- mony by was substantiated Mr. rebuttal Martin.
At evidence, the conclusion of all of the the court findings made oral of fact and conclusions of law as follows: “(A) defendant, Sayre, That P. A. breached duty fiduciary
a owing by plain- then him to the failed, tiff prior when he to the consummation loan, plaintiff to inform the bank of the exis- prior tenсe of the Small Business Administration lien. “(B) defendants, That both Frank R. Curatolo Sayre and P. A. primary were in their
respective capacities question on the note in and that neither of par- them was accommodation ty as claimed in their defenses.” (1) appeal issues raised on are The case whether: should be remanded to the trial court because that court did not findings make written of fact and conclusions required Virginia law Rule 52 of the West Rules (2) Procedure; defendant, Civil breached a fiduciary duty affirmatively advising to the bank in not prior them of the existence Small Ad- Business (3) lien; ministration the bank’s failure to record fi- nancing Secretary in the office of the of State impairment collateral, constitutes unreasonable so, if were par- Curatolo and accommodatiоn so liability by ties would be released impairment. virtue of such unreasonable After findings the trial court made its of fact and law, announcing orally court, conclusions of them reporter court They failed to transcribe them. are well documented, in the record motion of the parties. approve practice we do not While this impose mere-
general rule, do not conceive Rule 52 we findings are ly requirements. the court’s Since formal com- sufficiently record to allow a in the documented constituting review, findings, plete while the form the error, reversal remand. is not sufficient error Wy- Company Grange See, Mutual Insurance National *6 Va., County Agency, W. 195 S.E.2d oming Insurance (1973); Company v. Tri-State Tire 151 Commonwealth Company, 544. Tire W. Va. 193 S.E.2d disclo- an officer must make fullest A director or fairly thеre- with the bank in his relations and deal sure Banking, Chapter 3, Michie, Section Banks and with. 1 71, required, of his fidu- 291. A director is because page character, good faith and fair- ciary to act with utmost 180. Am. 2d Banks Section ness. 10 Jur. Blizzard, Parkersburg Bank In National Citizens 338, 511, failed to disclose 93 S.E. a director W. Va. by president on checks
payment of the bank overdrafts by and corporation a in which both the director issued president involved. The court held the direc- were given and have notified the directors tor should disapprove presi- opportunity approve or to them an See, Bank v. Oil & Coal dent’s acts. Lowther-Kaufman knowledge Co., 66 S.E. where 66 W. Va. director, not dis- which accrued to his interest was imputed closed, so as to bind could not be adversely. the bank any of his evidence does not reveal use
A review by Sayre position to secure favorable action the loan. contrary strictly probably Limited to is indicated. case, feel we don’t the circumstances of this affirmatively advising fiduciary duty not breached prior Business Administration the bank Small receiving good applying faith acts in loan. His in was discussed are not the same character loan above. the authorities cited appeal presented on this is The most serious issued paying appellants be should excused whether the balance due on the “impaired note because the bank perfecting the collateral” its lien on the television sets.
Code, 1931, 46-9-401, amended, provides: “(1) proper place in perfect file order ** security interest *: * * * “(c) secretary the office of the of state addition,
and in if place the debtor has a of busi- only county State, ness one of this also * * county office of the county, clerk of such There is perfected no doubt the bank could have lien on its the television sets so that it would have priority over lien, the Small Business Administration if security the bank had filed the instruments accor- provisions Code, 1931, 46-9-312(4), dance with the provision provides: amended. That *7 purсhase money security “A interest in collat- inventory eral other than priority has over a security conflicting interest in the same collater- purchase money security al if the per- interest is fected at possession the time the debtor receives days the collateral or within ten thereafter.” There is likewise no doubt the failure of the bank financing to file the at office of the secre- tary of state losing priority. resulted its its lien’s That question loss, raises whether such caused neglect, bank’s obliga- releases Curatolo and tion on the note.
Code, 1931, 46-3-606, amended, provides: as
“(1) discharges any party The holder par- instrument to extent that without such ty’s consent the holder “(b) unjustifiably any impairs collateral for the given by instrument party or behalf of the
178 right against has a of re-
any person whom he course.” signed the note considering the defendants
In
whether
defense,
this
as
avail
themselves
manner
to
such
failure to
whether
bank’s
must
first determine
we
unjustifiably
impairs
perfect
an
which
the lien is
action
question
considering
any
courts
collateral.
few
applicability
of the “im-
agreement
as to the
are not
pairment
to a transaction
such as
of collateral”
defense
Code, 46-3-606,
to
here. The official comment
is involved
“unjustifiable”
discussing
im-
what action constitutes
Code,
pairment,
That
relates
to
46-2-207.
section
refers
par-
is
“Rights
collateral
in secured
and duties when
governs
impairment
ty’s possession,”
direct
security
collateral,
impairment
rights
value
interpreted
A
of courts have
collateral.
number
in the
provision
Code in this
of the Uniform Commercial
this
Scullin,
Wide,
Supp.
v.
256 F.
Nation
Inc.
manner.
(D.C.
Corporation,
N.J.);
M. M.
Rushton v.
Credit
U.
&
81;
Willier,
2 Hart &
Ark.
434 S.W.2d
Commercial
U.C.C.,
12.21[2], page 12-88.
Paper
Some
Under
Section
held,
impairment
that such
courts have
security
here
rights
in collateral
was involved
is
contemplated
unjustifiable
impairment
of collateral
Company
Code,
v.
First Bank and Trust
46-3-606.
907;
v.
Post,
App. 3d
293 N.E.2d
House-
10 Ill.
White
(Ind.);
Corporation,
Finance
able
*8
parties.
undoubtedly
is
ary
This
or accommodation
secondary parties
is
both
defense
available
to
rule —the
parties, whether
the latter
are sec-
and accommodation
оndary
parties
as
accommodation
such
accommodation
endorsers,
primary
parties
such as
accommodation
or
is not
to
makers. The defense
available
accommodation
principal debtors,
i.e.,
See,
makers.
the official comment
Code, 46-3-606,
to
where it
is indicated
this is a
suretyship
party
defense
available
to
who has
re-
against
course
party
another
instrument.
See
also, Hawkland,
I
A Transactional Guide to the Uniform
Code,
2.1705,
Commercial
page 551,
Section
Section
2.2101,
563;
page
Oregon
Baardson,
Bank v.
256 Ore.
454,
signing they signed the notes. If par- as accommodation ties, they signed defense ais valid one. If the note principal debtors, i.e., as makers, as not an accom- endorser, modation maker or the defense of “impairment of collateral” is not available to them. party An Code, 1931, is accommodation defined in 46-3- “* * * 415(1), amended, signs as: who [0]ne the instru- any capacity ment in purpose lending for the his party name to Code, 1931, another it.” Under 46-3- 415(2), amended, party accommodation is liable in capacity in signed. may, which hе has therefore, He maker, be acceptor endorser, accommodation or etc. Anderson, 2In Code, Commercial Section 3- Uniform 415:4, page 1000, following appears: “One signs any capacity who an instrument purpose for the lending his party name to another to it is an accom- regardless party, modation any whether he received compensation acting grаtuitously.” so so did
Code, 1931, 46-3-415, amended, (4) pro- in subsection vides: “An indorsement which shows that it is chain of title is notice of its accommodation character.” general
It is the determining rule that whether given party party, fact an accommodation the in- significant tention of the is a element. 2 Ander- son, Code, 3-415:9, page Commercial Section Uniform 1002.
180 122, 1002, Harrold, the Va. 32 S.E. v. 46 W.
In Parsons Syllabus point as fol- fourth of the stated in the Court lоws: prima the persons make a note two “When fa- principals, presumption are both is that cie them, may treat unless the payee so and the circumstances, plainly
note, parties, or the or the surety. surety payee is a The that one inform the payee may notify payee, then the the so rights such.” regard to his as must have George, 86 W. However, v. Va. this held Cole Court person рlaced his name on a who that S.E. any qualifi- negotiable without instrument the back of a writing, agreed contract. endorser’s cation 46-3-402, amended, Code, 1931, states: “Unless the signature clearly that a is made indicates instrument capacity it is an indorsement.” some other negotiable clear, the face of the It from sign appellants the intended to the here that instrument note, containing the than as endorsers. note other * * * * “* *, evidencing promise pay while language we only promise, non-corporate plural the bore both signature corporation the on the front of the instru- negotiable the face of it is clear ment. Where parties signed capacity in a instrument the dispute endorsers, is a as to which but there than the capacity, parol is admissible to show inten- evidеnce capacity in parties as to the which instru- tion of the Company signed. and Trust First Bank ment was supra. Post,
Testimony concerning capacity appel- in which the conflicting signed the note was so trier lants only by believing resolved some wit- fact could have apparent- disbelieving trial court others. The nesses and ly the evidence for chose to believe directly to two individual defеndants was made loan (makers). evidence, together principal debtors This concerning corpo- structure with evidence ration, of the loan from the bank with active solicitation defendants, position individual and the of the defendant, certainly comprises evidence which the trial properly court could have considered arriv- ing finding at a fact as to the intention conсerning capacity they signed in which the note. findings sitting factual of a trial court in lieu of a *10 jury will appeal not be disturbed unless are plainly wrong. This rule is so well settled that it re- quires no Supply detailed discussion. Company Bluefield Appliances, v. Frankel’s 622, 149 W. Va. 142 S.E.2d 898; Foglesong Foglesong Home, Inc., Funeral 149 W. 390; Va. 141 S.E.2d Corpora- General Electric Credit Fields, tion v. 780; 148 W. Va. 52(a), 133 S.E.2d Rule Virginia West Rules of Civil Procedure. say in reviewing
Wе cannot the evidence in this case wrong that the finding trial court was that Curatolo and secondary were neither nor accommodation parties. above, judgment
In view the of of the Circuit County of Court Mason is affirmed.
Affirmed. Neely, Justice, dissenting-. respectfully ruling
I dissent from the majority Court, particularly regard of the holding with to the syllabus point provides 4 which that the unreasonable impairment Code, 1931, of collateral under 46-3-606 re- only secondary parties. leases and accommodation With due deference to the learned discussion of the official precedent contrary foreign commentator jurisdictions, appears that the statute is clear when it says: discharges any party “The holder to the instru- (emphasis supplied.) ....” pro- ment When the statute “any party” logic “any par- vides demands it mean ty” application secondary and its not be limited to parties. impairment accommodation Unreasonable of col- discharge adversely lateral should is maker who also by impairment collateral, affected a holder’s of the proceeds potential longer available the no has the maker reducing purpose his for of the collateral sale satisfy note. expenses out-of-pocket result. Furthermore, public policy dictates this proper regu- Virginia are not many parts borrowers of West In ignorant of the by legal and are larly counsel advised requirements complex set forth law and commercial security interests. perfecting for in the Code Commercial lawyers specialize who do not Many wеll-qualified Banks, similarly on the uninformed. law are commercial ev- hand, secured transactions perform numerous developing expertise capability ery day and have the security perfecting interests. It requirements in the security perfect its responsibility of the bank to protection, I would infer from for its own interest intent of the reading it was the plain of the statute Code, adopting 46-3-606 risk Legislaturе be sustained impairment of collateral virtue of loss expertise greatest and who is party with security perfection interest. responsible for the *11 the case and remand Accordingly, I would reverse exclusively of whether on the issues a new trial fiduciary duty defendant, breached a financ- failure to record and whether bank’s Secretary of State ing in the office impairment collateral. an unreasonable constituted Virginia of West State Bernard Hacker William
(No. 13465) 19, 1974. Decided November