Blount v. Farmers' Bank of Greenville, N.C.
Decision Date | 12 February 1924 |
Docket Number | 456. |
Citation | 297 F. 277 |
Parties | BLOUNT v. FARMERS' BANK OF GREENVILLE, N.C., et al. In re WINGATE. |
Court | U.S. Court of Appeals — Fourth Circuit |
Skinner & Whedbee, of Greenville, N.C., for plaintiff.
Small MacLean & Rodman, of Washington, N.C., and Albion Dunn, of Greenville, N.C., for Farmers' Bank of Greenville.
Lewis G. Cooper, of Greenville, N.C., for Southern Stockyards Corporation.
The bill, answers, plea of intervention, and evidence disclose the following facts:
R. W Wingate, of Ayden, N.C., at some time during the month of September, 1919, applied to the cashier of the Farmers' Bank of Greenville, N.C., for a loan of money. At that time Wingate was engaged in buying and selling horses and mules maintaining for that purpose a sale stable. The bank had theretofore made several loans to him, for the security of which he had deposited notes and chattel mortgages on horses and mules. The bank, in connection with its other banking business, was representing the Virginia-Carolina Joint-Stock Land Bank, of Norfolk, Va., receiving applications for loans secured by mortgages upon real estate in Pitt county. Mr Clodfelter, cashier, stated to Wingate that the loan which he desired was for a larger amount than the bank was in a position to make, and that, in view of his financial condition, he would require a longer credit than the bank could extend. He suggested that Wingate negotiate a loan from the Virginia-Carolina Joint-Stock Land Bank, of Norfolk, Va., for an amount sufficient to retire certain mortgages, then outstanding, on his land, and give him a surplus to meet his business needs, to which Wingate assented; Clodfelter proposing that he would aid him in negotiating the loan. A short time after this conversation, the secretary of the Land Bank, at Norfolk, Va., came to Greenville, saw Wingate and Clodfelter together, and the necessary steps were taken looking to securing the loan.
On September 19, 1917, application, upon blanks furnished by the Land Bank, was filled up, signed by Wingate, and delivered to the secretary or other appropriate officer or agent of the Land Bank. The application was introduced and a copy thereof filed herein. The amount of the loan applied for by Wingate was fixed at $37,500. The application contained a list of the tracts of land and the estimated value thereof, proposed to be conveyed by way of security for the proposed loan, together with a list of the incumbrances, mortgages, etc., thereon, represented to be $13,000. An appraisal of the land was made by the representatives of the Land Bank, and upon their report the executive committee of the Land Bank, on December 29, 1919, filed their report recommending that the bank make the loan.
The attorney for the Land Bank made an abstract of the title to the land, with a statement that the incumbrances thereon were $13,000. On April 1, 1920, Richard Wingate and his wife executed and delivered to the Land Bank their promissory note for $37,500, payable in 40 semiannual installments, including interest, of $1,622.25 each, and at the same time executed and delivered to the Guaranty Title & Trust Corporation a mortgage to secure the payment of said note, conveying the land described in the application, being a portion of the Gum Swamp tracts, which was admitted to probate and recorded in the office of the register of deeds of Pitt county, N.C., April 12, 1920, in Book Q 13, p. 411.
P. L. Clodfelter, cashier of the Farmers' Bank of Greenville, testified that several days after the suggestion was made by him to Wingate to apply for the loan, and 'while the application was in process, and after Wingate had agreed to borrow the money from the Land Bank, he, as cashier for the Farmers' Bank, loaned Wingate $8,000, for which Wingate executed his note to the bank. It was agreed between Wingate and wife and himself that, if he would advance this $8,000, they would cause the money loaned by the said bank to be put in his hands for this loan, so that he (Clodfelter) could get this particular money first. Witness was assured by F. W. McKinney, secretary of the Land Bank, that the loan would go through. Witness would not have made the advance of $8,000, except for the fact that this application was being made and the assurance that it would go through.
Before the executive committee of the Land Bank approved the loan, witness told them of this transaction. After McKinney told witness that the loan would go through, he advanced Wingate, November, 1919, $10,000, in addition to the loan of $8,000. This amount was loaned upon the agreement that the money was to be paid out of this particular loan from the Virginia-Carolina Joint-Stock Land Bank. This agreement was made between Mr. Clark, attorney for the Land Bank, Mr. McKinney, and the Land Bank, on one side, and Richard Wingate, on the other. The money was to be deposited in the Farmers' Bank, so that witness could get his money out of this loan. Wingate testified that it was his understanding with Clodfelter that from the proceeds of the loan, which he expected to receive from the Land Bank, the prior mortgages on the land were to be paid off first, and then the loans made by the Farmers' Bank were to be paid; that the money, proceeds of the loan, was to be sent by the Land Bank to the Farmers' Bank for that purpose. This is corroborated by McKinney and Clark. It was clearly understood by and between all of the parties that, when the loan was made by the Land Bank, the money was to be sent to the Farmers' Bank of Greenville, and the mortgages on the land paid and canceled, under the supervision of Mr. Clark, attorney for the Land Bank, and the notes for amounts advanced by the Farmers' Bank for $8,000 and $10,000 were to be paid from the proceeds of the loan. Mr. McKinney thus describes the process by which the loans were secured from the Land Bank:
There was delay in perfecting the arrangement for completing the loan and securing the money, occasioned to some extent by the litigation pending in the federal court, involving the validity of the federal Land Bank Act of July 17, 1916 (Comp. St. Sec. 9835a, et seq.), resulting, February 28, 1921, in the decision of the case of Smith v. Kansas City Title & Trust Co., 255 U.S. 180, 41 Sup.Ct. 243, 65 L.Ed. 577. During this time the value of lands in eastern North Carolina depreciated very heavily, occasioning doubt, whether, when the litigation came to an end, the Land Bank would make the loan. Wingate renewed his notes to the Farmers' Bank, under the same agreement, as to the application of the money expected from the loan, made at and before the loans were made. On December 24, 1920, Mr. W. A. Dunn, attorney for the Farmers' Bank wrote Mr. McKinney as follows:
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