American Nat. Bank v. Brickhouse

• Decision Date: 23 February 1927
• Docket Number: 16.
• Citation: 136 S.E. 636,193 N.C. 231
• Parties: AMERICAN NAT. BANK v. BRICKHOUSE et al.
• Court: North Carolina Supreme Court

136 S.E. 636

193 N.C. 231

AMERICAN NAT. BANK v. BRICKHOUSE et al.

No. 16.

Supreme Court of North Carolina

February 23, 1927

Appeal from Superior Court, Tyrrell County; Nunn, Judge.

Separate actions by the American National Bank against J. S Brickhouse and E. P. Cohoon. Judgments for defendants, and plaintiff appeals. New trial.

The evidence disclosed that on November 11, 1920, the defendant Brickhouse executed his promissory note for $750, payable "to the order of myself, *** value received and without offset," and said note was duly indorsed by said defendant Brickhouse on the back thereof. On November 11 1920, the defendant, Cohoon, executed a promissory note for $500, payable "to the order of myself, *** value received and without offset," and on the same date said defendant Cohoon issued his promissory note for $750 in the same language as the note above referred to, and duly indorsed the same on the back thereof. All of these notes were delivered to the Phos-Pho Germ Manufacturing Corporation in payment of purchase price for certain stock of said corporation. These notes were taken by the Phos-Pho Germ Corporation to the plaintiff, American National Bank, and hypothecated with the plaintiff as collateral security for a line of credit advanced by plaintiff to the Phos-Pho Germ Manufacturing Corporation. The Phos-Pho Germ Manufacturing Corporation had become insolvent, and the plaintiff contends that there is $7,264.64 due by the Phos-Pho Germ Manufacturing Corporation to it upon the line of credit for which the notes in controversy were pledged as security.

The evidence of defendants tended to show that the notes were secured by means of fraud and fraudulent representation made by the agents of the Phos-Pho Germ Manufacturing Corporation in a stock-selling scheme, and that said notes were executed and delivered by the defendants to the agent of the Phos-Pho Germ Manufacturing Corporation for the purchase price of stock in said corporation; that at the time said notes were issued by the defendants the agent of the Phos-Pho Germ Manufacturing Corporation represented that said company was a going concern, had paid large dividends, and the company had a large quantity of fertilizer on hand and that they had factories in Richmond and a large quantity of manufactured fertilizer ready for shipment at New Bern; that all of these representations were false; and that the defendants relied upon said representations.

The defendants further allege that Phos-Pho Germ Manufacturing Corporation had not complied with the Blue Sky Law, and that Mr. O. J. Sands, president of the plaintiff bank, was director in the Phos-Pho Germ Manufacturing Corporation, and that the plaintiff bank was not the purchaser of said notes in due course and without notice.

The issues and answers of the jury thereto were as follows:

"(1) Did defendants execute the notes sued on in this action, as alleged in the complaint? A. Yes.

"(2) Were defendants induced to execute said notes by fraud and misrepresentation on the part of Phos-Pho Germ Company, as alleged by defendants? A. Yes.

"(3) Did plaintiff, American National Bank, take said notes for value before their maturity and without knowledge of such fraud as alleged? A. No.

"(4) What amount is due on the J. G. Brickhouse notes? A. Nothing.

"(5) What amount is due on the E. P. Cohoon notes? A. Nothing."

From the judgment upon the verdict, plaintiff appealed.

W. L. Whitley, of Plymouth, for appellant.

Thompson & Wilson, of Elizabeth City, for appellees.

BROGDEN J.

Exceptions 8 and 12 present this question: Can a witness testify as to the contents of a letter received by him without proof of the genuineness of the original letter and without evidence as to the...