Baach v. Bank Of Pocahontas.*

• Decision Date: 17 September 1931
• Citation: 160 S.E. 68
• Court: Virginia Supreme Court
• Parties: BAACH v. BANK OF POCAHONTAS.*

160 S.E. 68

BAACH

v.BANK OF POCAHONTAS.^*

Supreme Court of Appeals of Virginia.

Sept. 17, 1931.

Error to Circuit Court, Tazewell County.

Action by notice of motion for judgment by the Bank of Pocahontas against Louis Baach and others. To review an adverse judgment, named defendant brings error.

Reversed and rendered.

Argued before CAMPBELL, EPES, HUDGINS, GREGORY, and BROWNING, JJ.

Clarence Smith, of Tazewell, for plaintiff in error.

R. O. Crockett, of Tazewell, for defendant in error.

EPES, J.

This is an action brought by notice of motion for judgment in the circuit court of Tazewell county by the Bank of Pocahontas against Sidney Bloch, Excelsior By-Producta Coal Company, a corporation, and Louis Baach, to recover from the defendants the amount due upon a certain negotiable note.

The note sued upon is a note dated Pocahontas, Va., October 19, 1926, drawn for $2,875, payable at First National Bank, Pocahontas, Va., eighty days after date, to the order of Excelsior By-Products Coal Company, and signed by Sidney Bloch. The indorsements on the back of the note, in so far as here material, read as follows:

"It is expressly agreed that we the undersigned endorsers of this note, do each waive the benefit of our homestead exemption on this note, and we each * * * agree * * * to pay in addition to the amount due hereon, 10% of said amount as attorney's fee, in no case to be less than $5.00.

"P. O.

"Excelsior By Products Coal Co.

"P. O. Louis Baach

"P. O. First National Bank

"Pocahontas, Virginia "W. R. Graham, Pres."

The note has on its face an unsigned memorandum as follows:

"Credit the maker.

"When due, April 17, 1927."

We are here concerned with the case only in so far as judgment was entered against Louis Baach. He pleaded the general issue, and filed his grounds of defense, which read:

"The defendant, Louis Baach, for his grounds of defense states that he intends to prove the following:

"(1) That Louis Baach signed said note on the back thereof not in his individual capacity but as an officer of Excelsior By-Products Coal Company, a corporation:

"(2) That the Bank of Pocahontas is not a holder in due course of said note."

By agreement, the case was tried by the court without a jury; and the plaintiff introduced the note sued on and rested.

The defendant introduced an agreement between the First National Bank of Pocahontas, hereinafter called the national bank, and the Bank of Pocahontas, hereinafter called the state bank, which, with some immaterial omissions, reads as follows:

"This contract made * * * this the 4th day of November, 1926, * * * between First National Bank of Pocahontas * * * party of the first part, and Bank of Pocahontas, * * * party of the second part:

"Witnesseth

"Whereas, the party of the first part finds itself embarrassed in meeting its current demands and obligations and is desirous of effecting an agreement by which its depositors may be paid without delay and without the cost and inconvenience of a receivership; and,

"Whereas, the party of the second part, in order to avoid the financial distress and in-convenience to the said depositors in the said First National Bank of Pocahontas and to promote the business interests of the entire community, has agreed provided it is fully indemnified, and upon certain stipulations hereinafter specified, to assume all liabilities as shown by the books as of this date, except those to shareholders, and pay off the depositors of the party of the first part as hereinafter shown.

"Now, therefore, it is agreed between the parties as follows:

"I. That for and in consideration of the premises, and of the sum of Five Dollars, paid, * * * the party of the first part hereby sells, transfers, assigns and delivers unto the party of the second part all of its assets of every kind and description consisting of * * * all the notes * * * (and) all other assets of whatever character and description and wherever situated and belonging to the party of the first part.

"II. The party of the first part binds itself, whenever requested, hereafter, to execute or cause to be executed, any and all writings which may be deemed necessary and expedient to vest in the said party of the second part title to and possession of any and all property, real and personal, hereby sold and assigned and which would expedite or facilitate the collection of any notes, discounts, bills receivable, or overdrafts hereinbefore mentioned, and that it will, wherever requested, make such additional assignments, writings, etc.

"III. In addition to the assets hereinbefore mentioned turned over to the party of the second part by the party of the first part, the party of the first part agrees and binds itself to deliver to the party of the second part contemporaneously with the signing of this contract and agreement, to further indemnify it, the said party of the second part, from any loss or damage by reason of the liabilities it assumes under this contract, a bond executed to the party of the second part by W. R. Graham, H. P. Brittain, H. W. Hicks, R. C. Harrison and L. E. Ward for the sum of Fifty Thousand Dollars ($50,000.00).

"It is expressly agreed and understood that in the event the assets herein transferred are ascertained, as hereinafter set out, as not sufficient to pay off and discharge all of the liabilities assumed hereunder by the said party of the second part, that the said bond of Fifty Thousand Dollars shall at once become due and collectible, and so much of the proceeds thereof as may be necessary to cover any loss sustained by the party of the second part by reason of its undertakings hereunder shall be applied to that purpose.

"IV. The party of the second part for the consideration hereinbefore stated agrees and binds itself to pay (a) all debts due the United States Government by the party of the first part, and all taxes for which the party of the first part is legally liable; (b) all necessary and proper expenses, incident to transferring of the business, including the preparation of papers, contracts, minutes and cost of stationery, clerk hire, if any, etc., incident to transfer, etc.; (c) amount due depositors of the party of the first part when and as called for, in accordance with the conditions of deposit; all expenses, including attorney fees and costs, incurred by the party of the second part in the collection of, or efforts to collect, the assets, all taxes, and all necessary expenses in handling the business, except the party of the second part shall make no charge for rental or for clerical help for its services in the regular course of business after the transfer has been fully consummated.

"V. It is further covenanted and agreed that whatever, if anything of the assets herein assigned, remains after paying the above liabilities, expenses, fees, costs, taxes, etc., shall be returned to the party of the first part or to its orders. * * *

"VI. It is expressly agreed that the party of the second part assumes no other or further liabilities than that herein expressly provided for.

"VII. It is further agreed and stipulated that the party of the second part shall have wide discretion in the manner of handling the business and collecting and disposing of the assets herein transferred to it, and shall use the best judgment of its officers in regard thereto; that it may make renewals and receive partial payments, exchange or substitute endorsers, receive additional or substitute collateral, and do whatever it believes to be to the best interest of the parties to this agreement in order to effect the collection of the assets. It shall have discretion as to the steps to be taken to collect such assets, and if party of the second part shall be of opinion that any of such assets are insolvent, worthless or not collectible, then it, party of the second part, may in its discretion make no effort by suit or otherwise to collect such assets so believed to be insolvent, worthless or not collectible and may return them to said liquidating agent, or said trustees for the shareholders and thereby be relieved from any further responsibility or liability as to such assets; provided if demand be made in writing by said party of the first part,...