Bank et al v. Bryan et al.
| Decision Date | 18 February 1913 |
| Citation | 72 W.Va. 29 |
| Court | West Virginia Supreme Court |
| Parties | Bank et al v. Bryan et al. |
1. Principal and Agent Rights as to Third Parties Authority
of Agent "Promissory Notes."
Power of attorney given an agent to purchase shares of stock in corporations, "formed or to be formed," and to pay for same by "promissory notes," payable at such time and place as the agent may determine, authorises such agent to purchase stock in a newly formed corporation, and to execute his principal's commercial notes therefor. (p. 35).
2. Bills and Notes Rights on Indorsement to Bona Fide Holders.
Such notes are collectible by an indorsee for value and without notice, who, relying upon the agent's authority, purchased them before maturity, notwithstanding the authority of the agent was procured by the fraudulent misrepresentations of a third person, and the stock for which they were given was worthless. (p. 40).
3. Corporations Functions and [Dealings Indorsement of Nego-
tiable Instruments.
A coporation owning negotiable notes made payable to its order, in consideration for capital stock to be issued to the maker of the notes, has a right to sell them. (p. 41).
4. Bills and Notes Defenses To Whom Available.
In a suit by the indorsees of such notes, against the maker, it is no defense that the treasurer who indorsed them for his corporation lacked authority, the corporation itself not complaining and having no right to complain of his act. (p. 41).
5. Same Actions Defenses.
Neither can he defend on the ground that one bank, without authority to do so, indorsed them for the accommodation of another that discounted them. (p. 37).
6. Banks and Banking' Functions and Dealings Notice to
Officer or Director.
Knowledge of the infirmity of commercial paper, acquired by an officer or director of a bank, outside of his official duties, who is personally interested in having the paper discounted, is not attributable to the bank. (p. 36).
Promissory notes executed by an agent pursuant to authority, but which contain a provision that the agent is not authorized to make, empowering any attorney-at-law to appear in any court of record, in the state where payable, and waive issuance and service of process and to confess judgment against the maker, are not void because of such unauthorized provision. (p. 38).
8. Bills and Notes Certificates of Deposit Negotiability.
Certificates of deposit, payable to the order of the depositor, are negotiable, and are governed by the law applicable to commercial paper, (p. 39).
9. Same Rights on Indorsement Bona Fide Purchasers.
Mere suspicion of its infirmity, by the purchaser for value and in due course of commercial paper, is not evidence of bad faith. (p. 39).
A variance between the allegation and proof, not called to the attention of the lower court by any means, if not so great as to show distinct causes of suit, will be treated by this Court as having been waived. (p. 42).
11. Fraudulent Conveyances Transaction Invalid Inadequacy
of Consideration Conveyance Between Parent and Child.
A sale and conveyance by one greatly indebted, of a material portion of his property, to a child for a consideration so grossly inadequate as to shock the moral conscience, is evidence of a fraud upon the creditors attacking such conveyance. (p. 43).
12. Same.
A conveyance of property worth $3D0, 000, yielding an income of $2,000 per month, made to his daughter, by a father largely indebted, in consideration of only $20,000, held to be fraudulent and void as to creditors attacking it, for inadequate consideration and for other reasons, (p. 43).
Appeal from Circuit Court, Marion County.
A bill in equity by the City Bank of Wheeling and others against W. J. Bryan and others. From a decree for defendants, plaintiffs appeal.
Reversed and Remanded.
Alfred Caldwell, T. S. Riley, Henry M. Russell, John J. Coniff, and Ershine & Allison, for appellants.
W. S. Meredith, J. Howard Holt, P. M. Hoge, D. S. Walton,
and W..A. Hook, for appellees.
This appeal is by the First Citizens Bank of Cameron, City Bank of Wheeling, and the Merchants & Manufacturers National Bank of Columbus, Ohio, from a decree rendered on the 22nd of January, 1910, by the circuit court of Marion county, in four several suits brought by them, respectively, against W. J. Bryan and others, for the purpose of collecting a number of notes held by them as indorsees, aggregating $99,000. The several suits were consolidated and heard together. Two of them are by the First Citizens Bank, some of the notes held by it not being due at the time it brought its first suit; and one suit each by the other two banks. All of them are attachment suits in equity attacking a conveyance made by W. J. Bryan to his daughter, Mrs. Lizzie B. Loller, on the alleged ground that it was made to hinder, delay, and defraud plaintiffs in the collection of their debt. Mr. Bryan's non-residency is also averred. The suits were brought in the latter part of 1903 and early part of January 1904. During their pendency W. J. Bryan died, and they were revived against his administrator.
W. J. Bryan was the owner in fee of 474 acres of valuable coal land in Marion county, West Virginia, which was being operated for coal, under a lease from him to the Fairmont Coal Company. That company was garnished as his debtor; and it appears from its answer filed in the suits that the royalties accruing to Bryan on account of coal being mined amounted to $2,000, or more, per month.
As to one note for $6,000 sued on by the First Citizens Bank on which there is a balance of $1,000, exclusive of interest, there is no controversy. The court gave a decree for this balance and its interest, but dismissed the suit as to the other notes sued on; and also dismissed the suits of the other two banks. All the notes, excepting the $6,000 note, and the $3,000 note held by the First Citizens Bank, were executed by S. W. Loller attorney in fact for W. J. Bryan. Loller is Bryan's son-in-law; and the power of attorney clothed him with power, among other things, "3. To indorse in my name or negotiate all checks, drafts, bills of exchange, notes or other negotiable paper, payable to me or my order, or which may require my indorsement, and to deposit the proceeds in my name in said First Citizens Bank of Cameron, W. Va., or in any other bank or banks, trust company or companies wherever located that my said attorney may from time to time select; and to make, draw, or sign in my name any promissory notes which my said attorney shall in his absolute discretion deem requisite in or about my business.
"To subscribe for or purchase in my name shares of the Capital stock of any company or companies, formed or to be formed, and to pay for said shares of stock in cash or by promissory note or notes payable at such time and in such manner as my said attorney shall in his absolute discretion determine."
One who deals with an agent is bound to take notice of the extent of his authority. There is no question, however, that Loller was empowered to execute promissory notes for Mr. Bryan, for the purpose of buying stock in corporations then existing, or thereafter to be formed; and it is clearly established by the proof that all the notes in question, except one for $3,000, held by the First Citizens Bank, were executed in consideration for stock purchased for Bryan in certain corporations. $50,000 in notes were executed on the 10th of June, 1903, payable to the Loller Manufacturing Company, for stock in that company. It had been chartered by the secretary of state of West Virginia, six days before.
Notes aggregating $47,000 were executed on July 16, 1903, payable to S. A. Englehard for stock in the American Manufacturing Company, a then existing corporation.
One other note for $3,000, held by the First Citizens Bank belongs to a class of notes aggregating $90,000 which were executed on the 10th of August, 1903, by W. J. Bryan in person. The $3,000 note was payable to S. A. Englehard; the others were payable to Benedum and Fox, and were executed for the purchase of stock held by A. E. Fox, E. C. Fox, his brother, and M. L. Benedum in the American Manufacturing Company. This $3,000 note is the only one of that class involved in this suit.
Following is a brief history of the transactions leading up to the execution of the notes. One EL K. Ascher had invented a tank and valve for use in water closets to be operated under low water pressure; and had applied for a patent. In January, 1903, a plumbing company, the Fox Tank and Valve Company, was chartered for the purpose of exploiting this device; and W. J. Bryan was induced to take $12,000 of stock in it. The $1,000, not controverted, is the balance of that subscription. At the time that subscription was made the Fox Tank and Valve Company owned nothing but the right to the invention, which Ascher had assigned to it. The patent was later issued to said company. W. J. Bryan was the president of that company. Later, the Loller Manufacturing Company was chartered for the purpose of taking over the stock and business of the Fox Tank and Valve Company, and enlarging the business of manufacturing and selling the device. S. W. Loller was made president, and A. E. Fox, treasurer, of that company.
The $47,000 of notes were executed in consideration of stock in the American Manufacturing Company. It owned a plant, located at Middleport, Ohio, and had been engaged in manufacturing plumbing fixtures. S. A. Englehard owned and controlled nearly all the stock of that company. It appears that the American Manufacturing Company was then insolvent; it owed debts amounting to $56,000, and its plant was sold some time after, under decree of court, and brought about $17,000.
On the loth of July, 1903, A. E. Fox and M. L. Benedum met S. A....
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