Bank of Anderson v. Breedin

• Decision Date: 11 April 1922
• Docket Number: 10859.
• Parties: BANK OF ANDERSON v. BREEDIN.
• Court: South Carolina Supreme Court

111 S.E. 799

119 S.C. 39

BANK OF ANDERSON v. BREEDIN.

No. 10859.

Supreme Court of South Carolina

April 11, 1922

Appeal from Common Pleas Circuit Court of Anderson County; George E Prince, Judge.

Action by the Bank of Anderson against C. S. Breedin. Judgment for plaintiff, and defendant appeals. Affirmed.

L. W Harris, of Anderson, for appellant.

J. M Paget, of Anderson, for respondent.

FRASER J.

The case contains the following statement:

"This is a suit on a note given by defendant, C. S. Breedin, to Chas. R. Moore, and alleged to have been discounted by the said Chas. R. Moore at the Bank of Anderson. Upon defendant's failure to pay same suit was instituted. At the June term of court of common pleas his honor Judge Geo. E. Prince directed a verdict for plaintiff for full amount asked for in the complaint. Notice of intention to appeal was duly served.

Synopsis of Complaint.

That plaintiff is a corporation duly chartered by and under the laws of South Carolina, doing a general banking business; that on February 17, 1920, the defendant executed and delivered to Chas. R. Moore his promissory note for $1,500, due 30 days from date [setting out note], with name of Chas. R. Moore indorsed on the back thereof. The note contains the provision that, if collected by suit or placed in the hands of an attorney for collection, to pay 10 per cent. attorney's fees for collection; that before the maturity of said note and for value the said Chas. R. Moore discounted same to this plaintiff, who is the legal owner and holder thereof; that same is long past due, no part of which has been paid. Prayer was for principal, interest, and attorney's fee of 10 per cent. and costs.

Synopsis of Answer.

(1) General denial; (2) denial of delivery; (3) denial of consideration; (4) failure of consideration; (5) want of consideration; (6) denial that plaintiff purchased note in open market; (7) alleged that note was made in consideration for services to be performed by Chas. R. Moore in putting a land sale for this defendant, which services were never performed; that plaintiff before it became owner of said note, if it became owner thereof, had knowledge that the services had not been performed and would not be performed; (8) that plaintiff had notice of the failure of consideration, want of consideration, nondelivery of note, or facts which would have put them upon inquiry of such matters of equity existing between the said C. S. Breedin and Chas. R. Moore, and that they cannot now be heard to say that they are purchasers for value and without notice of such equities."

At the close of the testimony the presiding judge directed a verdict for the plaintiff. From the judgment entered on the verdict the defendant appealed.

There are two questions before us. The first is:

I. Was it error to direct a verdict for the plaintiff?

It was not. The objection to the direction of the verdict was based upon the following extract from the testimony of the appellant:

"A. I told Mr. Clinkscales that I was entering into an agreement with Chas. R. Moore, of the Southern Land Auction Company, to promote the sale of a piece of Church street property that I was interested in; that Mr. Moore wanted $1,500 for expenses, which we figured on a bit, regarding the amount, as I considered it excessive; and he was to do certain things, and that I wouldn't give him the cash because I didn't know whether he would carry out his part of the contract or not; and for that reason I didn't pay him in cash, but I would give him a note to secure my word that he would be paid if he performed his part of the agreement. I believe that covers it."

It appears in the record that Mr. Clinkscales, the president of the plaintiff bank, was himself engaged in real estate business, and the conversation was not held with Mr. Clinkscales as president of the bank. It further appears that the conversation was held before the appellant and Moore had completed their bargain. It further appears that the first note was rejected because it was not written on the forms prepared by the plaintiff bank. There is no evidence that even Mr. Clinkscales had any other notice of the completed contract between the parties than the note that was discounted. The appellant objected to the amount, and yet he did agree to the amount. He objected to payment before the work done, and yet he did make an unconditional obligation to pay before the work was done. There is no evidence that either Mr. Clinkscales or the bank had any notice of any defect in the note, and the only thing for his honor to do was to direct a verdict for the plaintiff.

II. The other assignment of error is as to attorney's fees.

The note provided for it, and it appears that it was alleged in the complaint. The amount of it was in the note. It may be that the plaintiff was not required to prove that 10 per cent. was reasonable, unless the amount of it had been attacked; but proof that it was reasonable was certainly not prejudicial.

The judgment is affirmed .

WATTS, J., did not participate, on account of sickness.

COTHRAN J. (concurring).

Action upon a note executed and delivered by the defendant, C. S. Breedin, to one Charles R. Moore, dated February 17, 1920, due 30 days after date, for $1,500, and 10 per cent. attorney's fees. Although the "case" and both arguments state that the note was payable "to Charles R. Moore" without words importing negotiability in the commercial sense, it appears to have been treated throughout as a negotiable promissory note, and it will be so considered in this discussion. On the day of its execution the payee, Charles R. Moore, negotiated a transfer of the note to the plaintiff bank, indorsing it in blank and receiving from the bank $1,490 in cash. The vice president and cashier of the bank, P. E. Clinkscales, handled the transaction.

The sole point at issue between the parties was whether or not the bank was a holder in due course. Upon this issue the defendant testified that he was the owner of certain real estate in the city of Anderson; that he wished to have it developed and sold; that on the day before the note was given he discussed with Clinkscales, cashier of the bank, his proposed plans; told him that he was entering into an agreement with Moore to promote the sale of the property; that Moore wanted $1,500 for expenses of surveying, blueprints, electrotyping, advertising, engagement of experts, and so forth; that he regarded the amount as excessive, and was not willing to advance the money, but was willing and would give Moore a note for $1,500 to hedge against a violation of the agreement; the note being payable at a date beyond the time at which Moore was to perform his agreement.

The next day he completed the agreement with Moore and gave him a note similar to the one in suit, except that it was made out upon a blank form of another bank. Moore attempted to discount this note with the plaintiff bank, but they preferred to have a note made out upon their own forms. Moore returned to Breedin and informed him of the desire of the bank, and the note in suit was executed. Breedin was thus informed of the purpose of Moore to discount the note.

Moore immediately took it to the plaintiff bank, handling the matter with Clinkscales, the cashier, indorsed it in blank, and got the proceeds of the discount.

Clinkscales in his testimony admitted that he had a conversation with the defendant on the day before the note was given, during which they discussed the method of handling the property.

The contention of the plaintiff bank was that the conversation with Clinkscales was not participated in by him as an officer of the bank or in any wise connected with the business of the bank and substantially that, if Clinkscales had in this private interview acquired any information or was chargeable with notice of any defect in the note or any defense thereto, such notice was not imputable to the bank. The circuit judge sustained the bank's contention and directed a verdict for the full amount of principal, interest, and attorney's fees. The defendant has appealed.

Two questions arise in the consideration of the appeal:

(1) Is the knowledge of the consideration of the note acquired by the cashier imputable to the bank?

(2) If so, does the knowledge on the part of the assignee of a negotiable note, transferred for value before maturity, that the consideration of the note is executory, affect his position as a holder in due course?

As to the first question: Clinkscales, the cashier, was informed the day before the note was given of the condition upon which it was to be given. It will be presumed that he had this knowledge, so recently acquired, present in his mind when the note was discounted. Although the knowledge was acquired in a casual conversation, in no wise connected with the business of the bank, and before the transaction in question was negotiated, it will under these circumstances be imputed to the bank.

In Pomeroy, Eq. Jur. (4th Ed.) § 672, it is said:

"Where the transaction in question closely follows and is intimately connected with a prior transaction in which the agent was also engaged, and in which he acquired material information, or where it is clear from the evidence that the information obtained by the agent in a former transaction was so precise and definite that it is or must be present to his mind and memory while engaged in the second transaction, the foregoing requisite becomes inapplicable; the notice given to or information acquired by the agent in the former transaction operates as constructive notice to the principal in the second transaction, although that principal was a complete stranger to and wholly unconnected with the prior proceeding or

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