Bank of Vance v. Crowder

• Decision Date: 05 October 1927
• Docket Number: 93.
• Citation: 139 S.E. 601,194 N.C. 312
• Parties: BANK OF VANCE v. CROWDER et al.
• Court: North Carolina Supreme Court

139 S.E. 601

194 N.C. 312

BANK OF VANCE v. CROWDER et al.

No. 93.

Supreme Court of North Carolina

October 5, 1927

Appeal from Superior Court, Vance County; Grady, Judge.

Suit by the Bank of Vance, receiver of the Farmers' & Merchants' Bank, against Ethel D. Crowder and others. From a judgment for plaintiff, defendants appeal. New trial.

See also, 139 S.E. 604.

Whether husband made gift to wife of trust money used in purchasing land conveyed to her held for jury.

This was a suit in equity to establish a trust in land conveyed to Ethel D. Crowder, the feme defendant-the trust, when declared, to be subject to the deed of trust held by the defendant Kittrell, as trustee. The real controversy is between the plaintiff and Mrs. Crowder. In 1912 the Farmers' & Merchants' Bank was organized as a banking institution under the laws of North Carolina and conducted a banking business until April 16, 1924, when its doors were closed. Its principal place of business was in Henderson, the defendant R. B. Crowder serving as its cashier during the time of its business activity. On October 31, 1922, W. P Gholson and his wife conveyed to the feme defendant a lot in the town of Henderson, at the agreed price of $5,500. Of this sum $3,000 was paid to R. B. Crowder by Melville Dorsey for the benefit of the grantee, who is his daughter, and was applied by Crowder in part payment of the purchase price. The remainder ($2,500) was paid in this way: James Plummer had executed his promissory note to the Farmers' & Merchants' Bank in the sum of $2,500, bearing interest at 6 per cent. until paid, and the defendant R. B. Crowder, then cashier, discounted the note and credited the amount to his individual account. On November 10, 1922, he gave his personal check on the Farmers' & Merchants' Bank for $5,500 in full payment of the amount due for the lot. The plaintiff's most material allegations are that R. B Crowder fraudulently discounted the Plummer note for his own benefit and fraudulently used the amount thereof in the purchase of the land, the title to which was conveyed to his wife; that she was not a bona fide purchaser for value; that the money has not been repaid; and that the bank is entitled to have a constructive trust impressed upon the property to secure return to the bank of the amount thus misappropriated by Crowder.

Separate answers were filed by Ethel D. Crowder and her husband. She alleged that she was a bona fide purchaser for value; that she had no knowledge of her husband's alleged malfeasance until some time after the whole amount of the purchase money had been paid by her father for her benefit; and that the full amount of the note discounted by her husband had been returned to the bank. She alleged, also, that she had made valuable improvements upon the premises.

In his answer R. B. Crowder alleged that in discounting the Plummer note he had no fraudulent intent; that Mrs. Crowder had no knowledge of the discount; and that the amount had been paid back to the bank.

Issues were submitted to the jury and answered as follows:

"(1) Were the lands described in the complaint paid for in whole or in part by R. B. Crowder, out of the moneys derived from the discounting of the James Plummer note, as alleged in the complaint? Answer. Yes.

(2) If so, what amount of money belonging to said Farmers' & Merchants' Bank was invested in said lands by R. B. Crowder? Answer. $2,500.

(3) If such moneys were invested in said lands, as alleged, has the same been repaid by the defendants, or either of them? Answer. No.

(4) Is the plaintiff's cause of action barred by the statute of limitations? Answer. No."

It was adjudged upon the verdict that the defendant Ethel D. Crowder is the holder of the legal title of a five-elevenths undivided interest in the land conveyed to her for the use and benefit of the plaintiff, and that this interest be sold by commissioners. The defendants excepted and appealed upon errors assigned.

D. P. McDuffee and Thomas M. Pittman, both of Henderson, for appellants.

J. P. & J. H. Zollicoffer, Perry & Kittrell, and Kittrell & Kittrell, all of Henderson, for appellee.

ADAMS J.

The action is prosecuted by the plaintiff for the purpose of impressing a trust, for its benefit as receiver, upon the town lot described in the deed from Gholson to Mrs. Crowder. The equitable doctrine upon which the relief is sought is not questioned. If R. B. Crowder held the proceeds of the discounted note as a trustee for the Farmers' & Merchants' Bank, a trust resulted by operation of law for the benefit of the bank, and under the doctrine of implied trusts the fund could be followed into any property into which it was converted or invested unless affected by the rights of a bona fide purchaser for value, without notice. If, on the other hand he discounted the note with fraudulent intent he was a trustee ex maleficio, and against his fraud a court...