Bank v. Black

• Decision Date: 12 March 1908
• Court: Virginia Supreme Court
• Parties: TRADERS' & TRUCKERS' BANK . v. BLACK et al.

60 S.E. 743

108 Va. 59

TRADERS' & TRUCKERS' BANK .

v.BLACK et al.

Supreme Court of Appeals of Virginia.

March 12, 1908.

1. Trial—Instructions after Submission of Cause—Presence of Counsel.

Where a jury return for further instructions after going to their room to consider of their verdict, counsel should be present.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 46, Trial, § 39.]

2. Banks and Banking—Representation by Officers—Notes.

Three directors of a bank whose board consisted of 18 members, one of the 3 being the president and another the cashier, together with 3 large stockholders, met together and executed a note, and had it discounted at another bank. With the proceeds they paid an overdraft by a bankrupt depositor in their own bank, and agreed among themselves to say nothing about the matter to the other directors, and that the bank, when able, should pay them back, and charge the amount to profit and loss. The claim on the overdraft was turned over to one of their number and the amount collected applied on the note. Subsequently the bank, at the request of one of the makers, purchased the note, and on refusal of the makers to pay it brought suit. Held, that it was no defense that the note was made for the accommodation of the bank, and that, as the bank had received full benefit of the proceeds in the satisfaction of the overdraft, the note was fully paid when the bank acquired it.

3. Principal and Agent—Liabilities as to Third Persons — Constructive Notice — Collusion of Agent.

It is presumed that agents will communicate to their principal facts material to the principal's interest, and their knowledge therefore becomes the knowledge of the principal, but the doctrine of constructive notice has no application where the parties relying on it are the agents themselves and others who had agreed with them that the agents were not to communicate the facts to the principal.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 40, Principal and Agent, §§ 670-679, 690.]

4. Payment — Recovery of Payments—Persons Liable.

Where one voluntarily pays to a creditor the obligation of the debtor, he cannot recover the payment from the creditor on failure to collect from the debtor.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 39, Payment, § 265.]

Appeal from Law and Chancery Court of City of Norfolk.

Action by the Traders' & Truckers' Bank against E. Black and others. Judgment for defendants, and plaintiff appeals. Reversed.

Jas. G. Martin, for appellant.

N. T. Green, for appellee.

BUCHANAN, J. It appears that the Traders' & Truckers' Bank, in the city of Norfolk, was organized some months prior to May, 1902, with a board of directors consisting of 18 persons, and an executive committee composed of 6 of the board of directors. During that month the A. M. Eley Lumber Company, one of its depositors, which had to its credit in the bank the sum of $150, deposited checks to the amount of about $1,600. Later, during the same day, the cashier certified a check for $1,500, drawn by that company against its account. On the next day the Eley Lumber Company was adjudged a bankrupt, and the $1,600 of checks deposited were subsequently returned to the bank unpaid.

When it was ascertained that the checks were worthless, and that the lumber company had been permitted to overdraw its account to the amount of $1,481.12, E. Black, president, and T. P. Gray, cashier, of the bank, and A. G. Burrow, all three directors and members of its executive committee, W. D. Pender, G. A. J. Scott, and A. S. J. Gammon, all of whom were large stockholders in the bank, conferred about the situation. It was urged upon them by one or more of their number that as the bank had been organized only a short time, with a small capital, it would be bad policy and injurious, if not fatal, to the bank, for the public to know that it had permitted the Eley Lumber Company, whose credit was known around the town to be in bad odor, to overdraw its account to the extent it had. They thereupon determined to make the note sued on payable to themselves and have it discounted at some other bank, and make good the overdraft of the Eley Lumber Company, and agreed among themselves that as they bad a lot of green directors, who "did not know how to keep their mouths shut, " they would not let the other directors or the public know anything of the overdraft, or the manner in which it had been made good, and that the bank would at some future time, when it was able, pay them back, and charge it up to the account of profit and loss. The note was accordingly made, payable on demand, discounted at the National Bank of Commerce, of the city of Norfolk, which knew nothing of the purpose for which the money was borrowed, and the proceeds deposited to the credit of the Eley Lumber Company. No entry whatever of any of those transactions was made upon the bank's books, except crediting the Eley Lumber Company's account with that sum, as deposited by A. M. Eley, president of the company. When that deposit was made, the claim for the amount of the overdraft was turned over to Mr. Scott, one of the makers of the note, and asserted in his name, to avoid letting the public know of the bank'sconnection with it, against the Eley Lumber Company in the bankruptcy proceedings, and about one-fourth thereof collected by compromise, which was credited on the note while held by the National Bank of Commerce.

The first installment of interest which fell due on the note was paid by the makers of the note, and some of them paid their share of the next installment of interest. The Bank of Commerce held the note for nearly two years, when it insisted on payment. Mr. Burrow, one of the makers of the note, and who acted for the others in having it discounted at the Bank of Commerce, and in looking after the payment of interest thereon, requested the Traders' & Truckers' Bank, in which he...