Colerider. v. Cent. Nat'l Bank Op Buckhannon., (No. 9694)

• Decision Date: 12 June 1945
• Docket Number: (No. 9694)
• Court: West Virginia Supreme Court
• Parties: Clark Colerider et al. v. Central National Bank op Buckhannon et al.

128 W.Va. 520

Clark Colerider et al.

v.Central National Bank op Buckhannon et al.

(No. 9694)

Supreme Court of Appeals of West Virginia.

Submitted April 25, 1945.

Submitted on Rehearing January 15, 1946.

Decided June 12, 1945.

Decided March 5, 1946.

1. Appeal and Error

"It is the general rule that if a point in controversy has been decided in a former appeal to an appellate court, it will not be considered again in a second appeal in the same suit between the same parties, or their privies. It is regarded as 'the law of the case.' " Pt. 3, Syl., Roberts v. Lykins, 106 W. Va. 280.

2. Guaranty

Where a group of directors of a banking institution, for a valuable consideration, undertakes to guarantee the payment of a certain sum of money on a note held by the bank, and does so by separate written agreements, in one of which the liability is limited to a fixed sum for each individual guarantor, and in the other liability is joint and several as to the whole of the portion of the guaranty assumed by them, any payment received by the bank on the note, the payment of which is so guaranteed, should be applied to relieve each guarantor in proportion to the liability he assumes in the guaranty of such note.

Appeal from Circuit Court of Upshur County.

Suit by Clark Colerider and others against the Central National Bank of Buckhannon and others, seeking the return to complainants of certain collateral on the ground that the guaranty agreements secured thereby have been fully performed. From the decree, defendants appeal.

Reversed and remanded with directions.

Jerome V. Hall, Myron B. Hymes, and Maxwell & Young, for appellants.

F. E. Parrack and U. G. Young, Jr., for appellees. Fox, Judge:

This suit was instituted in the Circuit Court of Upshur County by Clark Colerider, C. J. Gibson, U. G. Young, Jr., Executor of the Estate of Mary A. Gibson, deceased, Sanford Graham and L. 0. Martin, against Central National Bank of Buckhannon and others, for the purpose of requiring the return to complainants of collateral aggregating sixteen thousand dollars, and consisting of government bonds and notes secured by trust deeds, because the collateral agreement, the performance of which they had been pledged to secure, had been fully performed and their liability thereunder thereby ended. The guaranty of the complainants applied to a note made by the Pecks Run Coal Company and payable to William Post for $15,243.55-5/9 which the defendant bank held as collateral.

From a decree in favor of the plaintiffs entered April 28, 1942, the defendants appealed, and this Court, in June, 1943, reversed the decree of the trial chancellor, holding in effect that certain collateral pledged by William Post to the Trader's National Bank of Buckhannon was deposited for the purpose of securing both his direct and indirect obligations and that the cause required further development in two respects. Upon remand the trial chancellor found that upon the payment of the sum of $480.62 to the defendants, the plaintiffs were entitled to the return of their securities. This appeal was allowed the defendants below. A thorough statement of the facts and circumstances giving rise to the differences then passed upon and now before this Court in part, will be found in Colerider v. Central National Bank of Buckhannon, 125 W. Va. 760, 25 S. E. 2d 903, and nothing more than a skeleton resume' will be attempted now.

In August, 1926, William Post conveyed in fee to Pecks Run Coal Company a tract of 449.12 acres for the sum of $157,192, $20,000 of which was paid and a vendor's lien retained to secure notes for the balance equally divided into nine yearly payments of $15,243.55-5/9 each. The deed contained a covenant that the standing timber upon the tract conveyed would not be removed until after the retirement of the first five notes, unless otherwise mutually agreed upon. In 1928 Post deposited the ninth note with the Trader's National Bank for the purpose of securing his indebtedness to that bank, estimated at that time to amount in direct obligations to $15,000, and in indirect obligations to $40,000. Post was then a director of the Trader's National Bank.

The affairs of Trader's National Bank, on October 15, 1931, were placed in the hands of a receiver. At that time William Post's insolvency was beyond question, the value of his assets being not less than $20,000 under the aggregate of his liabilities. Upon an examination of the records of the Trader's National Bank it became at once apparent that it had over-extended credit to a number of its directors, and to William Post in particular. It was, therefore, of some importance to all of the directors to arrange the affairs of Trader's National Bank to the end that care would be taken of its indebtedness, consisting very largely of that to depositors. This gave rise to a reorganization plan, under which its assets would be taken over and its liabilities assumed, with the approval of the receiver, by a new banking institution to. be known as Central National Bank of Buckhannon.

Among the largest assets held as collateral by the Trader's National Bank, to secure the indebtedness of William Post, was the ninth note in the series of vendor's lien notes executed by Pecks Run Coal Company, payable to Post. The value of the coal company's land had shrunk considerably, and, in appraising that note's value, the receiver discovered that Hurst H. Koblegard, or Koblegard Company, was the holder by assignment from Post of the second note of the same series, and claimed to be entitled to priority of payment due to the fact that its assignment antedated that to the Trader's National Bank, and that consequently it was doubtful whether the note in question was worth face value. He therefore insisted that its value be underwritten as a condition to his approval of the plan of reorganization. This attitude put the matter squarely up to the directors of the Trader's National Bank, and led to the negotiations detailed in the opinion announced on the first hearing of the case. Those negotiations occurred in the year 1932, and resulted in the execution of the agreement of guaranty secured by collateral that is now in dispute.

That agreement, copied in full in this Court's opinion upon the first appeal, reads as follows:

"In consideration of the reorganization and reopening of the Traders National Bank of Buckhannon, and in further consideration of our release from all liability under the law for any excess loans alleged to have been made by the board of directors for and on behalf of said Traders National Bank, we, whose names are hereunto signed, and affixed, propose to Roger E. Brooks, Receiver of said Bank and to the reorganization committee, of which Ed. C. Young is chairman, to place with the Receiver of said Bank securities entirely satisfactory to the said Receiver, and to the said committee in the amount set opposite our respective names, to be held by them as a guarantee to the payment to the said Receiver or to the vendee of said Receiver, or to the reorganized bank, the note esecuted by the Pecks Run Coal Company to William Post, dated August 30th, 1926, calling for the sum of $15,243.59-5/9, and by said Post endorsed to the Traders National Bank, and held by said Bank as collateral security for certain debts owing by said Post to said Bank, the aggregate amount of said note not to exceed $20,000.00, provided, however, that any interest accumulated on said securities pending the liquidation of the Post obligation is to be paid to us, and any party signing this writing shall have his name stricken from the guarantee bond dated May 17th, 1932, and this writing shall be a substitute of our names on said bond, and provided further that we shall not be liable for any further amount than that fixed opposite our signatures hereto.

We submit this paper with the bond signed by the remaining directors of the bank as our guarantee, the two papers to be taken together and read as a whole.

In the event of the payment of the Post obligations to said bank out of his property, or by him, without loss to the bank then the securities are to be returned to us.

Dated this 27th day of June, 1932.

C. W. GIBSON $5,000.00 CLARK COLERIDER $5,000.00 SANFORD GRAHAM $3,000.00 L. O. MARTIN $3,000.00"

The "bonds" referred to in the above writing will be found copied in our former opinion in this case. Clearly, the above writing was executed with knowledge of such "bonds" executed by other directors.

In our opinion this paper admits but one construction of its express language. It was to guarantee payment of sixteen thousand dollars upon a note, the aggregate amount of which, meaning principal plus interest, should not exceed twenty thousand dollars. There could have been but one purpose...