Commissioner of Banks ex rel. Farmers' Bank & Trust Co. v. Florence Mills, Inc.

• Decision Date: 06 April 1932
• Docket Number: 566.
• Citation: 163 S.E. 598,202 N.C. 509
• Parties: COMMISSIONER OF BANKS ex rel. FARMERS' BANK & TRUST CO. OF FOREST CITY, v. FLORENCE MILLS, Inc.
• Court: North Carolina Supreme Court

163 S.E. 598

202 N.C. 509

COMMISSIONER OF BANKS ex rel. FARMERS' BANK & TRUST CO. OF FOREST CITY, v. FLORENCE MILLS, Inc.

No. 566.

Supreme Court of North Carolina

April 6, 1932

Appeal from Superior Court, Rutherford County; H. Hoyle Sink Special Judge.

Action by the Commissioner of Banks on relation of the Farmers' Bank & Trust Company of Forest City, against Florence Mills Incorporated. From judgment for plaintiff, defendant appeals.

New trial granted.

The plaintiff brought suit to recover certain collateral securities alleged to be the assets of the Farmers' Bank & Trust Company of Forest City, which is now in the hands of the plaintiff as liquidating agent. The securities consist of two notes and approximately 500 shares of stock in certain manufacturing companies. The plaintiff alleges in substance that while the bank was insolvent the officers of the bank fraudulently and without a valuable consideration deposited these securities with the defendant for the purpose of obtaining the defendant's patronage and deposits. Upon the pleadings, the court formulated these issues, which were answered as follows (1) Was the Farmers' Bank & Trust Company of Forest City N. C., insolvent on January 14, 1930, as alleged in the complaint? A. Yes.

(2) Did the defendant on January 14, 1930, obtain the securities described in the complaint without a valuable consideration, as alleged in the complaint? A. Yes.

(3) Did the defendant on January 14, 1930, unlawfully and fraudulently obtain the securities as describe in the complaint from the Farmers' Bank & Trust Company of Forest City, N. C., as alleged in the complaint? A. Yes.

Judgment was rendered for the plaintiff, and the defendant appealed upon assigned error.

Quinn, Hamrick & Harris, of Rutherfordton, for appellant.

D. Z. Newton, of Shelby, and B. T. Jones, Jr., of Forest City, for appellee.

ADAMS J.

In reference to the second issue, his honor stated the plaintiff's chief contention to be that the securities in question had been turned over to the defendant, not to secure future deposits, but to secure such as were in the bank at the time of the transfer, that the alleged agreement between the parties was not supported by a valuable consideration, and that the issue should be answered in the affirmative. He stated one of the defendant's contentions to be that a part of the consideration was a promise by the defendant to give the bank the benefit of future and additional deposits. Then follows this instruction: "If you shall find that to be a fact, the court instructs you that it would be your duty to answer the second issue No, because that would be a valuable consideration."

Throughout the trial the defendant insisted that the defendant's promise of increased deposits was really the controlling factor in the agreement, and, indeed, the principal consideration. To establish its contention, the defendant introduced as a witness the active president of the bank and offered to show by him that he had a conversation with the active vice president, and that the collateral was to be turned over to the defendant for the purpose of securing whatever deposits the...