Conway v. Amer. Nat. Bank

• Decision Date: 25 February 1926
• Citation: 146 Va. 357
• Court: Virginia Supreme Court
• Parties: A. C. CONWAY v. AMERICAN NATIONAL BANK OF DANVILLE.

Page 357

146 Va. 357

A. C. CONWAY v. AMERICAN NATIONAL BANK OF DANVILLE.

Supreme Court of Virginia, Richmond.

February 25, 1926.

1. COURTS — Transfer of Case from one Side of Court to the Other — Inherent Power. — Independent of statute the courts possessed no power to transfer a case from one side of the court to the other, or hear a law case with a chancery suit.

2. BILLS, NOTES AND CHECKS — Endorser's Right to Have Maker's Property Sold — Remedy of Endorsers. — In an action against an endorser upon a note if the endorser has any equitable right to have the maker's property sold and the proceeds applied to the note for the relief of the endorser, his remedy is by injunction and not by motion in the action at law.

3. TRIAL — Transfer of Case from one Side of the Court to the Other — Section 6084 of the Code of 1919. — Section 6084 of the Code of 1919 confers no power upon a court to transfer an action at law against the endorser on a note, to the equity side of the court on motion by the endorser in the suit at law. Section 6084 of the Code of 1919 was intended primarily for the benefit of plaintiffs and is mandatory upon the trial courts only to the extent of prohibiting them from dismissing a case "simply because it was brought on the wrong side of the court." That is, where the only question was as to the forum.

4. BILLS, NOTES AND CHECKS — Action Against Endorser — Remedy of Endorser where he Desires to Subject the Estate of Maker and Compel Contribution by his Co-Endorser. — The holder of a note, by virtue of the contract thereby established, can sue at law all the parties, makers and endorsers, or any one of them. If in an action against him an endorser desires to subject the estate of the maker of the note and compel contribution by his co-endorser, he should buy the note before suit and thus be substituted to all the rights of the holder.

5. PAROL EVIDENCE — Rule Rigidly Adhered to. — The parol evidence rule, the wisdom and beneficence of which has been demonstrated by experience, is very rigidly adhered to in this State.

6. BILLS, NOTES AND CHECKS — Delivery — Conditional Delivery — Parol Evidence Rule. — A person may manually deliver a negotiable instrument to another, on its face containing a binding obligation in praesenti of such person to such other, with a contemporaneous verbal agreement that it shall not take effect until the happening of some specified event (as that others shall endorse it) and such condition is binding as between immediate parties, and as regards a remote party, other than a holder in due course. This does not violate the rule that a written instrument cannot be varied by a contemporaneous parol agreement, but is only evidence to show that the instrument never had vitality as a contract.

7. BILLS, NOTES AND CHECKS — Parol Evidence — Agreement by Payee that the Property of Maker Should be Exhausted Before Resort to Endorsers — Case at Bar. — In the instant case, an action against an endorser of notes, the endorser sought to introduce parol evidence to the effect that the payee, by its agent, had agreed to subject the property of the maker conveyed in deeds of trust to secure the notes before resorting to the endorsers. The notes became binding contracts from the instant of their delivery and the effect of the parol agreement was plainly to contradict and vary the contract evidenced by the notes, which could not be done, and the court was right in excluding all evidence of that agreement.

8. BILLS, NOTES AND CHECKS — Parol Evidence — Agreement that Payment was not to be Demanded at Maturity. — Where a negotiable note, or other unconditional promise to pay at a stipulated time, is regular upon its face, and is delivered to the payee as a valid and binding obligation for ever so short a time, no contemporaneous parol agreement can be set up to show that payment was not to be demanded at maturity, or until attached collateral had been exhausted, or upon the happening of any other subsequent event not mentioned in the note itself. All such efforts have as their end to change or vary the terms of the written contract.

9. BILLS, NOTES AND CHECKS — Attorney's Fee — Amount Specified in the Contract. — In all jurisdictions where contracts for attorney's fees in excess of those allowed by statute are recognized as valid and enforceable, the courts have construed such contracts to be contracts of indemnity by virtue of which the holder of the note is entitled to recover such reasonable attorney's fee as may be incurred by him, not exceeding the amount specified in the contract. The amount specified in the contract, unless unreasonable or unconscionable, is the measure of recovery in the absence of other evidence.

10. BILLS, NOTES AND CHECKS — Attorney's Fee — Burden of Proof. — In the instant case, an action against the endorser of notes, upon the failure of defendant to pay the notes and the placing them by the plaintiff in the hands of its attorney for collection, plaintiff was prima facie entitled to recover, according to the terms of the contract, ten per cent attorney's fee, provided it cost that amount. The burden was on the defendant to prove that plaintiff did not incur that amount of expense or that the fee agreed upon in the notes was excessive or unreasonable.

11. BILLS, NOTES AND CHECKS — Attorney's Fee — Questions of Law and Fact. — Where there is no conflict of evidence as to the amount of the fee, the court should decide the same, but like any other fact, if the evidence as to its amount and reasonableness is conflicting, it should go to the jury.

12. BILLS, NOTES AND CHECKS — Attorney's Fee — Questions of Law and Fact. — Where defendant in an action on a note offered no evidence to prove that the attorney's fee stipulated for in the note was unreasonable, or that the plaintiff did not incur that amount of liability to its attorney, the judge should have fixed the fee himself, but the fact that he permitted the jury to fix it (which is a common practice with many of the trial judges), was a very harmless error.

Error to a judgment of the Corporation Court of the city of Danville, in a proceeding by motion for a judgment for money. Judgment for plaintiff. Defendant assigns error.

The opinion states the case.

A. M. Aiken and Meade & Meade, for the plaintiff in error.

Harris & Harvey, for the defendant in error.

CHRISTIAN, J., delivered the opinion of the court.

This was an action by motion in the Corporation Court of Danville, to recover judgment against A. C. Conway as endorser on four notes of the Deep River Coal Company, Incorporated, all together amounting to $18,625.00, with interest thereon, and in addition thereto, ten per cent of the amount of said notes — attorney's fee — as provided in the notes. The notes were executed by the Deep River Coal Company, payable to the American National Bank, by its president, A. C. Conway, and its secretary and treasurer, E. P Crider, and were all endorsed by A. C. Conway, E. P. Crider and A. M. Aiken. At the time the loans were made to the coal company by the bank, the coal company executed two deeds of trust on all of its real and personal property in Chatham county, North Carolina, to secure the payment of its said notes. Crider, in addition to his official position with the coal company, was also the...