Federal Reserve Bank of Richmond, Va. v. Duffy
| Decision Date | 04 November 1936 |
| Docket Number | 305. |
| Citation | 188 S.E. 82,210 N.C. 598 |
| Parties | FEDERAL RESERVE BANK OF RICHMOND, VA., v. DUFFY et al. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Craven County; Marshall Spears, Judge.
Action by the Federal Reserve Bank of Richmond, Va., against F. S Duffy and others. From a judgment for plaintiff, defendants appeal.
No error.
Where conduct of agent is such as to raise a clear presumption that he would not communicate to his principal facts in controversy, or where agent acting nominally as such is in reality acting in his own business, or for his own interest and adversely to principal, or has a motive in concealing facts from principal, rule that knowledge of agent is imputed to principal does not apply.
Suit on a negotiable promissory note, executed by F. S. Duffy and indorsed by H. Bryan Duffy, payable to the First National Bank of New Bern, and by said First National Bank of New Bern transferred by indorsement to plaintiff, Federal Reserve Bank of Richmond.
The note sued on was in form as follows:
"New Bern, N. C.,
Sept 12, 1929.
Sixty days after date I promise to pay to the order of The First National Bank of New Bern, New Bern, N. C., Thirty-one Hundred and Fifty Dollars ($3,150.00). Negotiable and payable at the First National Bank, New Bern, N. C., with interest after maturity; and we, the makers and endorsers, hereby agree to continue and remain bound for the payment of this note and all interest thereon, notwithstanding any failure and omission to protest this note for non-payment, or to give notice of non-payment or dishonor or protest or to make presentment or demand for payment, expressly waiving any protest and all notice of non-payment or dishonor or protest in any form, or any presentment or demand for payment, or any notice whatsoever.
Due Nov. 11, 1929.
F. S Duffy [Seal]."
Back of said note:
Vice-President." It was not controverted that the note evidenced a valid debt of the defendants, which had been outstanding for a number of years, and which had been originally secured by deed of trust on real estate, still in force, though the note in suit made no reference to any security. It further appeared that the First National Bank of New Bern was indebted to plaintiff in the sum of $20,000, and as security therefor had assigned and transferred certain collaterals which were from time to time renewed and added to; that the note sued on was offered by the First National Bank of New Bern to the Federal Reserve Bank for discount on September 14, 1929, and credit therefor extended to the New Bern bank as of that date.
The First National Bank of New Bern closed its doors on October 26, 1929, without having paid its indebtedness to the plaintiff, and the note in suit was sent by plaintiff to New Bern for collection, and the defendants made payments and received credits thereon from time to time until the amount was reduced to $935.57, the exact amount the defendants had on deposit in the First National Bank of New Bern at the time it closed, and the defendants refused to pay anything more on the note, claiming the deposit as a set-off for the balance of said note.
Defendants in their answer admitted the execution of the note, but alleged that there was collusion and fraud in the purported transfer and assignment of the note; that the plaintiff knew the First National Bank of New Bern was in distressed condition; that the character of the note was misrepresented to plaintiff by the New Bern bank, of which plaintiff was chargeable with notice; that the note was ineligible for discount by plaintiff under the provisions of the Federal Reserve Act, because secured by real estate and not for an agricultural, industrial, or commercial purpose, and that plaintiff's action in taking and rediscounting said note was in bad faith, and that therefore the plaintiff is not holder in due course of said note, but took same subject to the defendants' right of equitable set-off to the amount of their deposit in the said New Bern bank.
The jury for their verdict found, in response to the issues submitted to them, that the plaintiff was the holder in due course of the note sued on and that defendants were indebted to plaintiff in the amount claimed.
From judgment on the verdict, defendants appealed.
Abernethy & Abernethy, of New Bern, for appellants.
M. G. Wallace, of Richmond, Va., and W. H. Lee, of New Bern, for appellee.
Defendants earnestly contend that under the circumstances of this case the action of the Federal Reserve Bank in taking and discounting the note in suit was in bad faith; that the paper itself was one ineligible for discount under the provisions of the Federal Reserve Act, 38 Stat. 251, as amended, 12 U.S.C.A. § 221 et seq., and the rules and regulations of the Federal Reserve Bank, and that plaintiff is not entitled to the position of holder in due course so as to deprive these defendants of the right of set-off to the amount of their deposit in the First National Bank of New Bern.
Defendants' views were fully set out in prayers for instructions tendered in apt time to the presiding judge, and they except to his refusal to give them.
The evidence, as it appears in the record before us, fails to sustain defendants' contentions.
There was no evidence of fraud invalidating the note, nor of collusion between the Federal Reserve Bank and the First National Bank of New Bern, nor of wrongful intent to deprive defendants of any legal rights. The note on its face purported to be an ordinary 60-day negotiable note, eligible for discount.
The fact that the vice-president of the First National Bank of New Bern had not stated all the facts with reference to the purpose of the loan, or that there was real estate security for the original debt, was not known to plaintiff until after the failure of the New Bern bank. The plaintiff is not now seeking to avail itself of the...
To continue reading
Request your trial
-
Conti v. Fid. Bank (In re NC & VA Warranty Co.)
...not part of the bank's lawful business and were not in the bank's interests, and citing Fed. Reserve Bank of Richmond, Va. v. Duffy, 210 N.C. 598, 188 S.E. 82 (1936) ). These limitations have been long recognized under North Carolina law.If the agent is so circumstanced as to make it his in......
-
In re Parmalat
...219 N.C. 505, 14 S.E.2d 509, 514 (1941); Stansell v. Payne, 189 N.C. 647, 127 S.E. 693, 695 (1925). 52. Federal Reserve Bank of Richmond v. Duffy, 210 N.C. 598, 188 S.E. 82, 84 (1936) (citations omitted); accord Sparks v. Union Trust Co. of Shelby, 256 N.C. 478, 124 S.E.2d 365, 368 (1962); ......
-
Zloop, Inc. v. Parker Poe Adams & Bernstein, LLP
... ... created in violation of state and federal law. (Am. Compl ... ¶ 75; Am. Compl. Ex. 35, ECF No ... included in the complaint, Coley v. N.C. Nat'l ... Bank , 41 N.C.App. 121, 126, 254 S.E.2d 217, 220 (1979), ... Id. (quoting Fed. Res. Bank v. Duffy , 210 ... N.C. 598, 603, 188 S.E. 82, 84 (1936)) ... 111 ... The Court need not reserve its ruling in anticipation of a ... further amended ... ...