First Nat. Bank of Peterstown v. Hansbarger
| Decision Date | 10 December 1946 |
| Docket Number | 9810. |
| Citation | 40 S.E.2d 822,129 W.Va. 418 |
| Parties | FIRST NAT. BANK OF PETERSTOWN v. HANSBARGER et al. |
| Court | West Virginia Supreme Court |
Syllabus by the Court.
1. A holder for value of a negotiable note may recover from the accommodation parties thereto, notwithstanding that the consideration for making and indorsing the note moved from said holder to the person accommodated, who is not a party to said note.
2. The giving of an erroneous instruction which favors the complaining party is not reversible error.
Sherman Ballard, of Peterstown, for plaintiff in error.
H E. DeJarnette, of Princeton, for defendants in error.
The First National Bank of Peterstown instituted this action by notice of motion for judgment in the Circuit Court of Monroe County against J. C. Hansbarger, E. A. Hansbarger, and Julia L. Hansbarger, and J. L. Warren. Warren was not served with process and made no appearance. The jury returned a verdict in the sum of $4300 in favor of plaintiff, on which the trial court rendered judgment against the three defendants first named above, who bring the case to this Court by writ of error.
J. H. Hansbarger, brother of two of the defendants and the son of another, was cashier of the First National Bank of Peterstown from the year 1923 to the year 1942.
In the month of January, 1929, he received a draft drawn by J. L Warren on Warren's brother and payable at a bank in Beckley, West Virginia. The proceeds of the draft were deposited to the credit of Warren in the plaintiff bank and checks drawn by him against his account were paid. Shortly after the draft was received and deposited, Warren's credit balance was exhausted. The draft was returned dishonored and was carried in the assets of the bank for a time as a 'cash item'. In the latter part of the year 1929, the foregoing state of affairs was brought to the attention of the board of directors of the bank, which then insisted that J. H. Hansbarger make the loss good or lose his position as cashier. J. H. Hansbarger testified that the board also threatened to instigate a criminal prosecution against him if the loss was not made good. It is not entirely clear whether the entire board or a committee thereof discussed this matter with J. H. Hansbarger. At any rate two former members of the board testified that no threat of prosecution against him was made by the board or its committee.
There is evidence tending to show that it was the accepted practice in conducting the affairs of the plaintiff bank to allow depositors to check against unrealized balances.
Owing to the fact that J. H. Hansbarger was then indebted to the bank in the sum of $1800, the bank refused to accept his note for the loss, as such action would result in an excessive loan.
J. H Hansbarger went to his brother, J. C. Hansbarger, who lived in McDowell County, and represented that he was in trouble with the bank, and that the bank was threatening him with prosecution and the loss of his job unless a note was signed by his mother and two brothers. Acting on this representation, J. C. Hansbarger signed the note as maker. J. H. Hansbarger then went to his brother, E. A. Hansbarger, a practicing attorney at Williamson, and told him that he was threatened with the loss of his job and criminal prosecution in connection with the overdraft in the bank, and on that occasion E. A. Hansbarger signed the note as an indorser. J. H. Hansbarger returned to Peterstown and inclosed the note in an envelope with a letter to his mother, Julia L. Hansbarger, in which he told her that he was 'in a little trouble at the bank', and requested her to indorse the note. Julia L. Hansbarger, observing that the note had been made and indorsed by her sons, indorsed the note and returned it to J. H. Hansbarger. These occurrences took place some time in the latter part of the year 1929 or the first part of the year 1930.
The note was carried for several years in the assets of the bank until December 30, 1943, when a renewal note, due on demand in the sum of $4,000, was given, which was signed by J. C. Hansbarger, as maker, and indorsed by J. L. Warren, E. A. Hansbarger and Mrs. J. E. Hansbarger, who is the same person as Julia L. Hansbarger. The renewal note made December 30, 1943, is the note on which this action is predicated.
The notice of motion was returnable on July 11, 1944. Some negotiations were entered into by E. A. Hansbarger with counsel for plaintiff for a continuance of the cause. Counsel would not consent to a continuance without the approval of plaintiff, and thereupon E. A. Hansbarger discussed the continuance with two members of the board of directors of the plaintiff, and a continuance was obtained. The two directors who talked with E. A. Hansbarger testified that the conversation between them and E. A. Hansbarger indicated that if J. L. Warren did not pay the note, the maker and the other indorsers thereon would probably be liable therefor.
Defendants pleaded the general issue and filed a special plea setting up the defense that the signatures of defendants to the note were obtained by duress. A demurrer was sustained to the first special plea, and thereafter an amended special plea was filed, pleading that the signatures of defendants on the original note were obtained by duress, and that defendants received no consideration for making and indorsing the note. A demurrer to the amended special plea was overruled, and plaintiff replied thereto. Upon the issues so made, the cause was submitted to the jury with the result above indicated.
For reversal of the judgment defendants rely upon following errors: (1) That there was no consideration moving from plaintiff to J. C. Hansbarger, E. A. Hansbarger and Julia L. Hansbarger for making and indorsing the original and renewal notes; and (2) that instruction No. 2, given on request of plaintiff, is erroneous.
Preliminary to discussing the assignments of error, it is to be noted that no judgment was rendered against J. L. Warren, although his primary liability for payment of the original indebtedness seems to be conceded.
We are here concerned with the status and liability of J. C. Hansbarger, E. A. Hansbarger and Julia L. Hansbarger, who were the maker and indorsers, respectively, of the original note, and they, together with Warren, are the maker and indorsers of the renewal note of December 30, 1943.
Accommodation parties to a negotiable instrument are defined by statute as follows: Code, 46-2-6. Unquestionably, J. C. Hansbarger, E. A. Hansbarger and Julia L. Hansbarger, in signing the original note as maker and indorsers, merely lent their names to J. H. Hansbarger. Their actions placed them in the category of accommodation parties to the original note, which fact was known to plaintiff when the original note was made and accepted. If the plaintiff bank was the holder for value of the original note, it follows that it is likewise a holder for value of the note given in renewal thereof, and the liability of the maker and indorsers thereof is imposed by statute. Code, 46-2-6.
Plaintiff contends that its relinquishment of its claim for civil liability against J. H. Hansbarger operated as a valuable consideration moving to J. H. Hansbarger for its acceptance of the original note. Such position is well taken. In a case similar to that presented by this record, this Court held that the director of a bank was liable on his personal note covering amounts of certain past due notes made by third parties, and discounted by the bank, while defendant was a director thereof, the bank having assigned the notes of the third parties to the director. First National Bank of West Union v. Freeman, 89 W.Va. 344, 109 S.E. 726, 728. The record herein does not indicate that there was an assignment to the maker and indorsers of the original note of the bank's claim against J. L. Warren; but it cannot be controverted that if and when the bank is repaid the sum received by Warren, the rights of the bank against Warren will pass by operation of law to the persons paying the indebtedness. In First National Bank of West Union v. Freeman, supra, the principle of valuable consideration is discussed in the following pertinent language: 'A valuable consideration is the relinquishment...
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