First Palmetto State Bank and Trust Co. v. Simkins
| Decision Date | 18 May 1988 |
| Docket Number | No. 1215,1215 |
| Citation | 296 S.C. 345,372 S.E.2d 592 |
| Court | South Carolina Court of Appeals |
| Parties | , 7 UCC Rep.Serv.2d 504 FIRST PALMETTO STATE BANK AND TRUST COMPANY, Respondent, v. A. Wilson SIMKINS, Appellant. . Heard |
John W. Foard and Joseph C. Coleman, Columbia, for appellant.
Donald E. Rothwell, Columbia, for respondent.
Respondent, First Palmetto State Bank and Trust Company, (hereinafter First Palmetto), sued appellant, A. Wilson Simkins, for judgment on a promissory note. Simkins answered and counterclaimed for damages alleging conspiracy to defraud. The trial judge granted First Palmetto's motion for dismissal to the counterclaim and, following a nonjury trial, found in favor of First Palmetto. Simkins appeals. We affirm.
In March of 1985, Joel Hendrix, owner of the adult book store Carolina Amusements contacted Rick Bradley, a vice president of First Palmetto, to procure a loan to finance the purchase and installation of videotape equipment. Hendrix requested that the manager of his book store, Harry Olsen, be allowed to sign a $55,000 promissory note for the funds, and Bradley agreed. Subsequently, Olsen went by First Palmetto and signed the note. Bradley neither looked into Olsen's financial situation nor had Olsen fill out a financial statement as it was understood between Bradley and Hendrix that Hendrix through the book store would make the payments.
Bradley never recorded the Olsen note in bank records, but kept it on his desk. When he later learned Olsen was going to jail, Bradley contacted Hendrix and informed him someone else would have to sign the note. As a result, in May of 1985 Simkins, at Hendrix's behest, went to First Palmetto and signed the note sued on in this action. Bradley then destroyed the Olsen note. The Simkins note was given to discharge the Olsen note. Bradley testified the note was filled out and he believed Simkins looked over it before he signed it. No payments were made on the note.
Defendant Simkins answering: in his First Defense admits the execution of the note and admits that no payments were made; in his Second Defense he asserts want of consideration; in his Third Defense he asserts failure of consideration; in the Fourth Defense he asserts no valid agreement; in his Fifth Defense he asserts that the note was created and used solely to cover up embezzlement prohibited by public policy. He then proceeds to allege as a defense a counterclaim asserting fraud and deceit on the part of the plaintiff bank acting by and through its Vice-President Bradley. In his counterclaim he seeks damages for mental anguish, cost of defending this law suit, damages to his reputation, and cost of satisfying any judgment which might grow out of this action.
In this appeal there are two basic issues for consideration: (1) Did the trial judge err in granting judgment in favor of the plaintiff? and (2) Did the trial judge err in dismissing the counterclaim under SCRCP Rule 12(b)(6)?
Patently the plaintiff is entitled to judgment as a matter of law based on admissions in the First Defense unless the judge erred in dismissing the counterclaim.
Section 36-3-408 South Carolina Code of Laws, 1976 provides:
Want or failure of consideration is a defense ..., except that no consideration is necessary for an instrument or obligation thereon given in payment of or as security for an antecedent obligation of any kind. (emphasis added).
The official comment to this section notes that the "except" clause is intended to remove the difficulties which have arisen where a note is given as payment for a debt already owed by the party giving it or a third person. See Farmers and Merchants Bank v. Fargnoli, 274 S.C. 23, 260 S.E.2d 185 (1979) ().
As to dismissal of the counterclaim, we agree with the trial judge when he held that knowledge of the bank's agent Bradley could not be imputed to the bank.
Assuming, without so deciding, that Vice-President Bradley and Hendrix conspired to defraud the bank, it is patent from the pleadings that defendant Simkins was a party to the fraud. In dismissing the counterclaim the judge was entitled to consider the allegations of the other defenses. In the defendant's Answer, we find the following:
The signing of the blank note form by Simkins was never...
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