Houser v. Fayssoux

• Decision Date: 09 December 1914
• Docket Number: 453.
• Citation: 83 S.E. 692,168 N.C. 1
• Parties: HOUSER v. FAYSSOUX ET AL.
• Court: North Carolina Supreme Court

83 S.E. 692

168 N.C. 1

HOUSER v. FAYSSOUX ET AL.

No. 453.

Supreme Court of North Carolina

December 9, 1914

Appeal from Superior Court, Gaston County; Shaw, Judge.

Action by Evon L. Houser, administrator, against T. M. Fayssoux and others. Judgment for defendants, and plaintiff appeals. Affirmed.

A payment by the maker on a note before the bar of the statute does not operate as a renewal of the note as to mere accommodation indorsers, though it does as to sureties as well as the maker.

This is a civil action to recover on a promissory note, as follows:

$2,000.00. One day after date, we promise to pay J. B. White or his order the sum of two thousand dollars, for value received of him, interest at six per cent. per annum from the 1st day of July, 1902.

This the 2d day of July, 1902.

Dallas Cotton Mills,

[Seal.] J. R. Lewis, Prest.

Attest J. D. Moore, Sec. & Treas.

The defendants indorsed this note by writing their names on the back before delivery to plaintiff's intestate, said defendants being directors of Dallas Cotton Mills. The interest on the note was paid by the corporation semiannually to July 1, 1910. October 1, 1910, $100 was paid by the corporation, and similar payments November 15, 1910, and February 1, 1911. At the conclusion of the evidence, the court rendered judgment for the defendants, dismissing the action, and the plaintiff appealed.

S. J Durham, of Gastonia, and F. I. Osborne, of Charlotte, for appellant.

Mason & Mason, of Charlotte, and Mangum & Woltz, of Gastonia, for appellees.

BROWN J.

There are two defenses interposed--want of notice of dishonor statute of limitations. That the defendants were accommodation indorsers on the note sued on is admitted.

It appears that the defendants placed their signatures on the back of the note; that they were not otherwise parties to the note; and, it not appearing that they intended to be bound in some other capacity, they became liable as indorsers, and were entitled to notice of dishonor. Perry v. Taylor, 148 N.C. 362, 62 S.E. 423; Eaton & Gilbert on Commercial Paper, § 108.

It is contended, however, that the defendants were directors of the Cotton Mills, and therefore no notice of dishonor was required, and for this position the plaintiff cites Hull v. Myers, 90 Ga. 674, 16 S.E. 653. It appears in the declaration in that case, and is admitted by the demurrer: First, "that each of said directors so signing said notes did so as surety for the maker, and it was so understood and agreed between each of them"; and, second, "that the maker [the company] was 'utterly insolvent' at the time of the execution of the note." The court bases its decision upon these facts, and the inference from this opinion is that the court would have decided the case differently if it had not been understood and agreed between the directors, who indorsed their names on the notes that they were "doing so as sureties for the maker," or if the company had been solvent. In the case at bar, there was no understanding or agreement that the indorsers were signing the note in controversy as sureties, and there was no evidence tending to prove that the Dallas Cotton Mills was insolvent. The facts in that case distinguish it from this. If the defendants had "understood and agreed that they were signing the note in controversy as sureties," it would take the case out of the provisions of section 2212 of the Revisal, but nothing of that nature appears in the case. The Hull Case is not in line with the great weight of authority.

It is generally held that the fact that the indorsers constituted a majority of the board of directors of a corporation does not dispense with the necessity of notice of dishonor. Phipps v. Harding, 70 F. 468, 17 C. C. A. 203, 30 L. R. A. 513 and cases cited. The prevailing doctrine is that the corporate entity is as distinct from its officers and directors as it is from third persons with whom it transacts business, and stockholders or directors who lend their individual credit to the corporation of which they are members by indorsement of negotiable paper, or otherwise, are entitled to the same rights and immunities which attach to the status of indorser or surety, where third parties have assumed those liabilities. Eaton & Gilbert on Commercial Paper, page 486; Burg v. Legge, 5 M. & W. (Eng.) 418; Carter v. Flower, 16 M. &...