Kindler v. Wachovia Bank & Trust Co.

• Decision Date: 22 February 1933
• Docket Number: 594.
• Citation: 167 S.E. 811,204 N.C. 198
• Parties: KINDLER v. WACHOVIA BANK & TRUST CO.
• Court: North Carolina Supreme Court

167 S.E. 811

204 N.C. 198

KINDLER v. WACHOVIA BANK & TRUST CO.

No. 594.

Supreme Court of North Carolina

February 22, 1933

Appeal from Superior Court, Buncombe County; Sink, Judge.

Action by H. W. Kindler against the Wachovia Bank & Trust Company. Judgment for plaintiff, and defendant appeals.

New trial.

One indorsing note without qualification could testify as to payee's agreement to pay it from proceeds of maker's collateral securities, but not that he was to be relieved of any liability.

On March 23, 1929, L. B. Jackson executed his promissory note to the defendant, Wachovia Bank & Trust Company, or order, in the sum of $5,000, with interest at 6 per cent., payable 90 days after date. It bore the following indorsement: "H W. Kindler." The defendant made the loan in June, 1928. The original note had twice been renewed, and the note in suit was the last renewal.

On March 16, 1930, the plaintiff instituted the present action. In his complaint he alleged in substance that prior to June 26, 1928, he had furnished material and done work for L. B Jackson, for which Jackson had become indebted to him in a sum exceeding $5,000; that the defendant held collateral securities of Jackson for the purpose of protecting Jackson's indebtedness to the bank; that the plaintiff and certain officers of the defendant entered into the following agreement: If Jackson would give a note and the plaintiff would indorse the note, the defendant would pay to the plaintiff the sum of $5,000, and would use the collateral it had in its possession belonging to Jackson and his affiliated interests and corporations for the purpose of paying off said note; that the collateral was sufficient to discharge the note; that the note would be paid out of the collateral; that the plaintiff would not be called upon to pay the note or to make it good; that the defendant would rely only upon the collateral for payment; and that in pursuance of this agreement the plaintiff signed the note as indorser, and did not insist upon the liens which he could have enforced against the property of Jackson.

The defendant denied the alleged agreement as to the collateral securities and the release of the plaintiff, and alleged that it had made no contract with the plaintiff, except such as appears upon the note in controversy.

The plaintiff was permitted to testify as follows, subject to the defendant's objection and exceptions:

"Q. What did they (the officers of the Wachovia Bank & Trust Co.) say when you told them the Central Bank & Trust Company wouldn't take the note that he owed you for this plumbing and heating? A. They said that Jackson had a large amount of collateral down there and that this note would be taken care of without it coming back on me.

"Q. State what occurred there. A. There was very little said beyond that. I was sure that the note wouldn't come back on me.

"Q. What did they say the note would be paid out of, if anything? A. Taken out of a large amount of collateral that Jackson had in their possession.

"Q. Who said that? A. Mr. Raysor. He stated that in the presence of Strong and Ebbs, sitting in the enclosure.

"Q. Then what did you do? A. I accepted the check for $5,000 endorsed the note and left the bank. Interest was deducted from that check. Jackson paid me the interest personally. ***

"Q. Did they make that agreement with you before you endorsed the note? A. Yes.

"Q. How soon after they made that agreement with you did you endorse the note? A. We conversed there for two or three minutes and finally I went to the window to the left and endorsed the note."

The verdict was as follows: "What amount, if any, is the defendant entitled to recover of the plaintiff on the note referred to in the complaint? A. Nothing."

Raysor, Strong, and Ebbs were officers of the defendant.

Judgment for plaintiff; appeal by defendant.

Alfred S. Barnard, of Asheville, for appellant.

R. R. Williams and William J. Cocke, Jr., both of Asheville, for appellee.

ADAMS Justice.

The decisive question is whether the evidence excepted to should have been excluded. The plaintiff admitted his indorsement of the note. He did not indicate by appropriate words his intention to be bound in any other capacity; he entered into a substantive agreement, and incurred the liability of a general indorser. By his indorsement without qualification, he warranted to all subsequent holders in due course that the instrument was genuine and in all respects what it purported to be; that he had a good title to it, that all prior parties had capacity to contract, and that the instrument was valid and subsisting. He also engaged that on due presentment the note should be paid according to its tenor, and if dishonored, and the necessary proceedings were taken, he would pay the amount of the note to the holder or to any subsequent indorser who might be compelled to pay it. C. S. §§ 3044, 3045, 3047; Perry Co. v. Taylor Bros., 148 N.C. 362, 62 S.E. 423; Wachovia Bank & Trust Co. v. Crafton, 181 N.C. 404, 107 S.E. 316; Raleigh Banking & Trust Co. v. York, 199 N.C. 624, 155 S.E. 263; Ray v. Livingston, 204 N.C. 1, 167 S.E. 496.

The indorsement of the plaintiff was neither special nor restrictive, nor qualified nor conditional. Can he release himself from the legal consequences of his indorsement by proof of a parol agreement with the defendant that by his indorsement he incurred no liability? No fraud or mistake is alleged. The indorsement itself imports liability. When a contract is reduced to writing parol evidence will not be heard to contradict, vary, or add to the written instrument. The principle is clearly set forth in Moffitt v Maness, 102 N.C. 457, 9 S.E. 399, and has often been restated. Another principle is equally familiar. If a contract not required to be in writing is partly written and partly verbal, the unwritten part may be proved if it does not contradict or vary the terms of the writing. Twidy v. Saunderson, 31 N.C. 5; Manning v. Jones, 44...