LaVecchia v. North Carolina Joint Stock Land Bank of Durham
| Decision Date | 19 June 1940 |
| Docket Number | 748. |
| Parties | LaVECCHIA v. NORTH CAROLINA JOINT STOCK LAND BANK OF DURHAM. |
| Court | North Carolina Supreme Court |
Civil action to recover for moneys of Paine Statistical Corporation, of New Jersey, alleged to have been wrongfully appropriated and used by John Overton Paine in paying personal debt to defendant.
This case came to this Court on former appeal from order refusing to allow motion of plaintiff for judgment on pleadings, 215 N.C. 73, 1 S.E.2d 119, and was considered on petition to rehear, 216 N.C. 28, 3 S.E.2d 276, 277. There the Court held that plaintiff was not entitled as a matter of law, to judgment on the pleadings for there was a denial of "a breach of his obligation as fiduciary".
Plaintiff alleges that on the 3d and 4th days of March, 1937, John Overton Paine, in his individual capacity, entered into four certain contracts to purchase from the defendant four tracts of land situate in North Carolina, at the price of $36,625 payable one fifth on execution of the contracts, and balance in eight annual installments; that as a payment on the purchase price of said lands John Overton Paine delivered to defendant two checks, one dated March 3, 1937, for $5,500 drawn on Union National Bank, Newark, New Jersey, and the other dated March 4, 1937, for $1,825, on Caldwell National Bank, Caldwell, New Jersey, each drawn in the name of "Paine Statistical Corporation, J. O. Paine President", and payable to the order of defendant; that in giving said checks of Paine Statistical Corporation as payments for his individual transactions, John Overton Paine misappropriated and wrongfully and unlawfully used funds of the corporation, of which fact defendant had notice in that it accepted the checks drawn on Paine Statistical Corporation, by J. O. Paine in his capacity as an officer of the corporation, which fully appeared upon the face of the checks, and that by so accepting the checks defendant participated in the misappropriation and wrongful use of the funds of the corporation and wrongfully received and now unlawfully withholds such funds, although demands for their return have been made by plaintiff; and that in contracting with defendant as above set forth John Overton Paine acted without the knowledge, authority or permission of Paine Statistical Corporation, and wholly in violation of his trust as an officer of the corporation.
Defendant, in answer, admits that on or about March 1, 1937, it entered into certain contracts for the sale of real estate with John Overton Paine; that he paid 20 per cent of the agreed purchase price "*** and in payment of said amount delivered to the defendant two checks of the Paine Statistical Corporation signed by John Overton Paine, President, and presumably they were in words and figures as indicated *** in the complaint; ***" and that it "accepted the checks of the Paine Statistical Corporation signed by John Overton Paine, President", but denies the remainder of allegations above set forth. For a further defense defendant avers that, on or about March 2, 1937, through its duly authorized agents and officers, and in good faith, it sold to John Overton Paine four tracts of land and entered into contracts with respect thereto referred to in the complaint; that John Overton Paine made the 20 per cent cash payment in accordance with his agreement and entered into possession of the land under certain agreements with respect to receiving of rents and payment of taxes and insurance; that he received the rents but failed to pay the taxes and insurance; that one of the tracts was sold to John Overton Paine through a broker to whom defendant paid a commission; and that defendant has been, and now stands able, ready and willing to carry out its agreement with John Overton Paine to execute deeds for said four tracts of land upon the payment of the purchase money due to defendants under said contracts.
Upon the trial below defendant introduced in evidence the admission of defendant, the original contracts which defendant then produced, the two checks, deposition of Andrew J. Markey, Assistant Attorney General of the State of New Jersey in charge of the securities division of the Attorney General's office, by whom, without objection, the minute book of the Paine Statistical Corporation was identified--the minute book being offered in evidence over objection by defendant--and deposition of Morris M. Beiner, certified public accountant of the State of New Jersey, Testimony of the witness Beiner, upon examination in chief, tends to show that: He was personally in charge of investigation and audit of the books and records of Paine Statistical Corporation for firm which was designated and appointed for the purpose by the court of chancery in the receivership proceeding, made a complete examination of the books and records, and prepared a statement of assets and liabilities of the corporation as of February 18, 1939. As of that date the aggregate amount of assets was $77,070.73, and of claims filed by creditors with receiver $362,000. The assets included a claim in the amount of $7,325 against the defendant. The nature of the business was buying and selling of securities and rendering a stock quotation service. Under the plan for conducting its business the corporation received from customers deposits of cash or securities which were used as collateral for the purchase of additional securities for the customers. In practically every instance the securities deposited by the customers were immediately disposed of for cash and the cash received for the customers was taken in and mingled with the funds received from the sale of these securities. All money on deposit in the bank account of Paine Statistical Corporation at the Union National Bank and the Caldwell National Bank represented the cash received from customers, together with the proceeds received by the Paine Statistical Corporation as a result of the sale of securities deposited by customers with the corporation as collateral. The check of March 3, 1937, for $5,500 drawn on Union National Bank as well as the check of March 4, 1937, on Caldwell National Bank, payable to the order of defendant were drawn on the funds of the corporation so deposited by the corporation. Neither the books nor records reflect the purchase or ownership of any real estate in North Carolina, nor do they contain any statement or indication of any authority or directions to John Overton Paine to purchase for the corporation any property in North Carolina, or that the corporation was indebted to him in any amount, or that it loaned any money, or authorized the loan of any corporate funds to him. The only record of the checks in question is the stub of the check book. Upon examination the minute book does not contain record authorizing John Overton Paine to use the funds of the corporation to purchase any real estate in North Carolina. (When the deposition was taken defendant entered objection to each question by which the foregoing evidence was elicited.)
Defendant offered no evidence.
Defendant reserved exception to refusal of court (1) to grant its motion for judgment as in case of nonsuit, and (...
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