Lower Main Street Bank v. Parker

• Decision Date: 07 February 1939
• Docket Number: 14819.
• Citation: 1 S.E.2d 181,189 S.C. 320
• Parties: LOWER MAIN STREET BANK v. PARKER et al.
• Court: South Carolina Supreme Court

1 S.E.2d 181

189 S.C. 320

LOWER MAIN STREET BANK v. PARKER et al.

No. 14819.

Supreme Court of South Carolina

February 7, 1939

The decree of Judge Thurmond in the court below follows:

This is an action by The Lower Main Street Bank to foreclose the mortgage securing the payment of a note, both given by the late W. R. Richey, Sr., to The Life Insurance Company of Virginia, dated May 4, 1926, said mortgage being recorded in the office of the Clerk of Court of Common Pleas for Laurens County, S. C., on May 6, 1926, in Book 59 of Mortgages, page 293, tract one as described in the mortgage, having been heretofore released from the lien thereof by The Life Insurance Company of Virginia. The said W. R. Richey, Sr. the mortgagor, subsequently died intestate, all of his heirs having been made parties defendant and duly served with process. Mrs. Lila May M. Richey was made a party defendant as an indorser of the note given by Grover C. Richey to The Lower Main Street Bank, the mortgage being foreclosed and the note secured thereby having been deposited with The Lower Main Street Bank, as collateral security for the payment of the note of Grover C. Richey to said Bank. The defendants other than Mrs. Lila May M. Richey and the heirs at law of the mortgagor are made parties by reason of some subordinate interest that they may claim. I find that all the defendants have been duly served with process and are properly before the court. The summons, complaint, notice for the appointment of a receiver and notice of lis pendens were duly filed in the office of the Clerk of Court for Laurens County, South Carolina, on or about October 5, 1936. The defendant, Mrs Lila May M. Richey, filed answer, admitting her liability as indorser on the note of Grover C. Richey to the plaintiff The Lower Main Street Bank. W. R. Richey, Jr., filed answer for the defendants, W. R. Richey, Jr., J. J. Adams, Sr. and Elizabeth R. Tyler, alleging, on information and belief, that the allegations contained in the complaint are true and admit same. Mrs. Annie R. Parker in her answer, alleges that the note and mortgage in question given by her father, W. R Richey, Sr., to The Life Insurance Company of Virginia, were assigned, transferred and delivered to her and that she was the owner thereof. She admits signing and indorsing her name on the back of the note and mortgage and delivering them to Grover C. Richey, her brother, on or about April 18, 1932, admitting in paragraph four (4) that the indorsement was in blank, but alleging that delivery was "with the distinct understanding that he was to furnish her and her father Fifty ($50.00) Dollars a month each," and he was to hold said mortgage papers "for any and all amounts to be advanced in accordance with said agreement;" that thereafter, her brother, Grover C. Richey, refused to abide by said agreement and that the transfer of the said note and mortgage was void for failure of consideration. She further denied that she gave permission to her brother to transfer the note and mortgage to The Lower Main Street Bank. She further denies that the plaintiff Bank has any lien on the note and mortgage and joins in the prayer of the foreclosure complaint herein. The other heirs at law and defendants are in default, as appears from the affidavit of default of plaintiff's counsel.

The Bank contends that the defendant, Grover C. Richey borrowed on April 26, 1932, $2500 from said Bank and deposited with it as collateral security for the said note the mortgage and note of W. R. Richey, Sr., to The Life Insurance Company of Virginia, the said note and mortgage having been indorsed in blank by Mrs. A. R. Parker and transferred to Grover C. Richey; that said note of Grover C. Richey was renewed on the 24th day of November, 1935, and that said note and mortgage constitutes collateral security for the payment of the note of Grover C. Richey to said Bank.

There is no controversy as to the amount due on the note and mortgage sought to be foreclosed, a written stipulation having been introduced in evidence, signed by the mortgagor, stating that there was due on said note and mortgage the principal sum of Sixty-eight Hundred ($6,800) Dollars, with interest thereon from May 4, 1931. Under the testimony, I further find that there is due on the note given by Grover C. Richey to The Lower Main Street Bank the principal sum of Twenty-five Hundred Dollars ($2500), with interest thereon from February 4, 1936, at the rate of seven per cent. per annum, payable annually, the total amount due on said note as of February 24, 1938, being the sum of Three Thousand, One Hundred-ten and fifty hundredths ($3,110.50) Dollars, in accordance with the following statement:

Principal at ........................................................ $2,500.00

Interest on $2,500.00 from Feb. 24, 1936 (7%) ........................ 350.00

Interest on $175.00 from February 24, 1937, to February 24, 1938

(6%) 10.50

---------

$2,860.50

Attorney's fees ...................................................... 250.00

---------

Total, as of Feb. 24, 1938 .......................................... $3,110.50

I find that the sum of Two Hundred and Fifty ($250) Dollars is a reasonable sum to be allowed plaintiff's counsel for services rendered and to be rendered herein .

The sole question arises under the defense alleged by Mrs. Annie R. Parker. The cause by consent of counsel was referred to W. T. Bolt, Esquire, of Laurens, S. C., to take the testimony and report the same. What does the evidence disclose? The President of the bank advised Grover C. Richey that he would not take an assignment of the note and mortgage as collateral security until he had had the title examined. Thereupon, R. E. Babb, Esq., of Laurens, S. C., examined the title for The Lower Main Street Bank and advised the Bank that the title was satisfactory and that the mortgage constituted the first lien. Mr. Babb's testimony substantiated the writing of this letter, I have ruled, however, that the letter offered in evidence, beginning "At the request of Mrs. Annie R. Parker" is inadmissible against Mrs. Parker and could be used only for purpose of refreshing the witness' memory. The evidence further discloses that Mr. Babb procured from W. R. Richey, Sr., owner of the property under mortgage, a statement that there were no offsets to the mortgage and note, this statement in writing also showing the amount due thereon, this statement being introduced in evidence. This evidence is relevant on the issue of good faith on the part of the Bank.

The evidence further shows considerable correspondence between The Lower Main Street Bank and Mrs. Annie R. Parker, the correspondence being voluminous. Something like a year before the mortgage was sought to be foreclosed, Mrs. Parker wrote two or three letters to the Bank, stating in effect that "you will get your money," and that the value of the property was sufficient to protect the Bank.

In these letters she did not raise the slightest question concerning offset which she later claimed. In these letters she thanked the Bank for the consideration shown her and her father. Mrs. Parker admitted indorsing the note and mortgage and delivering them to her brother; that she did so after conference with her father, an experienced attorney of the Laurens bar; that she and her father needed money and "decided to take a chance"; that she was not quite clear as to what she expected her brother to do with the note and mortgage. She said:

"My name is on it, but I know it is my signature. I transferred it."

Question: "How did you expect Mr. Grover Richey to raise this $50.00 a month when you did not intend him to borrow the money on the mortgage?" Answer by Mrs. Parker: "I do not know. All that I had was his word. I accepted his word."

Question: "You did not expect him to use the mortgage for borrowing money?" Answer: "I do not know."

Question: "So when you delivered the note and mortgage to your brother, Mr. Grover Richey, you trusted him, of course, in the transaction?" Answer: "I did absolutely."

Answer: "Why did I wait? Because he failed to pay what he said he would and we thought it best to secure the mortgage before he went through with it."

Question: "Before he went through with it." Answer: "Borrowed on it, I suppose."

It is important to note that above Mrs. Parker's signature was a typewritten form of assignment in blank, the name of the assignee not being filled out.

What are the legal principles applicable?

I. Since the adoption of the Negotiable Instruments Act there is no question, however, as to a holder who takes by way of security for a pre-existing indebtedness being a holder for value. 3 R.C.L. page 1061.

Furthermore, Section 6776, South Carolina Code 1932 (Uniform Negotiable Instruments Law), provides: "An antecedent or pre-existing debt constitutes value; and is deemed such, whether the instrument is payable on demand or at a future time." See Farr-Barnes Lumber Company v. Town of St. George, 128 S.C. 67, 122 S.E. 24.

II. Section 6781, South Carolina Code 1932 (Uniform Negotiable Instruments Law), provides: "An instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee the holder thereof. If payable to bearer it is negotiated by delivery; if payable to order it is negotiated by the endorsement of the holder completed by delivery."

III. Section 6765, 1932 South Carolina Code, provides: "Where the instrument is wanting in any material particular, the person in possession thereof has a prima facie authority to complete it by filling up the blanks therein."

IV. A mortgage securing a negotiable...