Nat'l Union Bank Op Mart Land v. Hollingsworth

• Decision Date: 22 December 1906
• Citation: 143 N.C. 520,55 S.E. 809
• Parties: NATIONAL UNION BANK OP MART LAND . v. HOLLINGSWORTH et al.
• Court: North Carolina Supreme Court

55 S.E. 809

143 N.C. 520

NATIONAL UNION BANK OP MART LAND .

v.HOLLINGSWORTH et al.

Supreme Court of North Carolina.

Dec. 22, 1906.

1. Corporations—Indorsement of Accommodation Note—Act of President.

Where the president of a corporation indorsed an accommodation note in the name of a firm, which had been succeeded by the corporation, but the note was never payable to the corporation, and was not executed to pay a debt due it, the corporation was not liable on the indorsement.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 12, Corporations, § 1641.]

2. Appeal — Pleading — Issues—Questions Raised.

Where the parties went to trial on the pleadings, it was too late on appeal to raise the question whether one of the issues litigated was presented by the pleadings.

3. Corporations — Assets —Transfer—Payment of Debts—Persons Entitled to Complain.

One not a creditor of a corporation could not complain that a transferee of all of its stock and assets did not pay ail of the corporation's debts as agreed.

4. Same—Bona Fide Purchaser fob Value —Evidence.

Evidence held sufficient to sustain a finding that R. was a bona fide purchaser of a corporation's stock and assets, for value, without notice of the alleged fraud of its president in organizing such corporation to take over the business of a firm without satisfying firm debts.

5. Assignments fob Benefit of Obeditors— Transfer of Corporation Assets.

Where the president of a corporation, who owned or controlled all of its stock, transferred the same to R. in consideration of a present debt due the latter, R.'s collateral agreement with reference to the disposition of certain notes evidencing such indebtedness, and to pay the outstanding debts of the corporation, did not make the transfer an assignment for the benefit of creditors, within Acts 1893, p. 433, c. 453. entitled "An act to prevent fraudulent assignments."

Hoke, J., dissenting.

Appeal from Superior Court, Buncombe County; W. R. Allen, Judge.

Action by the National Union Bank of Maryland against J. B. Hollingsworth and others. From a judgment for defendants, plaintiff appeals. Affirmed.

Julius C. Martin and Chas. A. Webb, for appellant.

Locke Craig and Moore & Rollins, for appellees.

CONNOR, J. This cause was before us at the December term, 1903, and is reported in 135 N. C. 556, 47 S. E. 618. The facts are there fully set forth in the statement of the case, and we find no reason, in disposing of this appeal, for restating them, but refer to the case as reported. After discussing the several phases of the controversy, as presented and argued before us, we concluded by saying: "The cause should be remanded, and a new trial had upon the issues of fraud raised by the pleadings and the claim of the defendant Robertson that, in any event, he Is a purchaser for value and without notice The burden of proof upon the first issue will be upon the plaintiff, and as to the second upon the defendant." His honor, in accordance with this decision, submitted the issues indicated, and, In addition thereto, submitted the third issue. "Did the defendant the J. E. Dickerson Company indorse the notes in controversy in the name of J. E. Dickerson & Co.? His honor instructed the jury, in deference to what he construed to be the opinion of this court, to answer the issue In the negative.

The plaintiff's fifteenth exception is directed to this ruling. It was alleged that the defendant corporation had, through J. E. Dickerson & Co., as agents, contracted the debts sued on, had received the benefit of the money advanced on the notes, and was therefore liable for them. We do not think the question raised by the third issue was left open, and his honor may have refused to submit the issue. It will be observed that neither J. E. Dickerson or J. E. Dickerson & Co. had any connection with these notes, save by way of indorsement. There is no evidence that the J. E. Dickerson Company had any connection whatever with them. We expressed our opinion in the first appeal upon this phase of the case as follows: "This note was never payable to the corporation, was not executed in consideration of any debt due the corporation, was never Indorsed by any officer of the corporation in his official capacity, and it is difficult to perceive how it could have become liable upon the cause of action set forth in the complaint; that is, the promissory note of Hollingsworth." We adhere to that view. The learned counsel contends that there was abundant evidence to go to the jury to prove that J. E. Dickerson was acting as agent of the corporation when he indorsed Holllngsworth's note, given in renewal of notes payable to J. E. Dickerson & Co., in the name of J. E. Dickerson & Co. While It is true, as contended by counsel, that a corporation may contract under an assumed and fictitious name and be bound on the contract, we know of no authority by which the president or other managing officer of a corporation, without any authority whatever, can bind the corporation by Indorsing, In his own name, or the name of some firm of which he may be a member, a note payable to himself, for which the corporation received no benefit or consideration. There Is no suggestion that either J. E. Dickerson undertook, or any officer of the bank understood or supposed that he was undertaking, to bind the corporation by indorsing the words "J. E. Dickerson & Co." upon the back of a note payable to J. E. Dickerson & Co. We find no scintilla of evidence tending to establish any liability against the corporation upon the indorsement, which is the cause of action. If the corporation received property from J. E. Dickerson, or by J. E. Dickerson & Co., in fraud of his or their creditors, the right to follow the property in the possession of the corporation, or the hands of a purchaser with notice, isconceded. The exception cannot be sustained.

The plaintiff's tenth exception is pointed to the submission of the fifth and ninth issues, directed to the question whether Robertson was a purchaser for value without notice of the fraud of Dickerson. The exception is based upon the contention that the issues are not raised by the answer. We construed the pleadings as raising the question, and directed...