National Loan & Exchange Bank v. Tolbert

Decision Date14 October 1924
Docket Number11581.
Citation124 S.E. 772,129 S.C. 503
CourtSouth Carolina Supreme Court

Appeal from Common Pleas Circuit Court of Greenwood County; J. H Johnson, Judge.

Action by the National Loan & Exchange Bank against R. R. Tolbert and T. P. Tolbert. Judgment for plaintiff, and last-named defendant appeals. Affirmed.

Cothran J., dissenting.

Thurmond & Daniel, of Greenwood, for appellant.

Grier Park & McDonald, of Greenwood, for respondent.


R. R. Tolbert was indebted to the respondent bank in the sum of $19,500, evidenced by his note, secured by an assignment of warehouse receipts for 156 bales of cotton. The note was due and the bank made a bargain to sell the cotton. Before the sale was consummated, R. R. Tolbert learned of the sale and went to the bank and asked for further time. He thought, as so many others did, that cotton would go up in price. Mr. Bailey, the vice president and cashier, who conducted the matter for the bank, told Mr. Tolbert that the amount of the note was too large in proportion to the capital stock of the bank to be loaned to any one person; that, if he would divide the loan, the bank would carry it. Mr. Bailey suggested that, if he would get his brother, T. P. Tolbert to give the bank his (T. P. Tolbert's) note for $9,500, the bank would renew the R. R. Tolbert note for $10,000 and call off the sale of the cotton. The T. P. Tolbert note was renewed from time to time and divided into two notes; one for $5,000 and the other for $4,500. Cotton went down, and was finally sold at a very greatly reduced price. Who sold the cotton is in dispute. The bank claims that R. R. Tolbert sold it, and R. R. Tolbert claims that the bank sold it. It is not denied that, if the sale had been made when the bank first made its contract to sell, it would have not only paid the $19,500, but would have produced a comfortable surplus to have been paid over to R. R. Tolbert. When it was sold, the proceeds of sale were insufficient to pay the R. R. Tolbert note for $10,000. The bank applied the entire proceeds of sale to the R. R. Tolbert note and brought this action against T. P. Tolbert for the full amount of his notes. R. R. Tolbert indorsed the T. P. Tolbert notes. R. R. Tolbert did not answer the complaint. T. P. Tolbert did answer, and set up that he was a mere accommodation indorser, and that he signed the notes with an agreement that the warehouse receipts would be held by the bank as security, not only for the R. R. Tolbert note for $10,000, but as security for the two notes signed by him (T. P. Tolbert), and that he was entitled to a pro rata share of the proceeds of sale as a credit upon his notes.

The presiding judge, at the conclusion of the evidence, directed a verdict for the plaintiff, and from the judgment based upon this verdict this appeal is taken. The exceptions allege error in the exclusion of evidence:

I. T. P. Tolbert undertook to show that, in the transaction that culminated in his signing the notes, R. R. Tolbert was not only acting for himself, but as agent for the bank, and offered evidence as to the statement made to him by R. R. Tolbert that the bank had agreed to hold the warehouse receipts as security, not only for the R. R. Tolbert note, but as security for the T. P. Tolbert note. The bank objected, on the ground that parol evidence was inadmissible to vary the terms of the written contract. The objection was sustained and the evidence excluded.

The evidence was properly excluded. The object of the evidence was to show that the warehouse receipts which had been assigned to the bank alone, in writing, had, by parol, been assigned to T. P. Tolbert. This was a clear violation of the rule. The exceptions that raise this question cannot be sustained.

II. The appellant complains that he was not allowed to show the true consideration of the note. The evidence did not tend to show the consideration of the note. It tended to show that an absolute promise to pay the debts of another, expressed in writing, was made conditionally. This is a hard case, and the defense is put in in all good faith and honesty, but it cannot be sustained. There is no dispute that R. R. Tolbert owed the bank too much money in proportion to its capital. The bank was required by law to reduce the amount of the loan to one man. When the bank examiner comes along, making an inspection for the protection of stockholders and depositors, he finds among the assets of the bank two notes, one for $10,000, secured by warehouse receipts for 156 bales of cotton, and one of two notes for $9,500 by T. P. Tolbert. The official inspection would afford no protection, if the securities can be shown by parol not to be what on their faces they purport to be.

III. The appellant complains that he was not allowed to show that R. R. Tolbert was acting as agent for the bank in procuring the signature of T. P. Tolbert to the notes sued upon. Whether R. R. Tolbert was the agent of the bank or not was a mixed question of law and fact. The facts being undisputed, it became a question of law. The bank was proceeding to collect its money. The substitution of the new security was solely in the supposed interest of the debtor. The fact that the bank told the debtor that it would stop proceedings on certain conditions to be performed by the debtor did not make the debtor the agent of the bank.

The attorney's fees are not argued.

The judgment is affirmed.

WATTS and MARION, JJ., concur.

GARY, C.J., did not participate.

COTHRAN J. (dissenting).

This is an action upon two promissory notes, made by the defendant T. P. Tolbert and indorsed by the defendant R. R. Tolbert, Jr. Both notes are dated December 30, 1921; one for $5,000 and the other for $4,500, both payable to the plaintiff bank on December 1, 1922. They are renewals, from time to time, of a note for $9,500, dated October 3, 1920, made by T. P. Tolbert to the bank, and indorsed by R. R. Tolbert, Jr.

This action, against both T. P. Tolbert and R. R. Tolbert, Jr., was commenced May 24, 1923, in the court of common pleas for Greenwood county. R. R. Tolbert, Jr., made default. T. P. Tolbert made several defenses, only one of which it is deemed necessary to consider. It will sufficiently appear in what follows. The case was tried before his honor, Judge Johnson, and a jury, at October term, 1923. At the close of all evidence, upon motion of the plaintiff, the presiding judge directed a verdict in favor of the bank for the full amount claimed. Upon this verdict, judgment has been entered, and from it the defendant T. P. Tolbert alone has appealed.

The $9,500 note, of which the notes sued upon are renewals, was made under the following circumstances:

On April 28, 1920, the defendant R. R. Tolbert, Jr., made a note to the plaintiff bank for $19,500, due June 5, 1920, and deposited as collateral security therefor warehouse receipts for 156 bales of cotton. T. P. Tolbert had nothing to do with this transaction at its inception. It does not distinctly so appear in the record for appeal, but it is assumed that R. R. Tolbert, Jr., renewed this note, when it fell due on June 5, 1920, to October 3, 1920.

Prior to this date, some time in the latter part of September, 1920, the bank notified R. R. Tolbert, Jr., that the note could be carried no longer in its then shape, for the reason that it was in excess of the legal limit fixed by the Federal Reserve Bank, and that it would have to be paid or materially reduced at its maturity. Not having had a satisfactory compliance by R. R. Tolbert, Jr., with this requirement, the bank proceeded to realize upon the collateral. They contracted to sell the cotton represented by the warehouse receipts to Cooper & Griffin of Greenville. Before the sale was consummated, however, an arrangement was made by which the sale was called off, and R. R. Tolbert, Jr., who was anxious to hold the cotton for better prices, was allowed an extension of the loan. The parties are not agreed as to the terms of this arrangement, and upon their differences the case turns.

W. T. Bailey, vice president and cashier of the bank, who handled the transaction, testified that on October 3, 1920, he was anxious to close the matter out, but that R. R. Tolbert, Jr., was insistent upon further indulgence, in the hope of a rising market; that R. R. Tolbert, Jr., asked him, "Will you carry it if I get Tom [the defendant T. P. Tolbert] to sign part of the note with me?" that he replied, "I will;" that he then prepared a plain bank note for T. P. Tolbert to sign, for $9,500, payable December 3, 1920, and gave it to R. R. Tolbert, Jr., to be executed; that this note was returned to him by R. R. Tolbert, Jr., signed by T. P. Tolbert as maker, and indorsed by R. R. Tolbert, Jr.; that he credited the $19,500 note with "cash $9,500" (which in reality was the T. P. Tolbert note), leaving $10,000 due by R. R. Tolbert, Jr., on the original note, secured by the warehouse receipts. The bank contends that thereafter the warehouse receipts stood as collateral for the $10,000 balance on the $19,500 note, alone, and that they had no security at all for the $9,500 T. P. Tolbert note, except his financial ability and R. R. Tolbert, Jr.'s, indorsement, a position quite unusual, which will be explained by the sequel.

On the other hand, the defendant T. P. Tolbert offered the testimony of R. R. Tolbert, Jr., tending to show that, at the time the above arrangement was consummated, there was a parol agreement between him and the bank that, in the event T. P Tolbert made a note for part of the debt, the warehouse receipts should stand as security for that note, as well as for the $10,000 balance on the original note; that he explained this...

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  • Gustilo v. Tang
    • United States
    • South Carolina Court of Appeals
    • April 4, 2008
    ... ... integration of the agreement.”); Nat'l Loan ... & Exch. Bank v. Tolbert , 129 S.C. 503, 512, 124 ... ...

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