Page Trust Co. v. Rose

• Citation: 135 S.E. 795,192 N.C. 673
• Decision Date: 08 December 1926
• Docket Number: 429.
• Parties: PAGE TRUST CO. et al. v. ROSE et al.
• Court: United States State Supreme Court of North Carolina

135 S.E. 795

192 N.C. 673

PAGE TRUST CO. et al. v. ROSE et al.

No. 429.

Supreme Court of North Carolina

December 8, 1926

Appeal from Superior Court, Richmond County; Schenck, Judge.

Controversy without action by the Page Trust Company and others receivers of the Bank of Hamlet, against T. M. Rose and others. From the judgment, defendants appeal. Reversed.

Where bank gave bonds to secure deposit of county funds, and gave security for sureties thereon, that bank officer who conducted transaction was one of sureties does not deprive them of their security.

Controversy without action to determine title to certain notes of the total face value of $38,128.77. On September 8, 1925, and prior thereto, said notes were owned by the Bank of Hamlet as part of its assets.

Plaintiffs contend that, as receivers of the Bank of Hamlet, they are entitled to said notes, to be held by them as general assets for distribution among all the creditors of said bank defendants contend that, by virtue of an assignment by said bank, made on September 8, 1925, they are entitled to said notes, to be held by them under the terms of said assignment. The validity of the assignment, denied by plaintiffs, is the only matter involved in this controversy and presented for decision.

The court was of opinion that the assignment was not valid, and thereupon adjudged that plaintiffs are entitled to said notes, free and clear of any rights, claims, or equities therein of defendants. From this judgment, defendants appealed to the Supreme Court.

Rose & Lyon, of Fayetteville, for appellants.

Bynum & Henry, of Rockingham, for appellees.

CONNOR J.

Plaintiffs were, on November 14, 1925, duly appointed receivers of the Bank of Hamlet, which is insolvent. Having qualified as such receivers, they are now engaged in the performance of the duties of their office. On said date, and for some time prior thereto-particularly on September 8, 1925-defendants were respectively, president, vice president, and vice president and cashier of said bank.

During the month of September, 1925, the board of commissioners of Richmond county proposed to deposit in the Bank of Hamlet, one of the banks located and doing business in said county, the sum of $37,500. This sum was a part of the road fund of Richmond county, then under the control of said board. Before making said deposit, however, and as a condition of making the same, the board of commissioners required the Bank of Hamlet to execute and file with said board a bond in the sum of $37,500, conditioned as follows:

"Now, if the said Bank of Hamlet, Hamlet, N. C., shall well and truly execute the duties imposed upon it, according to law, and, on the warrant of the chairman of the board of county commissioners, pay all moneys which shall come into its hands, as county depository, and render a just and true account thereof to the board when required by law or by said board of county commissioners, then this obligation shall be null and void; otherwise to remain in full force and effect."

The requirement by the board of commissioners of the bond was in accordance with the provisions of chapters 503, 603, and 685, Pub. Loc. Laws of 1915. These provisions are in effect the same as that contained in C. S. § 1389, with respect to deposit of funds belonging to a county in a bank located and doing business in said county. The bank, before receiving deposits of county funds, is required to execute a bond for the safe-keeping and proper accounting of such funds as may be deposited by the board of commissioners of the county therein, under the authority of the statute.

On September 8, 1925, the Bank of Hamlet, as principal, and defendants, as sureties, executed a bond in the form required, and filed same with said board. Thereupon the board deposited in the Bank of Hamlet the sum of $37,500, which was entered upon the books of the bank to the credit of "Richmond County Road Fund, J. D. Covington, Auditor." The said sum remained on deposit in said bank until the appointment of plaintiffs as receivers, and is now included among the liabilities of said bank.

Contemporaneously with the execution of said bond, the Bank of Hamlet, by David Easterling, its vice president and cashier, transferred and assigned the notes which are the subject-matter of this controversy to defendants T. M. Rose, W. K. McNeill, and David Easterling, as security, "to save them harmless for having signed said bond," as sureties of the Bank of Hamlet. The notes were delivered to defendant T. M. Rose, to be held by him as trustee for himself and his cosureties. This transfer and assignment was made pursuant to an agreement between said bank, acting by its vice president and cashier, David Easterling, and defendants as sureties on the bond. Defendants, in assuming the obligations as sureties for the bank, relied upon said agreement and assignment.

It is expressly agreed between the parties to this controversy, as appears in the statement of agreed facts-

"(7) That on September 8, 1925, the Bank of Hamlet was a going concern, and was regarded by the parties as solvent, and the entire transaction was carried out by T. M. Rose and W. K. McNeill for the use and benefit of the Bank of Hamlet, and in order that the bank might receive the benefit of the deposit of $37,500 being made by the county of Richmond.

(8) That neither T. M. Rose nor W. K. McNeill had or derived any personal interest or benefit from the signing of said paper writing, as surety for the Bank of Hamlet, except as stockholders of the bank.

(9) That the said transactions, the execution and delivery of the paper writing, as well as the delivery of the notes belonging to the Bank of Hamlet, were never approved by any formal meeting of the board of directors of the Bank of Hamlet, and no resolution has been passed by the board of...