"(1)
That on and for some time prior to February 26, 1924
plaintiff, People's National Bank of Winston-Salem, N.
C., was the regular depository of this defendant in which
defendant kept on deposit a considerable portion of its
funds, and the vice president of plaintiff, who has active
charge of its affairs, was a member of the advisory board
of this defendant, as representative of the plaintiff bank,
and, according to the course of business of this defendant,
it submitted to the plaintiff bank and to its said vice
president all paper which it took in the regular course of
business from the vicinity in which plaintiff bank did
business, and this defendant was accustomed to rely, and
did rely, upon the information given it by the plaintiff
bank and its said vice president with regard to the
financial standing and responsibility of persons in the
neighborhood of plaintiff bank from which this defendant
purchased all papers and securities, and for the service
and information rendered by the plaintiff and its said vice
president, the plaintiff was duly compensated by this
defendant, and this defendant had a right to rely upon
information received by it from the plaintiff.
"(2)
That the plaintiff, well knowing the confidence reposed in
it by this defendant, abused the confidence of this
defendant in the matter of the indorsement hereinbefore
described, and, as this defendant is informed and believes,
conspired and agreed with certain persons against whom it
held insolvent papers to obtain security for a certain
unsecured indebtedness at the expense of this defendant,
and, with intent to cheat and defraud this defendant, made
false and fraudulent representations to this defendant, and
obtained from defendant the indorsement to the note of J.
H. Mackie, as hereinafter more fully set forth.
"(3)
That prior to the said 26th day of February, 1924, the
plaintiff held worthless and unsecured paper made or
indorsed by Webb S. Alexander, J. H. Mackie, F. W. Hanes,
and others, aggregating approximately $16,500. That
plaintiff, being desirous of obtaining some security for
the said worthless indebtedness, entered into an agreement
with the said Alexander and others, as defendant is advised
and believes, by the terms of which the said Alexander and
others were to sell to the said Mackie $16,500 of stock in
the Southern Finance Company, which was to be placed by
Mackie as collateral to a note of the said Hanes, which was
to be given in lieu of the aforesaid worthless paper. That
the plaintiff was to induce this defendant to issue the
said stock for the worthless note of Mackie by representing
to this defendant that the said Mackie was solvent, and
that his said note was good, and was to obtain the
indorsement of this defendant on said note by said
representation, and by offering to discount same for
defendant.
"(4)
That, in pursuance of the aforesaid fraudulent scheme and
conspiracy, the said Webb S. Alexander and certain of his
associates did obtain the $16,500 note sued on in this
action from the said J. H. Mackie, and thereupon presented
same, together with a stock subscription for $16,500 stock,
to this defendant. That, before this defendant would accept
said note, it made inquiry of the plaintiff as to the
solvency and responsibility of the said J. H. Mackie, and
was assured by plaintiff that the said J. H. Mackie was
solvent and responsible, and that this defendant would be
safe in taking said note in payment of his stock
subscription and agreed that if this defendant would take
said note, plaintiff would purchase same from the defendant
upon its indorsement, and that, relying upon the said
representations made to this defendant by the plaintiff, as
aforesaid, this defendant issued its stock to the said J.
H. Mackie in the sum of $16,500, and indorsed the note sued
on to plaintiff. That this defendant thereupon delivered
the said stock and the said note to one
S. F. Penry, who was acting in concert with the plaintiff
and the said Webb S. Alexander, to the end that the said
note might be delivered to the plaintiff, and that the
stock might be pledged as security to the said note,
defendant assuming and believing that the said stock would
be placed with plaintiff as security for the note given for
the purchase price of said stock, but this defendant has
recently learned that the plaintiff did not place the said
stock as security to the said note given for its purchase
price, as aforesaid, but allowed same to be placed as
security for a note of one F. W. Hanes, which note was
given to take up the aforesaid worthless paper given by
Mackie. Hanes, Webb S. Alexander, and others, as aforesaid,
and that plaintiff thereupon held the said $16,500 note
signed by defendant Mackie without any security whatever
for the payment of same, except the indorsement of this
defendant obtained in the fraudulent manner aforesaid.
"(5)
That, at the time plaintiff obtained from this defendant
its indorsement on the said promissory note, the said J. H.
Mackie was not solvent or responsible, and his credit was
not good for $16,500, but, on the contrary, he was involved
in debt and insolvent, and his note was worthless, as the
plaintiff then and there well knew. That the plaintiff made
the aforesaid false representations as to the solvency and
responsibility of the said J. H. Mackie for the purpose of
deceiving and defrauding this defendant, and by means
thereof did deceive and defraud and obtained from this
defendant the issuance of said stock and indorsement
aforesaid, all to the great damage of this defendant, and
in breach of the trust and confidence reposed by this
defendant in the plaintiff.
"(6)
That in the manner and way aforesaid the plaintiff obtained
from the defendant its indorsement on the worthless note of
J. H. Mackie for the sum of $16,500, and also obtained
$16,500 of the stock of this defendant as collateral
security to the aforesaid worthless loans which it held,
and for which the practically worthless note of F. W.
Hanes, secured by the aforesaid stock, was exchanged as
aforesaid. That, after obtaining the said stock of the said
Mackie, as this defendant is informed and believes,
plaintiff proceeded to allow the said Webb S. Alexander to
sell said stock or a large portion thereof, and applied the
proceeds on the said note of Hanes given for said worthless
indebtedness.
"(7)
That it was understood and agreed, at the time the said
stock was issued to J. H. Mackie, that same should be
pledged as collateral to the note of the said J. H. Mackie
purchased by the plaintiff as aforesaid, and this defendant
is informed and believes that the said J. H. Mackie did put
up said stock as collateral to said note, and this
defendant avers that this plaintiff, by relinquishing its
rights against said stock as...
