Peurifoy v. Loyal

• Decision Date: 24 January 1930
• Docket Number: (No. 12818.)
• Citation: 151 S.E. 579
• Court: South Carolina Supreme Court
• Parties: PEURIFOY. v. LOYAL et al.

151 S.E. 579

PEURIFOY.

v.LOYAL et al.

(No. 12818.)

Supreme Court of South Carolina.

Jan. 24, 1930.

Cothran, J., dissenting.

Appeal from Common Pleas Circuit Court of Richland County; M. M. Mann and W. H. Townsend, Judges.

Action by James E. Peurifoy, as receiver of the American Bank & Trust Company, against I. M. Mauldin and the American Surety Company, wherein the National Surety Company and others were subsequently made parties defendant, and wherein O. P. Loyal, as administrator of the estate of I. M. Mauldin, deceased, was substituted as defendant. Judgment for plaintiff against the first two named defendants, and decree overruling exceptions of the last two named defendants to the master's report, and defendants named separately appeal. Affirmed.

The decree of Judge Townsend, directed to be reported, was as follows:

This matter comes before me on exceptions to the report of the Master, dated June 22, 1928, and filed 25th June, 1928.

The verdict rendered by the jury on the trial before Judge Mann, at the Spring term, 1928, and the judgment entered thereon, settled the questions, as to the breach of the bond given to the American Bank & Trust Company, by the American Surety Company, and any defense to its liability thereon—as stated in the first exception of the American Surety Company.

From the evidence I find that on 20th Feby., 1926, the American Bank & Trust Company, acting through Mauldin and Matthews, purchased negotiable bonds from the Joint Stock Land Bank for $61,000. On the 23rd February, 1926, Mauldin without the consent of the American Bank & Trust Company took thirty of these bonds, worth about $30,000, and for value coming to him personally, transferred them to the National Surety Company, who believing them to be Maul-din's property, took them in good faith, as an innocent purchaser for value without any notice that the American Bank & Trust Company had any interest in them.

Thereafter in an effort to secure a ratification of their conduct by the American Bank & Trust Company, Mauldin, together with Matthews who had likewise taken some of the bonds, procured the adoption of a resolution by themselves together with two other directors of the bank—being a minority of its board, permitting them to borrow from the bank $30,000.00 and $31,000.00, respectively —value of the bonds which had been taken and used by them on their personal obligations "such as shall be acceptable to the State Bank Examiner" in place of said bonds so borrowed.

Neither the bonds "borrowed" or any securities in place thereof were delivered, returned to, or placed in the assets of the American Bank & Trust Company before it became insolvent, and closed its doors on the 25th June, 1926. About the middle of June, 1926, ten days before the bank closed, Mauldin for the first time spoke to the State Bank Examiner about the transaction, and attempted to get his approval of the securities listed in Exhibit "A, " dated 20th February, 1926— which were offered with the consent of his daughter, Miss Ivy Mauldin, as security for the loan proposed in the resolution of March 1st, but did not physically tender the securities to the Examiner before the bank closed —nor were they delivered to anyone for the bank before it closed.

Subsequently after the bank closed, about the 5th of July, Mauldin wrote a letter Exhibit "B" to the Examiner—offering the same securities—as a pledge for the value of the bonds taken by him—and also the note and mortgage mentioned in Exhibit "C, " and now claimed by Mr. Bostick. The State Bank Examiner then undertook to approve the appraisement or value of the securities offered, but did not act evidencing an intent to accept the offer made by Mauldin. After the receiver took charge, the Examiner on 20th August, 1926, wrote him that he held for Mauldin certain securities offered the bank in the bond transaction, which he would bring down to the Receiver. In December, 1926, the Examiner turned these securities over to the Receiver, who held them for what they were worth, and in order to protect the bank subject to the rights of any parties who might be entitled thereto; but he never accepted them for the bank on the terms on which they were offered, and the bank never claimed them through its Receiver or otherwise. No demand for them prior to the rendition of the verdict on the trial before Judge Mann was made on the Receiver by Mauldin or his administrator or his daughter or by Mr. Bostick or by anyone else. There must be an expression of mutual assent—or acceptance—to constitute a valid pledge of securities by their owner to another. Sollee v. Meugy, 1 Bailey, 623; Lawton v. Maner, 9 Rich. 335; Ward-law v. Harrison, 11 Rich. 626; Griffin v. Rembert, 2 S. C. 410; Duncan v. Heller, 13 S. C. 94, and Greene v. Simon Brown's Sons, 128 S. C. 91, 121 S. E. 597. Acceptance of the offer of the securities made by Mauldin and his daughter required (1) the physical receipt of the securities by the bank (2) their approval by the State Bank Examiner and (3) the mental assent of the bank to the terms of the offer. In re Geo. M. Hill Co., 123 F. 866, 59 C. C. A. 354; Harrison v. Scott, 135 App. Div. 546, 120 N. Y. S. 377; Patterson & Holden v. Sargeant, Osgood & Roundy Co., 83 Vt. 516, 77 A. 338, 138 Am. St. Rep. 1102; Miller v. Sharp, 52 Ind. App. 11, 100 N. E. 108, 110. These three elements never concurred before the bank closed its doors nor since that time. Hence, I concur in the Master's finding that the offer of the securities mentioned in Exhibits "A, " "B" and "C, " made by Mauldin and his daughter was never accepted by the bank or anyone authorized to act on its behalf, and I overrule the third, fourth, fifth, tenth, eleventh, fourteenth, fifteenth, eighteenth, nineteenth and twenty-first exceptions of the American Surety Company.

The above finding renders it unnecessary for me to consider the prerequisites to the right of subrogation raised in the eleventh and twelfth exceptions, as the bank never had any property rights in the securities offered by Miss Mauldin and her father. Those exceptions are overruled.

So, the State Bank Examiner never having undertaken to accept on behalf of the bank, the securities offered by Mr. and Miss Mauldin, his authority to accept on behalf of the bank need not be considered. The fifteenth exception is overruled.

I find that the settlement between the Southern Motor Company and the Receiver was not intended to affect, and did not affect, the liability of that company on the $4,200.00 note, which belongs to Miss Mauldin and not to the bank. The fourth, sixth, seventh, eighth and eighteenth exceptions of the American Surety Company are overruled.

I find that the settlement between the Southern Motor Company and the Receiver was not intended to affect, and did not affect, the liability of that company on the $4,200.00 note, which belongs to Miss Mauldin and not to the bank. The fourth, sixth, seventh, eighth and eighteenth exceptions of the American Surety Company are overruled.

I find that the note and mortgage given by the Carolina Peanut Oil Company belongsto Mr. J. B. Bostick. Its attempted transfer to the bank was unauthorized by him, and the bank never accepted it. The ninth, sixteenth and seventeenth exceptions, and also the thirteenth exception, of the American Surety Company are overruled.

I conclude that the provision in the receipt of the National Surety Company, Exhibit "9" on the trial before Judge Mann, that the Surety Company might apply the proceeds of the sale of the pledged bonds to the payment of the claims referred to the claim on behalf of the collector or the United States Government to be made under the bond written by the National Surety Company, and the reimbursement of all expenses or expenditures made in connection with such claims, and does not include expenses incurred or expenditures made in this action or in defending its title to the securities transferred to it; and that the Master erred in holding that the National Surety Company is entitled to deduct from the funds in its possession, the expenses to which it has been put in this litigation. It is therefore ordered, adjudged and decreed that the National Surety Company shall pay over to the plaintiff James E. Peurifoy as Receiver of the American Bank & Trust Company, the sum of Five Thousand and Four Hundred and Sixty-four and 63/100 Dollars, which when paid to said Receiver shall be credited on the amount of the judgment heretofore rendered in his favor against the estate of I. M. Mauldin and the American Surety Company; and the Master's report is modified in this respect. In all other respects it is confirmed and its other recommendations are adopted as the judgment of this Court.

It is further ordered, adjudged and decreed that the certificate for 200 shares of the capital stock of the Southern Credit Company, and the note of the Southern Motor Company, executed by O. P. Loyal, Treasurer, dated 1st January, 1926, for $4,200.00, payable September 1, 1928, are the property of and should be delivered to Miss Ivy Mauldin, or her attorneys for her.

It is further ordered, adjudged and decreed that the note of the Carolina Peanut Oil Company, executed by B. H. Bostick, Secretary, to J. B. Bostick, dated 15th June, 1921, payable 15th December, 1921, and the accompanying mortgage are the property of, and should be delivered to, said J. B. Bostick or his attorneys.

It is further ordered, adjudged aud decreed that the costs and disbursements in this action, incident and subsequent to the service of the supplemental complaint, and order of reference to the Master, be taxed and adjusted by the Clerk of this Court; and that one-half of such costs and disbursements be paid jointly by the estate of I. M. Mauldin and the American Surety Company and that the other half of such costs and disburse ments be paid by the National Surety Company; and that the plaintiff, Receiver of the American Bank &...