Slaughter v. Philadelphia National Bank

• Decision Date: 18 September 1968
• Docket Number: Civ. A. No. 36421.
• Citation: 290 F. Supp. 234
• Parties: Samuel B. SLAUGHTER, Jr., Plaintiff, v. The PHILADELPHIA NATIONAL BANK, Defendant and Third-Party Plaintiff, v. PEOPLES NATIONAL BANK OF CAMDEN COUNTY, Third-Party Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

290 F. Supp. 234

Samuel B. SLAUGHTER, Jr., Plaintiff, v. The PHILADELPHIA NATIONAL BANK, Defendant and Third-Party Plaintiff, v. PEOPLES NATIONAL BANK OF CAMDEN COUNTY, Third-Party Defendant.

Civ. A. No. 36421.

United States District Court E. D. Pennsylvania.

September 18, 1968.

Roger A. Johnson, Burton Spear, Philadelphia, Pa., for plaintiff.

Arthur R. Littleton, Philadelphia, Pa., for defendant.

Norman R. Bradley, Philadelphia, Pa., for third-party defendant.

MEMORANDUM OPINION

WEINER, District Judge.

In this case the jury returned a verdict in favor of plaintiff and against defendant, Philadelphia National Bank (hereinafter PNB) for $47,500 as compensatory damages and $35,000 as punitive damages, and in favor of PNB and against third-party defendant, Peoples National Bank of Camden County, New Jersey (hereinafter Peoples) for $41,250.

Motions for judgment notwithstanding the verdict or for a new trial were filed by both defendants. After argument, the motions for a new trial were withdrawn. Predicated upon irreconcilable inconsistent jury findings, the court, on its own initiative,¹ set aside the judgment and ordered a new trial. PNB and Peoples now move to vacate the court's opinion and request that we render a decision on its motion for judgment n. o. v. or to limit the new trial to the sole issue of agency.

INCONSISTENCY OF VERDICT

A special written finding designated as 2(a) was submitted to the jury.² Their obligation was to determine if Peoples was the agent of PNB. The jury received instructions that liability could attach to Peoples only in the event that they found that the relationship of principal and agent existed. Their answer was in the negative. The jury, nonetheless, also found Peoples responsible in damages to PNB. (Finding 5). The verdict was perverse and clearly demanded the exercise of the court's authority to prevent a miscarriage of justice.

It is important to recognize that the verdict of this jury was controlled by Rule 49(a) and was not the equivalent of a general verdict pursuant to Rule 49(b). Decisive is the holding in Gallick v. Baltimore & Ohio R. R., 372 U.S. 108, 125, 83 S.Ct. 659, 668, 9 L.Ed.2d 618 (1963):

"the fact is that the jury returned no general verdict for either party. * * * By undertaking to reconcile irretrievably conflicting findings of the jury * * *. (the court would have) invaded the province of the jury * * *. We would avoid such an intrusion by ordering that the cause be put to another jury".

Movant cites, Jones and Laughlin Steel Corp. v. Matherne, 348 F.2d 394 (5th Cir. 1965) to persuade us to attempt to reconcile the inconsistency previously illustrated. The distinction between the case at bar and Jones is that (Jones) was relevant to Rule 49(b), whereas the instant case is governed by Rule 49(a) and hence, to reconcile this jury's verdict would be tantamount to invading their province. In our view the perverse and inconsistent jury finding is dispositive for the granting of a new trial. However, persuaded by the fact that the inconsistency had no application to the cause of action wherein Slaughter was the plaintiff and relates solely to the action wherein PNB sought relief from Peoples, we will limit said new trial to all matters in issue existing between PNB as plaintiff and Peoples as defendant.

MOTION FOR JUDGMENT N.O.V.

We now conclude that where motions for a new trial and judgment n. o. v. are filed that the parties to the action are entitled to the trial judge's decision on both motions. Montgomery Ward & Co. v. Duncan, 311 U.S. 243, 251, 61 S. Ct. 189, 85 L.Ed. 147 (1940); Mailloux Enterprises, Inc., and Merchants Wholesale Co., Inc. v. Fireman's Insurance Company of Newark, New Jersey, 366 F.2d 740, 742 (9th Cir. 1966).

In this action in replevin there are three sub-cases. The plaintiff is suing the defendant, PNB, on the theory that it wrongfully withheld his stock as collateral, and that he was damaged because of this wrongful retention by a drop in the value of the stock. Secondly, PNB asserted a claim against Peoples on the ground that PNB is entitled to indemnification from Peoples since whatever damage occurred, happened while Peoples had possession of the stock, and Peoples failed to apprise PNB of plaintiffs' claim although aware of same when it issued a certificate of participation to PNB. Finally an action between Peoples as plaintiff and Slaughter as defendant, predicated upon a debt alleged to be due to Peoples from Slaughter.

SLAUGHTER v. PNB

On August 9, 1962, West Indies Company Limited, a Liberean corporation issued 38,000 shares of its common stock to plaintiff. There were four other individuals who also received 38,000 shares of common stock.

The five stockholders arranged a loan of $360,000 from a firm named Doll-Stevens Inc., and at various times executed the following documents:

(a) Series of promissory notes; (b) Pledge of their stock as collateral security; (c) Irrevocable power of attorney authorizing Doll-Stevens to take any action in respect of the pledged stock; (d) Judgment notes.

The pledge agreement, inter alia, provided that upon repayment or discharge of the loan, the pledged stock was to be returned to the pledgor.

The proceeds of the loan were then obtained by Doll-Stevens from Peoples, and the common stock, subject to pledge agreements, was assigned and the loan was placed on Peoples' books as loans to each of the stockholders. Subsequently, Peoples completed negotiations with PNB wherein, according to plaintiff's theory, a new loan was made to four of the stockholders and the plaintiff's obligation discharged. Defendant, PNB, to the contrary, argues that the taking of a new note for any existing debt did not affect the liability of Slaughter with regard to the original indebtedness. This dispute was decided by the jury in plaintiff's favor. We will analyze the testimony to determine if there was sufficient evidence to sustain the verdict.

Our opinion will be ruled by the law of New Jersey since the "center of gravity" of the various transactions occurred in that State. The Uniform Commercial Code was adopted in New Jersey in 1963. N.J.S.A. 12A: § 1-101 et seq., L.1961, c. 120, § 1-101 et seq. Section 3-601 enumerates the ways in which an individual may be discharged from liability on an instrument.

Our review of the testimony indicates that the jury concluded that the negotiations for the original loan were finalized in the early part of January, 1963. To secure the loan, plaintiff and four other borrowers executed joint and individual loans and pledged their stock. The pledge agreement provided, inter alia, that the stock was to be returned to pledgor in the event that the loan was repaid or discharged. It further specified that if payment was made within six (6) months, the principal amount would be reduced from $360,000 to $333,000. Thereafter, with the exception of plaintiff's notes, all others were recorded.

Within the six month period, demands were made for payment and were rejected. The debtors and their wives were requested to sign a new note. Plaintiff and his wife refused, but the others acquiesced and joined in signing a new note in the sum of $330,000. The judgments entered on the original indebtedness were satisfied and on the ledger cards of the bank a notation was entered reciting that the loan was paid in full. Plaintiff, declaring that the initial loan was to be regarded as paid demanded that Peoples comply with the terms of the pledge agreement and return his stock to him.

Defendants contend that the evidence falls short of establishing the necessary facts to enable the jury to properly find that plaintiff's liability was terminated. They strenuously contend that the giving of a new note for an existing or antecedent debt does not discharge the existing debt citing Pignone v. Brooks, 120 N.J.L. 258, 199 A. 372 (1938) and that the taking of a new note for a secured claim does not constitute the abandonment of the security posted as collateral for the old note. Union Cleaners & Dyers v. Zeidman, 113 N.J.L. 86, 172 A. 546 (1934). They also argue that under New Jersey law, unless a note is surrendered, or a written agreement executed indicating that the note is discharged, the obligation evidenced by that note still exists. In re Kirschenbaum Estate, 44 N.J. Super. 391, 130 A.2d 640, cert. denied, 25 N.J. 51, 134 A.2d 754 (1957).

The point advanced by the plaintiff is that from all of the facts, circumstances and conduct attending the securing of the new note the jury was justified in arriving at its conclusion that it was the intent of the parties to discharge the original debt. We subscribe to this view and it is our judgment that it is the intent of the parties as is determined by the facts and circumstances that is decisive of this issue. It was not a single act of the parties as was performed in Pignone, supra, (execution of a renewal note) nor as in Kirschenbaum, supra, (the mere oral renunciation of a debt accompanied by retention of the note), but the aggregate acts of the parties that revealed their true intent. Whether a renewal note is accepted in payment is to be determined from the intent of the parties; Holden v. Farwell, Ozmun, Kirk & Co., 223 Minn. 550, 27 N.W.2d 641 (1947); which is to be determined by the facts and circumstances attending the transaction. Chase v. Gregory, 274 Mich. 32, 263 N.W. 789 (1935). The totality of all of the evidence is the true criteria to fix intent. In our opinion the jury's finding was amply supported by the evidence.

DAMAGES

It is the further contention of PNB and Peoples that plaintiff has failed to establish any loss as a result of retention of its stock by PNB. Their argument that the proper measure of damages is the market value of the stock and that the only evidence produced by plaintiff involved book value which is an improper measure of the value of the stock must be rejected.

The general rule in an...