Sparks v. Union Trust Co. of Shelby, 165
| Decision Date | 07 March 1962 |
| Docket Number | No. 165,165 |
| Citation | 124 S.E.2d 365,256 N.C. 478 |
| Court | North Carolina Supreme Court |
| Parties | John Miller SPARKS v. UNION TRUST COMPANY OF SHELBY. |
Henry M. Whitesides, Gastonia, for plaintiff-appellant.
D. Z. Newton, Shelby, for defendant-appellee.
The complaint alleges in substance, except when quoted:
Defendant is a state bank with its principal office in the town of Shelby. It has a branch bank in the town of Lawndale of which John Francis Carpenter was manager. At all times mentioned Carpenter was an agent of defendant, and was acting within the scope of his employment. On 1 October 1956 plaintiff went to Carpenter in his capacity as manager of defendant's branch bank in Lawndale, and stated to him in detail his desire to borrow money to erect a building to be leased for a term of five years to Yates Williams. He informed Carpenter of his proposed plan 'in a confidential nature' solely because Carpenter was manager of defendant's branch bank in Lawndale. During the conversation Carpenter knew of his own knowledge and in his capacity as manager of defendant's branch bank in Lawndale, that he, Carpenter, as manager of the defendant's branch bank in Lawndale, was retaining the sum of $152,469.12 in bad cheques drawn by Yates Williams, and if these cheques were put in circulation, it would render Williams insolvent. Carpenter as manager of defendant's branch bank in Lawndale knew, or should have known, that Williams was being presented to the general public as a wealthy and prosperous businessman. In fact, by reason of the acts of defendant bank through its branch manager in Lawndale, defendant was allowing Williams to present himself as a prosperous businessman, when he was insolvent in the sum of $152,469.12, which was being concealed by Carpenter as manager of defendant's branch bank in Lawndale.
If defendant by its branch manager Carpenter had informed plaintiff of the true financial condition of Williams, he would not have entered into a long-term lease with Williams. If defendant had properly run its branch bank at Lawndale, Williams would not have been able to hold himself out to the general public as being in sound financial condition, when he was insolvent.
When defendant was advised through its branch manager Carpenter of plaintiff's proposed plan above stated, and was in a position to prevent him from harm as a result of defendant's misconduct in retaining Williams' cheques, which had been occurring for ten years prior to 1 October 1956, it refused to divulge such information to plaintiff, although it knew full well he would be financially injured as a result of its secretiveness. Defendant through its branch manager Carpenter knew, or should have known, that plaintiff's proposed plans were based upon mistaken impressions as to the financial condition of Williams, and that defendant had sole knowledge of Williams' insolvency and did not impart it to plaintiff, when plaintiff was about 'to render himself to a financial loss.'
Plaintiff erected a special building for Williams, and leased it to him for five years. At that time plaintiff had an existing lease with Williams, which was entered into in September 1956, when the financial condition of Williams was represented to the general public to be good, said representations being made possible solely by defendant's illegal acts.
In October or November 1957 the acts of Carpenter became known, and the assets of Williams were seized. As a result thereof Williams due to insolvency was unable to make any payments of rent on his two leases with plaintiff, and plaintiff has been damaged thereby in the sum of $1,750.00.
Defendant knew, or should have known, the loss to plaintiff was the natural and probable resulting consequence of its acts. 'Defendant when consulted in a confidential manner by the plaintiff prior to entering into said second lease and building said building especially for said lease should have, could have, and was morally and legally responsible to notify the plaintiff of his impending predicament, all of which the defendant, by and through its agent John Francis Carpenter, did not do.'
Defendant's demurrer ore tenus, for the purpose, admits the truth of factual averments well stated, and such relevant inferences as may be deduced therefrom, but not legal inferences or conclusions of law asserted by the pleader. Troy Lumber Co. v. Hunt, 251 N.C. 624, 112 S.E.2d 132.
It would seem from a study of the complaint and plaintiff's brief that he has attempted to allege a case of damages for defraud and deceit against defendant bank for not informing him or concealing from him the alleged fact that Carpenter, manager of its branch bank in Lawndale, was retaining $152,469.12 in worthless cheques of Yates Williams and thereby permitted Williams to hold himself out as a prosperous businessman, when in fact he was insolvent.
Defendant is a state bank organized and created under the provisions of G.S. Chapter 53, Article 2, Creation of Banks. Its powers and duties are set forth in Article 6 of the same chapter. State banks have no powers beyond those expressly granted, or those fairly incidental thereto, in Article 6 of Chapter 53 of G.S. Pue v. Hood, Com'r of Banks, 222 N.C. 310, 22 S.E.2d 896; Young v. Roberts, 252 N.C. 9, 112 S.E.2d 758.
'Banks are under no duty at law to warn the investing public as to the financial condition of their depositors.' Cunningham v. Merchants' Nat. Bank (C.C.A. 1st), 4 F.2d 25, 41 A.L.R. 529, cert. denied in 268 U.S. 691, 45 S.Ct. 511, 69 L.Ed. 1160 (). The Court said in Taylor v. Commercial Bank, 174 N.Y. 181, 66 N.E. 726, 62 L.R.A. 783, 95 Am.St. Rep. 564: 'Nor is it within the line of the duty of a cashier to disclose the condition of the accounts of the customers of a bank whenever inquiry is made as to their responsibility.'
What this Court said in ...
To continue reading
Request your trial
-
State ex rel. Porter v. Bivens, 12659
...a demurrer does not admit as true a mere conclusion of law. Douglass v. Koontz, 137 W.Va. 345, 71 S.E.2d 319; Sparks v. Union Trust Company of Shelby, 256 N.C. 478, 124 S.E.2d 365; McKinley v. Hinnant, 242 N.C. 245, 87 S.E.2d 568; Vandiver v. Endicott, 215 Ga. 250, 109 S.E.2d For the reason......
-
In re Parmalat Securities Litigation
...at 597 (applying North Carolina law); Hice v. Hi-Mil, Inc., 301 N.C. 647, 273 S.E.2d 268, 272 (1981); Sparks v. Union Trust Co. of Shelby, 256 N.C. 478, 482, 124 S.E.2d 365, 368 (1962); Travis v. Duckworth, 237 N.C. 471, 474, 75 S.E.2d 309, 311 (1953); Sledge Lumber Corp., 126 S.E.2d at 100......
-
Conti v. Fid. Bank (In re NC & VA Warranty Co.)
...has a motive for concealing the knowledge from his principal, or when he participates in fraud. See Sparks v. Union Tr. Co. of Shelby, 256 N.C. 478, 482, 124 S.E.2d 365, 368 (1962) (finding that a bank is not chargeable with the knowledge of its agent when the agent was engaged in independe......
-
In re Parmalat
...Reserve Bank of Richmond v. Duffy, 210 N.C. 598, 188 S.E. 82, 84 (1936) (citations omitted); accord Sparks v. Union Trust Co. of Shelby, 256 N.C. 478, 124 S.E.2d 365, 368 (1962); Wilson Lumber & Milling Co. v. Atkinson, 162 N.C. 298, 78 S.E. 212, 215 (1913); see also RESTATEMENT (SECOND) OF......