Union Trust Co. v. Wilson

• Decision Date: 12 October 1921
• Docket Number: 256.
• Parties: UNION TRUST CO. v. WILSON.
• Court: North Carolina Supreme Court

108 S.E. 500

182 N.C. 166

UNION TRUST CO. v. WILSON.

No. 256.

Supreme Court of North Carolina

October 12, 1921

Appeal from Superior Court, Wake County; Connor, Judge.

Action by the Union Trust Company against J. F. Wilson. From judgment overruling demurrer to complaint, defendant appeals. Affirmed.

Where complaint in action on notes alleged plaintiff to be an innocent holder, demurrer thereto on the ground that plaintiff is not an innocent holder held properly overruled since the allegation of complaint as to plaintiff being an innocent holder was admitted by the demurrer.

This action was brought to recover the amount of two negotiable promissory notes executed by the defendant, each of them in the sum of $5,000 (dated March 30, 1920), and payable to the order of the maker 12 months after their date, and indorsed by the defendant, the maker thereof, in blank and before maturity and delivered to the Harnett County Trust Company. It is alleged in the complaint:

"That thereafter before maturity, for valuable consideration and without notice of any defect or infirmity in or respecting said notes, the Harnett County Trust Company, of Lillington, N. C., purchased and became the holder in due course of said notes."

It is further alleged that thereafter, for value and before maturity of the notes, plaintiff became the bona fide holder in due course, of the same by transfer from the said Harnett County Trust Company, and was at the commencement of this action the bona fide holder thereof in due course, for full value and without notice. That the said notes are past due and unpaid, and that defendant is indebted to the plaintiff thereon in the sum of $10,000, with interest from March 30 1920, for which sum plaintiff demands judgment.

The agreement referred to in the complaint states that the Harnett County Trust Company agreed with plaintiff and the holders of certain certificates of deposit in the Harnett County Trust Company to the amount of $68,000; that the latter would assign and deliver to the plaintiff the said certificates to be held in trust by it for the benefit and use of the parties named in the agreement, and, when they are delivered to the trustee, the Harnett County Trust Company should transfer and deliver to the said trustee certain notes, particularly described in the agreement which were acquired and held as aforesaid, in due course, for value, and without notice, by it to a corresponding amount; that the trustee should collect the notes so delivered to him, with power to sue for the same, if necessary, and employ counsel at a reasonable rate of compensation for that purpose and when all the notes are collected, or compromised and settled by the trustee with the consent of the certificate holders and after deducting necessary expenses incurred by him in the execution of his trust, including his fees and allowances as may be approved by the clerk of the superior court of Wake county the trustee shall distribute the balance of the funds so collected by him to and among the certificate holders aforesaid; that the two notes, the subject of this action, were included in those acquired by the trustee in the manner above stated, the Harnett County Trust Company being the holder in due course thereof when they were transferred before their maturity to the trustee, and having no notice of any defect or infirmity therein, or any equity in favor of defendant existing in respect thereto.

The defendant demurred as follows:

"(1) Because it appears from the complaint and exhibits that the notes sued on in this action are the property of the Harnett County Trust Company that issued its time deposit certificate for said notes.

(2) That defendant has started his suit against said Harnett County Trust Company in the county of Franklin, said suit having been started on February 5, 1921, and said action is now pending in said county of Franklin for the purpose of vacating and setting aside said notes for fraud, and for the fact that said Harnett County Trust Company was not an innocent purchaser for value without notice, and a holder in due course.

(3) That said complaint and exhibits show a combination between said Harnett County Trust Company and the holders of its certificates of deposit, when not one cent has ever been paid by said Trust Company, nor have they surrendered their title to property in said notes, if they have any; but it appears that plaintiff is only a collecting agent and attorney for said trust company.

(4) That the holders of said certificates of deposit are parties to this action by and through their agent and attorney, the plaintiff herein, when they have no cause of action whatever against this defendant.

(5) It appears that plaintiff company is not a holder in due course or an innocent purchaser for value without notice, but merely an agent to collect the Harnett County Trust Company claims, if it indeed has any."

The court overruled the demurrer, and defendant appealed.

W. M. Person, of Louisburg, for appellant.

J. M. Broughton, of Raleigh, for appellee.

WALKER, J. (after stating the facts as above).

It is an established principle, not now open to question, that a demurrer by a defendant admits as true every material fact alleged in the complaint which is properly pleaded ( Crane Co. v. L. & T. Co., 177 N.C. 346, 99 S.E. 8; Merrimon v. Paving Co., 142 N.C. 539, 55 S.E. 366, 8 L. R. A. [ N. S.] 574), and this is equally true of a demurrer to an answer, or other pleading. The demurrer, in this instance, calls to its aid facts stated therein which do not appear on the face of the complaint and is generally denominated a "speaking demurrer." In Von Glahn v. De Rossett, 76 N.C. 292, 294, Chief Justice Pearson so characterizes it in this passage taken from his opinion:

"The second ground of demurrer is subject to another objection. It is a 'speaking demurrer,' as styled by the books. That is, in order to sustain itself, the aid of a fact not appearing upon the complaint is invoked. Whether there be any fund left on hand at the expiration of the charter of the bank is a question of fact that cannot be inquired into upon demurrer, which raises only an issue of law in regard to the cause of action set out in the complaint."

And to like effect is 6 Enc. of Pl. & Practice, p. 297, where it is said by the author, citing the authorities:

"It is not the office of the demurrer to set out facts; it involves only such facts as are alleged in the pleading demurred to, and raises only questions of law as to

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