Watson v. First Nat. Bank of Norfolk

• Decision Date: 05 March 1973
• Citation: 194 S.E.2d 749,213 Va. 687
• Parties: , 12 UCC Rep.Serv. 308 Harvey L. WATSON and Clifton T. Chalk v. FIRST NATIONAL BANK OF NORFOLK.
• Court: Virginia Supreme Court

Page 749

194 S.E.2d 749

213 Va. 687, 12 UCC Rep.Serv. 308

Harvey L. WATSON and Clifton T. Chalk v. FIRST NATIONAL BANK OF NORFOLK.

Supreme Court of Virginia.

March 5, 1973.

Stanley G. Barr, Jr., L. Charles Burlage, Canoles, Mastracco, Martone & Barr, Burlage & Burlage, Norfolk, on brief, for plaintiffs in error.

Frederick M. Quayle, Rixey & Rixey, Norfolk, on brief, for defendant in error.

Before SNEAD, C.J., and I'ANSON, CARRICO, HARRISON, COCHRAN, HARMAN and POFF, JJ.

HARMAN, Justice.

The trial court entered summary judgment for $5,000 in favor of First National Bank of Norfolk (Bank) jointly and severally against John J. Tate (Tate), Harvey L. Watson (Watson) and Clifton T. Chalk (Chalk). The judgment has become final against Tate, who did not appeal. We granted a writ of error to Watson and Chalk.

The only question here is whether summary judgment should have been awarded against Watson and Chalk.

On September 30, 1969, Tate executed a 60-day note for $5,000 plus interest payable to Bank. Watson and Chalk were endorsers on this note. A handwritten amendment on the face of the note provided: 'R once Pay at 2nd M.' The parties agree that this language means: 'Renew once; pay at second maturity.'

The printed body of the note provides: 'All parties to this note . . . hereby agree that extension or extensions of the time of payment of this note, or any part thereof, may be made before, at, or after maturity by agreement with any one or more of the parties hereto without notice to or without releasing the liability of any other party to this note . . ..'

The record establishes that Bank was represented in all of its dealings with Tate, Watson and Chalk by Armistead W. Dey (Dey), one of its Vice Presidents. Dey testified that he handled the loan and prepared the note signed by Tate and endorsed by Watson and Chalk. He said there was a 'clear understanding' between the parties that the note could be renewed once but that it would be paid at or before the second maturity.

On cross examination Dey testified, without objection, that he 'would have no right' after the first maturity to renew the note without the consent of the endorsers.

The note was renewed at its first maturity on November 29. It was also renewed when it subsequently matured on January 28, 1970, March 29, 1970, and May 28, 1970.

Dey testified that Tate, Watson and Chalk were the principals in a new insurance agency, Christian Casualty Insurance Agency, Inc. The loan to Tate was made to provide him with funds to purchase stock in the agency. Bank also made loans to others to enable them to purchase stock in the agency. The insurance agency, at the time the Tate loan was made, had accounts with Bank of approximately $100,000.00.

Dey further testified that Tate, Watson and Chalk were working as a 'unit' and that he had a number of conversations with them, individually and jointly, about their progress with the insurance agency. He said that they 'would 'cry the blues' and we would renew the note again.' While Dey was unable to recall who was present on each occasion when the note was renewed, he insisted that he 'was certain' that he had obtained the consent of the endorsers, either in person or by telephone, before each renewal.

Watson and Chalk denied that they ever agreed to a renewal or extension of the note after the first renewal. Each specifically denied he had been consulted about or agreed to renewal...