Zaks v. Elliott

• Decision Date: 28 August 1939
• Docket Number: No. 4465.,4465.
• Citation: 106 F.2d 425
• Parties: ZAKS v. ELLIOTT et al. KRUPNICK v. PEOPLES STATE BANK OF SOUTH CAROLINA et al.
• Court: U.S. Court of Appeals — Fourth Circuit

106 F.2d 425 (1939)

ZAKS v. ELLIOTT et al. KRUPNICK v. PEOPLES STATE BANK OF SOUTH CAROLINA et al.

No. 4465.

Circuit Court of Appeals, Fourth Circuit.

August 28, 1939.

P. L. Felder, Jr., of Orangeburg, S. C. (Lide & Felder, of Orangeburg, S. C., on the brief), for appellant.

Coming B. Gibbs, of Charleston, S. C. (W. M. Shand, of Columbia, S. C., on the brief), for appellees.

Before PARKER and SOPER, Circuit Judges, and HENRY H. WATKINS, District Judge.

SOPER, Circuit Judge.

This action was brought by the receivers of Peoples State Bank of South Carolina against the defendant, S. Zaks, to recover balances due upon two promissory notes held by the bank. The first note, dated January 1, 1930, and payable April 1, 1930, was for the sum of $5,211.91 and was secured by a pledge of 61 bales of cotton. It was signed by Zaks alone. The second note also dated January 1, 1930, and payable April 1, 1930, was for the sum of $10,912.42 and was secured by a pledge of 89 bales of cotton. It was signed by Zaks and L. Lourie. Both notes were in the same form, which provided that the Bank might sell the security with or without notice and stated that "in case of a deficiency (after sale of the collateral) the undersigned promise to pay to said Bank the amount thereof forthwith".

The first note was credited with a payment on April 28, 1930, of $951.70 from a sale of 10 bales of the cotton collateral, and a further payment of $304.90 on August 1, 1931. On May 4, 1933, the receivers sent a registered letter to the defendant at St. George, South Carolina, advising him that the remaining collateral would be offered for sale unless storage, insurance and other charges on it were paid. This letter was forwarded to the defendant's residence at Eutawville, where its acceptance was refused. On June 19, 1933, the remaining collateral was sold and the proceeds credited to the note, leaving a balance as of that date of $2,999.22, which is sought to be recovered with interest.

The second note was also credited with the proceeds of a sale on April 28, 1930, of a portion of the collateral and several other payments, leaving a balance as of February 23, 1932, of $9,618.72. On May 4, 1933, the receivers mailed a registered letter, similar to that sent with regard to the first note, to Zaks and Lourie at St. George, and received a return receipt therefor signed "Messrs. Zaks and Lourie, J. E. Westbury, Agent". On June 19, 1933, the remaining collateral was sold and the note was credited with the proceeds. Then on January 5, 1935, the receivers accepted from L. Lourie a payment of $501.11 and endorsed on the note a full release of Lourie from all liability. This left an unpaid balance of $7,206.73, which is now sought to be recovered with interest.

This action was instituted on September 14, 1937, and the defendant pleaded as the only defense the bar of the statute of limitations, which in South arolina provides for a period of six years. I South Carolina Code 1932, section 388. The case was tried before a jury, but when the defendant moved for a directed verdict at the close of all the evidence, the court dismissed the jury on the ground that there was no question for it to decide. After hearing argument on a motion for judgment filed by defendant in accordance with his motion for a directed verdict, the court found for the plaintiffs and entered judgment to that effect.

In an opinion subsequently filed, the court found both the facts and the law and stated that the case had been withdrawn from the jury under Rule 50(b) of the Rules of Civil Procedure, 28 U.S.C.A. following section 723c. That rule permits the trial court to reserve its decision on a motion for a directed verdict until after the jury has returned its verdict, but does not authorize withdrawing the case from the jury entirely. The action of the court resembled the old practice, now abolished by Rule 50(b), of withdrawing the case from the jury when both parties move for a directed verdict. There was, however, no material error in the instant case for both parties not only consented to the court's action, but were anxious to have the case decided as a question of law by the court. The case may properly be treated as one in which the parties agreed at the outset not to have a jury.

Although more than six years had run since the maturity of the notes, the court concluded that the statute of limitations was not a bar to recovery on the ground that the application of the proceeds from the sale of the remaining collateral on June 19, 1933, amounted to voluntary payments by Zaks, sufficient to toll the period of limitations on each note. In support of this decision, the court cited the provision in the notes whereby "in case of a deficiency after sale of the collateral, the undersigned promised to pay said bank the amount thereof forthwith" 25 F.Supp. 858, and relied upon the decisions in First National Bank v. King, 164 N.C. 303, 80 S.E. 251, 49 L.R.A.,N.S., 392, and Bosler v. McShane, 78 Neb. 86, 110 N.W. 726, 12 L.R.A.,N.S., 1032....