Crutchfield v. . Rowe

OlabK, C. J. The defendant Eowe testified that after the note had been due some 90 days he asked Crutchfield about it, who said that the proceeds of the note had been placed to the credit of Eowe and Fellows as partners, and Eowe was allowed to testify that he then told Crutch-field that he was not a partner with Fellows in that matter. This conversation was excepted to as irrelevant, the bank being an innocent purchaser for value. It appears from the evidence that Eowe and Fellows were farming together in partnership; that Eowe and his wife executed a note to Crutchfield, trustee, which was put into the hands of Fellows, his co-partner, to negotiate with the bank. Fellows, whom he trusted to negotiate for this loan, had the proceeds placed to the credit of Eowe and Fellows, and the money was checked out by Fellows by checks drawn in the name of the firm, and the bank had no notice or knowledge other than that given to it by Fellows, who brought the note to the bank. Fellows having brought the mortgage and note for discount, notified the cashier of the bank to place the same to the credit of Eowe and Fellows, who, the cashier knew, as he testified, were in partnership, and the proceeds having been drawn out by checks drawn in the name of the firm, there was nothing to put the bank on notice, and the defendant Eowe, nothing else appearing in the evidence, the plaintiff claims was bound by his acquiescence not only during the four months for which the note *213 was given, but for three mouths thereafter, and excepts that the court did not direct a yerdict in fayor of the plaintiff on the ground that when there is a loss in a case of this kind, it should be borne by the one whose carelessness has contributed to the misfortune. There was no contradiction that Rowe and Fellows were farming jointly, that the note was placed in the hands of Fellows by the authority of Rowe, and carried by him to the hank; that the proceeds were placed to their joint account, and the proceeds drawn out by checks in their joint name, and that Rowe made no objection and gaye no notice of any dissent until at least seven months had passed. In the absence of evidence contradicting any part of this testimony, the court might have directed a yerdict against the maker of the note. The defendant was guilty of gross negligence by his acquiescence for seven months, three months after the maturity of the note. On such conduct the cashier, knowing of the partnership, was not guilty of negligence in paying out the proceeds upon such checks. The most serious error, however, is this: The cashier of the bank, J. E. Crutchfield, was asked to explain the transaction, and tell all that he knew about it. The court sustained an objection to this testimony, which was certainly relevant and competent. The record states that the cashier would have testified that Fellows stated to him that he had paid more than his share of the expenses of their joint farming, and that if Rowe would pay up what he owed him they would carry on the business; and if he could get a loan for Rowe, Rowe would pay him; that Fellows brought him this note and mortgage, which was credited to the account of Fellows and Rowe, and the proceeds were drawn out by checks signed “Rowe and Fellows”; that Rowe never came to see him nor had any conversation about it, and that the entire transaction was with Fellows. This evidence was very material, both as corroborative and substantive evidence, and the court erred in not admitting this testimony, which was also in contradiction of Rowe. Powell v. Lumber Co., 168 N. C., 632. It was also error to exclude the question to Crutchfield, whether he knew that Rowe and Fellows were in business together at that time. It was admitted that he would have testified, “They were operating a farming-partnership. He (Crutchfield) never spoke to Rowe about this loan in controversy. Fellows negotiated the loan. He had the conversation with him about negotiating the loan on Rowe’s note, as above stated, and two or three weeks later he returned with the paper signed, which the bank discounted.” This evidence was competent in contradiction of Rowe, and competent to show that the bank was without knowledge or information that Fellows was not authorized to make the transaction. *214 Tbe court also excluded tbe question to Fellows: “Was it tbe understanding between you and Rowe tbat tbe discounted loan was to pay for money you bad advanced Rowe up to tbat time?” Tbe record states tbat tbe witness would bave replied tbat “It was understood tbat Rowe agreed to borrow tbe money for tbis purpose. Rowe and I were farming on tbe Moore plantation.” He then stated tbe quantity of land and tbe extent of tbe operations and tbat tbe money was checked out to pay tbe bills as tbey came in in tbeir farming operations, and be added: “I ebecked tbe money out to pay tbe bills tbat came up, and I gave Rowe credit.” According to tbe testimony of tbis witness, as tbe agent of Rowe be negotiated tbe loan, was directed to carry tbe mortgage and note to tbe bank, and bad tbe money placed to tbe credit of Rowe and Fellows, and cbecked tbe money out to pay tbeir joint bills. Tbe competence of tbis testimony is apparent, and it was error to exclude it. There was no'evidence tending to show tbat any fraud was practiced on tbe defendants, and in tbe placing of tbe proceeds of tbe discounted note of Rowe to tbe credit of Rowe and Fellows. Tbe evidence shows tbat tbe bank was an innocent purchaser for value, and upon tbis evidence, if admitted, tbe court should bave directed a verdict in favor of tbe plaintiff bank. Tbe plaintiff also excepted to tbe following charge: “Tbe defendants, however, although tbey executed tbis note, and it was delivered to tbe bank, say tbey never received tbe proceeds of tbe note; now if such be tbe fact, gentlemen, then of course tbe defendants are not indebted to tbe plaintiff.” Tbis was erroneous, for if tbe bank took tbe note under tbe circumstances testified to, and according to tbe testimony erroneously excluded, tbe bank was a purchaser for value without notice, and was entitled to recover. Tbe court also erroneously charged as follows: “It is only in tbe event tbat it be a fact tbat tbe defendants received tbe proceeds of tbis note will tbey be indebted to tbe bank.” Tbis was telling tbe jury, without qualifications or explanations, tbat Rowe must bave received tbe proceeds of tbe note; otherwise be would not be indebted to tbe plaintiff even though tbe bank received tbe note from bis agent and tbe money was put to tbe credit of tbe partnership and drawn out and paid on tbe partnership debts. Tbe court also charged: “It is not necessary, however, gentlemen, for you to find tbat tbe proceeds of tbe note were paid directly to Z. P. Rowe and wife, or to either of them, tbat is, to them in person.” Tbis charge contradicts tbe previous instruction tbat if tbey never received tbe proceeds of tbe note tbe defendants were not indebted to tbe plaintiff, and is misleading to tbe jury. *215 It is not denied in this case that Fellows, by direction of Eowe, was entrusted with the mortgage and note, and that Fellows was told to take them to the bank, and that Eowe made no complaint or objection until many months after the note had matured. It was admitted that Fellows was Eowe’s agent with respect to inquiring of the bank if it would discount this note, and in carrying the note to the bank. It was erroneous to rule out the evidence of J. E. Crutchfield and of J. P. Fellows, as above stated, which tended to show that Fellows was the agent of Eowe in having the note discounted and in placing it to the credit of the partnership of Eowe and Fellows. There were other errors assigned in the record, and which, we think, entitled the plaintiff to a new trial, but it is unnecessary further to discuss the exceptions. For the errors pointed out, there should be a New trial.