Peoples United Bank v. Wells

Clark, C. J. Tbe defendants moved for nonsuit upon tbe ground tbat “Tbos. E. Cooper was president of tbe Bank of Soutbport and participated in tbe discount of tbe note by tbat bank, and any knowledge of any informality in tbe note or any defense thereto known to bim is imputable to tbat bank, or, more properly, is tbe knowledge of tbe bank itself.” There is no evidence tbat Thos. E. Cooper participated in tbe discounting of tbe note by tbe Bank of Soutbport. It is true tbat be transmitted tbe note from Wilmington to tbat bank with a statement of tbe entire solvency of tbe signer and endorser thereof. There is nothing in tbe record to justify tbe claim in the defendant’s brief tbat tbe note was discounted by Tbos. E. Cooper with tbe Commercial National Bank. Tbe note on its face is payable to tbe bank at Soutbport. Tbe court charged tbe jury tbat tbe burden of proof was upon tbe plaintiff to satisfy tbe jury, by tbe greater weight of tbe evidence, tbat tbe Bank of Soutbport at tbe time of tbe purchase of tbe note bad no notice of tbe fraud, and tbat it was admitted tbat Tbos. E. Cooper was president of both tbe Commercial National Bank and tbe Bank of *518 Southport; that as said Cooper was at that time president of the Bank of Southport, and sent the note to that bank for purchase, any notice or knowledge he had of the fraud is presumed to he imputed to the bank; that is, it is presumed that the bank had such notice or knowledge of the fraud as its president (Cooper) had, and added the following, which is excepted to: “This presumption would be rebutted, however, if Cooper at the time, and with respect to this transaction, was acting for himself and in hostility to the Bank of Southport, or if, as president of both the Bank of Southport and the Commercial National Bank, he felt such a greater interest in the affairs of the Commercial National Bank, that because of such interest he refrained from informing the other officers of the Bank of Southport of the circumstances of the sale of the stock to Wells and the making by Wells of the note in question.” The defendants also except to the following charge: “The plaintiff further contends that the testimony tends to show that though Cooper was president of the Bank of Southport, yet that it was a personal matter to him, and having committed a fraud in the sale of the stock, that he was then acting, in the matter of the sale of the note to the Bank of Southport, in hostility to the Bank of Southport; or, the plaintiff contends that you should find, if there was a sale of the note by the Commercial National Bank to the Bank of Southport, there is testimony to show that Cooper was favoring the Commercial National Bank, and because of his feeling greater interest in that bank he refrained from giving to Ruark and Berg, the officers of the Bank of Southport, information of the circumstances under which' the stock was sold and the note was given.” The record does not disclose any request by the Bank of Southport at or about that time to send down any paper for discount. There is no endorsement shown by the Commercial National Bank of the note in suit. Ordinarily a bank is presumed to have notice of matters which are known to its president, upon 'the theory that he will, in the line of his duty, communicate to the bank such information as he has, but the law recognizes the frailty of human nature, and where the president has a personal interest to serve or is acting in a transaction in his own behalf, the presumption does not obtain that he will communicate to the bank matters which are detrimental to him. Grady v. Bank, 184 N. C., 162; Anthony v. Jeffress, 172 N. C., 381; Corp. Com. v. Bank, 164 N. C., 358; Brite v. Penny, 157 N. C., 114; Bank v. Burgwyn, 110 N. C., 273. In LeDuc v. Moore, 111 N. C., 516, it appeared that Moore was president 'of the bank and, with the cashier, constituted the discount eomittee, and actually participated as a member of such committee in discounting the note in question. *519 Bank v. Burns, 49 L. R. A. (N. S.), 764, also differs from tbis case in tbat tbe payee of tbe note in tbat case was president and active manager of tbe bank; tbat be sold and discounted tbe notes to tbe bank, and in so doing acted for bimself personally and as endorsee and also for tbe bank as its president; tbat no other officer or person connected witb tbe bank bad anything to do witb tbe purchase of tbe note, and it bad no notice or knowledge of any facts tbat would invalidate said notes in tbe bands of tbe president. Tbat case cites Innerity v. Bank, 139 Mass., 332, as follows: “While tbe knowledge of an agent is ordinarily to be imputed to tbe principal, it would appear now to be well established tbat there is an exception to tbe construction or imputation of notice from tbe agent to tbe principal in case of such conduct by tbe agent as raises a clear presumption tbat be did not communicate tbe facts in controversy, as where tbe communication of tbe facts would have necessarily prevented tbe consummation of tbe fraud tbe agent was engaged in perpetrating.” In Curtis v. U. S., 262 U. S., 215, tbe agent whose knowledge was imputed to tbe principal was actively carrying on for tbe principal tbe specific work for which tbe agent bad been appointed. If tbe Commercial National Bank, of which Cooper was actively tbe president, bad discounted tbis paper witb said bank and transmitted it to tbe Bank of Southport, tbe knowledge which be possessed would have been imputed to tbe bank in Wilmington, but there is no evidence to tbat effect. It does appear tbat be was president only in name of tbe Bank of Southport and' did not actively manage tbe affairs; tbat be lived in Wilmington, where tbe Commercial National Bank did business, and only went to Southport once or twice a year in connection witb tbe affairs of tbe Bank of Southport, to which tbe paper on its face was made payable. Upon tbe evidence tbe jury might reasonably infer tbat Tbos. E. Cooper “felt such a greater interest in tbe affairs of tbe Commercial National Bank, and tbat because of such interest be refrained from informing tbe officers of tbe Bank of Southport of tbe circumstances of tbe sale to Wells and tbe making by Wells of tbe note in question.” Tbe Commercial National Bank, of which Tbos. E. Cooper was tbe active president and manager, would be fixed witb tbe notice of fraud practiced by him upon the defendants in tbis connection, but tbis would not be true as to tbe Bank of Southport, of which be was only nominally president, and whose affairs, upon tbe evidence, were managed by its vice-president and cashier. We think'tbat there is no error in tbe charge in tbe particulars referred to. In Bank v. Burgwyn, 110 N. C., 267, it was held tbat a bank was not affected witb constructive notice by reason of tbe actual knowl *520 edge of its president, when tbe latter was dealing witb it in bis individual capacity, and not acting officially for tbe bank in any manner concerning tbe particular transaction. It bas been frequently beld that notice to an officer of a bank or other corporation of an equity will not be imputed to tbe bank or corporation when sucb officer was clearly not dealing for tbe bank or corporation, but was dealing for bimself witb tbe bank or corporation. Tbis case is stronger because bere Tbomas E. Cooper made an outside transaction, tbe sale of stock in another bank to defendants, and bad no part in discounting tbe note they gave which is in suit. Tbe evidence justified tbe jury in finding that in tbis case, where tbe note was payable to tbe Bank of Southport and discounted by it, tbe mere fact that Tbos. E. Cooper, who mad© tbe fraudulent representations and profited by it, would not be imputed to tbe Bank of South-port, of which be was only nominally president, when its officers, actually and actively conducting its affairs, bad no knowledge of tbe fraud perpetrated upon tbe defendants which was in nowise a part of tbe transaction by which tbe defendants executed their note to tbe Bank of Southport and received tbe net proceeds of tbe same. Tbe only other assignment of error in tbe defendant’s brief, to tbe evidence, does not require discussion. Tbe Bank of Southport loaned tbe defendants tbe $5,000 on their note now in suit, and tbe jury having found that sucb bank bad no notice of tbe fraud, and that it purchased tbe note for value and before maturity, it was not affected by tbe fraud of Tbos.' E. Cooper in procuring tbe defendants to execute said note for bis individual benefit, and is entitled to recover tbe sum loaned. No error.