National Loan & Exchange Bank v. Tolbert

The opinion of the Court was delivered by Mr. Justice Fraser. R. R. Tolbert was indebted to 'the respondent bank in the sum of $19,500, evidenced by his note, secured by an assignment of warehouse receipts for 156 bales of cotton. The note was due and the bank made a bargain to sell the cotton. Before the sale was consummated, R. R. Tolbert learned of the sale and went to the bank and asked for fur *505 ther time. He thought, as so many others did, that cotton would go up in price. Mr. Bailey, the vice president and cashier, who conducted the matter for the bank, told Mr. Tolbert that the amount of the note was too large in proportion to the capital stock of the bank to be loaned to any one person; that, if he would divide the loan, the bank would carry it. Mr. Bailey suggested that, if he would get his brother, T. P. Tolbert to give the bank his (T. P. Tolbert’s) note for $9,500, the bank would renew the R. R. Tolbert note for $10,000 and call off the sale of the cotton. The T. P. Tolbert note was renewed from time to time and divided into two notes; one for $5,000 and the other for $4,500. Cotton went down, and was finally sold at a very greatly reduced price. Who sold the cotton is in dispute. The bank claims that R. R. Tolbert sold it, and R. R. Tolbert claims that the bank sold it. It is riot denied that, if the sale had been made when the bank first made its contract to sell, it would have not only paid the $19,500, but would have produced a comfortable surplus to have been paid over to R. R. Tolbert. When it was sold, the proceeds of sale were insufficient to pay the R. R. Tolbert note for $10,000. The bank applied the entire proceeds of sale to the R. R. Tolbert note and brought this action against T. P. Tolbert for the full amount of his notes. R. R. Tolbert indorsed the T. P. Tolbert notes. R. R. Tolbert did not answer the complaint. T. P. Tolbert did answer, and set up that he was a mere accommodation indorser, and that he signed the notes with an agreement that the warehouse receipts would be held by the bank as security, not only for the R. R. Tolbert note for $10,000, but as security for the two notes signed by him (T. P. Tolbert), and that he was entitled to a pro rata share of the proceeds of sale as a credit upon his notes. The presiding Judge, at the conclusion of the evidence, directed a verdict for the plaintiff, and from the judgment *506 based upon this verdict this appeal is taken. The exceptions allege error in the exclusion of evidence: I. T. P. Tolbert undertook to show that, in the transaction that culminated in his signing the notes, R. R. Tolbert was not only acting for himself, but as agent for the bank, and offered evidence as to the statement made to him by R. R. Tolbert that the bank had agreed to hold the warehouse receipts as security, not only for the R. R. Tolbert note, but as security for the T. P. Tolbert note. The bank objected, on the ground that parol evidence was inadmissible to vary the terms of the written contract. The objection was sustained and the evidence excluded. The evidence was properly excluded. The object of the evidence was to show that the warehouse receipts which had been assigned to the bank alone, in writing, had by parol, been assigned to T. P. Tolbert. This was a clear violation of the rule. The exceptions that raise this question cannot be sustaned. II\ The appellant complains that he was not allowed to show the true consideration of the note. The evidence did not tend to show the consideration of the note. It tended to show that an absolute promise to pay the debts of another, expressed in writing, was made conditionally. This is a hard case, and the defense is put in in all good faith and honesty, but it cannot be sustained. There is no dispute that R. R. Tolbert owed the bank too much money in proportion to its capital. The bank was required by law to reduce the gmount of the loan to one man. When the bank examiner comes along, making an inspection for the protection of stockholders and depositors, he finds among the assets of the bank two notes, one for $10,000, secured by warehouse receipts for 156 Bales of cotton, and one of two notes for $9,500 by T. P. Tolbert. The official inspection would afford no protection, if the securities can be *507 .shown by parol not to be what on their faces they purport ■to be. III. The appellant complains that he was not allowed to show that R. R. Tolbert was acting as agent for the bank in procuring the signature of T. P. Tolbert to the notes sued upon. Whether R. R. Tolbert was the agent of the bank or not was a mixed question of law and fact. The facts being undisputed, it became a quesiton of law. The bank was proceeding to collect its money. The substitution of the new security was solely in the supposed interest of the debtor. The fact that the bank told the debtor that it would stop proceedings on certain conditions to be performed by the debtor did not make the debtor the agent of the bank. The attorney’s fees are not argued. The judgment is affirmed. Messrs. Justices Watts and Marion concur. Mr. Chiee Justice Gary did not participate.