Conway v. American National Bank

131 S.E. 803, 146 Va. 357, 1926 Va. LEXIS 340
CourtCourt of Appeals of Virginia
DecidedFebruary 25, 1926
StatusPublished
Cited by33 cases

This text of 131 S.E. 803 (Conway v. American National Bank) is published on Counsel Stack Legal Research, covering Court of Appeals of Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Conway v. American National Bank, 131 S.E. 803, 146 Va. 357, 1926 Va. LEXIS 340 (Va. Ct. App. 1926).

Opinion

Christian, J.,

delivered the opinion of the court.

This was an action by motion in> the Corporation Court of Danville, to recover judgment against A. C. Conway as endorser on four notes of the Deep River Coal Company, Incorporated, all together amounting to $18,625:00, with interest thereon, and in addition thereto, ten per cent of the amount of said notes — attorney’s fee — as- provided in the notes. The notes were executed by the Deep River Coal Company, payable to the American National Bank, by its president, A. C. Conway, and its secretary and treasurer, E. P. [360]*360Crider, and were all endorsed by A. C. Conway, E. P. Crider and A. M. Aiken. At tbe time tbe loans were made to the coal company by the bank, the coal company executed two deeds of trust on all of its real and personal property in Chatham county, North Carolina, to secure the payment of its said notes. Crider, in addition to his official position with the coal company, was also the vice-president of the American National Bank, with general control in the management of the plaintiff bank.

There was no controversy at the trial over the validity of the notes, or that they were past due and binding obligations upon the maker and each endorser, but Conway defended the action upon three grounds: (a) The action was prematurelyü brought; (b) it was brought in the wrong forum, and (c) that therefore no attorney’s fee was collectible. The court refused to sustain the motions of Conway setting up his defenses, and excluded from consideration of the jury all evidence tending to prove said defense^. The jury brought in a verdict in favor of the plaintiff bank against Conway for $18,625.00 with interest from the dates when the notes were respectively due and payable, and ten per cent attorney’s fee. The defendant made a moton for a new trial which was overruled, and the court entered judgment in favor of the bank upon the verdict of the jury, whereupon Conway has brought the ease by writ of error before us for review.

Conway had pending in the court when this case was called for trial a bill in equity to which all parties to the notes were defendants; the purpose thereof was to force the sale of the property of the Deep River Coal Company under the deeds of trust and apply the proceeds to the payment of the sums due the bank, pursuant to the parol condition, and agreement between [361]*361himself and Aiken, with Crider as representative of the bank, before the endorsers were called upon to pay anything upon the notes. He made a motion in writing that the instant case be transferred to the equity side of the court and be heard with the chancery suit, because all the rights and equities of the parties could therein be settled, and thus a number of suits be avoided. The plaintiff moved to dismiss this motion which the court did, and this constitutes the defendant’s first assignment of error

Independent of statute the court possessed no power to transfer a ease from one side of the court to the other, or hear a law case with a chancery suit. If Conway had any equitable right to have the maker’s property sold and the proceeds applied to the notes for the relief of the endorsers, his remedy was by injunction, and not by motion in the suit at law.

Nor does section 6084 of the Code of 1919 confer such power. It was intended primarily for the benefit of plaintiffs and is mandatory upon the trial courts only to the extent of prohibiting them from dismissing a case “simply because it was brought on the wrong side of the court.” That is, where tbe only question was as to the forum. French v. Stange Mining Co., 133 Va. 602, 114 S. E. 121.

The holder of the notes, by virtue of the contract -thereby established, could sue at law all the parties, makers and endorsers, or any one or more of them. If Conway desired to subject the estate of the maker of the notes and compel contribution by his coTendorsers, he should have paid the notes before suit, and he would have been substituted to all the rights of the bank. The court was right in dismissing the motion to transfer the law case to the chancery side of the court.

[362]*362The right of Conway to relief and the extent thereof, as set forth in his bill in chancery, was included in his grounds of defense filed in this suit. It was based upon the parol agreement made by Crider, as representative of the bank, with the other parties to the notes, at the time of their execution, and as part of the contract, to the effect that if the notes .were not paid according to their terms, the property of the maker conveyed in the deeds of trust to secure the notes should first be sold and applied to the payment of said notes. That is, the endorsers were ’not bound according to the terms of their endorsement, but only for the balance due after the property of the maker was exhausted.

Upon the trial the defendant offered to prove this parol agreement by several witnesses, whereupon the plaintiff objected to the introduction of any evidence to prove that agreement, as it contradicted and varied the written contract embodied in the notes, therefore was void because it violated the parol evidence rule. This objection was sustained by the court as to the testimony of all the. witnesses as to this parol agreement, and the defendant reserved the point in several exceptions. One exception would have been sufficient to present that ruling to this court.

The parol evidence rule, the wisdom and beneficence of which has been demonstrated by experience, is very rigidly adhered to in this State. The principle established in section 5578 of the Code, and the case of Robertson v. Virginia National Bank, 135 Va. 166, 115 S. E. 536, is not an exception to the parol evidence rule. It enunciates the rule that a person may manually deliver a negotiable instrument to another, on its face containing a binding obligation in praesenii of such person -to such other, with a con[363]*363temporaneous verbal agreément that it shall not take effect until the happening of some specified event (as that others- shall endorse it) and such condition is binding as between immediate parties, and as regards a remote party, other than a holder in due course. This does not violate the rule that a written instrument cannot be varied by a contemporaneous' parol agreement, but is only evidence to show that the instrument never had vitality as a contract. In the instant case the notes became binding contracts from the instant of their delivery, and the effect of the parol agreement was plainly to contradict and vary the contract evidenced by the notes, which could not be done and the court was right in excluding all evidence of that agreement.

But this is no longer an open question in Virginia. In the case of Crafts v. Broadway National Bank, 142 Va. (Spl. Ct. of App.) 702, 128 S. E. 364, which is very similar to the instant case, decided at its May session 1925, Judge McLemore, in an able opinioñ, makes plain the difference between the delivery of a note upon parol condition that it shall have no vitality until the happening of a certain event, and a note delivered to take effect immediately, but to be varied by a subsequent condition.

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Bluebook (online)
131 S.E. 803, 146 Va. 357, 1926 Va. LEXIS 340, Counsel Stack Legal Research, https://law.counselstack.com/opinion/conway-v-american-national-bank-vactapp-1926.