Gurley v. . Woodbury

97 S.E. 754, 177 N.C. 70, 1919 N.C. LEXIS 75

• Court: Supreme Court of North Carolina
• Decided: January 3, 1919
• Status: Published

Opinion

AlleN, J.

Tbe learned counsel for tbe defendant has been diligent to preserve bis right to a trial by jury, and we would be inclined to reward bis efforts in tbat behalf if the facts, about which there is no controversy, were not determinative of tbe rights of tbe parties.

It appears, however, tbat tbe counterclaim of tbe defendant is based on substantially tbe s.ame facts alleged in bis complaint in tbe action brought in Buncombe County, and is within tbe scope and terms of tbe compromise and settlement of 21 April, 1916, and, therefore, cannot again be inquired into in tbe absence of an allegation of fraud or mistake, and, witb tbe counterclaim eliminated, tbe controversy is reduced to tbe single question of tbe amount of tbe credit to which tbe defendant is entitled on account of tbe shares of stock in tbe North Georgia Bank, there being no evidence of any damage to tbe defendant or depreciation of tbe stock because tbe plaintiff did not attend tbe meeting of tbe stockholders of 18 May, 1916, at which tbe defendant was present and voted for a sale of tbe assets, which showed tbe stock to be worthless. And tbe credit by reason of tbe stock depends on the construction of tbe contract or agreement of 21 April, 1916, and on tbe effect to be given to tba notice of assessment by tbe controller of the currency.

■ Tbe parties have contracted as to tbe means of ascertaining tbe value of tbe stock on 18 May, 1916, and tbe question presented is not tbe actual or market value on tbat date, but what was tbe value measured by the contract, which provides that the credit shall be “the actual book value of the said shares of stock as shown by the records and books of said bank.”

The meaning of “book value of stock” is well understood and is ascertained by deducting from the assets carried on the books the liabilities and other matters required to be deducted (People v. Coleman, 107 N. Y., 541; Cobble v. Cobble, 97 N. Y. Supp., 773), and if the contract stopped here, there would be good reason in support of the defendant’s contention that he is entitled to a credit of $125 per share, but it goes further and says it is the book value “as shown by the records and books of said bank.”

Why this addition to a term having a definite meaning in the commercial world -if no modification was intended, and why are the records of the bank specially mentioned ? The reason is obvious. Sixteen days before the contract was signed the controller of the currency had given notice to the directors of an impairment of the capital of the bank, stating in detail the losses, amounting to $31,259.31, which were carried on the books as assets; and he also notified the directors that an assessment must be made on the stockholders to make good the loss or the hank must go into liquidation, and a meeting of the stockholders had been accordingly called for 18 May, 1916.

This notice of impairment of the capital and of the assessment was on file in the bank, and the defendant testified “it was among the records of the bank.” The plaintiff and defendant knew of its existence because they refer to the notice of assessment and the meeting of the stockholders of 18th May in the contract, and as said in Thomas v. Gilbert, Anno. Cases, 1912 A, 519, of the action of the controller in reference to another bank, “The decision of the controller of the currency, as to the impairment of the capital stock of the Moscow Bank, was conclusive and final on the stockholders and the courts (Aldrich v. Yates, 95 Fed., 80; Kennedy v. Gibson, 8 Wall., 505, 19 U. S. (L. Ed.), 476; Casey v. Galli, 94 U. S., 677, 24 U. S. (L. Ed.), 168) and it left no alternative to the bank but to make up the deficiency or go into liquidation.”

We have, then, at the time. the contract was made the notice on file, which was binding on the stockholders and the courts and which the defendant regarded as a part of the records of the bank, and it was present in the minds of the parties because it is referred to, and it is but reasonable to conclude that they were contracting with reference to it, and for this reason the book value was to be ascertained from the books and records, and not from the books alone. If this is not true, the defendant is in the position of demanding and the plaintiff of agreeing to pay the book value of the stock when both knew that more than $31,000 of the assets carried on the books had been condemned and were worthless, which is not to be believed of those in their right minds when there is no fraud or imposition.

The use of the word “actual” before “booh value” is also significant.. Webster defines “actual” as “real,” and when used as it is in the contract, and considered in connection with the surrounding circumstances, it indicates clearly that the parties intended by “actual book value” the assets less liabilities carried on the books, with the items of assets condemned by the controller stricken out, and this is the opinion held by his Honor and embodied in his judgment.

We are, therefore, of opinion the notice of assessment by the controller must be considered as one of the records of the bank, and that the value of the stock on 18th May was the book value as modified by the notice, and, so holding, there is no reversible error on either appeal.

Affirmed on both appeals.