Corporation Commission v. Bank of Jonesboro, 164 N.C. 357 (1913)

Sept. 24, 1913 · Supreme Court of North Carolina

164 N.C. 357

CORPORATION COMMISSION v. BANK OF JONESBORO.

(Filed 24 September, 1913.)

1. Principal and Agent — Adverse Interest — Imputed Knowledge.

The knowledge of a cashier of a bank of his own transaction made in his defalcation of the bank’s funds, not known to the other officers or to the directors of the bank, will not be imputed to the bank, his principal; for the cashier has therein acted exclusively in his own interest or behalf.

2. Banks and Banking — Defalcation — Insolvency—Correspondence Bank — Balance Due — Valid Debt.

One H. was cashier of bank J., and president of bank S., the former of which became insolvent and went into receivers’ hands through his defalcation. It was found that I-I., as the president of bank S., had customarily remitted for collections sent to bank J., by out-of-town banks, using the form of check of bank S., and the amount claimed by bank S', was for money consequently taken from its own funds: Held, this amount constituted a valid indebtedness of the insolvent bank in the receivers’ hands.

3. Appeal and Error — Facts Found by Consent — Pleadings—Amendments.

Where it appears- that by consent of the parties the trial judge has found the facts in dispute, and awarded damages in a greater sum than claimed by a party, no reversible error will be found on appeal; and when necessary a pleading may be allowed to be amended in the Supreme Court so as to demand such larger amount.

Appeal by defendant from Daniels, J., at July Term, 1913, of Lee.

This is a contest between creditors over the distribution of assets in the hands of A. A. F. Seawell, receiver of the Bank of Jonesboro. The receiver finds and allows a debt due the Banking, Loan and Trust Oompahy in the sum of $15,367.85, and in a subsequent report filed allowed said debt in the sum of $16,581.10 to share pro rata in distribution of assets in his hands. His Honor, F. A. Daniels, judge, under agreement of parties that he should find the facts and enter judgment thereon, rendered judgment.

The creditors other than the Banking, Loan and Trust Company excepted and appealed.

Mclver & Williams and H. A. London & Son for Banicing, Loan and Trust Company.

Hayes & Bynum, U. L. Spence, and Hoyle & Hoyle for ex-ceptors.

Per Curiam.

The controlling facts are'that A. W. Huntley was cashier of the Bank of Jonesboro and president of the Banking,"Loan and Trust Company; that the said A. W. Huntley paid all checks drawn on the Bank of Jonesboro by its depositors, and forwarded to the Bank of Jonesboro for payment by out-of-town banks, by checks drawn upon the correspondent banks of the Banking, Loan and Trust Company, in its name, and upon its check forms, and signed by the said A. W. Huntley as its president; that the said Huntley made remittance for all collections made by the Bank of Jonesboro by exactly similar checks; that the money so paid amounted to $16,581.10; that the said Huntley misappropriated the funds of the Bank of Jonesboro and caused it to become insolvent; and that none of the officers of the Banking, Loan and Trust Company except Huntley had any knowledge of such misappropriation.

The knowledge of Huntley, if material, would not be imputed to the Banking, Loan and Trust Company, because he was acting in his own interest and adversely to his principal. Bank v. Burgwyn, 110 N. C., 267; Bank v. School Committee, 118 N. C., 383.

These cases were cited with approval in Brite v. Penny, 157 N. C., 114, and the Court there says: “We recognize the general doctrine held by all courts, that a corporation is not bound by the action or chargeable with the knowledge of its officers or agents in respect to a transaction in which such officer or agent is acting in his own behalf, and does not act in any official or representative capacity for the corporation.”

But in any event, it appears that the money of the Banking, Loan and Trust Company was used to pay checks drawn on the Bant of Jonesboro by its depositors, and to cover remittances for collections made by tbe bank, which, we must bold constituted a'valid indebtedness.

It was within the power of the judge, under the terms of submission to him, to correct the finding as to the. amount due, and if necessary the pleadings would be amended in this Court to conform- to the finding.

We find no error.

Affirmed.