Arbogast v. Corporation Commission, 200 N.C. 793 (1931)

May 20, 1931 · Supreme Court of North Carolina

200 N.C. 793

JOHN C. ARBOGAST and Wife, IDA M. ARBOGAST, v. CORPORATION COMMISSION OF NORTH CAROLINA as Liquidating Agent of the Central Bank and Trust Company of Asheville, et al.

(Filed 20 May, 1931.)

Estoppel O b — Bank retaining benefits held estopped to deny authority of president to make contract, and liquidating agent was bound' thereby.

A bank having knowingly received and retained before its insolvency the adequate consideration of a contract made by its president in its behalf, is estopped to deny the authority of the president to bind it thereto, and where the contract obligates the bank to return certain notes upon which the plaintiff is either maker or endorser, and the consideration remains a part of the assets of the bank in the hands of the Corporation Commission or its successor, the Corporation Commission or its successor is also estopped to deny the terms of the contract and are bound thereby, and must return the notes in accordance therewith.

Appeal by defendants from McElroy, J., at April Term, 1931, of Buncombe.

Affirmed.

On and prior to 21 April, 1930, the Central Bank and Trust Company of Asheville, N. 0., owned certain notes and bonds, on which the plaintiff, John 0. Arbogast, was liable as maker or endorser. All these notes were past due. Some of the said notes were secured by deeds of trust on lands executed by the plaintiffs; others were secured by collaterals, and others were unsecured. The aggregate amount of said notes was $127,573.59.

It was agreed by and between "Wallace B. Davis, president of the Central Bank and Trust Company, acting for and in behalf of said company and the plaintiff, John C. Arbogast, that the deeds of trust on the lands should be foreclosed, and that the Central Bank and Trust Company should acquire title to all the lands described therein, and that all of said notes, together with collateral held by the said company, should be delivered to the plaintiff, John 0. Arbogast. The fair market value of said lands, at the date of this agreement, was $150,000.

Pursuant to said agreement, the said deeds of trust were foreclosed by sale under the powers of sale contained therein. The lands described in said deeds of trust have been conveyed to a corporation organized for the purpose of taking title thereto. This corporation holds the title to said lands in trust for the Central Bank and Trust Company. The notes and bonds held by the said Central Bank and Trust Company on which the plaintiff, John 0. Arbogast was liable, have not been delivered to him, in accordance with the agreement.

On 19 November, 1930, tbe Central Bank and Trust Company, because of its insolvency, closed its doors and ceased to do business. Its affairs are now in the possession of the Corporation Commission of North Carolina, or its successor, the Commissioner of Banks, for the purpose of liquidation as provided by statute. The said Corporation Commission and its successor, the Commissioner of Banks, have refused to deliver the said notes and bonds, with collateral securing the same, all of which came into their possession as assets of the Central Bank and Trust Company, to the plaintiffs.

On the foregoing facts, it was ordered and adjudged that the defendants deliver to the plaintiffs all the notes and bonds, with collateral securing the same, described in the exhibit attached to the complaint, and that plaintiffs recover "of the defendants the costs of the action.

From this judgment defendants appealed to the Supreme Court.

Anderson ■& Howell for plaintiffs.

Johnson, SmoAh&rs & Rollins for defendants.

Per Cueiam.

By the contract made in its behalf by its president, "Wallace B. Davis, with the plaintiff, John C. Arbogast, the Central Bank and Trust Company of Asheville, N. C., acquired property of the value of $150,000. The said company acquired said property, and retained the same with full knowledge of the agreement of its president that the notes and bonds held by it, aggregating in amount the sum of $127,573.59, with collateral securing the same, should be delivered by it to the plaintiffs.

The Central Bank and Trust Company, having ratified the contract, prior to its insolvency, was estopped from contending that its president was without authority to make the contract with the plaintiff on its behalf. The said company was bound by all the terms of the contract. See Union Indemnity Company v. Perry, 198 N. C., 286, 151 S. E., 629. The defendants are likewise bound by all of said terms, and are estopped from contending to the contrary. The judgment is

Affirmed.