BANK v. NIMOCKS

Note — Accommodation Endorser — Collateral Security.

1. Where there is material conflict in the testimony introduced, as it would be impossible for the jury to believe all the testimony, what part they shall believe and what they shall reject is for their exclusive determination.

2. Where a note with an accommodation endorser is discounted at bank for the maker, who subsequently lodges with the bank, as collateral security, his note, with another solvent endorser, which note the bank, without the knowledge and consent of the accommodation endorser, surrendered without placing any credit therefor on the first note: Held to be a discharge pro tanto of the liability of the accommodation endorser.

DOUGLAS, J.

The plaintiff brought this action upon a promissory note for $3,000, executed by the defendant Nimocks to the defendant McArthur, and by him endorsed to the plaintiff. There were certain admitted credits upon the note. The defendant McArthur, hereinafter called the defendant, as Nimocks made no defense, alleged that the plaintiff discounted the note for Nimocks, well knowing that the defendant was only an accommodation endorser; "that, for his protection and to save himself against loss by reason of said accommodation endorsement on said note, he procured Nimocks to lodge with the plaintiff bank collaterals ample in value to secure the payment of the note, the net proceeds of which were to be applied by the bank to the payment of said note, and the bank well knew of the arrangement and purpose for which the collaterals were so deposited with it, and this defendant is informed and believes that the credits on the note were the proceeds of part of the collaterals which the plaintiff collected and applied the net proceeds in accordance with said agreement. The bank still held as part of the collaterals, so deposited with it to secure the note, a note or obligation for payment of $1,000 and interest, (359) amounting to more than the balance due on the $3,000 note, on which collateral note or obligation said Nimocks and one Slocomb were liable, and said collateral note was solvent and ample to secure the payment of the balance due on the $3,000; that thereafter the plaintiff so holding the collateral note, without any notice to this defendant and without his knowledge, surrendered said collateral note to said Slocomb without making any credit therefor on the $3,000 note, and refused to account for any proceeds of the same or the value thereof, and as this defendant is informed and believes, said collateral note has been destroyed."

In its replication the plaintiff denied that the note for $1,000, made by Nimocks and Slocomb, was deposited with or held by it as collateral security to the note sued on.

The issues and answers thereto were as follows:

1. Was defendant McArthur an accommodation endorser and surety for Nimocks on the note sued on? A. "Yes."

2. Did the bank have knowledge of that fact when it took the note? A. "Yes."

3. Did the plaintiff agree with defendant McArthur to hold the Slocomb note of $1,000 as collateral security and to apply it to the note sued on? A. "Yes."

4. Did the plaintiff surrender and part with the Slocomb note without the knowledge and consent of McArthur and without placing any credit therefor on the note sued on? A. "Yes."

5. Is defendant McArthur indebted to the plaintiff, and if so, in what amount? A. "Nothing."

The plaintiff excepted to the submission of the first, second, third and fourth issues, but as it states no ground of exception, and none suggests itself to our minds, it cannot be sustained.

The only exception seriously pressed was that to the refusal (360) of the court to instruct the jury that "if they believed the whole evidence there was nothing tending to show that the bank agreed with McArthur to hold the Slocomb note as collateral security to the note sued on, and they should answer the third issue `No.'" As this instruction could not properly have been given, there was no error in its refusal. It is well settled that no such instruction can be given where there is any material conflict in the testimony, as it would be impossible for the jury to believe all the testimony, and what part they shall believe and what they shall reject is for their exclusive determination. Of course, this rule applies only to admitted evidence, as the jury cannot consider evidence excluded by the court or withdrawn from their consideration. The competency or mere existence of the evidence is a question of law for the court, but its weight is a question of fact for the jury. In all such cases the request for such an instruction presumes the truth of the evidence as construed in the light most favorable to the adverse party. Cable v. R. R., 122 N.C. 892; Cox v. R. R., 123 N.C. 604.

In the case at bar there was ample evidence to go to the jury. The defendant testified that the president of the bank, shortly before Nimocks' assignment, told him that the Slocomb note was all right. Witness McKethan testified in part as follows: "In May, 1897, I was director in, and vice-president of, the bank. McArthur told me some time before 1897 that he was liable to the bank for $3,000, for Nimocks, and was uneasy about it. After the conversation with McArthur I looked at the books of the bank and found this entry in the collection book: `15 January, 1897, Bank of Fayetteville credit to discount 15 757, A. H. Slocomb, R. M. Nimocks, 31 December, 60 days, 4 March, $1,000.' I asked one of the officers of the bank what 15 757 meant, and he said it was Alexander McArthur's note." It is a common custom among banks to enter all bills receivable, whether discounts or collections, in the (361) proper books, under consecutive numbers, and a reference to this serial number identifies the paper. The jury might well conclude that this entry meant that the proceeds of the Slocomb note had been credited to the note now in suit.

The plaintiff contends that the so-called Slocomb note, which was executed by Nimocks as principal and Slocomb as surety, was placed in the bank by Nimocks merely for collection. In nearly all transactions there are certain inherent probabilities, which are strongly marked in the case at bar. It seems scarcely reasonable to suppose that the maker of a note, remaining still its owner, should place his own note in bank to be collected from himself and placed to his own credit. It seems more probable that the surety was willing to endorse for only a thousand dollars and that the maker, needing a greater sum, was willing to relieve his principal endorser pro tanto by the deposit as collateral security of the smaller note. This view was undoubtedly taken by the jury.

Cases often complicated by the testimony of witnesses, who however honest may be their intentions, testify to assumed facts which are in reality merely conclusions of law.

Viewing the Slocomb note as collateral security to the note in suit, its surrender to Slocomb without the consent of the defendant operated as a release pro tanto, and as it was for an amount greater than the balance due on the note in suit, the judgment must be affirmed. Cooper v. Wilcox, 22 N.C. 90; Nelson v. Williams, ib., 118; Pipkin v. Bond, 40 N.C. 91; Bell v. Howerton, 111 N.C. 69.

NO ERROR.

Cited: Henry v. Heggie, 163 N.C. 527.

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