Court Opinion

ID: 7992726
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:33:07.107379+00
Date Added: 2024-06-11T16:35:25.836945
License: Public Domain

Stevens, J.,
delivered the opinion of the court.
We think the right result was reached by the trial court in this case. The note sued on was a renewal of the old note for six thousand dollars executed by the Oxford Dry Goods Company and S. H. Plant, in favor of the Merchants’ & Farmers’ Bank. The execution of the new note released the old corporation, the Oxford Dry Goods Company,'and substituted an entirely new maker, R. H. McElroy. Mr. Plant, when the new note was presented to him for execution, in the exercise of his inherent right to make his own contracts, then had the absolute right either to execute or decline to execute the new paper. It appears that he agreed to execute the- new note,upon the condition evidenced by the separate written contract ‘ ‘ that when R. H. McElroy shall pay to the bank upon his present indebtedness the amount that S. H. Plant is indorser for him, that the said S. H. Plant shall then be released of his indorsement and obligation in full upon the note of the said McElroy. The payments shall be reckoned out cf the first amounts paid by McElroy upon his indebtedness.” This separate written contract ex*487ecuted by the Merchants’ & Farmers’ Bank in favor of Plant did not contradict or vary the terms of the note. It simply stipulated that this note should he paid out of the first moneys McElroy turned into the bank upon his general line of indebtedness. This was a legitimate undertaking on the part of the hank, and the mere fact that Mr. Plant was at that time a director in the bank in no wise precludes him from claiming the benefits of this agreement. As to the bank, Mr. Plant was a comaker on the note; as- to McElroy, he was a surety. Mr. Plant at that time was a very old man, and it is most natural that he should desire to be released from his suretyship within a reasonable length of time.
But appellants pleaded, and the trial judge seems to have been of the opinion, that the benfits of the written contract executed by the bank in Plant’s favor, agreeing that the notes should be liquidated out of the first amounts, had been waived by Mr. Plant. This waiver is attempted to be based upon evidence that he was a director in the bank; that this note was carried for several years as a part of the bank’s assets; that it was reported along with the other bills receivable to the directors at their regular meetings; and that Mr. Plant at none of these meetings advised the board of directors that he was relying upon the written agreement in question, but, on the contrary, permitted the bank to discount the note and use it as a basis of credit. But the party to whom the bank assigned or pledged the note at any time is not here complaining. This is a controversy between the bank and Mr. Plant, the original parties to the agreement. It could -hardly be said that the board of directors had no knowledge of an agreement executed by the bank through its president. More than this, Plant neither said nor did anything, with reference to the note, to the hurt or injury of the bank. The mere silence of Mr. Plant in no wise changed the status of the parties. To say that Mr. Plant, by mere silence, waived the benefits of the *488private agreement in question would be a misconception of the doctrine of estoppel.
We readily subscribe to tlie doctrine that a director óf the bank must act in good faith in all of his dealings with the institution which he is helping to manage, and cannot take advantage of his position to make an unlawful profit or be excused from his obligations. But there is here no showing of fraud. There was ample consideration for the new note. The old corporation was released, a new party was introduced, and an extension of time granted. As we see it, appellee was entitled to a peremptory instruction; and this being our view of the case, it is unnecessary to discuss the errors complained of. The jury, under an incorrect issue, brought in a correct verdict.

Affirmed.