Court Opinion

ID: 3298611
Source: CourtListenerOpinion
Date Created: 2016-07-05 17:15:37.03482+00
Date Added: 2024-06-11T13:34:08.219413
License: Public Domain

On February 15, 1897, plaintiff and her husband, Thomas McDonald, since deceased, made and delivered to A.W. Randall their joint negotiable promissory note for $12,895.45, payable to the order of said Randall on February 15, 1900, three years from date; and on the same day, and concurrently with the giving of said note, the plaintiff executed and delivered to Randall, as security for said note, a mortgage on certain real property of plaintiff. This action is brought to obtain a decree canceling said mortgage, on the ground of want of consideration. The action is against said Randall, the Randall Banking Company (a corporation), and J.R. Hanify. The Eel River and Eureka Railroad Company intervened. Judgment went in the court below for defendants, and the plaintiff and intervener appeal from the judgment. It seems to be admitted, and, at all events, the fact is, that the rights of the intervener in the premises are dependent upon those of the plaintiff, and the rights of Hanify upon those of the Randall Banking Company; so that the questions involved are practically those between plaintiff and said banking company.
The court found that the only consideration for the note and mortgage was a past indebtedness of the husband, Thomas McDonald, to Randall, which was barred by the statute of limitations, — that is, if an action had been brought upon said indebtedness, Thomas McDonald could, if he should choose to do so, have successfully pleaded the bar of the statute to such action. Upon this state of facts counsel for the respective parties elaborately argued the question whether, although this past, outlawed indebtedness was a sufficient consideration for the making of the note by Thomas McDonald, it was a sufficient consideration for the making of the note and mortgage by the plaintiff. But under our views of the case, it is not necessary for us to decide this question; for we think that the judgment must be affirmed upon another ground.
The note, to which the mortgage was an incident, was a negotiable instrument. It was regularly indorsed by the payee, Randall, and delivered to the respondent, the Randall Banking Company, on April 12, 1897, — of course, long before its maturity. At that time Randall was indebted to the banking company in an amount much larger than the *Page 250 
amount of the note, and the banking company received the note and mortgage as part payment of Randall's indebtedness to it, and credited the full amount of the note on such indebtedness. The court found "that the said Randall Banking Company purchased said note and mortgage in good faith, in the ordinary course of business, and for value, before its maturity, and in ignorance of the fact that as to Margaret H. McDonald it was given without consideration, or for a debt which was barred by the statute of limitations." This finding, if sustained by the evidence, is determinative of the case against the appellants. It is contended, however, that this finding must be held to be unwarranted, because it appears, and the court found, that Randall was the president of the bank and knew of the consideration of the note. But when he procured the bank to take the note as part payment of his indebtedness, he was acting individually and at arm's-length to the bank, and his knowledge was not the knowledge of the bank. The same may be said of the former secretary, Murray, who was absent when the bank acted in the matter of accepting the note and mortgage, and who obtained his knowledge while acting for Randall individually; and also of Roberts, who was elected secretary on the day the bank acted, and who presented the note and mortgage to the bank for and as agent of Randall. The note and mortgage were accepted at a meeting of the board of directors of the bank, at which were present Hill, the vice-president, and four of the other directors, Randall not being present, Neither Hill nor any of the other directors knew that the consideration of the note was an outlawed indebtedness. The fact that some of them knew, or should be held to have known, that shortly before the making of the note and mortgage the property covered by the mortgage had been conveyed to the plaintiff by her husband, — it formerly having been community property, — and that the conveyance had been recorded, is of no significance. The validity of the transaction here involved was in no way dependent upon the time at which she acquired title to the mortgaged premises. That a corporation is not chargeable with the knowledge of one of its officers or agents who is acting on his own behalf, and not for the corporation, is *Page 251 
beyond question the law. Sufficient authorities are cited to the point in Bank v. Burgwyn, 110 N.C. 267. It is there said, among other things: "In such transactions the attitude of the agent is one of hostility to the principal. He is dealing at arm's-length, and it would be absurd to suppose that he would communicate to the principal any facts within his private knowledge affecting the subject of his dealing, unless it would be his duty to do so, if he were wholly unconnected with the principal. As was said by the court in Wickersham v. Chicago Zinc Co., 18 Kan. 481,1
`Neither the acts nor knowledge of an officer of a corporation will bind it in a matter in which the officer acts for himself and deals with the corporation as if he had no official relations with it'; or, as was said in Barnes v. Trenton Gas Light Co.,27 N.J. Eq. 33, `His interest is opposed to that of the corporation, and the presumption is, not that he will communicate his knowledge of any secret infirmity of the title to the corporation, but that he will conceal it.'"
We are of the opinion that the finding above discussed cannot here be disturbed; and therefore it is unnecessary to consider any other point argued by respondents.
The judgment appealed from is affirmed.
Lorigan, J., Angellotti, J., and Van Dyke, J., concurred.
1 26 Am. Rep. 784.