Court Opinion

ID: 9864554
Source: CourtListenerOpinion
Date Created: 2023-09-25 13:56:28.296203+00
Date Added: 2024-06-11T12:17:55.805925
License: Public Domain

THE COURT.
In their petition for rehearing the respondents criticise our statement of facts and insist that we overlooked the evidence of the relations between the Oriental Bank and the directors of the Canton Bank. 'They state that the Oriental Bank controlled the other institution and that the directors of the latter were mere “dummies”. The criticism is supported by incomplete and isolated quotations from the record with a disregard of the connecting links which demonstrate the true facts. The note in suit was a renewal of a note executed by the same parties in October, 1923. At that time there were eleven directors of the Canton Bank. There is no evidence in the record that any number of them were “dummies”. There is evidence that one owned 107% shares, one 20 shares, one 30 shares and another 19% shares. The stock was entered at $100 a share. One witness testified that he held 10 shares, but that they were owned by the Oriental Bank. He tried to create the impression that none of the other directors owned more than ten shares, but on cross-examination he explained that he was referring to the time when the Canton Bank failed in 1928 and not to the time when the note was executed in 1923.  There is no dispute that the Oriental Bank owned and controlled the majority of the stock of the Canton Bank; but it must be borne in mind that this is a joint and several note and that all the signers united in a common defense, hence, a consideration to one of the signers is sufficient. (See. 3105, Civ. *739Code; First Nat. Bank of Scribner v. Golder, 89 Neb. 377 [131 N. W. 600-602].)
On the issue of consideration we find the evidence uncontroverted that some of the respondents were substantial stockholders in the Canton Bank, some were depositors, some owed the bank large sums of money, others were stockholders and directors of the China Mail Steamship Company, and two—Chin Lain and Tong—were personally obligated to the bank in the sum of $72,000 on the indebtedm s of the steamship company. Hence the loan from the Oriental Bank, which enabled the Canton Bank to keep its doors open and which canceled the indebtedness of the steamship company, benefited these directors in various ways and in varying amounts—some as stockholders in the Canton Bank, some as officers receiving salaries as such, some as depositors, and some as individuals indebted to the bank for personal and company loans. To say that no one of them received any consideration for the loan is to disregard the plain commonsense knowledge of such business transactions.
It may be conceded that the Oriental Commercial Bank, as holder of fifty-one per cent of the stock of the Canton Bank, also received some consideration for the loan of its funds to the Canton Bank in return for the detriment which it suffered. But this concession does not compel the conclusion that the holders of the remaining forty-nine per cent of the Canton stock did not receive any consideration for the loan. If a consideration passed to the Oriental Bank it must also have passed to those respondents who .were stockholders at least. But this is not the ground upon which the issue should be decided. The rules of law which are determinative of this issue are based upon sound principles. In the absence of fraud, when a good and valid consideration exists, the law will not weigh the quantum thereof (Whelan v. Swain, 132 Cal. 389, 391 [64 Pac. 560]; Rusconi v. California Fruit Exchange, 100 Cal. App. 750, 754 [281 Pac. 84]); a good and valid consideration exists when there is either a benefit to the promisor or a detriment to the promisee (see. 1605, Civ. Code); upon the principle of the Whelan case the law will not weigh the quantum of the detriment suffered by the promisee any more than it would weigh the quantum of the benefit received by the promisor; where the payee of a promissory note has suffered a detri*740ment and the maker has received a benefit it would be a contradiction of terms to say that there was na consideration for the note because the payee has incidentally received some benefit from the transaction. It is the consideration running to the maker which determines whether he is an accommodation party under the terms of section 3110 of the Civil Code. "When, as here, the uneontradieted evidence demonstrates that the makers of the note received some consideration and that they were not accommodation parties within the meaning of the code section their defenses fail as a matter o'f law and this demands a reversal of the order appealed from.
The petition for rehearing is denied.
A petition by respondents to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on November 10, 1932.