SPRINGS v. McCoy.

H. G. SPRINGS v. J. W. McCOY et al.

Action for Money Paid at Request of Defendant-Note-Payment by Accommodation Endorser-Implied Promise to Repay.

Where plaintiff, at the express request and for the benefit of defendants, endorsed a note executed by a third person for the benefit of, but not payable to, defendants, and, upon the insolvency of the makers, plaintiff was compelled to pay the note under a judgment thereon against him, the law will imply a promise by defendants to repay him.

CIVIL ACTION, tried before Norwood, J., and a jury, at March Term, 1897, of MECKLENBURG Superior Court.

The plaintiff tendered the following issue, which was adopted by the court:

"Are the defendants indebted to the plaintiff, and, if so, what is the amount of the indebtedness?"

The plaintiff offered in evidence a note signed by E. F. McCoy and B. L. Wedenfeller, payable to W. B. Gooding, city tax collector, for $250 due October 1, 1895, endorsed by the plaintiff, H. G. Springs.

The plaintiff offere] himself as a witness, and plaintiff's counsel stated that they proposed to show by the witness that the defendants, J. W. McCoy and A. R. Bowles, were partners, and that J.. W. McCoy was the managing partner; that J. W. McCoy brought said note to the plaintiff, Springs, and told him that the note was given to secure a debt due by the co-partnership, and asked him to sign the note for the benefit of the firm of J. W. McCoy and A. R. Bowles, the defendants in this action; that plaintiff did so sign it at the request of the said McCoy, and solely for the benefit of the partnership business; that the note was thereafter used for the benefit of the partnership by being delivered to the city treasurer to secure the license tax of

SPRINGS v. McCoy.

defendants; that thereafter plaintiff was sued upon this note, and judgment was taken against him, and plaintiff was compelled to pay and did pay that judgment; that when plaintiff approached A. R. Bowles, one of the defendants in this suit, in regard to paying this debt, said Bowles said that it was a partnership debt, and that his partner ought to have paid it out of partnership funds which he had had in his hands, but which he had converted to his individual purposes in paying for a lot for himself; that plaintiff has made a demand of payment on the partnership, and they have refused to repay plaintiff. The plaintiff also proposed to show that the signers, E. F. McCoy and B. L. Wedenfeller, are insolvent, and that this note is one of three of the same amount, given at the same time, signed and endorsed in same way, and that defendants have paid the other two.

Defendants objected to all this testimony as offered. Objection sustained and plaintiff excepted.

The court, having announced the opinion that the plaintiff could not recover upon this testimony, in deference. to the intimation of his Honor the plaintiff submitted to a non-suit, and appealed.

Messrs. Jones & Tillett, for plaintiff (appellant).

Messrs. Osborne, Maxwell & Keerans and Clarkson & Duls, for defendants.

MONTGOMERY, J.: If there was any error committed by the court below, it is one of practice and of so slight importance and consequence that we are unwilling to remand the case for a new trial. No possible injury could have been sustained by the defendants in the matter complained of. It would have been more regular if the witness had been asked such questions as were calculated to show that

SPRINGS v. McCoy.

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he had endorsed the note, the circumstances attending the endorsement, i. e., that he had endorsed it at the request of the defendants and for their benefit, and his payment of it by the judgment of the law. The note could then have been proved and received as evidence of the endorsement and in corroboration of the witness. This is, however, not the defendant's appeal, and the plaintiff, of course, had nothing to appeal from as to the manner of the introduction of the evidence because his Honor admitted it. plaintiff's appeal is from the judgment of non-suit taken in deference to the intimation of his Honor that the plaintiff could not recover upon the testimony as received. So the real question in the case is, does the testimony offered and received, conceding it to be true, constitute a cause of action against the defendants and render them liable to the plaintiff as alleged in the complaint? We are of the opinion that the matters contained in the evidence, if true, make the defendants liable to the plaintiff on the cause of action set out in the complaint. The note, though executed by other persons than the defendants, was, according to the evidence, made for the benefit and advantage of the defendants; it was endorsed by the plaintiff at the express request of the defendants.

The maker of the note had no interest in it at any time and received no consideration for it. Of course, the fact that the makers received no consideration would not affect their liability to the payee, but it turned out that they were insolvent and the debt fell upon the plaintiff, who paid it after judgment was recovered against him for the amount. The testimony, if true, showed the payment by the plaintiff was for the use and benefit of the defendants under such circumstances as that the law will imply a promise to repay on the part of the defendants. Burns v. Parish, 3 B. Mon. (Ky.), p. 3. The judgment of non-suit is reversed

and there must be a new trial.

New Trial.

THOMPSON v. LOAN ASSOCIATION.

J. S. THOMPSON et als. v. NORTH CAROLINA BUILDING AND LOAN ASSOCIATION.

Building and Loan Associations-Insolvency-Receivers―Foreclosure of Mortgages by Trustee-Credits to Borrowing Stockholders-Fines-Distribution of Assets of Building and Loan

Associations.

1. In the settlement of the affairs of an insolvent building and loan association, a borrowing member is entitled to have credit for fines paid by him.

2. While the receiver of an insolvent building and loan association cannot, without an order of foreclosure, sell property mortgaged to the concern, yet, when the debts to it are secured by a deed to a trustee, he may sell under the power in the deed without an order of court.

3. It is the duty of a trustee, who sells property conveyed to secure the debts of a borrowing member of a building and loan association in the hands of receivers, to pay all proceeds to the receiver, although in excess of the amount due the association, inasmuch as the mortgagor is a member as well as a debtor of the concern and his liability cannot be ascertained until it is known to what extent the concern is insolvent.

4. The receiver of an insolvent building and loan association should pay out no money, except for necessary expenses in making collections, without the order of the court.

CIVIL ACTION, pending in the Superior Court of MECKLENBURG County, instituted by the plaintiffs as stockholders of the defendant corporation, for the appointment of a receiver and to have paid to them, the plaintiffs, the amounts due to them on paid-up stock. Receivers were appointed, who made a report to the court that the assets would not be sufficient to repay to the stockholders the amounts they had paid into the association, made certain recommendations and asked the court for instructions and orders. His Honor, W. L. Norwood, Judge Presiding, made the following order:

THOMPSON v. LOAN ASSOCIATION.

"Upon reading and considering the petition of J. W. Keerans and E. T. Cansler, receivers, it is ordered that the said receivers be directed to call upon the borrowing members of the North Carolina Building and Loan Association to pay into their hands the net amount due from the said borrowing members to the association, the amount so due and called for to be ascertained as follows: that is to say, by charging the borrowing member with the sum paid to him by the association, and interest thereon according to contract, and giving him credit for all suns paid in by him with like interest thereon, except fines collected, if any, the matter of said fines to be left open for future settlement under a further order of this court; and that if any borrowing member shall fail to respond to this call within a reasonable time after it is made, W. C. Maxwell, trustee, and the receivers shall proceed to exercise the power of sale conferred upon W. C. Maxwell by such borrowing member and fully set out in the deed of trust made by him, and, out of the proceeds of the sale of the property thus made, the said trustee shall pay to the receivers the amount due to the association according to the rule of the Mills case, and shall hold the balance of the purchase money subject to the further order of this court and the final adjustment of the account between the borrowing member and the receivers and the association.

"The receivers will make no further call upon such of the borrowing members as will respond to the call directed by this order, until further direction of the court They will report hereafter, as soon as practicable, the exact status of the affairs of the corporation, and the amount of deficiency of its assets, to the end that an adjustment of such loss or deficiency may be made among the members of the association, and no mortgage or trust deed made for the benefit of the association shall be cancelled or macked satisfied by