--682 STOKES V. FARMERS' BANK OF- HARDY. 4487 STOKES V. FARMERS BANK OF HARDY. 4-3040
Opinion delivered Jnne 26, 1933. BILLS AND NOTES CONSIDERATION.—An unconditional note given by directors to a: bank to take up bad paper in the bank upon promise of, the president, later fulfilled, to put in a like amount in cash, held supported by a sufficient consideration.
ARK.] STOKES V. FARMERS' BANK. OF HARDY. 683 Appeal from Independence Circuit Court; S. M. Bone, JUdge;: affirmed. .• . •- STATEMENT BY THE COURT.:, • .• This . suit was brought by aPpellee for the collection of a promissory note for $1,000, dated- June .1,d.928, 'dud 7 . months after date. The .answer admitted the executibn of the note, denied receiVing any consideration whatever therefor, and . alleged it •was executed solely • for •the accommodation of the bank, which fact wa.s known and understood by the cashier and other officials. in the !bank; 'it being expressly understood at the time that the bank would never expect or deniand payment thereof: . The testimony tended to shoW that • Arthur Metcalf was president of . the:bank On June I, 1928; haVing been active in the S'erVice sinee the . 'preceding February, gOing back into the . bank immediately after the death of Mr. Turner, the cashier. He made-an 'examination of the bank's affairs and foUnd Some bad Paper, not collectable, to the value *of $2,006 Or. -Ile went 'tb Batesville and to Messrs. Stolies, appellants, alsO directors of the bank, and told them of the discovery of the bad paper, and that the banking department insisted that something must he done about it, and, to keep from impairing the capital of the bank, he proposed a voluntary assessment on the three Of them. They said that they were short of cash; and he then suggested that they put up a- note, agreeing that, if they would do so, .he . would. match it with an equal amount of cash, "and we would ask the stockholders to reimburse us, but it was necessary to . .do this or impair the capital of the bank.!' He, later received the note sued on, credited it to the undivided-profits account, eharged off $600 or $700 worth of bad-paper, and put in $1,000 himself on the date of the maturitY of the Stokes.' note, using it• for the- same purpose: • -Notice was• Mailed to the makers of this, note •by. the bank. in due time, as to other debtors, but the depression came: on and they never responded to the notices and they were never able to recover or pay the stockholders: In• 1929, the president of the bank "took up $1,428 worth 'of other bad.paper,”-
684 STOKES - FARMERS BA N . K OF HARRY. [187- - - still carrying out, he . said, his 'agreement with the Stokes. W. S. Stokes asked him frequently in.meetings if he had not charged off the note, and was told that be had no authority to charge-it-off as it was a• 'hatter for the stock-holders- to .determine. The testimony is well nigh undisputed , that the note was executed by appellants for the -purpose as .stated, that the amount of it. was matched and : the same. amount of cash put into the bank by the president on the date the note became due to carry out the •agreement made With Metcalf, the president of the bank, to keep from impairing the capital of the bank by the protiosed voluntary assessment on -our part, the three of them, when the agreement was made and later performed. Met-calf later purchased $1,428.14 worth of bad paper of the hank on his own account; paying , cash therefor'. - The case was tried Without a jury, and judgment rendered in the bank's favoefor the amount of the note. •Coleman cf . Reeder, for Appellant. .. • Sidney Kelley and Gus Causbie, for appellee. KIRBY, J.,. (after stating the facts).. Appellants insist that the court erred in not holding the note invalid as executed for accommodation of the bank, with the Understanding •it 'was not to be paid and without consideration. . • • The testimony showed tbat the:.preSident of the bank, Metcalf, who had jnst thken charge of tbe bank's affairs to save it if it could be done, was not i-esponsible for its condition any -more than appellants, that he stated the bank's condition to them and the necessity foi the con-tribntion or assessment in order to prevent and avoid.the necessity for assesSfnents-against the stockholders that it 'night continue 'business without .such assessment-and with capital 'unimpaired. • That they gave their note for the pUrpose of:taking up the bad paper upoh the agreement of the : bank president to match the amount thereof in- caSh, which was done. This furnished, of course, sufficient consideration for the note. Jones v. Green, 173 Ark...846, 293 S. W. 749; Ellis v. Jonesboro Trust Co., 179 Ark. 615, 17 S..W. (2d) 324.
It makes no difference, so far as such consideration was concerned, that Metcalf later. bought and took up $1,428 worth of the notes in the bank, whether they Were bad paper or tot,Since he paid in cash the value:thereof. ..:The . note: sued -on : was not conditional; and Metcalf, with whom :the agreethent was made for its execution; paid.the amount as he agreed . to do and used same in taking out :the' bad paper of the bank arid prevented au assessment of stockholders or impairment -of- the Capital. ',The note-was:a valid obligation made for a valuable consideration, of which,the court correctly found .there was no failure, upon testimony.amply sufficient to sustain the. finding, and returned judgment „thereon- accordingly. Ellis-AT:Jonesboro Trust Co.,:supra.-. We find 110 . error in the .1: . ecord, and , the judgment is affirmed... .
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