First National Bank v. Anderson & Co. , 28 S.C. 143 ( 1888 )

Mr. Chief Justice Simpson.

I concur in the result, on the ground of the admission of the declarations of Gage, which I think were incompetent.

Mr. Justice McIver concurred in the result in a separate opinion as follows: I concur in the conclusion reached by Mr. Justice McGowan in this case. It seems to me that there was absolutely no testimony impeaching the bona fides of the transfer of the note to the bank, and therefore any testimony as to the failure of the consideration of the note was clearly incompetent. The bank, not relying alone upon the presumptions arising from its possession of this negotiable note, offered direct testimony to the effect that the note was transferred for value before it was due, without any notice or suspicion of any defect therein, in the usual course of business. The fact that the president of the bank was a stockholder in the corporation known as B. D. Buford & Co., as well as in the Rock Island Plow Company, and the further fact that J. M. Buford was one of the stockholders in the bank, and had been, several months before the note was discounted by the bank, the cashier thereof, was certainly no evidence to fix upon the bank notice of the various dealings which B. D. Buford & Co. may have had with all or any of its customers. When a. bank is applied to, to discount commercial paper, it certainly never was supposed that it must be assumed to know all that each and every one of its stockholders may happen to know in regard to such paper. Such an assumption would involve the necessity of consulting every one of its stockholders before any commercial paper could be safely discounted, and that would very seriously impair, if it would not entirely destroy, the peculiar value of such paper, and strike a fatal blow at the commercial interests of the country.

So, too, the fact that the president of the bank was a stockholder in the concern of B. D. Buford & Co., affords no evidence whatever that he knew all the details of the business of such corporation. On the contrary, the very theory upon which the business of a corporation is conducted negatives the idea that the stockholders know all the details of the business at the time such business is transacted. That is necessarily entrusted to the officers and agents of the corporation, and the stockholders are not supposed to know anything about the management and conduct of the business of the corporation, except as reported to them by their officers or agents. The fact that one who is a stockholder in a corporation should therefore be presumed to know the details of the various business transactions in which such corporation may engage, would indeed be a startling proposition, and very seriously unsettle the security which is universally supposed to attend all dealings in commercial paper. Nor does the fact that J. M. Buford had been at one time cashier of the bank afford any evidence whatever that the bank had notice of the facts known to Buford in regard to this note. He had ceased to hold the office of cashier on the 19th of December, 1884, and the note was discounted by the bank on the 9th of February, 1885, several months afterwards, and surely the bank could not be affected by any notice that its former officer may have had. It seems to me that there was not the slightest evidence of any want of - good faith in the purchase of the note by the bank, or of any notice to it before its transfer of any defect in the consideration, and therefore that the Circuit Judge erred in receiving evidence tending to show a failure of the consideration of the note.

It seems to me also that there was error in admitting the declarations of John P. Gage, Esq., for there was not the slightest testimony that he was at the time either the agent or the attorney of the bank. The fact, admitted at the hearing, though not incorporated in the “Case,” that the present action was commenced by Mr. John P. Gage in June, 1885, was certainly no proof that he was the attorney of the plaintiff in April, 1885, when these declarations appear to have been made. Until it was shown that he was the attorney or agent of the plaintiff at the time the declarations were made, his declarations, like those of any other third person, would be incompetent.

I agree, therefore, that the judgment below should be reversed and the case remanded for a new trial.