#### AMERICAN TRUST COMPANY, a Corporation, as Receiver of Charlotte Bank and Trust Company, v. CHARLES J. ANAGNOS.

(Filed 5 December, 1928.)

1. Bills and Notes — Requisites and Validity — Consideration—Presumptions.

Where there is evidence tending to show that the president of a bank had received from the defendant an exchange of notes for the former’s benefit, and that the defendant in the bank’s action on the note admits its execution and delivery, it is prima facie evidence that the note was *328given for a consideration under the provisions of our statutes, O. S., 3004, 3005, and defendant must show failure of consideration when relied upon by him.

S. Baúles and Banking — Functions and Dealings — Officers and Agents.

Where a president and director of a bank acts in his own interest in procuring from the defendant the note sued on by the bank, which is named payee therein, given for the accommodation of the officer alone, the knowledge of such officer will not be imputed to the bank.

3. Same.

Where a bank is made the payee of a note, and the evidence tends to show that it was given to the bank’s president for his own accommodation in an exchange of notes, there is a reasonable inference that the exchange of notes was made to enable' the president to make illegal use of the funds of the bank.

4. Bills and Notes — Requisites and Validity — Consideration.

In law a valuable consideration may consist in some right, interest or benefit accruing to one party, or in some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other.

Appeal by plaintiff from Harding, J., at May Special Term, 1928, of MeokleNbueg.

New trial.

Plaintiff brought suit on two notes executed by' defendant to the Charlotte Bank and Trust Company, one for $1,600 dated 7 November, 1926, and the other for $5,000 dated 3 December, 1926, payable 3 March, 1927. The defendant admitted his indebtedness on the former note for the full amount less a payment of $250. Judgment was rendered for the amount admitted to be due and the cause was retained for trial on the note for $5,000.

The defendant alleged that on 4 September, 1926, he executed a note to M. A. Turner, who was president of the Charlotte Bank and Trust Company, for $5,000 due 90 days after date; that Turner was a member of the loan committee; that the note was executed at Turner’s request and for his accommodation in consideration of a similar note to be executed by Turner to the defendant, both notes having the same date and maturing at the same time; that when the first note became due Turner requested another exchange of notes in renewal; that the defendant made the note in suit payable to the Charlotte Bank and Trust Company, and that the defendant received nothing of value in any way for said note, except the note of M. A. Turner. An issue was submitted to the jury, who found that the defendant was not indebted to the plaintiff. Judgment for defendant; exception and appeal by the plaintiff on error assigned.

T. C. Guthrie, Jr., for plaintiff.

R. T. Puhlman and Thaddeus A. Adams for defendant.

*329AdaMs, J.

Tbe plaintiff excepted to tbe following instructions: “Tbe court charges that tbe defendant having admitted execution of this note, it will be jour duty to answer this issue $5,000 with interest from 3 March, 1927, but if tbe defendant has satisfied you by tbe greater weight of tbe evidence that it was agreed by a representative of tbe bank that it should not be paid, that be should not be called upon to pay it, but that it was a matter of accommodation of tbe bank or if you shall find it to be true by tbe greater weight of tbe evidence that tbe note was without consideration, tbe court charges you defendant would not be liable, then you would answer that issue Nothing.’ ”

Every negotiable instrument is deemed prima facie to have been issued for a valuable consideration, and every person whose signature appears thereon to have become a party for value — value being any consideration sufficient to support a simple contract. C. S., 3004, 3005. It will be noted that tbe jury was instructed in tbe alternative as to tbe agreement “by a representative of tbe bank” and tbe want of consideration : tbe issue should be answered “Nothing” if tbe agreement was made or if there was no consideration for tbe note. We have no knowledge that any particular finding was tbe basis of tbe verdict.

According to tbe testimony of tbe defendant, M. A. Turner, who was president of tbe Charlotte Bank and Trust Company, requested tbe d&-fendant to give him a note for $5,000 as an accommodation to him, promising to execute to tbe defendant a note for tbe same amount. Notes were thus interchanged on 4 September, 1926, and at maturity they were returned to tbe respective makers. Turner then asked tbe defendant to execute another note for tbe same sum in place of tbe one 'Turner bad returned. Tbe defendant did so, but tbe Charlotte Bank and Trust Company, not Turner, was named as payee. Turner then gaye bis note to tbe defendant.

If tbe defendant’s testimony be accepted, tbe transaction was intended as an accommodation not to tbe bank, but to Turner; and if Turner was acting only for bis own interest tbe bank would not be bound by bis agreement with tbe defendant. It is settled law that an officer of a bank cannot bind tbe bank by bis acts in respect to matters in which be is personally interested, and that those who have business with him are deemed to know that be cannot use tbe funds of tbe bank for bis own benefit. Grady v. Bank, 184 N. C., 158; Bank v. West, ibid., 220; Stansell v. Payne, 189 N. C., 647; Quarries Co. v. Bank, 190 N. C., 277, 280. In Bank v. Wells, 187 N. C., 515, it-is said: “Ordinarily a bank is presumed to have notice of matters which are known to its president, upon tbe theory that be will, in tbe line of bis duty, communicate to tbe bank such information as be has, but tbe law recognizes tbe frailty of human nature, and where tbe president has a personal *330interest to serve or is acting in a transaction in Ms own behalf, the presumption does not obtain that he will communicate to the bank matters which are detrimental to him.”

It is not unreasonable to presume that Turner made the Charlotte Rank and Trust Company payee in the defendant’s note with the design of using the funds of the bank for his own benefit. If he did so and made use of the funds there is no presumption that he communicated to the bank his agreement with the defendant. On the contrary, under these circumstances, the bank would have parted with its money on the strength of the defendant’s note, and the defendant, nothing else appearing, would be liable thereon. It may be true that the defendant received nothing in consideration of his note except the note of Turner. But the note he executed to the bank may have been supported by a valuable consideration though the defendant neither received nor expected to receive any benefit; it is sufficient if the bank was subjected to loss or inconvenience. In a legal sense a valuable consideration may consist in some right, interest or benefit accruing to one party, or in some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other. Brown v. Ray, 32 N. C., 73; Institute v. Mebane, 165 N. C., 644; Fawcett v. Fawcett, 191 N. C., 679; Fertilizer Co. v. Eason, 194 N. C., 244.

The instruction complained of is subject to these criticisms: (1) an agreement between Turner and the defendant would not be binding on the bank if Turner was personally intei’ested in getting the amount of the note from the bank for his own benefit — a phase of the case which the jury was not permitted to consider; (2) there is no sufficient evidence that the note in question was executed as a matter of accommodation to the bank; (3) the phrase “without consideration” should be more fully explained in view of the plaintiff’s contention that Turner received the amount of the note from the bank and used it for his own benefit. For the error assigned there must be a

New trial.