1 S.E.2d 119 | N.C. | 1939
This was a civil action instituted by the plaintiff, receiver for Paine Statistical Corporation, a corporation of New Jersey, to recover certain funds expended by J. O. Paine, president of Paine Statistical Corporation, in payment of certain alleged individual debts owed by J. O. Paine to the defendant, North Carolina Joint Stock Land Bank of Durham, totaling $7,325, under certain contracts entered into by J. O. Paine individually with the defendant North Carolina Joint Stock Land Bank. These payments were made by checks drawn on Paine Statistical Corporation.
The following is a copy of one of the checks given:
"PAINE STATISTICAL CORPORATION No. 3708 Newark, N. J., March 3rd, 1937.
"Pay to the order of N.C. Joint Stock Land Bank $5500.00
FIFTY-FIVE HUNDRED AND 00/100 ............. DOLLARS
PAINE STATISTICAL CORPORATION J. O. PAINE, President.
"UNION NATIONAL BANK in Newark, New Jersey."
(Endorsement on Check No. 3708)
*74"Deposit to the credit of North Carolina Joint Stock Land Bank of Durham."
The judgment of the court below was as follows: "This cause coming on to be heard upon the motion of the plaintiff for a judgment on the pleadings, and the court being of the opinion that such motion should not be allowed: Now, therefore, it is hereby ordered, considered and adjudged that the motion of the plaintiff for judgment on the pleadings is denied. C. V. Cowper, Judge, etc."
To the signing of the foregoing judgment the plaintiff excepted, assigned error and appealed to the Supreme Court. The complaint (paragraph 5) alleges, in part: "That in giving said checks of Paine Statistical Corporation as payments for his individual transactions, John Overton Paine misappropriated wrongfully and unlawfully used funds of Paine Statistical Corporation, of which misappropriation and wrongful use of funds defendant had notice in that defendant accepted the said checks drawn on Paine Statistical Corporation, by John Overton Paine, in his capacity as an officer of said corporation, which fully appears from the face of said checks, and that defendant thereby participated in the said misappropriation and wrongfull use of said corporate funds and wrongfully received and now unlawfully holds the said funds of Paine Statistical Corporation, although demands for their return have been made by plaintiff."
The defendant in answer to the above allegation says: "It is admitted that the defendant accepted the checks of the Paine Statistical Corporation signed by John Overton Paine, president, and except as herein admitted all of the other allegations contained in paragraph 5 of the complaint are untrue and are denied."
The principle of law in Dancy v. Duncan,
It is well settled that he who knowingly participated in the fruits of the misappropriation is responsible. The complaint alleges that the only notice plaintiff had was the fact that the checks were signed "Paine Statistical Corporation, J. O. Paine, Prest." We do not think that this was sufficient to put defendant on notice that the checks were not bona fide. Any other rule would hamper seriously business transactions of this kind which are carried on every day. There must be actual or constructive notice before liability would attach to one who takes a check of the kind given in this case. Bank v. Crowder,
In R. R. v. Kitchin,
For the reasons given, the judgment of the court below is
Affirmed.