1 S.E.2d 841 | N.C. | 1939
Civil action to subject proceeds of draft with bill of lading attached, drawn by defendant through the Southern Bank of Norfolk on Howard-Bobbitt Company, of Sanford, N.C. to satisfy a debt the plaintiff alleges is due and owing him by the defendants, which proceeds were seized under writ of attachment.
On 10 May, 1938, the receivers of Shenandoah Milling Company shipped a carload of flour from Norfolk, Va., to Howard-Bobbitt Company, Sanford, N.C. At the same time the receivers drew a sight draft on Howard-Bobbitt Company, payable to the Southern Bank of Norfolk, for the purchase price of the flour in the sum of $913.03. Bill of lading was attached to the draft. The Norfolk Bank credited the amount of the draft to the account of the receivers and forwarded the draft for collection. Upon presentation of the draft to the drawee through the National Bank of Sanford it was paid 12 May, 1937. The plaintiff instituted this action 11 May, 1938, and procured the issuance of a warrant of attachment, which was served upon the National Bank of Sanford, attaching the proceeds of said draft. The plaintiff seeks to have said sum condemned and applied to the satisfaction of a debt for services rendered he alleges is due him by the Shenandoah Milling Company.
After the service of the attachment the Southern Bank of Norfolk filed an interplea and bond in accord with the statute and the sum in the hands of the National Bank of Sanford was paid to it.
The cause came on to be heard in the court below on the issue of title to said fund raised by the interplea. Under the instruction of the court *373 that: "The court, therefore, holds as a matter of law, and instructs you, that if you find the facts to be as all the evidence tends to show, as a matter of law, that as to the first issue, `Did the intervener, Southern Bank of Norfolk, take the draft as a purchaser or for collection?' I instruct you that you will answer that issue, `For collection.'" The jury answered the first issue, "For collection," and found under a like instruction in answer to the second issue that the intervener is not the owner of the proceeds of said draft. Thereupon, the court signed judgment against the intervener and the intervener appealed. The draft, the proceeds of which are here involved, was made payable to the Southern Bank of Norfolk and was not endorsed by the intervener. On the deposit slip issued to the depositor of the draft at the time there was printed: "In receiving items for deposit or collection, this bank acts only as depositor's collecting agent and assumes no responsibility beyond the exercise of due care. All items are credited subject to final payment in cash or solvent credits. This bank will not be liable for default or negligence of its duly selected correspondents nor for losses in transit, and each correspondent so selected shall not be liable except for its own negligence. This bank or its correspondents may send items, directly or indirectly, to any bank, including the payor, and accept its draft or credit as conditional payment in lieu of cash; it may charge back any item at any time before final payment, whether returned or not, also any item drawn on this bank not good at close of business on day deposited." There was entered thereunder the following: "B.L.S.D., Howard-Bobbitt Company, $913.03."
The vice president of the intervener, as a witness for intervener, testified that the draft was brought to his bank 10 May and accepted as a deposit and the proceeds thereof credited to the account of defendants in their regular checking account; that the bank took the draft for value and that it has never been charged back and the bank has not been refunded by the Shenandoah Milling Company. The intervener offered further evidence tending to show that, while the defendants at all times had on deposit in the intervener bank a sum more than sufficient to permit the intervener to charge the item back to the account of the receivers without creating an overdraft, the defendants in fact withdrew from the account the proceeds of the draft and that the balance was created by other deposits. *374
In forwarding the draft for collection the intervener, on the letter or remittance sheet, designated the Shenandoah Milling Company as the owner of the draft enclosed for collection.
The questions presented by the appeal are: (1) Is the intervener the holder of said draft in due course for value as a matter of law, and (2) If not, is there conflicting evidence, requiring the submission of the cause to a jury under appropriate instructions?
The intervener's witness, on cross-examination, testified that if he handled the transaction at the time the draft was deposited he had no recollection thereof. If it be conceded that this rendered incompetent his former testimony, there was no motion to strike. Had a motion to strike been made and allowed the intervener would have been at liberty to offer its agent who actually handled the transaction. Under these circumstances we are required to consider the question involved as if this testimony, in so far as it is pertinent, was competent, giving due consideration thereto, together with the other evidence offered, to determine the questions presented. Morgan v. Benefit Society,
The appellant earnestly contends that the contract under which the Southern Bank of Norfolk received the draft from the defendants was made in Virginia and that the Virginia law is controlling. As to this, we do not take issue. It further contends, however, that under the Virginia law the passing of the draft to the appellant vested title thereto in the bank as a matter of law. In support of this position, appellant offered in evidence and relies upon McAuley v. Morris Plan Bank of Virginia,
In Fine v. Receiver of Dickenson County Bank,
"The cashier of the bank testifies that the bank would have permitted Fine to check against this `deposit,' but there is nothing to show that this was communicated to Fine. Nor do we find anything in the evidence which we think constituted a waiver either by the bank or by Fine of the contract made between them by the delivery to him and the acceptance by him of this deposit slip." Thus we find that the Supreme Court of Virginia has held that the cases relied upon by the appellant are not here in point.
Where a check or draft is deposited in bank as cash and credited to the account of the depositor with the right to check against the proceeds thus credited in the usual course of business with no restricting contemporaneous agreement with respect thereto, the relationship of creditor and debtor is created and the bank becomes the owner of the check or draft. The act of crediting when nothing else appears is equivalent to a payment in money. Miller v. Norton Smith,
When a check or draft is deposited as such the bank holds the same for collection even though the amount of the check or draft was credited to the depositor with the privilege of drawing against it. This is particularly true when the deposit is accompanied by an express agreement, such as that used in the instant case. If the check or draft was in fact delivered to the bank for collection or for collection and credit a credit to the customer before collection is deemed merely provisional, which the bank may cancel if the paper is not paid. If such paper is delivered to the bank for collection and credit the credit of the amount to the customer before and in anticipation of collection is merely provisional and the privilege of drawing against it merely gratuitous, especially when the bank reserves the right to cancel the credit or charge back the paper to the customer's account at any time. Greensburg Nat. Bank v. *376 Syer, supra; Fine v. Receiver of Dickenson County Bank, supra; Re StateBank,
Where the paper is deposited as such and credited to the account of the customer and the customer thereafter draws checks against such proceeds which are honored by the bank and the proceeds are thus withdrawn this constitutes a waiver of the original agreement and the bank becomes the holder of the instrument, at least as collateral. Standard Trust Co. v.Commercial National Bank,
Where a deposit is made without any specific agreement the intention of the parties at the time is controlling. Miller v. Norton Smith, supra;Fayette Nat. Bank v. Summers, supra; Greensburg Nat. Bank v. Syer, supra;Fourth Nat. Bank of Montgomery v. Bragg, supra, in which it is said: "The result of the decision of this Court in Fayette Nat. Bank v. Summers
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Under the evidence in this cause it clearly appears that the draft in question was originally deposited with the appellant under a written agreement that the bank was to act as collector. This agreement being in writing, it is not subject to contradiction by proof that another and a different agreement was in fact at the time made. There is, however, evidence offered by the appellant from which a jury might permissibly draw the conclusion that after the proceeds of this draft were deposited in the appellant bank they were drawn against by the depositor and the checks were honored by the bank, and that in fact, the proceeds of the *377 draft were actually paid to the depositor. If this be the fact, then under the law the appellant bank has an interest in the paper superior to that of any creditor of the drawer who might attempt to attach the proceeds thereof.
Upon a consideration of the authorities on the subject, we are of the opinion that the appellant has offered sufficient evidence to require the submission of this cause to a jury on the question as to whether the original agreement that the bank should act as collector only was thereafter waived.
New trial.