Armour Packing Co v. Davis

• Decision Date: 31 March 1896
• Citation: 118 N.C. 548,24 S.E. 365
• Court: North Carolina Supreme Court
• Parties: ARMOUR PACKING CO. v. DAVIS.

24 S.E. 365

118 N.C. 548

ARMOUR PACKING CO.

v.DAVIS.

Supreme Court of North Carolina.

March 31, 1896.

Banks and Banking — Deposit of Check for Collection—Insolvency.

That a check deposited with a bank for collection was unrestrictedly indorsed to the bank, and credit therefor given the depositor, does not pass the title to the bank, where, on nonpayment of the check, its amount was to be charged up to the depositor, so as to prevent its recovery by the depositor from a receiver appointed for the bank.

Appeal from superior court, New Hanover county; Starbuck, Judge.

Action by the Armour Packing Company against J. Davis, receiver, to recover a check. There was a judgment for defendant, and plaintiff appeals. Reversed.

Iredell Meares, for appellant.

George Rountree and P. B. Manning, for appellee.

CLARK, J. Had the paper, when deposited by the plaintiff in the bank, been indorsed "For collection, " there can be no question that it would have remained the property of the depositor, for the title would not have passed. Boykin v. Bank (at this term) 24 S. E. 357. Had the paper been collected, and the proceeds mingled with the general funds of the bank, even if the paper had been indorsed "For collection, " the plaintiff would have been a simple contract creditor, with no preference over other creditors. Bank v. Bank of New Hanover, 115 N. C. 226, 20 S. E. 370; Bank v. Davis, 114 N. C. 343, 19 S. E. 280. The point here presented is different from either of the above, and has elicited some conflict of decision; but it seems now settled, by theweight of authority, especially the more recent cases, and it is in accordance with the "reason of the thing, " that, while an indorsement "for collection" of a draft or check does not transfer title to the indorsee, but merely constitutes him the agent of the indorser, a different result does not follow an unrestricted indorsement where, though the indorser is credited and the indorsee charged with the amount of such paper, it appears, as a fact, that the indorsee does not become unconditionally responsible for such amount until the check or draft is actually paid. Bank v. Hubbell, 117 N. Y. 384, 22 N. E. 1031. In a very recent case (In re State Bank [Minn.] 57 N. W. 336), the court says: "There can be no doubt that, if a draft or other paper is delivered to a bank for collection, the mere fact that the indorsement of the owner is unrestricted will not, as between him and the bank, make the latter the owner of the property. Neither is it conclusive, upon the question of ownership of the paper, that, before collection, the amount of it is credited to the customer's account, against which he has the privilege of drawing by check. * * * Such privilege is merely gratuitous, if the bank may cancel the credit, or charge back the paper to the customer's account, when it is not paid by the maker or drawee. Giles v. Perkins, 9 East, 12; Levi v. Bank, 5 Dill. 104, Fed. Cas. No. 8, 289; Balbach v. Frelinghuysen, 15 Fed. 675." And in a late case in the United States circuit...