Elm City Lumber Co. v. Childerhose & Pratt

• Decision Date: 14 October 1914
• Docket Number: 177.
• Citation: 83 S.E. 22,167 N.C. 34
• Parties: ELM CITY LUMBER CO. v. CHILDERHOSE & PRATT ET AL.
• Court: North Carolina Supreme Court

83 S.E. 22

167 N.C. 34

ELM CITY LUMBER CO. v. CHILDERHOSE & PRATT ET AL.

No. 177.

Supreme Court of North Carolina

October 14, 1914

Appeal from Superior Court, Craven County; Daniels, Judge.

Action by the Elm City Lumber Company against Childerhose & Pratt in which the Bank of Ottawa intervened. From a judgment in favor of the interpleader, plaintiff appeals. Affirmed.

The custom of a bank claiming to be the owner of proceeds of drafts drawn by a seller on the buyer and paid by the buyer cannot be proved by its method of treating another draft and charging it back when not paid.

This is an action to recover damages accruing upon a contract for the sale of hay, bought by the plaintiff from Childerhose & Pratt, in which the proceeds of two drafts, drawn by Childerhose & Pratt on the plaintiff, and paid by it, were attached in the hands of the People's Bank of New Bern. The Bank of Ottawa intervened, alleging that it was the owner of the proceeds of the drafts, and the only issue in controversy is as to ownership, raised by the interplea. The drafts were introduced in evidence, and on each was the word " collections."

T. A Uzzell testified for the plaintiff:

"I am cashier of the People's Bank, and was cashier in 1912. In 1912 we received drafts from the Girard National Bank of Philadelphia on the Elm City Lumber Company. We have record of a draft for $211.03 and one for $161.30. They were sent to us for collection. (The drafts introduced in evidence identified by witness.) The regular indorsement stamp of the Girard National Bank appears on both drafts. The green stamp has the word 'collection' on it. We did not give the Girard National Bank any credit on our books for these amounts before they were paid. In receiving drafts of this kind, sometimes we would remit proceeds less collection charges, and sometimes credit the bank's account and give them notice of the credit on the collection."

Cross-examination:

"The drafts were made payable to the Bank of Ottawa, and were sent to us through our correspondent, the Girard National Bank. The former is a Canadian bank, and the latter an American bank. I don't know whether or not the Bank of Ottawa bought the drafts. They indicate on the face they were sent here for collection. We receive drafts in different ways. Sometimes as cash items and collection items. It depends how the draft is sent to us. It could be sent to the Girard either as cash or collection, and be sent to us in the same way."

Redirect:

"The form of this draft is the usual form furnished to customers of banks. This is the form furnished by us to our customers, and that we have on our counters. When drafts come to the bank, we notify the drawee that we have it for collection. We either send our collector or mail notice of same. In this instance we would notify Elm City Lumber Company we hold draft on them for Childerhose & Pratt, and the Bank of Ottawa would not appear on the notice. The stamp across the corner of the draft means we are not to surrender the bill of lading attached to the draft, only upon payment of the draft, and if necessary hold the item for arrival of the goods. We would have no authority to turn the goods over until the payment of the draft. It is this direction in stamp across corner of draft not in the regular printed form."

Defendant offered the following evidence:

J. G. Burgess, witness in behalf of Bank of Ottawa, interpleader, who testified as follows:

"I reside at Ottawa. I am manager of the Chaudier branch of the Bank of Ottawa; that is equivalent to cashier in your country. I have been manager over three years, and in the banking business 16 years. I am acquainted with Childerhose & Pratt. In regard to this hay, Mr. Pratt brought the drafts to me in the bank, and the bills of lading also. On April 29, 1912, Mr. Pratt brought into the office of the Bank of Ottawa these two drafts, with bills of lading attached, drawn at sight on the Elm City Lumber Company, one for $211.03 and one for $161.30, and asked that they be discounted and placed to their credit (Childerhose & Pratt), which I did, less our commission, and they withdrew the money the same day the drafts were brought in. I have the original entry sheet on which the entry was made. I attended to this and checked it over, and it was under my inspection, and I checked it over and put my initials on the sheet. On the original record I find $161.30 and $211.03. That is the discount sheet and that the ledger sheet (witness indicates different sheets). The original entry in the discount sheet and that is checked by me as correct, also the other one. After the money was placed to the credit of Childerhose & Pratt, and the money withdrawn by them, we forwarded the drafts to the Girard National Bank, who are our agents for the Southeastern and Southern states practically, for collection. This collection was to be made for us. Childerhose & Pratt did not have any interest in the collection. They had received the money and had no further interest. The collections were ours, and we sent the drafts to the Girard National Bank, and they sent them to the People's Bank and were to return the money to us. I did not know, of course, to whom the Girard National Bank would send them. The proceeds were to be paid to us. Since then Childerhose & Pratt have dissolved. Childerhose & Pratt were paid by the bank $371.33. The full amount was $372.60. The difference between the two represented the discount. We have not received any money upon the drafts, because Elm City Lumber Company attached the funds."

Cross-examination:

"We charge interest at 7 per cent. in Canada. Interest on $372.60 for 15 days would be $2.50. We did not take their paper at a loss. You claim collection took 15 days. It should not have taken that long. I left Ottawa Saturday at 4:30 p. m., arrived in New Bern at 9:30 a. m. Tuesday following. This draft was not paid until 30 days after it was presented to us into the People's Bank. The draft is stamped May 26th, and discounted April 29th. The interest on that amount of money for 30 days would have been three times the amount charged for collection. It should not have been that long. I do not know how long it would take to come from Ottawa--the freight transportation. I left Ottawa Saturday at 4:30, and was here Tuesday at 9:30. As far as I know, Childerhose & Pratt are solvent. They did not carry a pretty good account with us. The ledger accounts shows a balance of from $600 down to $10. I do not consider that big. We had several drafts for Childerhose & Pratt. We never charged back to them any draft on the Elm City Lumber Company. One of the drafts, I know, was returned. All these dealings occurred within four or five days. There is a draft for $235.55 made in the same manner as this. I don't know that we charged this draft back after it was returned. These were discounted the 29th of April, and the $235.55 was on April 25th. If the drafts had been returned to the Bank of Ottawa, we would have returned them to Childerhose & Pratt. This is our usual method. We might have got the bill of lading and charged them back to their account. I don't know, with their permission we might have charged them back. We have never made any demand on Childerhose & Pratt for payment of this money. They signed the draft for which this collection was made. Of course I cannot recall any case when the person signing the draft was not liable when the draft was not paid, but I have had them. Childerhose & Pratt had no money when I left Ottawa. Childerhose & Pratt have both left Ottawa, been gone about a year. I don't know where they have gone. They dealt in real estate and commissions. They shipped varied amounts of hay each month. I don't know that they were doing a large business. I knew the two drafts were for hay. We had the bills of lading which showed they were for hay. I did not know anything about any contract between them and the Elm City Lumber Company. We did not look up the Elm City Lumber Company in a commercial agency."

Redirect:

Question: "The reason you didn't investigate the commercial rating

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