Killette v. Raemell's Sewing Apparel, Inc.

• Citation: 93 N.C.App. 162,377 S.E.2d 73
• Decision Date: 07 March 1989
• Docket Number: No. 8811SC568,8811SC568
• Court: Court of Appeal of North Carolina (US)
• Parties: Lena KILLETTE v. RAEMELL'S SEWING APPAREL, INCORPORATED; Raemell Hines; Tammy H. Corbin; and Linwood Earl Hines.

Page 73

377 S.E.2d 73

93 N.C.App. 162

Lena KILLETTE v. RAEMELL'S SEWING APPAREL, INCORPORATED; Raemell Hines Tammy H. Corbin; and Linwood Earl Hines.

No. 8811SC568.

Court of Appeals of North Carolina.

March 7, 1989.

Narron, O'Hale, Whittington and Woodruff by James W. Narron, Smithfield and E. Craig Jones, Jr., Selma, for garnishee-appellant Bank of Pine Level.

Thomas S. Berkau, Smithfield, pro se, receiver-appellee.

PHILLIPS, Judge.

This controversy, ancillary to the main action, is between the receiver for the insolvent corporate defendant and Bank of Pine Level, and it concerns a $2,568.55 balance that the company had in its checking account with the bank when plaintiff's action was filed on 13 March 1987. At that time the corporate defendant owed the bank $5,000, plus interest, on a note that had been past due for several months, and twenty-one of its payroll checks, amounting altogether to $2,496.16, had been submitted to the bank but not honored. The same day suit was filed the bank was attached as a debtor of the corporate defendant and served with a summons and notice of levy. The bank disputed the attachment on the ground that it had an offset against the company. Based upon these facts and that the bank had honored a number of the corporation's checks after the note became due and did not assert its setoff until the account was attached, the court concluded as a matter of law that the bank had waived its right of setoff against the corporation and ordered the bank to turn the $2,568.55 balance over to the receiver.

The court's conclusion is erroneous. Because of the company's checking account with the bank it was the bank's creditor and the bank its debtor. 9 C.J.S. Banks and Banking Sec. 267, p. 546 (1938). As debtors of their general depositors banks have long had the right to setoff against the deposits any matured debts the depositors owe them. Continental Trust Co. v. Spencer, 193 N.C. 745, 138 S.E. 124 (1927). Nothing else appearing, and nothing else does appear here, the right may be exercised "at any time after the debt becomes due," Coburn v. Carstarphen, 194 N.C. 368, 370, 139 S.E. 596, 597 (1927); and "any time," so it was held in In the Matter of the Taxes of Bob Dance Chevrolet, 67 N.C.App. 509, 512, 313 S.E.2d 207, 209 (1984), includes when a bank is served with a notice of levy or attachment. Furthermore, the right to assert the setoff "[i]n answer to a summons to garnishee" is expressly recognized by subsection (f) of the statute under which the levy was issued, G.S. 1-440.28, and that it was not asserted sooner is without legal significance.

Nor did the bank waive its setoff right by honoring some of the company's checks after the note became due. A waiver is an intentional and permanent relinquishment of a known right, Green v. Patriotic Order Sons of America, Inc., 242 N.C. 78, 87 S.E.2d 14 (1955), that usually must be manifested in a clear and unequivocal manner. Klein v. Avemco Insurance Co., 289 N.C. 63, 220 S.E.2d 595 (1975). The law does not discourage leniency to one's debtors, and in our opinion the mere honoring of a depositor's checks after its note is due manifests only an intention by the bank to...