National Bank of Sanford v. Marshburn
| Decision Date | 19 May 1948 |
| Docket Number | 244 |
| Citation | 47 S.E.2d 793,229 N.C. 104 |
| Parties | NATIONAL BANK OF SANFORD v. MARSHBURN et al. |
| Court | North Carolina Supreme Court |
The action reached the Superior Court on an appeal from a judgment of a justice of the peace, and was submitted to the judge in the Superior Court upon a case agreed. The determinative facts are set forth below.
On February 16, 1947, James Marshburn drew a check for $155 on the plaintiff, National Bank of Sanford, payable to the order of the defendant, C. H. Cobb, Trustee, who accepted it in satisfaction of a preexisting debt of Marshburn. At the time of its delivery, Marshburn informed the defendant, C. H Cobb, Trustee, that he did not have funds on deposit with the plaintiff to meet the check, but that he would have funds on deposit with the plaintiff to pay it on and after March 1 1947. Pursuant to this information, the defendant, C. H Cobb, Trustee, held the check until on or about March 17 1947, when he presented it to the plaintiff for payment through the agency of other banks. The plaintiff thereupon paid the amount of the check through such banks to the defendant, C. H. Cobb, Trustee, who received the payment without reason to know that it was made by the plaintiff under the mistake hereafter specified. The defendant, C. H. Cobb, Trustee, still has the money in his custody.
James Marshburn, the drawer of the check, never had any funds on deposit with the plaintiff at any time. But another person bearing exactly the same name had substantial funds on deposit with the plaintiff when the check was presented to it for payment. The plaintiff paid the check to the defendant, C. H. Cobb, Trustee, because of a mistaken belief on its part that the signature of James Marshburn, the drawer of the check, was that of James Marshburn, its depositor, and charged the amount of the check against the account of the latter. At the end of the month, however, the plaintiff discovered its mistake, credited the account of James Marshburn, its customer, with the amount of the check, and made immediate demand upon James Marshburn, the drawer of the check, and upon the defendant, C. H. Cobb, Trustee, for restitution of the sum paid by it to the latter on account of the check.
As the demand for restitution proved unavailing, the plaintiff brought this action against James Marshburn, the drawer of the check, and the defendant, C. H. Cobb, Trustee, before a justice of the peace, and obtained judgment against them for the $155 with interest from March 17, 1947. The defendant, C. H. Cobb, Trustee, appealed from this judgment to the Superior Court. James Marshburn, the drawer of the check, did not join in the appeal. But he has since died insolvent, and the judgment rendered against him by the magistrate is unccllectible.
The trial judge concluded upon the case agreed that the defendant, C. H. Cobb, Trustee, had been unjustly enriched at the expense of the plaintiff to the extent of the payment made on the check, and entered judgment accordingly. The defendant, C. H. Cobb, Trustee, thereupon appealed to this Court.
J. G. Edwards, of Sanford, for plaintiff-appellee.
E. C. Bryson, of Durham, for defendant, C. H. Cobb, Trustee, appellant.
The case at bar is somewhat nevel in origin. Fundamentally, however, it presents for decision the perplexing problem constantly recurring in various guises as to which one of two innocent parties must bear a loss occasioned by some third person.
It is well to note here the circumstances under which the defendant, C. H. Cobb, Trustee, acquired and collected the check. Since the paper was a negotiable instrument, and since he took it in payment of an antecedent or pre-existing debt, he purchased it for value within the meaning of the negotiable instruments law. G.S. s 25-30; G.S. s 25-192; Singer Mfg. Co. v. Summers, 143 N.C. 102, 55 S.E. 522; Mauney v. Coit, 80 N.C. 300, 30 Am.Rep. 80; Reddick v. Jones, 28 N.C. 107, 44 Am.Dec. 68. He acted in the utmost good faith in taking, presenting, and collecting the check. His status as a bona fide holder was not altered in any way by his knowledge that there were no funds on deposit with the plaintiff to meet the check at the time he accepted it. The check was to be presented for payment at a time when it was represented that such funds would be available in the plaintiff bank. Johnson v. Harrison, 177 Ind. 240, 97 N.E. 930, 39 L.R.A., N.S., 1207; 10 C.J.S., Bills and Notes, s 331; 8 C.J., Bills and Notes, s 720. The case agreed shows that the defendant, C. H. Cobb, Trustee, was not guilty of any fault causing or contributing to the plaintiff's mistaken belief as to the identity of the drawer of the check. And, finally, he received the money in suit without any reason to know that its payment was made by the plaintiff bank under a mistake.
When all is said, our case comes to this: Should a drawee bank be permitted to recover back from an innocent holder for value money paid by it to such holder upon a check because of its mistaken belief that the signature of the drawer on the check was that of a depositor bearing the same name?
The plaintiff insists that this question should be answered in the affirmative because of the general principle of law that money paid under a mistake of fact may be recovered from the payee by a payer who was under no legal obligation to make the payment. Harrington v. Lowrie, 215 N.C. 706, 2 S.E.2d 872; Sparrow v. Morrell & Co., ...
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