Woodward v. Savings & Trust Co.

• Decision Date: 01 October 1919
• Docket Number: 30.
• Citation: 100 S.E. 304,178 N.C. 184
• Parties: WOODWARD v. SAVINGS & TRUST CO.
• Court: North Carolina Supreme Court

100 S.E. 304

178 N.C. 184

WOODWARD v. SAVINGS & TRUST CO.

No. 30.

Supreme Court of North Carolina

October 1, 1919

Appeal from Superior Court, Beaufort County; Devin, Judge.

Action by J. S. Woodward against the Savings & Trust Company. From a judgment for defendant, plaintiff appeals. No error.

Where the holder of a check demands that the bank on which it is drawn deposit the same to his credit, and the bank credits him with the amount of the check, and the holder is not guilty of any want of good faith, the act of crediting is equivalent to a payment in money, and the bank cannot recall or repudiate the payment because on an examination of the accounts of the drawer, it is ascertained that he was without funds to meet the check.

Where the seller of an automobile received in payment a sum in cash and a check, which the buyer signed with his mother's name, held that the seller, having recovered possession of the machine and retained the cash payment, could not recover from the drawee bank with whom it deposited the check to its account, the bank having recalled the credit on discovery that the check was not signed by the drawer, there being no showing of damage.

This is an action to recover damages against the defendant bank for charging back against the account of the plaintiff a check of $380. The jury returned the following verdict:

"(1) Did the defendant represent to the plaintiff that the check for $380, signed in the name of Winnie E. Jackson, was good and would be paid? Answer. No.

(2) Was the plaintiff induced by said representation to sell and deliver the car to Simon Jackson? Answer. No.

(3) Did the defendant accept the check for $380, and credit plaintiff's account therewith? Answer. Yes.

(4) Was the name of Winnie E. Jackson signed to said check without the authority, knowledge, or consent of said Winnie E. Jackson? Answer. Yes.

(5) What damage, if any, is plaintiff entitled to recover therefor? Answer. None."

The verdict, considered in connection with the evidence and the charge, discloses the following facts: In January, 1919, the plaintiff was engaged in the business of selling automobiles in Washington under the name of the Overland Washington Company. On the morning of January 24th one Simon Jackson went to the place of business of the plaintiff about 8 o'clock in the morning, and entered into a contract for the purchase of a Ford car from one Hollowell, agent of the plaintiff, by the terms of which Jackson was to pay $20 in cash, give a paper for $100 with solvent indorsers, a check for $280, and a note for $25, secured by mortgage on the automobile. Simon Jackson had no account with the defendant bank, but he gave a check for the $280, signing the name of his mother, Winnie Jackson, as drawer, who did have an account in the bank. Hollowell took the check to the defendant bank, and asked if the check of Winnie Jackson for $280 was good, which was answered in the affirmative, Winnie Jackson having at that time $340 to her credit in the bank. Hollowell returned to the place of business of the plaintiff when the plaintiff was present, and it was then found that Simon Jackson could not secure the papers for $100, properly indorsed, and the check for $280 was then torn up, and he gave to the plaintiff as payee another check upon the defendant bank for $380, signing the name of Winnie Jackson as drawer in the presence of the plaintiff, who took this check to the bank, indorsed it passed it across the counter, and was given credit for the same on his account as a depositor. Later in the day the defendant bank charged back the check to the account of the plaintiff, finding that Winnie Jackson did not have $380 to her credit, and that she had not authorized Simon Jackson to sign her name to the check, which the jury finds to be a fact.

The automobile was delivered to Simon Jackson on Friday, and was used by him, and, being injured, was returned to the plaintiff on Saturday for repairs.

The plaintiff, then claiming the right to hold the automobile under his mortgage to secure the $25, after advertisement sold it, and had it bought in for himself.

The plaintiff now has the automobile, $20 in cash paid by Simon Jackson, and his note for $25.

The plaintiff moved for judgment on the third issue, which was refused, and he excepted.

Judgment was rendered for the defendant, and the plaintiff appealed.

E. A Daniel, Jr., of Washington, N. C., for appellant.

Stewart & Bryan and Ward & Grimes, all of Washington, N. C., for appellee.

ALLEN J.

The weight of authority is in favor of the proposition for which the plaintiff contends, that a bank, the drawee of a check accepting it unconditionally and passing it to the credit of the depositor, in the absence of special custom known to the depositor, cannot charge it back against the account of the depositor on the ground that it is an overdraft.

The court says in Bank v. Burkhardt, 100 U.S. 689, 25 L.Ed. 766:

"In Morse's well-considered work on Banking, p. 321, it is said: 'But if at the time the holder hands in the check he demands to have it placed to his credit, and is informed that it shall be done, or if he holds any other species of conversation which practically amounts to demanding and receiving a promise of a transfer of credit, as equivalent to an actual payment, the effect will be the same as if he had received his money in cash, and the bank's indebtedness to him for the amount will be equally fixed and irrevocable.'

We regard this as a sound and accurate exposition of the law upon the subject, and it rests upon a solid basis of reason. The authority referred to sustains the text.

When a check on itself is offered to a bank as a deposit, the bank has the option to accept or reject it, or to receive it upon such conditions as may be agreed upon. If it be rejected, there is no room for any doubt or question between the parties. If, on the other hand, the check is offered as a deposit and received as a deposit, there being no fraud and the check genuine, the parties are no less bound and concluded than in the former case. Neither can disavow or repudiate what has been done. The case is simply one of an executed contract. There are the requisite parties, the requisite consideration, and the requisite concurrence and assent of the minds of those concerned. It was well said by an eminent chief justice, 'If there has ever been a doubt on this point, there should be none hereafter.' Oddie v. National City Bank of New York, 45 N.Y. 735 ."

"When a bank credits a depositor with the amount of a check drawn upon it by another customer, and there is no want of good faith on the part of the depositor, the act of crediting is equivalent to a payment in money, and the bank cannot recall or repudiate the payment because, upon an examination of the accounts of the drawer, it is ascertained that he was without funds to meet the check, though, when the payment was made, the officers labored under the mistake that there were funds sufficient. In such a case the bank could have received the check conditionally, and have come under obligations to account to the holder for it, only in the event that on an examination of the accounts of the drawer it was found he had funds to meet it, or in the event that he provided funds for its payment. Or it could have asked for time to examine the accounts, that it might determine whether it would accept and pay or dishonor the check. It would have been within the option of the holder to have accepted or rejected either of these propositions. But when the holder presented the check with his passbook, that the check might be entered as a deposit to his credit, it was a request for the payment of the check; and there can be no distinction between a request for payment in money, and a request for payment by a transfer to the credit of the holder." 3 R. C. L. 526.

To the same effect see 7 C.J. 681; Levy v. Bank, 4 Dall. 234, 1 L.Ed. 814; Bank v. Burns, 68 Ala. 267, 44 Am. Rep. 142; Bank v. Gregg, 138 Ill. 596, 28 N.E. 839, 32 Am. St. Rep. 173; Wasson v. Lamb, 120 Ind. 514, 22 N.E. 729, 6 L. R. A. 191, 16 Am. St. Rep. 345.

And the authorities also sustain the position that the same rule applies when the check is a forgery:

"A bank is bound to know the signatures of its customers; and if it pays a forged check it must be considered as making the payment out of its own funds, and cannot ordinarily charge the amount so paid to the account of the depositor whose name was forged." 7 C.J. 683.

"In pursuance of the rule that a bank, as between itself and the bona fide holder of a check, is bound to

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