Woody v. Nat'l Bank Of Rocky Mount, (No. 55.)

• Citation: 140 S.E. 150
• Decision Date: 06 January 1927
• Docket Number: (No. 55.)
• Court: United States State Supreme Court of North Carolina
• Parties: WOODY. v. NATIONAL BANK OF ROCKY MOUNT.

140 S.E. 150

(194 N. C. 549)

WOODY.

v.NATIONAL BANK OF ROCKY MOUNT.

(No. 55.)

Supreme Court of North Carolina.

Nor. 16, 1927.

Appeal from Superior Court, Edgecombe County; Nunn, Judge.

Action by J. I. Woody against the National Bank of Rocky Mount. From a judgment for defendant, plaintiff appeals. Reversed.

Action to recover damages for the wrongful nonpayment of a check drawn by plaintiff, a depositor of defendant bank. It is alleged that said nonpayment was not only wrongful, but also willful, wanton, and malicious. Defendant demurred to the complaint for that the facts stated therein do not constitute a cause of action. From the judgment sustaining the demurrer and dismissing the action, plaintiff appealed to the Supreme Court.

Geo. M. Fountain, of Tarboro, for appellant.

Battle & Winslow, of Rocky Mount, for appellee.

CONNOR, J. The material facts alleged in the complaint, upon which plaintiff demands judgment in this action against defendant are as follows:

(1) On April 28, 1926, plaintiff, a resident of the city of Rocky Mount, N. C, drew his check upon defendant bank for the sum of $6, said check being payable to the order of E. L. Hollingsworth. It was delivered by plaintiff to said Hollingsworth, in part payment for a suit of clothes.

(2) A few days after its delivery to him by plaintiff, the said Hollingsworth, having first indorsed the check, delivered same to the Kinston Garage, Inc., at Kinston, N. C, in payment for. automobile supplies' purchased by him from said garage. The said Kinston Garage, Inc., as indorsee, promptly deposited said check in a bank at Kinston, N. C, for collection and deposit to its account in said bank. In due course of business the Kinston Bank caused said check to be duly presented to defendant bank at Rocky Mount, N. C, for payment.

(3) At the time said check for $6 was drawn by plaintiff, and also at the time same was presented to defendant for payment, plaintiff had on deposit with defendant, subject to his check, a sum of money in excess of $50. Plaintiff had kept a checking account with defendant for many years. Defendant refused to pay said check when same was presented; it caused said check to be returned to the Kinston Garage, Inc., the holder, with notation thereon as follows: "No account."

(4) After said check with said notation had been returned to it, the Kinston Garage, Inc., caused a criminal warrant to be issued from the recorder's court of Kinston, N. C, for the arrest of plaintiff, upon the charge that he had given a worthless check with intent to cheat and defraud. Pursuant to said warrant, plaintiff was arrested in the city of Rocky Mount and required to give bond for his appearance in the recorder's court at Kinston to answer the charge upon which thewarrant for his arrest had been issued. Upon his appearance in said court, plaintiff showed by the assistant cashier of defendant bank, and by its ledger sheets, that he had funds on deposit with defendant, both at the time the check was drawn and at the time it was presented for payment, more than sufficient in amount for the payment of the check. Upon this showing, with the consent of the prosecuting attorney, a verdict of "Not guilty" was entered, and plaintiff was discharged.

(5) The refusal of defendant to pay plaintiff's check for $6, when same was presented was willful, negligent, wanton, and malicious, and in utter disregard of the duty which defendant owed to plaintiff, as a depositor, with respect to said check; prior to such refusal, plaintiff had enjoyed a wholesome reputation in the city of Rocky Mount where he had long resided, and where he was employed by the Atlantic Coast Line Railroad Company.

(6) As a result of his arrest and confinement in jail, pending the giving of his bond, and of his enforced attendance upon the recorder's court in Kinston, pursuant to said bond, plaintiff was humiliated and degraded, and his reputation and standing in the city of Rocky Mount impaired, to his great damage in the sum of $5,000. The injury which he thereby sustained was proximately caused by the wrongful and malicious act of defendant in refusing to pay his check, and resulted in special damage to plaintiff.

Upon the foregoing facts alleged in the complaint, and for the purposes of this action admitted by the demurrer, plaintiff prays judgment that he recover of defendant (1) compensatory damages in the sum of $5,000; (2) punitive damages in the sum of $5,000; (31 the costs of the action; and (4) such other and further relief as he may be entitled to in the premises.

Defendant demurred to the complaint for that same does not state facts sufficient to constitute a cause of action. C. S. § 511, subsec. 6. The court sustained the demurrer and rendered judgment dismissing the action. Plaintiff excepted to the judgment, and upon his appeal to this court assigns same as error. The sole question therefore presented for decision by this court is whether, upon the facts alleged in the complaint, plaintiff is entitled to recover of defendant in this action. The decision of this question requires, first, a consideration of the law generally, with respect to an action by a depositor against his bank to recover damages for the wrongful nonpayment of his check, and, second, an examination of the statute in this state relative to such action, in order to determine its effect, if any, upon plaintiff's right to recover in this action.

It has been generally held that the relation of a depositor to his bank is ordinarily, if not universally, that of a creditor and debtor. This relation arises out of the contract, express or implied, that the bank will, from time to time, pay to the depositor or to his order, upon his demand, amounts not exceeding his deposit or balance. These demands are usually made by checks, signed by the depositor, payable to the order of the payee, and duly presented to the bank for payment by the payee, indorsee, or holder. A check is denned by statute as a bill of exchange drawn on a bank, payable on demand. C. S. § 3167. In Trust Co. v. Bank, 166 N. C. 112, 81 S. E. 1074, this court has said:

"A check is a bill of exchange, and may more particularly be defined as a written order on a bank or banker, purporting to be drawn against a deposit of funds, for the payment, at all events, of a sum of money to a certain person therein named, or to him or his order, or to bearer, and payable on demand. Norton on Bills and Notes, 404."

Upon the refusal or failure of the bank to pay the check of its depositor, the bank is liable for a breach of its contract. This liability the depositor may enforce against the bank by an action against the bank in a court of competent jurisdiction. In such action, the depositor may recover of the bank the amount of his check, with interest and cost; the action being on contract, the recovery is limited to the amount of the check, with interest from date of demand and refusal, and, by virtue of the statute, the costs of the action.

Except possibly in rare cases, a debtor is not liable to his creditor for damages in an action in tort, upon his failure or refusal to pay the debt. His liability arises upon contract and is limited to the amount of his debt. However, it has been generally held that notwithstanding the relation of the bank to its depositor is that of debtor and creditor, a bank may be held liable in tort to its depositor whose check it has wrongfully refused or failed to pay. In Marzetti v. "Williams, decided by the Court of King's Bench in 1830, and reported in 1 B. & D. 415, 109 Eng. Rep. 842 (full reprint), it was held that a banker is bound by law to pay a check drawn by a customer, within a reasonable time after the banker has received from the customer funds sufficient in amount for such payment, and that the latter may maintain an action in tort against the banker, who has wrongfully refused or failed to pay his check, although he has sustained no actual damages. In that case, Taunton, J., said:

"The defendants were guilty of a breach of duty, which duty the plaintiff at the time had a right to have performed. The jury have found that when the check was presented for payment, a reasonable time had elapsed to have enabled defendants to enter the £40 to the credit of plaintiff, and therefore they must or ought to have known that they had funds belonging to him. That was sufficient to entitle plaintiff to recover nominal damages, for he had a right to have his check paid at the time itwas presented, and defendants were guilty of a wrong by refusing to pay it. The form of the declaration, whether it be in tort or in assumpsit, makes no substantial difference, nor can it be any real ground of distinction whether the foundation of the action be an express or implied assumpsit. There are many instances where a wrong, by which the right of a party may be injured, is a good cause of action, although no actual damage be sustained."

In Rolin v. Steward, decided in the court of common pleas and Exchequer Chamber, in 1854, and reported in 14 C. B. 594, 139 Eng. Rep. 245 (full reprint), it was held that substantial damages may be recovered of a banker for dishonoring the checks of his customer, there being sufficient funds in his hands at the time to meet them. At the trial, the jury were instructed that they ought not to limit their verdict to nominal damages, but should give the plaintiff such temperate damages as they should find to be reasonable compensation for the injury which plaintiff must have sustained by the wrong of the defendant. Creswell, J., upon the appeal,...