American National Bank v. Savannah Trust Co., 172 N.C. 344 (1916)

Nov. 1, 1916 · Supreme Court of North Carolina

172 N.C. 344

AMERICAN NATIONAL BANK v. SAVANNAH TRUST COMPANY and WACHOVIA LOAN AND TRUST COMPANY, Garnishee.

(Filed 1 November, 1916.)

1. Banks and Banking’ — Correspondent Bank — Collection—Drafts—lost in the Mail — Negligence.

Where a bank sues its correspondent bank for tbe amount of a deposit therein, and tbe defendant sets up, as a counterclaim, tbe negligence of tbe plaintiff in not notifying it of a draft, tbe amount of which would offset tbe amount claimed in tbe action, and it appears tbat tbe plaintiff mailed tbe draft to the defendant without hearing from it and without inquiry for a month, and tbat tbe defendant bad not received it: Held,, the omission of tbe plaintiff to make due inquiry after not hearing from tbe defendant was negligence per se.

2. Same — Drafts—Payee Bank — Negligence.

It is negligence per se for a bank to send a draft or check for collection to tbe payee bank.

B. Same — Counterclaim—Burden of Proof — Trials—Questions for Jury.

While a forwarding bank may be negligent in not making due inquiry of its correspondent bank, etc., as to a draft sent tbe latter for collection, but was lost in tbe mail, tbe burden of proof is on tbe correspondent bank to sbow, in order to recover tbe amount set up as a counterclaim in plaintiff’s action, tbat it bas sustained damages arising from sucb negligence, wbicb raises an issue for tbe determination of tbe jury.

Civil aotioN tried at April Term, 1916, of New Hahover, before Peebles, J.

At the conclusion of all tbe evidence tbe court rendered judgment in favor of tbe defendant The Savannah Trust Company. Tbe plaintiff appealed.

Herbert McClammy for plaintiff.

John D. Bellamy & Son for defendant.

Beoww, J.

Tbe plaintiff sued the defendant The Savannah Trust Company to recover tbe amount of a deposit in tbe said trust company, a corporation of Savannah, Georgia, and attached tbe sum of $1,400 in the possession of tbe Wachovia Loan and Trust Company of Winston-Salem. Tbe defendant admitted tbe deposit and claimed tbat it bad applied a part of it to tbe payment of a draft for $705, dated Swansea, S. C., 18 November, 1912, drawn by E. L. Lybrand & Co. on tbe Bank of Swansea in favor of Eeliance Fertilizer Company. Tbe defendant forwarded the draft to plaintiff bank, where it was received and credited to defendant 23 November, 1912. Tbe plaintiff claims it forwarded tbe draft to tbe drawee, tbe Bank of Swansea, on same day for payment. The drawee made no acknowledgment, and plaintiff charged it up to tbe defendant, wbicb in effect struck out or balanced tbe credit of tbe item. Tbe defendant charged tbe $705 up to plaintiff as a debit against latter’s deposit, and avers in its counterclaim that plaintiff is liable to it for the $705 in failing to exercise due diligence in collecting the draft, for which sum defendant prays judgment against plaintiff.

In any view of tbe evidence as now presented, we think plaintiff was negligent'. It received tbe draft 23 November, 1912, and forwarded it by mail to tbe drawee, tbe Bank of Swansea, tbe same day for payment. Plaintiff never beard from tbe Bank of Swansea until 24 December, 1912, when in response to telegraphic inquiry tbe latter replied in substance tbat plaintiff’s letter and draft were never received. There is no evidence before us tbat plaintiff made inquiry of the Swansea Bank, after mailing the draft, until 24 December, 1912. There is no evidence tbat plaintiff notified tbe defendant of the loss of the draft in tbe mails and tbat it bad not been paid until over a month after plaintiff bad received it and credited defendant with it.

We think, in any view o£ the evidence, plaintiff was guilty of negligence in not notifying the defendant of the loss of the draft as soon as it had reason to believe it was lost. The evidence is that a letter mailed at Wilmington, N. 0., in the morning should reach Swansea, S. 0., the following day.

Not hearing from the Swansea Bank, plaintiff should have made inquiry of it at once, and in. due time have notified the defendant in order that the latter or its customer, the payee, might take immediate steps to protect themselves. Not to do so for one month after receiving the draft was negligence.

Plaintiff was also negligent in sending'the draft direct to the drawee, the Bank of Swansea. “It is negligence in a bank having a draft dr check for collection to send it directly to the drawee, and this is true though the drawee is the only bank at the place of payment.” Bank v. Floyd, 342 N. C., 187; 3 R. C. L., 255, note 13; Bank v. Bank, 5 A. and E. Anno. Cases, 753. While the form of this action in arraying the parties is different, this is practically an action by the defendant to recover damages of the plaintiff for negligence in respect to the draft. That is the gravamen of defendant’s counterclaim. If the evidence is taken to be true, the plaintiff has been negligent; but something more is necessary to justify a recovery by the defendant. The burden of proof is upon it to show that it has sustained damage by reason of plaintiff’s negligence. While there is evidence from which a jury might infer that the draft would have been paid if presented in apt time, the judge drew the inference himself and did not submit the issue to the jury. There is no evidence that defendant purchased the draft or paid anything for it. We would infer from the correspondence in evidence, and especially the letter of 6 February,_ 1913, that the fertilizer company was a customer of the defendant and deposited the draft for collection. There is no evidence that the defendant has paid to its customer the amount of the draft or admits its liability for same.

For these reasons we think there must be a venire de novo, and that the issues should be submitted to a jury with proper instructions.

The costs of this Court will be taxed against the defendant The Savannah Trust Company, the appellee.

New trial.