Commercial National Bank v. Cutter Realty Co.

Stacy, C. J. If the receipt, upon which the plaintiff sues as assignee, stood alone, there might be considerable strength in the position that it created a pledge, which shielded said funds from any claim of set-off (Bank v. Winslow, 193 N. C., 470), but, viewed in the light of all that transpired between the parties, we think it must be regarded as subject to the defendant’s counterclaim in the nature of a recoupment for moneys paid in excess of $12,000 for extra repairs on the building. Hurst v. Everett, 91 N. C., 399. The case in a nutshell is this: Shops deposited $3,000 with the defendant, pending construction of the building, to guarantee faithful performance of lease on its part, said amount to be returned upon execution of bond or beginning of lease. A month later, and before the store was ready for occupancy, a supplemental agreement was entered into whereby Shops became indebted to defendant in the sum of $4,363.56 for extra repairs on the building. Thereafter, “we had no intention of returning the money, we considered it ours,” says the treasurer of the defendant company. Taken in its entirety, therefore, the rights and liabilities of the parties may be said to arise out of the same contract. The deposit made by Shops was but one step in the negotiations. Moreover, there is respectable authority for the position that a deposit of money to guarantee the faithful performance of a contract creates the relation of debtor and creditor, and not that of pledgor and pledgee, or bailor and bailee. Wilcox v. Gauntlett, 200 Mich., 272, 166 N. W., 856. There was error in directing a verdict against the defendant. New trial.