Adams v. First National Bank of Winston

OuaRK, J.: If the overdraft of the firm of which plaintiff was a member was paid by the bank after the balance was drawn out, it not appearing that the bank had any notice of *335 the dissolution, such overdraft could be recovered by the bank out of the plaintiff as a member of the firm. If, at the time the plaintiff drew a check for the balance which the cashier told him was due the firm, in fact, there was less due the firm, it was equally an overdraft, by mutual mistake of the parties, and the bank could recover it back out of the plaintiff as a member of the firm. But the bank had no right to charge up against the individual account of a member of a partnership a balance due it on the firm’s account. Such right of set-off only exists between the same parties and in the same right. Morse on Banks, § 334. The bank has no lien on the deposit of a partner for a balance due from the partnership. Bolles on Banks, § 3S5. The reason is thus given by Lord Langsdale, Master of the Rolls, in Watts v. Christie, 11 Beavan, 555: “It is of the nature and essence of transactions between banker and customer that a customer, having a balance in the hands of his banker, should have full power over it and be able to command payment at sight. If, where there is an account between a firm and the bank, and another account with one particular member of the firm, it be once held that the bank has a lien upon the balance due upon the separate account of the individual partner for a balance due to the bank from the firm, there would be an end to some transactions which it is most important to commerce should be continued.” Inasmuch as the members of the partnership can draw in the name of the firm, if their overdrafts can instantly be charged up against the individual account of a member of the firm, no partner would .be safe in keeping his private account in the same bank where the partnership account is kept. Otherwise his private funds, deposited perhaps for special engagements he may have in view, would be liable at any time to be swept away by checks drawn by another for his own personal ends, but in the name of the firm, and the partner’s checks on his private account would go to protest, *336 to his damage and inconvenience. Then, too, in case of insolvency and an assignment by the partner, or of the partnership, his available cash could be subject to appropriation by the bank in this short-hand mode to his partnership liability, notwithstanding his or the firm’s election in the deed of assignment to prefer another or to share the assets pro rata. And this also would deprive the individual partner having a sum to his credit, using it as his personal property exemption as against the indebtedness of the partnership to the bank. It is true in the present case the plaintiff being liable to the bank for the overdraft of the firm, the bank could sue him therefor, and hence, of course, could have pleaded it as a counter-claim instead of bringing an independent action. But the bank did not plead a counter-claim. It claimed the right to charge up against the individual account of the plaintiff the overdraft of the firm, and hence pleaded the general issue that it was not indebted. This it cannot do. The difference between a counter-claim and a payment is not merely technical, but substantial. Some of the differences are pointed out above. There are others, among them the cases in which the statute of limitations might be pleaded to the counter-claim. In the present case, it is still open to the bank, as it did not plead the counter-claim, to bring an action against the plaintiff for the balance due by the firm. It is not yet barred by the statute of limitations, and if the plaintiff has property in excess of his exemptions, the bank has lost nothing except the bill of cost in this case. While not concurring altogether in the reasons of hisHonor,. we reach the came conclusion, and declare the Judgment Affirmed.