American National Bank v. Hill

Bkown, J. This is an action to recover upon a promissory note executed by the defendant to the Southern Savings Bank of Wadesboro, N. C., and duly indorsed to the plaintiff before maturity. The execution of the note and its nonpayment are admitted. The findings of the jury under the charge of the court, to which no exception is taken, establish the fact that the plaintiff is the owner and holder in due course of the said note. Striking out the answer, or other pleading, or a part of it, is an unusual practice in this State, but is recognized as proper practice elsewhere. “It is often necessary,” says 5 Ene. P. and P., 341, “for the court, in the administration of justice, to strike out a count,” citing Sherratt v. Webster, 9 Jur. U. S., 629; Chapman v. King, 4 D. and L., 311, and other cases. The evident purpose of the part of the answer stricken out is to set up a counterclaim or set-off against the note sued on in plaintiff’s hands. *237 We will, therefore, treat the motion to strike out the “further answer” as a demurrer ore terms to it, upon the ground that it fails to state a valid counterclaim. It is admitted that the plaintiff bank holds the note of the defendant as collateral security for the note of the Southern Savings Bank. The jury find that the plaintiff was the holder in due course of the note sued on; that is to say, that plaintiff received it by indorsement before maturity for value and without knowledge of any infirmity. The note is a negotiable instrument on its face, and the fact that it was indorsed to the plaintiff as collateral security for the debt of the indorser, the Southern Savings Bank, does not invalidate the position of the plaintiff that it is a holder in due course. The plaintiff has the legal right to collect the collateral which it has-tiáis received in due course in its own name, and can maintain an action thereon against the maker. Bank v. Oil Co., 157 N. C., 302. It is true that where, in an action on a note, the plaintiff proves only an equitable title thereto, the defendant, maker of the note, cannot properly be cut off from matters of defense existing between the defendant, maker and indorsee or payee. Tyson v. Joyner, 139 N. C., 70. In this case the defendant fails to allege that the debt due to the plaintiff by the Southern Savings Bank has been paid and discharged by the collection of the collateral or in any other way. There is no allegation in the answer that the payment of the note in this case will overpay the indebtedness due by the said Savings Bank to the plaintiff, and that, therefore, the defendant would have a right to set up the alleged counterclaim. If the defendant had alleged in his answer that the plaintiff held a large amount of collateral as security for the note executed to it by the Savings Bank,'and that the plaintiff’s note had been fully paid by collections from his collateral or otherwise, then a very different case would have been presented for the consideration of the Court. As it is, nothing of that sort appears in the answer. A further and conclusive reason supporting the ruling of the court below is that the answer does not allege any set-off or counterclaim. It simply alleges that the note sued on was given to the Savings Bank as a renewal for one previously given to the Dixie Development Company and indorsed to the Savings Bank and originally given for the purchase money of land; that the Dixie Company cannot make good title to said land for the reason that there was a mortgage on the same in favor of one Little, and another mortgage on the same in favor of the said Savings Bank. When the defendant executed the note sued on to the Savings Bank it was made payable to the Savings Bank, and, evidently, the note to the *238 Dixie Company, executed by tbe defendant, was discharged and canceled. Tbe renewal note to tbe Savings Bank was a contract between tbe defendant and tbe Savings Bank, and if tbe defendant bad any equity, set-off, or counterclaim against tbe Dixie Company, it was bis duty to make it known to tbe Savings Bank at tbe time wben tbe Savings Bank discharged tbe note indorsed to it by tbe Dixie Company and took tbe defendant’s note payable directly to itself instead. Again, tbe allegations of tbe answer attempting to set up a counterclaim or set-off are too vague, indefinite, and uncertain upon which to raise an issue. It is well settled that tbe averments as to set-off or counterclaim must be definite and certain. Yague, general, and indefinite allegations are not sufficient. Tbe counterclaim is substantially tbe allegation of a cause of action on tbe part of a defendant against tbe plaintiff, and it ought to be set forth with tbe same precision and certainty. Smith v. McGregor, 96 N. C., 101. See, also, a case similar to this and from tbe same county, at this term, tbe American National Bank v. Northcutt, ante, 225. If it be a fact, which is not alleged in tbe answer, that after tbe collection of all tbe collateral in its bands, tbe plaintiff should have in its possession funds in excess of tbe amount due by tbe Savings Bank to it, tbe proper course is for the receivers of tbe Savings Bank to institute action against tbe plaintiff, if it fails to make a proper accounting and pay over tbe funds in its bands in excess of tbe amount due it. Tbe judgment of tbe Superior Court is Affirmed.