Page Trust Co. v. Wachovia Bank & Trust Co.

Connor, J. The Sanders note was not paid, at maturity, by the • maker or endorsers. The holder of the note, the Wachovia Bank and Trust Company, with which the First National Bank of Hamlet, N. C., had a deposit account, charged the note to the said account on 9 May, 1923. The deposit account was thus reduced by the amount so charged, to wit, $2,502.90. This charge was made upon the contention by the Wachovia Bank and Trust Company that at the time the note was discounted by its assignor, the Merchants National Bank, its prompt payment, at maturity, was guaranteed by the First National Bank, of Hamlet, N. 0., at whose request and for whose credit the note was discounted. If the First National Bank of Hamlet, N. C., was liable as guarantor of the note to the Merchants National Bank, the Wachovia Bank and Trust Company, as assignee of the note, had the right to make the charge and to deduct the amount due on the note from the’ amount on deposit with it to the credit of the First National Bank of Hamlet, N. C. Upon default of the maker or endorser to pay the note promptly at maturity, the guarantor became liable to the holder, and the relation of debtor and creditor was at once established between the guarantor and the holder of the note. “A bank has the right to apply the debt due by it for deposits to any indebtedness by the depositor, in the same right, to the bank, provided such indebtedness to the bank has, matured.” Hodgin v. Bank, 124 N. C., 540; Moore v. Trust Co., 178 N. C., 118. The letter dated 10 March, 1923, addressed to the cashier of the Merchants National Bank, at Raleigh, N. C., and signed by the cashier of the First National Bank, of Hamlet, N. C., is sufficient in form, as a guaranty of the prompt payment of the note enclosed with the letter and discounted in accordance with the request contained therein. Ashford v. Robinson, 30 N. C., 114; Birdsall v. Heacock, 30 Ohio St., 177; 30 Am. Rep., 572. The guaranty of the payment of the note, at maturity, made to the Merchants National Bank, upon the transfer and assignment of the note to the Wachovia Bank and Trust Company, passed to the transferee or assignee, as security for the note, and therefore the Wachovia Bank and Trust Company had all the rights arising out of said guaranty *771 that the Merchants National Bank had. 12 R. C. L. 1056 n 15; Craig v. Parkis, 40 N. Y., 181; 100 Am. Dec., 469; Tideoute Savings Bank v. Libbey, 101 Wis., 193, 70 A. S. R., 907. “A guaranty is assignable with the obligation secured thereby, and goes with the principal obligation. It is enforceable by the same person who can enforce the principal obligation.”- The First National Bank of Hamlet was a depositor and therefore a creditor of the Wachovia Bank and Trust Company on 9 May, 1923. Was it also a debtor by reason of the guaranty contained in the letter of 10 March, 1923, of the payment of the Sanders note, the maker and endorsers of the said note having failed to pay the same, promptly? This question must be answered in the affirmative, if the cashier of the First National Bank of Hamlet, N. C., had authority to make the contract of guaranty and bind the bank thereby. The letter was signed by Noah H. Jenrette, as cashier; it contained the request that the note enclosed be discounted and that the proceeds be placed to the credit of the bank; the proceeds were placed to the credit of the bank, and the bank so notified. The transaction was similar to other transactions between the said banks, extending over a period of three years or more. There is no evidence that the cashier had any personal interest in the note or in the proceeds of the note. There is affirmative evidence that the note was the personal obligation of the maker, and that he received credit for the note at the First National Bank of Hamlet, N. C. He was a customer of said bank. The First National Bank of Hamlet, N. C., was the sole beneficiary of the transaction with the Merchants National Bank at Raleigh. It is immaterial, so far as the Merchants National Bank is concerned, whether the Sanders note was the property of the First National Bank or whether it was sold by the bank as an accommodation for its customer. If the note was first discounted by the First National Bank of Hamlet, N. C., for the maker, and its proceeds placed to his credit, the note thus becoming the property of the bank, the cashier had authority to redis-count the note to the Merchants National Bank at Raleigh, N. C., in the usual course of business, and to guarantee the payment of the note by the bank, upon default in payment, at maturity, by the maker or endorsers-. If the note was sold by the bank, for its customer, to the Merchants National Bank, and thus was never the property of the bank, the proceeds of the sale being placed to the. credit of the bank, the cashier had authority to guarantee the payment of the note by the bank, whose officer he was and for whom he was acting, upon default in payment, at maturity, by the maker or endorsers; 3 R. C. L., 453; Sturges v. *772 Bank, 78 Am. Dec., 296; Hutchins v. Bank, 128 N. C., 72; Bank v. Oil Co., 157 N. C., 302; Sherrill v. Trust Co., 176 N. C., 591. There is no evidence that the cashier of the First National Bank was acting in his own interest in this transaction. On the contrary all the evidence shows that it was a bona fide transaction, in the usual course of business, of which the bank, for whom the cashier was acting, was the beneficiary. Bank v. Grady, 184 N. C., 158, is not applicable to the facts in this case. The transaction had been closed on 9 May, 1923, and the First National Bank of Hamlet'had not controverted the right of the Wachovia Bank and Trust Company as assignee of the Merchants National Bank to charge the Sanders note to its account on said date. The plaintiff herein, did not take over the business of the First National Bank of Hamlet, N. C., until July, 1923. At that time the Sanders note was in possession of the First National Bank of Hamlet, N. C., and the deposit account with the Wachovia Bank and Trust Company did not include the sum of $2,502.90. The Wachovia Bank and Trust Company cannot be held liable to plaintiff because of errors, if any, in the books of the First National Bank of Hamlet, N. C. Plaintiff’s exception to the instruction of his Honor to the jury is not sustained. There is No error.