Williams v. . Coleman

CoNNOR, J. Plaintiff’s first assignment of error is the refusal of the court to submit to the jury certain issues tendered by him. These issues arise in the cross-action set up in his answer by defendant Coleman against his eodefendant Mitchell. They are not material to or determinative of the action of plaintiff against defendant Mitchell. Payment by Coleman, the maker, to Mitchell, the payee, of the note, the same having been transferred by Mitchell by endorsement to the bank for value and before maturity, is not a defense to the action of the plaintiff receiver against Coleman on the note. Coleman does not rely upon such payment as a defense, and in his answer does not deny liability to plaintiff. If the defense relied upon by Mitchell is not sustained, plaintiff is entitled to judgment on'the note against Coleman, as maker and against Mitchell as endorser. The issues submitted were determinative of this defense. There was no error in refusing to submit the issues tendered by plaintiff. Plaintiff assigns as error the instruction by the court to the jury as follows: “The court charges you as a matter of law, that if Mitchell did have the agreement with the bank, as alleged, he would be entitled to require the bank to take payment for the $260 note out of the deposit of *371 $400, which was left there for that purpose, if you find by the greater weight of the evidence that there was such an agreement.” At the date of plaintiff’s appointment as receiver, defendant, Mitchell, by reason of his deposit, was a creditor of the bank; by reason of his liabilty to the bank, as endorser, and under the agreement with the bank, as found by the jury, he was also a debtor. Prior to the maturity of the note, Coleman was primarily liable, and Mitchell liable only as endorser, C. S., 3047. Demand, notice of protest and nonpayment were waived by the endorser. At its maturity, the bank was authorized to charge the note to Mitchell’s account as depositor, because of his liability as an endorser, with qualifications, as well as under the special agreement. Under the agreement, he had sufficient funds in the bank for the payment of the note, in full, deposited and kept there for that purpose. He had no right, prior to the maturity of the note, to withdraw said funds. Coleman having failed to pay the note, at maturity, Mitchell’s deposit was immediately available for that purpose. As between Mitchell and the hank the note was paid at date of the bank’s insolvency. The right to a set-off against the receiver of a bank is to be governed by the state of things existing at the moment of insolvency and not by conditions thereafter created. 7 C. J., 746. When a receiver comes to-make a settlement with a creditor of the bank he should deduct from his credit all sums for which he is a debtor, and when he settles with a debtor he should allow him credit for sums for which he is a creditor of the bank. This Court has held this rule to be in accordance with equity and justice. Davis v. Mfg. Co., 114 N. C., 321; 23 L. R. A., 322; Graham v. Warehouse Co., 189 N. C., 533. “Where a depositor in an insolvent National bank had endorsed a note on which he was in fact primarily liable, and procured the bank to discount it for his benefit, he was entitled in a suit by the bank’s receiver to recover the amount of the note, to set off his deposit in the bank against his liability on the note.” Williams v. Rose, 218 Fed., 898; Yardley v. Cothic, 51 Fed., 506, 17 L. R. A., 462; Scott v. Armstrong, 146 U. S., 499, 36 L. Ed., 1059; Yardley v. Philler, 167 U. S., 346, 42 L. Ed., 192. Funds for the payment of the note having been deposited with the bank, by defendant Mitchell, immediately available for that purpose at its maturity, prior to the insolvency of 'the bank, plaintiff is not entitled to recover on the note as against defendant Coleman. There was no error in the instruction of the court. Mitchell, payee of the note, having paid the bank, was entitled to the return of the note and to collect the same from Coleman, the maker. The judgment is affirmed. We find No error.