Textile Corp. v. . Hood, Comr. of Banks

ClaeksoN, J. The judgment of the court below, that “plaintiff have and recover of the defendants, as a preferred claim against the assets of the North Carolina Bank and Trust Company, the sum of $173.93,” must be sustained. Under chapter 103, Public Laws of 1933, the North Carolina Bank and Trust Company limited withdrawals by any depositor, to five per cent of deposits at the close of business on 2 March, 1933. The plaintiff was solvent and its checking account at that time was $8,447.72 — five per cent of which was withdrawn in accordance with the restriction. On this appeal, the only items now in controversy are the following: $42.50 check drawn on First National Bank of Arcadia, La.; $225.00 check drawn on First National Bank of Appleton, Wis.; $87.27 check drawn on Anglo-American National Bank of San 'Francisco, and $44.55 check drawn on Central Bank and Trust Company of Peoria, Ill., totaling $399.32, less five per cent on items of deposit as set forth below in the judgment, leaving $173.93. These items were collected by the bank after it had ceased to operate, except upon a restricted basis and after the plaintiff had withdrawn five per cent of its prerestricted book balance, but before the Commissioner of Banks took possession of the bank for the purpose of liquidation. The judgment of the court below, in part, is as follows: “That the plaintiff is entitled to a preferred claim against the assets of the North Carolina Bank and Trust Company in the amount of $173.93, representing the aggregate amount of the items collected by the North Carolina Bank and Trust Company on or after 3 March, 1933, to wit, *788 $399.32, less the five per cent thereof ($19.96) which plaintiff has already received, and also less the five per cent of $3,079.42 ($153.97), which the plaintiff received on. items deposited prior to 3 March, 1933, which were returned unpaid, and that the plaintiff is not estopped to claim said preference because of its withdrawal of five per cent of its 2 March, 1933, book balance, as set out in the agreed statement of facts.” The full amount to the credit of the plaintiff’s account, $8,447.72, in the bank at the close of business on 2 March, 1933, had not been collected. In addition to the checks listed on the statement hereto attached as Exhibit “B,” said $8,447.72 included checks and drafts totaling $3,079.42, which were deposited, but which, subsequent to 3 March, 1933, were returned unpaid to the bank, and then returned by the bank to the plaintiff, and the amounts of which were charged against the plaintiff’s restricted account. The plaintiff has tendered to the defendants five per cent of the uncollected items, totaling $3,079.42, and five per cent of the items, collected on or after 3 March, 1933. "When the checks and drafts were deposited by plaintiff, the following was in the contract, made with the North Carolina Bank and Trust Company, in part: “In receiving items for deposit or collection, this bank acts only as depositor’s collecting agent, and assumes no responsibility beyond the exercise of due care. All items are credited subject to final payment in cash or solvent credits. ... It may charge back any item at any time before final payment, whether returned or not, also any item drawn on this bank not good at close of business on day deposited.” The first question involved: Did the checks deposited in the bank under the facts as agreed upon, become the property of the bank, or, pending collection, were they held by the bank as agent for the plaintiff ? ¥e think they were held by the bank as agent for the plaintiff. We think under all the facts and circumstances of this case, that the bank by express contract was an agent for collection, the contract in clear language so states. In Worth Co. v. Feed Co., 172 N. C., 335 (342), citing numerous authorities, this Court said: “The rule prevails with us, and it is supported by the weight of authority elsewhere, that if a bank discounts a paper and places the amount, less the discount, to the credit of the indorser, with the right to check on it, and reserves the right to charge back the amount if the qiaper is not paid, by express agreement or one implied from the course of dealing, and not by reason of liability on the indorsement, the bank is an agent for collection and not a purchaser.” Temple v. La Berge, 184 N. C., 252; Sterling Mills v. Milling Co., 184 N. C., 461; Bank v. Rochamora, 193 N. C., 1; Denton v. Milling Co., 205 N. C., 77; 42 A. L. R., p. 494. *789 Tbe North Carolina Bank and Trust Company, after its restriction at tbe close of business on 2 March, 1933, collected tbe checks in controversy. If these checks had been deposited after the restriction, the proceeds would have been plaintiffs’. The order provided “that the bank might thereafter receive any deposits and that the new deposits received by it on or after 3 March, 1933, should not under any circumstances, be subject to any limitations as to payment or withdrawal.” The bank after the restriction, collected the checks for plaintiff and on its check or demand, the agent bank was bound to' pay the plaintiff. The bank had not purchased them, but took them to collect them like any other agent, and on demand the agent bank was bound to pay the plaintiff. The defendants have refused to pay the proceeds of these cheeks which belonged to plaintiff. The court below properly held that they were preferred claims against the assets of the bank. The second question involved: Is a depositor in a bank in process of liquidation who withdrew from the bank five per cent of its book balance at a time when it knew that the bank had limited withdrawals to five per cent of its depositors’ actual collected balances, and also knew that several of the items included within its book balance had not been collected, estopped as against the other creditors of the bank from thereafter claiming that certain of the items were not actually collected until a later date? We think not, under the facts and circumstances of this case. The plaintiff was carrying a checking account with the North Carolina Bank and Trust Company for their mutual benefit. No interest was paid plaintiff on its daily balances. The bank required plaintiff’s endorsement and allowed it to check on the deposits, but it was not the custom of the bank to notify plaintiff when the checks so handled were actually collected, but in the event that such checks were not paid, the bank would return them to the plaintiff and charge the amount against the plaintiff’s account and notify the plaintiff accordingly. The plaintiff was solvent and this was known to the bank. The whole matter was in fieri. It would be indeed hard measure to say plaintiff was estopped and be held to any strict accountability when he, under the circumstances here narrated, the bank going on a restricted basis, in these hard times, could only withdraw five per cent on $100.00 and this done by a legislative act and without his consent. The plaintiff tendered back the five per cent to defendants. In 10 R. C. L., “Estoppel,” at page 697-8, section 25, is the following: “The final element of an equitable estoppel is that the person claiming it must have been misled into such action that he will suffer injury if the estoppel is not declared. That is, the person setting up the estoppel must have been induced to alter his position, in such a way that he *790 will be injured if the other person is not held to the representation or attitude on which the estoppel is predicated. Furthermore, an equitable estoppel cannot arise except when justice to the rights of others demands. It was never intended to work a positive gain to a 'party. Its whole office is to protect him from a loss which, but for the estoppel, he could not escape. Consequently, the estoppel should be limited to what may be necessary to put the parties in the same relative position which they would have occupied if the predicate of the estoppel had never existed.” Trust Co. v. Wyatt, 191 N. C., 133 (136) : In Mayor v. Reaves, 193 N. C., 172 (178), speaking to the subject: “ ‘Where a person has, with knowledge of the facts, acted or conducted himself in a particular manner, or asserted a particular claim, title,- or right, he cannot afterwards assume a position inconsistent with such act, claim, or conduct to the prejudice of another.’ 16 Cyc., p. 785; Holloman v. R. R., 172 N. C., 376; Cook v. Sink, 190 N. C., at p. 626. See Freeman v. Ramsay, 189 N. C., 790; 21 C. J., p. 1202.” Thomas v. Conyers, 198 N. C., 229 (234). We do not think under the facts and circumstances of this case, plaintiff is estopped. The third question involved: Where such checks were deposited in a bank as agent for collection, • which availed itself of the privileges of chapter 103, of the 1933 Public Laws of North Carolina, between depositing of the checks for collection and the collection of the checks, and after the collection of the checks, the bank was taken over by the Commissioner of Banks for the purpose of liquidation, is the plaintiff entitled to a preferential claim against the assets of the bank? We think so. Before the transactions in controversy took place, the bank was not on a restricted basis and was not in liquidation. The restriction subsequently “tied up” these checks and did away with the contract between the plaintiff and the North Carolina Bank and Trust Company. It took them as agents for collection and when collected, plaintiff was entitled to the proceeds and under the peculiar factual situation, defendants cannot now contend that when collected, the principle of debtor and creditor would prevail. The peculiar legislation contrary to plaintiff’s agreement fixed it so that plaintiff could not get this fund collected by the North Carolina Bank and Trust Company, as its agent. The factual situation and agreement distinguishes this case from those cited by defendants. The North Carolina Bank and Trust Company collected the checks as plaintiff’s agent and the fund under the facts and circumstances of this case, was a trust fund and when the Commissioner of Banks took over the North Carolina Bank and Trust Company, it took it cum onere. For the reasons given, the judgment of the court below is Affirmed.