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c o p y X-4312 A p r i l 1, 1925. F e d e r a l Heservo Board, Washington, B.C. A t t e n t i o n of Mr. W a l t e r Wyatt, General C o u n s e l . Dear S i r s ; I hand y o u h e r e w i t h a copy of t h e o p i n i o n o f t h e Supreme Court of Uorth C a r o l i n a i n t h e c a s e o f F e d e r a l Land Batik: o f Columbia v . J . B . Barrow, e t a l s . A copy of t h i s o p i n i o n was f u r n i s h e d ne by Mr. Ruark o f t h e f t * m of Ruark a n d Campbell. The F e d e r a l R e s e r v e Bank of Richmond was n o t a p a r t y t o t h i s s u i t , but y o u w i l l n o t i c e t h a t t h e q u e s t i o n p r e s e n t e d i n v o l v e d t h e f a i l u r e of the F e d e r a l R e s e r v e Bank o f Richmond t o c o l l e c t a c a s h i e r ' s check on t h e Bank o f V a n c e b o r o . The c a s e i s o f p e c u l i a r i n t e r e s t t o me, b e c a u s e i n t h e o p i n i o n t h e Court r e c o g n i z e s t h a t s i n c e a F e d e r a l R e s e r v e Bank c a n n o t demand payment i n c a s h from a N o r t h C a r o l i n a S t a t e Bank, t h e r u l i n g o f t h e Supreme Court of t h e U n i t e d S t a t e s i n t h e M a l l o y c a s e c a n n o t a p p l y i n so f a r a s that,, c o u r t h e l d t h a t t h e F e d e r a l R e s e r v e Bank was n e g l i g e n t i n s u r r e n d e r i n g a c h e c k b e f o r e r e c e i v i n g payment i n c a s h . As y o u know, I have two c a s e s p e n d i n g i n w h i c h t h e h o l d e r s of c h e c k s drawn on t h e Bank o f Vaticeboro s e e k t o r e c o v e r a g a i n s t t h e F e d e r a l R e s e r v e Bank o f Richmond u n d e r t h e d o c t r i n e o f t h e M a l l o y c a s e , and t h i s d e c i s i o n w i l l n a t u r a l l y be o f g r e a t a s s i s t a n c e t o me i n t h e s e c a s e s , a l t h o u g h i t i s n o t of g r e a t i m p o r t a n c e i n c a s e s a r i s i n g o u t s i d e o f t h e S t a t e o f North C a r o l i n a . Yours v e r y t r u l y , M. Gr. W a l l a c e , Counsel. MGU:IB• (SUPB31S COURT OS1 NORTH CAROLINA) X "431S250 THE FEDERAL LA2TD 3AIJK OF COLUMBIA v. J . B. BARROW and M. J . BAZROW, HI^ WIFE, ET ALS. (File1. 18 March, 1 9 2 5 ) B i l l s and l l o t e s - Banks and Banking - Payment - C a s h i e r ' s Check C o l l e c t i o n - n e g l i g e n c e - Burden o f P r o o f . Where t h e d e f e n s e t o a n a c t i o n "by a bank upon an u n p a i d c h e c k g i v e n f o r a p a r t i a l payment upon one o f a s e r i e s o f mortgage n o t e s i s the n e g l i g e n c e o f the p l a i n t i f f bank i n not h a v i n g u s e d a c o u r s e o f c o l l e c t i o n w h e r e i n t h e check would have b e e n p r o m p t l y p r e s e n t e d to t h e drawee bank and paid* t h e burden i s on t h e d e f e n d a n t r e l y i n g t h e r e o n . 2. .Same-Evidence - U o n s u i t - Q u e s t i o n s f o r J u r y . In an a c t i o n by p l a i n t i f f l a n d bank t o r e c o v e r upon c e r t a i n n o t e s g i v e n by a b o r r o w e r , s e c u r e d by m o r t g a g e on t h e a m o r t i z a t i o n p l a n f o r d e f a u l t i n p a y ment o f one o f i t s n o t e s i n t h e s e r i e s w h e r e i n , u n d e r t h e terms of t h e t r a n s a c t i o n , a l l of t h e n o t e s become due and p a y a b l e , t h e r e was e v i d e n c e t e n d i n g t o show t h a t under i n s t r u c t i o n s of t h e p l a i n t i f f t h e d e f e n d a n t s o b t a i n e d a c a s h i e r ' s c h e c k f o r t h e f u l l amount o f t h e payment of t h e n o t e t h e n due, which the p l a i n t i f f was t o a c c e p t a s payment, and, owing t o t h e p l a i n t i f f ' s n e g l i g e n c e , t h e c h e c k r e a c h e d t h e bank of i t s i s s u a n c e a f t e r i t had s u s p e n d e d payment: H e l d , two i s s u e s o f f a c t were r a i s e d f o r t h e j u r y - o n e , w h e t h e r t h e p l a i n t i f f h a d a g r e e d t o a c c e p t t h e c a s h i e r ' s c h e c k i n a b s o l u t e payment; and t h e o t h e r , w h e t h e r t h e p l a i n t i f f h a d n e g l i g e n t l y s e l e c t e d f o r the g a s h i e r ' s check a delayed course o f c o l l e c t i o n that p r e v e n t e d the check r e a c h i n g the bank o f i t s i s s u a n c e b e f o r e payment h a d b e e n t h e r e s u s p e n d e d ; and a m o t i o n a s o f n o n s u i t was p r o p e r l y d e n i e d . 3. Courts - D i s c r e t i o n - Motion t o S e t A s i d e V e r d i c t - Appeal and E r r o r . A m o t i o n t o s e t t h e v e r d i c t a s i d e a s b e i n g a g a i n s t t h e w e i g h t or c r e d i b i l i t y o f t h e e v i d e n c e i s t o t h e sound d i s c r e t i o n o f t h e t r i a l j u d g e ; and i n t h e a b s e n c e o f an a b u s e o f t h i s d i s c r e t i o n , i s n o t r e v i e w a b l e on a p p e a l . Appeal by p l a i n t i f f from M i d y e t t e , J . , a t September Term, 1 9 2 4 , of Craven. On t h e 9 O c t o b e r , 1 9 1 9 , p l a i n t i f f l o a n e d t o d e f e n d a n t s , J . B . Barrow and w i f e , t h e sum o f $ 5 , 4 0 0 , and d e f e n d a n t s on same day e x e c u t e d and d e l i v e r e d t o p l a i n t i f f , t h e i r n o t e by which t h e y p r o m i s e d t o p a y t o p l a i n t i f f t h e p r i n c i p a l sum of $ 5 , 4 0 0 , w i t h i n t e r e s t a t &g- p e r c e n t , i n 34 annual i n s t a l l m e n t s , e a c h i n t h e sum of $351 due on 1 December, o f e a c h s u c c e e d i n g yes-r, t h e r e b y p r o v i d i n g f o r t h e payment o f p r i n c i p a l sum and i n t e r e s t on t h e a m o r t i z a t i o n p l a n . In order t o s e c u r e payment o f s a i d n o t e , by i n s t a l l m e n t s a s p r o v i d e d t h e r e i n , d e f e n d a n t s on s a i d day, by m o r t g a g e , d u l y e x e c u t e d and r e c o r d e d , c o n v e y e d t o p l a i n t i f f a t r a c t o f l a n d , s i t u a t e i n Craven County, N . C . , f u l l y d e s c r i b e d t h e r e i n . I t i s p r o v i d e d i n b o t h n o t e and mortgage t h a t u p o n d e f a u l t i n t h e payment o f any one of t h e a n n u a l i n s t a l l m e n t s , , by w h i c h s a i d n o t e was p a y a b l e , t h e w h o l e p r i n c i p a l sum p i t h a c c r u e d i n t e r e s t , s h a l l become due and p a y a b l e a t o n c e . P l a i n t i f f a l l e g e s t h a t t h e i n s t a l l m e n t due on 1 Decanber, 1 9 2 3 , was n o t p a i d , and t h a t b e c a u s e of such d e f a u l t , t h e w h o l e p r i n c i p a l , w i t h a c c r u e d i n —2 — X -431lS51 t o r e s t became due and p a y a b l e , a t dates o f such d e f a u l t ; t h a t p l a i n t i f f i s t h e owner and h o l d e r of s a i d n o t e and t h e r e i s iloto due on tin: iame t h e sum of $ 5 , 1 6 5 . 1 0 , w i t h i n t e r e s t a t 5^ p e r c e n t from 1 December, 1 9 2 2 . P l a i n t i f f demands judgment t h a t i t r e c o v e r of d e f e n d a n t s , J . B. Barrow and w i f e t h e sum of $ 5 , 1 6 5 . 1 0 w i t h i n t e r e s t from 1 December, 1 9 2 2 , and p r a y s t h a t t h e c o u r t a p p o i n t a c o m m i s s i o n e r t o s e l l t h e l a n d c o n v e y e d i n t h e m o r t g a g e and t h a t out of t h e p r o c e e d s o f s a i d sale', t h e i n d e b t e d n e s s due by s a i d d e f e n d a n t s t o p l a i n t i f f be p a i d . D e f e n d a n t s deny t h a t t h e r e was d e f a u l t by them i n t h e payment o f s a i d i n s t a l l m e n t , and t h a t t h e n o t e , s e c u r e d by s a i d mortgage i s now due; t h e y a l l e g e that s a i d i n s t a l l m e n t has been p a i d . Defendants a l l e g e that p r i o r to 1 December, 1 8 2 3 , t h e y were i n s t r u c t e d by p l a i n t i f f t o p u r c h a s e a c a s h i e r ' s c h e c k or money o r d e r f o r t h e amount due on s a i d i n s t a l l m e n t and t o r e m i t same i n payment o f s a i d i n s t a l l m e n t ; t h a t c o m p l y i n g w i t h s a i d i n s t r u c t i o n s , d e f e n d a n t s , on 30 November, 1923, p u r c h a s e d o f t h e Bank of Vanceboro, a t Yanceboro, N . C . , i t s c a s h i e r ' s c h e c k f o r $ 3 5 1 , p a y a b l e t o t h e F e d e r a l Land Bank of Columbia, a n d f o r w a r d e d same a t once by r e g i s t e r e d l e t t e r t o p l a i n t i f f i n payment of i n s t a l l m e n t due on 1 December, 1 9 2 3 ; t h a t p l a i n t i f f r e c e i v e d s a i d c a s h i e r ' s c h e c k i n payment o f s a i d i n s t a l l m e n t and t h e r e a f t e r s e n t t o d e f e n d a n t s , t h r o u g h t h e m a i l , a r e c e i p t a c k n o w l e d g i n g payment of amount due on s a i d i n s t a l l m e n t . Defendants f u r t h e r a l l e g e that p l a i n t i f f n e g l i g e n t l y f a i l e d to send s a i d c a s h i e r ' s check p r o m p t l y to "Dank o f Vanceboro, f o r payment; t h a t i f p l a i n t i f f h a d p r o m p t l y s e n t s a i d c a s h i e r ' s check w h i c h was i n i t s hands on 3 December, 1923, t o Bank of Vanceboro i t would have b e e n p a i d . Defendants f u r t h e r a l l e g e that p l a i n t i f f n e g l i g e n t l y sent s a i d c a s h i e r ' s c h e c k t o t h e Murchison I"£ t l o n a l Bank of Wilmington, N . C . , on 4 December, 1923; t h a t s a i d Murchison N a t i o n a l Bank on 6 December, 1 9 2 3 , f o r w a r d e d s a i d c h e c k t o t h e F e d e r a l R e s e r v e Bank a t Richmond, V a . , and t h a t s a i d F e d e r a l R e s e r v e Bank on 7 December, 1923, s e n t s a i d c h e c k t o Bank of Vanceboro, a t Vanceboro, N . C . , a t which bank i t was r e c e i v e d by m a i l , on S a t u r d a y , 8 December, 1 9 2 3 , t h a t on Monday, 10 December, 1 9 2 3 , Bank o f Vanceboro s e n t i t s d r a f t on t h e n a t i o n a l Bank of Hew Bern, N . C . , t o t h e F e d e r a l R e s e r v e Bank a t Richmond, V a . , i n payment o f s a i d c a s h i e r ' s c h e c k w h i c h was t h e r e u p o n marked "Paid" by t h e s a i d Bank o f Vanceboro, T h i s d r a f t was f o r w a r d e d by F e d e r a l R e s e r v e Bank t o t h e drawee o f s a i d c h e c k . H a t i o n a l Bank o f Hew Bern, w h i c h r e f u s e d payment of same. A r e c e i v e r f o r Bank of Vanceboro was a p p o i n t e d on 1 3 December, 1 9 2 3 . Defendants a l l e g e that i f p l a i n t i f f h a d s e n t t h e c a s h i e r ' s c h e c k d i r e c t t o F e d e r a l R e s e r v e Bank a t Richmond, i n s t e a d o f t h e Murchison n a t i o n a l Bank a t Wilmington, i t would h a v e b e e n p r e s e n t e d t o Bank of Vanceboro i n t i m e f o r t h e d r a f t on t h e N a t i o n a l Bank of New Bern t o F e d e r a l R e s e r v e Bank a t Richmond i n payment of some, t o h a v e r e a c h e d N a t i o n a l Bank of New Bern on 9 December, 1 9 2 3 , when i t would have b e e n p a i d o u t o f t h e d e p o s i t s o f t h e Bank o f Vanceboro w i t h s a i d N a t i o n a l Bank of New B e r n . P l a i n t i f f i n i t s r e p l y , d e n i e d t h e a l l e g a t i o n s c o n t a i n e d i n t h e answer, i n d e f e n s e of p l a i n t i f f ' s c a u s e of a c t i o n . The i s s u e s s u b m i t t e d t o t h e j u r y , w i t h t h e a n s w e r s t h e r e t o , were a s follows: 1 . Was p l a i n t i f f ' s f a i l u r e t o g e t t h e $351 i n s t a l l m e n t p a y a b l e t o i t by d e f e n d a n t , Barrow, 1 December, 1923, due t o i t s own n e g l i g e n c e ? Answer: y e s . 2 . Did t h e p l a i n t i f f bank i n s t r u c t t h e d e f e n d a n t , Barrow, t o s e n d them a c a s h i e r ' s c h e c k o r money o r d e r i n payment of t h e i n d e b t e d n e s s ? Answer: y e s . From judgment i n a c c o r d a n c e w i t h t h e v e r d i c t o f t h e j u r y i n f a v o r o f d e f e n d a n t s , p l a i n t i f f a p p e a l e d , a s s i g n i n g e r r o r s b a s e d upon e x c e p t i o n s f i r s t , t o t h e r e f u s a l o f t h e c o u r t t o a l l o w p l a i n t i f f ' s m o t i o n f o r judgment a t the c l o s e o f a l l t h e e v i d e n c e ; s e c o n d , t o t h e c o u r t ' s r e f u s a l t o c h a r g e t h e j u r y a s r e q u e s t e d by t h e p l a i n t i f f ; t h i r d , t o t h e s u b m i s s i o n o f t h e s e c o n d i s s u e ; s.&cL f o u r t h , t o tho r e f u s a l of t h e c o u r t t o s e t a s i d e t h e v e r d i c t and g r a n t a new t r i a l . R. A. Hunn f o r p l a i n t i f f D. L. Ward f o r d e f e n d a n t s . Connor, J . D e f e n d a n t s admit i n t h e i r answer t h e e x e c u t i o n o f t h e n o t e a s a l l e g e d i n t h e c o m p l a i n t . As a d e f e n s e t o p l a i n t i f f ' s c a u s e o f a c t i o n , upon t h i s n o t e , d e f e n d a n t s p l o a d p a y p e n t o f t h e i n s t a l l m e n t due on They t h e r e b y assumed t h e burden upon t h e i s s u e s r a i s e d 1 December, 1 9 2 3 . by t h e p l e a d i n g s and s u b m i t t e d t o t h e j u r y . E l l i s o n v . R i x , 85 H. C. 8 0 . At t h e c o n c l u s i o n o f t h e e v i d e n c e o f f e r e d by d e f e n d a n t s , p l a i n t i f f s moved f o r judgment upon t h e a d m i s s i o n s i n t h e p l e a d i n g s , c o n t e n d i n g t h a t t h e e v i d e n c e o f f e r e d by d e f e n d a n t s was n o t s u f f i c i e n t t o s u s t a i n a f f i r m a t i v e a n s w e r s t o t h e issues. The m o t i o n was d e n i e d , a n d p l a i n t i f f e x c e p t e d . P l a i n t i f f t h e n o f f e r e d e v i d e n c e , and a t t h e c o n c l u s i o n of a l l t h e e v i d e n c e renewed i t s m o t i o n f o r judgment. The m o t i o n was a g a i n d e n i e d by t h e c o u r t , and p l a i n t i f f e x c e p t e d . Assignments of e r r o r , based upon t h e s e e x c e p t i o n s , are d i s c u s s e d t o g e t h e r i n the brief f i l e d for p l a i n t i f f . These a s s i g n m e n t s o f e r r o r p r e s e n t f o r r e v i e w by t h i s c o u r t h i s H o n o r ' s h o l d i n g t h a t t h e r e was s u f f i c i e n t e v i d e n c e t o be s u b m i t t e d t o t h e j u r y upon t h e i s s u e s . . I t i s a d m i t t e d t h a t on 3 December, 1 9 2 3 , p l a i n t i f f r e c e i v e d , a t Columbia, S . C . , t h r o u g h t h e m a i l , a l e t t e r from d e f e n d a n t , J . S . Barrow, e n c l o s i n g a c a s h i e r ' s c h e c k , d a t e d 30 November, 1 9 2 3 , f o r $ 3 5 1 , i s s u e d by t h e c a s h i e r o f t h e Bank o f Vanceboro, N . C . , and p a y a b l e to t h e o r d e r of F e d e r a l Land Bank o f Columbia; t h a t s a i d c a s h i e r ' s c h e c k was s e n t by d e f e n d a n t s t o p l a i n t i f f i n payment o f i n s t a l l m e n t due on s a i d n o t e 1 December, 1 9 2 3 , and was a c c e p t e d by p l a i n t i f f ; t h a t t h e l e t t e r from d e f e n d a n t , w i t h w h i c h t h e c a s h i e r ' s c h e c k was e n c l o s e d , was r e t u r n e d t o d e f e n d a n t , stamped w i t h t h e words, "Federal Land Bank, P a i d , December 3 , 1 9 2 3 , Columbia, S . C . " ; t h a t t h e l e t t e r , e n c l o s i n g r e m i t t a n c e , s t a q p e d , showing t h e d a t e o f i t s r e c e i p t by p l a i n t i f f , and payment by t h e r e m i t t a n c e , i s t h e o n l y r e c e i p t which p l a i n t i f f s e n d s t o i t s c u s t o m e r s f o r payments made on n o t e s ; t h a t t h i s l e t t e r , so stamped, was r e c e i v e d by d e f e n d a n t s a t Vanceboro, U . C . , on 4 December, 1 9 2 3 . D e f e n d a n t J . B. Barrow t e s t i f i e d t h a t h e r e c e i v e d a l e t t e r from p l a i n t i f f a f e w days p r i o r t o 30 November, 1923, i n s t r u c t i n g him t o s e n d c a s h i e r ' s c h e c k or money o r d e r i n payment of i n s t a l l m e n t t o b e due on 1 December, 1 9 2 3 , and t h a t i n c o m p l i a n c e w i t h t h i s i n s t r u c t i o n h e p u r c h a s e d and s e n t t o p l a i n t i f f , by r e g i s t e r e d l e t t e r , a c a s h i e r ' s c h e c k f o r t h e amount d u e . D e f e n d a n t s o f f e r e d i n e v i d e n c e t h e c a s h i e r ' s check o f t h e Bank o f Vanceboro, d a t e d 30 November, 1 9 2 3 , f o r $ 3 5 1 , p a y a b l e t o F e d e r a l l a n d Bank o f Columbia, marked "Paid, December 10, 1 9 2 3 . " 4 » *«* ^ ## X-4312a253 There was e v i d e n c e t h a t t h e c a s h i e r ' s c h e c k was r e c e i v e d by p l a i n t i f f a t Columbia, S . C . , on 3 December, 1S23, and p r e s e n t e d f o r p a r e n t t o Banlc of Vanceboro, IT.C., on S a t u r d a y , 8 December, 1923; t h a t c h e c k was s e n t by p l a i n t i f f t o t h e Ivlurchison N a t i o n a l Banlc n f " a l m i n g t o n , N . C . , "by m a i l , and r e c e i v e d by s a i d l i u r c h i s o n n a t i o n a l Bank on Thursday, 6 December, 1933; t h a t c h e c k was s e n t by Murchison n a t i o n a l Bank to t h e F e d e r a l E e s e r v e Banlc a t Richmond, 7 a . , and r e c e i v e d by s a i d F e d e r a l E e s e r v e Bank on F r i d a y , 7 December, 1923; t h a t c h e c k was s e n t by s a i d F e d e r a l Be s e r v e Banlc t o Bank of Vanceboro*, IT. C . , a n d r e c e i v e d by s a i d Bank o f Vanceboro on S a t u r d a y , 8 December, 1923; t h a t on Monday, 10 December, 1923, Bank o f Vanceboro s e n t i t s d r a f t , i n c l u d i n g t h e amount o f s a i d c a s h i e r ' s c h e c k , e n d i n payment o f same, on t h e n a t i o n a l Bank o f New Bern, N . C . , t o F e d e r a l R e s e r v e Bank a t ?.iehmond, V a . , and t h e r e u p o n marked s a i d c a s h i e r ' s c h e c k "Paid, December 10, 1923"; t h a t F e d e r a l B e s e r v e Bank s e n t t h e d r a f t of Bank o f Vanceboro, which i t h a d r e c e i v e d i n payment o f t h e c a s h i e r ' s c h e c k , to t h e N a t i o n a l Bank o f Ee-.? Bsrn on 11 December, 1923; t h a t payment o f t h i s d r a f t was r e f u s e d by ' N a t i o n a l Bank o f New Bern, and t h a t on 13 December, 1923, a r e c e i v e r was a p p o i n t e d f o r Bank of Vanceboro, and t h a t t h e d r a f t o f Bank o f Vanceboro, p a y a b l e t o F e d e r a l E e s e r v e Bank o f Richmond, on n a t i o n a l Bank o f new Bern, h a s n o t b e e n p a i d ; t h a t p l a i n t i f f h a s n o t r e c e i v e d payment of s a i d c a s h i e r ' s check. There was c v i i e r . c e t h a t from 3 December t o 1 3 December, 1 9 2 3 , t h e Bank of Vanceboro h a d on d e p o s i t w i t h t h e N a t i o n a l Bank o f new Bern, e a c h day, a sum of c o n e y l a r g e l y i n e x c o s s o f t h e amount o f t h e c a s h i e r ' s c h e c k ; t h a t i f c a s h i e r ' s c h e c k h a d boon p r e s e n t e d on e i t h e r of t h e s e days t o Bank of Vanceboro i t would h a v e b e e n p a i d ; and t h a t Bank of Vanceboro, up u n t i l 11 o r 12 o ' c l o c k o f the morning o f 1 3 December, 1923, p a i d a l l c h e c k s o r d r a f t s p r e s e n t e d to i t f o r payment. There was e v i d e n c e t h a t i f p l a i n t i f f had s e n t c a s h i e r ' s c h e c k d i r e c t to Bank of Vanceboro f o r payment, or had s e n t i t d i r e c t t o F e d e r a l B e s e r v e Bank a t Richmond f o r c o l l e c t i o n , or i f Murchison N a t i o n a l Bank h a d s e n t the c a s h i e r ' s c h e c k d i r e c t t o Bank o f Vanceboro f o r payment, i t w o u l d h a v e b e e n p a i d i n c a s h or by d r a f t w h i c h w o u l d h a v e b e e n p a i d , and t h a t p l a i n t i f f w o u l d " t h u s h a r a r e c e i v e d payment f o r s a i d c a s h i e r ' s c h e c k . There was e v i d e n c e t o t h e c o n t r a r y , o f f e r e d by p l a i n t i f f , b u t upon t h i s assignment of e r r o r , o n l y evidence s u s t a i n i n g the a f f i m a t i v c of the i s s u e s i s t o be c o n s i d e r e d . The a s s i g n m e n t s of e r r o r a r e n o t s u s t a i n e d . There was no e r r o r i n r e f u s i n g t h e m o t i o n of p l a i n t i f f . In apt time, p l a i n t i f f , i n w r i t i n g , j u r y upon t h e f i r s t i s s u e a s f o l l o w s ; requested the court to charge the That i f t h e j u r y s h o u l d f i n d by t h e g r e a t e r w e i g h t of t h e e v i d e n c e t h a t t h e F e d e r a l Land Bank of Columbia r e c e i v e d t h e check o f t h e c a s h i e r o f the Bank o f Vanceboro, 3 December, 1923, and s e n t i t to t h e Murchison N a t i o n a l Bank of Wilmington, 4 December, and t h e Murchison N a t i o n a l Bank s e n t i t t o t h e F e d e r a l R e s e r v e Bank o f Richmond, 6 December, and t h e F e d e r a l R e s e r v e Banlc s e n t i t t o the'Banlc of Vanceboro, 7 December, and t h e Bank o f Vanceboro s e n t i t s d r a f t t o t h e F e d e r a l R e s e r v e Bank, 10 December, and t h e F e d e r a l R e s e r v e Bank s e n t t h e d r a f t t o t h e N a t i o n a l Bank of New Bern, 11 December, t h e f i r s t i s s u e s h o u l d be answered ' N o . 1 " t • —5 — x - 4 3 1 9 5 4 This r e q u e s t f o r s p e c i a l i n s t r u c t i o n was r e f u s e d "by t h e c o u r t , and p l a i n t i f f excepted. P l a i n t i f f a s s i g n s r e f u s a l to g i v e t h i s i n s t r u c t i o n as error. The a c c e p t a n c e by p l a i n t i f f o f t h e c a s h i e r ' s c h e c k , s e n t by d e f e n d a n t s i n payment o f t h e i n s t a l l m e n t due on 1 December, 1923, a l t h o u g h n o t i n i t s e l f a d i s c h a r g e o f d e f e n d a n t s ' l i a b i l i t y u n l e s s and u n t i l same h a d b e e n a c t u a l l y p a i d by t h e Bank of Vanceboro, imposed upon p l a i n t i f f t h e duty of e x e r c i s i n g due d i l i g e n c e i n p r e s e n t i n g t h e c a s h i e r ' s c h e c k f o r payment t o t h e Bank o f Vanceboro. I f t h e c h e c k was n o t p a i d when p r e s e n t e d t o t h e Bank o f Vanceboro, and t h e g i v i n g of a w o r t h l e s s chock was n o t payment, t h e l o s s d o e s n o t f a l l upon d e f e n d a n t s u n l e s s p l a i n t i f f f u l l y p e r f o r m e d t h i s d u t y and e x e r c i s e d due d i l i g e n c e i n p r e s e n t i n g the check. The l o s s r e s u l t i n g from f a i l u r e t o p e r f o r m t h i s d u t y must f a l l on p l a i n t i f f i f t h e f a i l u r e o f p l a i n t i f f t o s e c u r e payment o f s a i d check was due t o n e g l i g e n c e o f p l a i n t i f f . 2 1 E . C. L. 66, s e c . 6 5 . "It i s w e l l s e t t l e d that i n t h e absence of an agreement to the contrary, a c h e c k or p r o m i s s o r y n o t e o f e i t h e r t h e d e b t o r or a t h i r d p e r s o n , r e c e i v e d f o r a d e b t , i s m e r e l y c o n d i t i o n a l payment - t h a t i s , s a t i s f a c t i o n o f t h e d e b t i f and when p a i d ; b u t fof. a c c e p t a n c e o f s u c h c h e c k o r n o t e i m p l i e s an u n d e r t a k i n g o f due d i l i g e n c e i n p r e s e n t i n g i t f o r payment. And i f h e from whom i t i s r e c e i v e d s u s t a i n s l o s s by want o f such d i l i g e n c e , i t w i l l be h e l d t o o p e r a t e a s a c t u a l payment. 1 1 D i l l e v . Y<hite, n o t e 1 0 L . R . A . ( U . S . ) 5 4 1 . When p l a i n t i f f r e c e i v e d t h e c a s h i e r ' s c h e c k , on Monday, 3 December, 1923, i n payment of d e f e n d a n t s ' i n d e b t e d n e s s , i t e l e c t e d t o s e n d same t o Murchison N a t i o n a l Bank, a t Wilmington 1T.C., f o r p r e s e n t a t i o n t o Bank o f Vanceboro, w i t h k n o w l e d g e t h a t t h e Murchison N a t i o n a l Bank would, a c c o r d i n g t o i t s custom, s e n d same t o F e d e r a l R e s e r v e Bank a t Richmond, V a . , a n d t h a t s a i d F e d e r a l R e s e r v e Bank would s e n d same by m a i l t o Bank o f Vanceboro f o r p r e s e n t a t i o n ; t h i s c o u r s e was p u r s u e d , a c c o r d i n g t o t h e e v i d e n c e , b e c a u s e i t s a v e d t r o u b l e and e x p e n s e . If p l a i n t i f f had ^ s e n t c h e c k d i r e c t t o Bank o f Vanceboro f o r p r e s e n t a t i o n and p a y ment, i t vrould have r e c e i v e d a " q u i c k e r r e s p o n s e . " There i s e v i d e n c e from w h i c h t h e j u r y c o u l d f i n d t h a t i f t h e c a s h i e r ' s c h e c k had b e e n s e n t d i r e c t , e i t h e r by p l a i n t i f f or by Murchison n a t i o n a l Bank, i t would h a v e b e e n p a i d . Whether i t was due d i l i g e n c e t o a d o p t t h e c o u r s e which p l a i n t i f f d i d a d o p t , was f o r t h e j u r y , upon a l l t h e e v i d e n c e , to d e t e r m i n e , and t h e r e was no e r r o r i n t h e r e f u s a l o f t h e c o u r t t o i n s t r u c t t h e j u r y t h a t a s a m a t t e r o f law t h e c o u r s e a d o p t e d was due d i l i g e n c e , a l t h o u g h t h e r e was no d e l a y due t o n e g l i g e n c e i n p r e s e n t i n g t h e c h e c k f o r payment a c c o r d i n g t o t h e c o u r s e a d o p t e d . I f p l a i n t i f f , o r t h e Murchison N a t i o n a l Bank o f Wilmington, N . C . , h a d s e n t t h e c a s h i e r ' s c h e c k , drawn upon t h e Bank o f Vanceboro, d i r e c t t o s a i d drawee bank f o r payment, t h i s w o u l d h a v e b e e n "due d i l i g e n c e " . P u b l i c Laws 1921, c h . 4 , s e c . 3 9 . The h o l d i n g o f t h i s Court, i n Bank v . F l o y d , 142 N. C., 1 8 7 , and i n Bank v . Trust C o . , 172 N . C . , 3 4 5 , t h a t " I t i s n e g l i g e n c e i n a bank h a v i n g a d r a f t o r check f o r c o l l e c t i o n t o s e n d i t d i r e c t l y t o t h e drawee, and t h i s i s t r u e , though t h e drawee i s t h e o n l y bank a t t h e p l a c e o f payment!' i s t h u s a b r o g a t e d by t h e e x p r e s s p r o v i s i o n s o f t h i s s t a t u t e . See Malloy v . Fed. R e s e r v e Bank, 2 6 1 F e d . , 1 0 0 3 . "The f a i l u r e of t h e p a y e r bank, b e c a u s e of i t s i n s o l v e n c y or o t h e r d e f a u l t , to account f o r the p r o c e e d s t h e r e o f , s h a l l not render t h e f o r w a r d i n g bank l i a b l e t h e r e f o r , p r o v i d e d s u c h f o r w a r d i n g bank s h a l l have u s e d due d i l i g e n c e i n o t h e r r e s p e c t s i n c o n n e c t i o n w i t h t h e c o l l e c t i o n o f such n trume Digitizedi forsFRASER n t . " — 6 -* X"~4:312ci 255 v/hcro t h e r e a r c two or r.;oro c o u r s c s which a bank nay p u r s u e i n p r e s e n t i n g f o r c o l l e c t i o n a check or d r a f t upon a n o t h e r "bank, and t h e r e i s e v i d e n c e from w h i c h a j u r y nay f i n d t h a t the s e l e c t i o n of one c o u r s e c a u s e d l o s s o r damage t o t h e owner of t h e chock or d r a f t , or t o one who i s i n t e r e s t e d i n the p r e s e n t a t i o n o f s a i d check or d r a f t "because of l i a b i l i t y t h e r e f o r which would n o t h a v e "been s u s t a i n e d i f a n o t h e r c o u r s e open t o s a i d "bank had "boon p u r s u e d , i t i s f o r t h e j u r y to d e t e r m i n e , upon a l l t h e f a c t s and c i r c u m s t a n c e s which t h e y nay f i n d from t h e e v i d e n c e , whether t h e c o u r s e p u r s u e d was n e g l i g e n t or n o t , i n a c c o r d a n c e w i t h t h e s t a n d a r d of the prudent nan* The s e c o n d i s s u e s u b m i t s t o t h e j u r y t h e f a c t s upon which d e f e n d a n t s r e l y i n t h e i r answer f o r a d e f e n s e to p l a i n t i f f * s c a u s e o f a c t i o n . The a l l e g a t i o n t h a t d e f e n d a n t s were i n s t r u c t e d "by p l a i n t i f f to p u r c h a s e a c a s h i e r ' s check or money o r d e r f o r t h e p u r p o s e o f r e m i t t i n g t h e amount due o n t h e i n s t a l l m e n t i s denied i n the r e p l y . There was no e r r o r i n s u b m i t t i n g t h e s e c o n d i s s u e . Upon t h i s i s s u e t h e c o u r t c h a r g e d the j u r y a s f o l l o w s : "If t h e j u r y i s s a t i s f i e d "by t h e g r e a t e r w e i g h t o f t h e e v i d e n c e , w i t h t h e "burden on t h e d e f e n d a n t , t h a t t h e p l a i n t i f f "bank e n t e r e d i n t o a c o n t r a c t w i t h t h e d e f e n d a n t Barrow, under t h e terms and c o n d i t i o n s o f which i t was e x p r e s s l y a g r e e d t h a t t h e d e f e n d a n t Barrow s h o u l d s e n d t h e p l a i n t i f f bank a c a s h i e r 1 s c h e c k f o r $351 i n f u l l payment o f t h e i n s t r u m e n t t h e n due, and t h a t t h e p l a i n t i f f bank would a c c e p t s a i d c a s h i e r * s check i n f u l l payment t h e r e o f , whether p a i d or not p a i d , and s h o u l d f u r t h e r f i n d t h a t t h e d e f e n d a n t Barrow s e n t t h e p l a i n t i f f bank a c a s h i e r ' s check f o r $351, which was r e c e i v e d by them and a c c e p t e d by them i n f u l l payment and . d i s c h a r g e of t h e i n s t a l l m e n t t h e n due, you w i l l answer t h e s e c o n d i s s u e ! Y e s 1 ; o t h e r w i s e , y o u w i l l answer i t 'Ho 1 "• There was no e x c e p t i o n t o t h i s i n s t r u c t i o n . I t i s a c l e a r and f u l l s t a t e m e n t of t h e law a p p l i c a b l e t o t h e f a c t s , which t h e j u r y might f i n d from the evidence. "The f a c t t h a t a check or d r a f t was r e c e i v e d i n a b s o l u t e payment may be e s t a b l i s h e d by showing an e x p r e s s agreement t o t h a t e f f e c t , or by showing such c i r c u m s t a n c e s a s w i l l s a t i s f y t h e mind t h a t such was t h e u n d e r s t a n d i n g o f the p a r t i e s a t t h e time t h e check was t a k e n . Whether a check i s g i v e n and a c c e p t e d a s a b s o l u t e payment i s a q u e s t i o n o f f a c t t o be d e t e r m i n e d by t h e j u r y on t h e e v i d e n c e p r e s e n t e d . " 2 1 R. C, L, p . 64, s e c . 6 3 . The r e f u s a l by t h e c o u r t of t h e n o t i o n t o s e t a s i d e t h e v e r d i c t , a s s i g n e d a s e r r o r , was w i t h i n t h e d i s c r e t i o n v e s t e d i n i t by law, and i s n o t r e v i e w a b l e i n t h i s Court, upon t h e f a c t s a p p e a r i n g i n t h i s r e c o r d . The F e d e r a l R e s e r v e Bank o f Richmond, to w h i c h t h e c a s h i e r 1 s c h e c k was s e n t f o r p r e s e n t a t i o n t o Bank of Vanceboro, a c c e p t e d t h e d r a f t o f t h e Bank of Vanceboro on t h e N a t i o n a l Bank of New Bern i n payment. This d r a f t was not p a i d . In M a l l o y v# F e d e r a l R e s e r v e Bank, 281 F e d . , 9 9 7 , 291 Fed*, 763; 2 6 4 U. S . , 160; 68 L. E d . , 617, i t i s h e l d t h a t "a F e d e r a l r e s e r v e bank, t o w h i c h a check was forwarded f o r c o l l e c t i o n , and which a c c e p t e d from drawee bank i n payment o f check the drawee bank*s w o r t h l e s s check on a t h i r d bank, was l i a b l e t o p a y e e f o r l o s s e s s u s t a i n e d , s i n c e t h e bank h a d no a u t h o r i t y to a c c e p t t h e d r a f t i n s t e a d o f money i n payment of t h e c h e c k , and s i n c e t h e a c c e p t a n c e o f t h e d r a f t a s payment r e l e a s e d t h e drawer." I t i s a l s o h e l d t h a t "banks must be presumed t o have d e a l t w i t h each o t h e r w i t h r e s p e c t t o a s t a t u t e o f t h e S t a t e i n which a check wafs d e p o s i t e d f o r c o l l e c t i o n , d e f i n i n g t h e r i g h t s and l i a b i l i t i e s of banks t o which c h e c k s a r e forwarded f o r c o l l e c t i o n . " The q u e s t i o n a s t o whether and, i f s o , t o what e x t e n t t h e law a s t h u s d e c l a r e d h a s b e e n m o d i f i e d or a l t e r e d i n t h i s S t a t e by P u b l i c Laws 4• 7 - X-4312 a 256 1921, c h . 4 , s e e . 3 9 , and. P u b l i c Laws 1921, e h . 2 0 , i s n o t p r e s e n t e d , i n t h i s c a s e . Under t h e f i r s t s t a t u t e c i t e d , t h e s e n d i n g of t h e c a s h i e r ' s c h e c k "by t h e F e d e r a l R e s e r v e 2cnl= o f E i c h n o n d , V a . , t o t h e drawee bank f o r c o l l e c t i o n v a s "due d i l i g e n c e " , and the f a i l u r e o f t h e drawee "bank t o a c c o u n t f o r s a n e d i d not r e n d e r t h e f o r w a r d i n g hank l i a b l e t o t h e owner of t h e c h e c k , t h e f o r w a r d i n g bank h a v i n g u s e d due d i l i g e n c e i n o t h e r r e s p e c t s . " Under t h e s e c o n d s t a t u t e c i t e d , t h e c a s h i e r ' s c h e c k , f o r w a r d e d t o t h e bank on which i t was drawn f o r c o l l e c t i o n , by t h e F e d e r a l R e s e r v e Bank of Richmond, was p a y a b l e , a t the o p t i o n of t h e drawee bank, i n exchange drawn on t h e r e s e r v e d e p o s i t s o f drawee bank, and t h e F e d e r a l R e s e r v e Bank c o u l d n o t r e q u i r e payment i n any o t h e r n e d i u n than such e x c h a n g e . The v a l i d i t y o f t h i s l a t t e r s t a t u t e h a s b e e n s u s t a i n e d by t h e Suprone Court o f t h e U n i t e d S t a t e s i n Farriers & Merchants Bank v . F e d e r a l R e s e r v e Bank, 262 U. S . , 649; 67 L. E d . , 1 1 5 7 . S e c , a l s o , s a n e c a s e , 1 8 3 , ST. G., 5 4 6 . P l a i n t i f f c a n n o t r e c o v e r i n t h i s a c t i o n , n o t b e c a u s e t h e r e was l a c k o f due d i l i g e n c e on i t s p a r t o r on t h e p a r t of t h e I f u r c h i s o n n a t i o n a l Bank or t h e F e d e r a l R e s e r v e Bank w i t h r e s p e c t t o t h e c o l l e c t i o n o f t h e c h e c k , but b e c a u s e * t h e j u r y h a s f o u n d u p o n competent e v i d e n c e t h a t t h e c o u r s e a d o p t e d by plaintiff f o r c o l l e c t i o n o f c h e c k was, under a l l t h e f a c t s and c i r c u m s t a n c e s , n e g l i g e n t t h a t i s , i n v i o l a t i o n o f i t s duty t o d e f e n d a n t t o e x e r c i s e due d i l i g e n c e i n col-el e c t i n g s a n e , and t h a t t h i s n e g l i g e n c e was t h e p r o x i m a t e c a u s e o f p l a i n t i f f ' s l o s s . The j u r y h a s a l s o f o u n d , upon competent e v i d e n c e , and u n d e r i n s t r u c t i o n n o t excepted, t o , t h a t p l a i n t i f f i n s t r u c t e d d e f e n d a n t s t o s e n d c a s h i e r ' s c h e c k i n payment of t h e i n d e b t e d n e s s . Defendants, having complied with t h i s i n s t r u c t i o n , are discharged fron l i a b i l i t y for said indebtedness. Judgment a f f i r m e d . Ho e r r o r . There i s
@FedFRASER