Opinion · Nclaw North Carolina
LOWE'S v. TRUST CO., 44 N.C. App. 365 (1979)
LOWE'S OF SANFORD, INC., PLAINTIFF v. MID-SOUTH BANK & TRUSTCOMPANY, DEFENDANT & THIRD-PARTY PLAINTIFF v. BILLY T. GLADDEN,JR. & BILLY T. GLADDEN, SR., FIRST THIRD-PARTY DEFENDANTS v.SOUTHERN Nat’l BANK OF N.C., SECOND THIRD-PARTYDEFENDANT v. HARRY E. WILSON, THIRD THIRD-PARTY DEFENDANT, 260 S.E.2d 801 (N.C. Ct. App. 1979)
- Type
- Opinion
- Court
- Nclaw North Carolina
- Jurisdiction
- Nclaw
- Date
- 1979-01-01
- Topic
- general
LOWE'S v. TRUST CO., 44 N.C. App. 365 (1979) 260 S.E.2d 801 LOWE'S OF SANFORD, INC., PLAINTIFF v. MID-SOUTH BANK AND TRUSTCOMPANY, DEFENDANT AND THIRD-PARTY PLAINTIFF v. BILLY T.
Citator
UpLaw has not yet analyzed LOWE'S v. TRUST CO., 44 N.C. App. 365 (1979). The absence of a flag is not a finding that it is good law.
LOWE'S v. TRUST CO.,44 N.C. App. 365(1979)
260 S.E.2d 801
LOWE'S OF SANFORD, INC., PLAINTIFF v. MID-SOUTH BANK AND TRUST
COMPANY, DEFENDANT AND THIRD-PARTY PLAINTIFF v. BILLY T. GLADDEN,
JR. AND BILLY T. GLADDEN, SR., FIRST THIRD-PARTY DEFENDANTS v.
SOUTHERN NATIONAL BANK OF NORTH CAROLINA, SECOND THIRD-PARTY
DEFENDANT v. HARRY E. WILSON, THIRD THIRD-PARTY DEFENDANT
No. 7911SC282
North Carolina Court of Appeals
Filed 18 December 1979
In 1976, G and G was involved in a Lee County construction project. On or about 28 April 1976, G and G issued a check for $12,378.01 to Lowe's as payment for building materials. Lowe's presented the check to Mid-South for payment on 4 May and on 10 May. Both times the check was returned for insufficient funds.
G and G had been in financial difficulty for some time. Its account at Mid-South was frequently overdrawn. Consequently, all cashiers and tellers had been instructed not to pay any check drawn on the G and G account without approval of a bank officer. Mid-South alleges that Lowe's was aware of the financial difficulty.
On Friday, 14 May 1976, G and G obtained a loan of $36,695.05 from Southern National Bank (hereinafter Southern National). The full amount was placed in G and G's account at Southern National. Subsequently, G and G wrote a check for $21,000 on the Southern National account and deposited it with Mid-South.
Lowe's again presented its check from G and G to Mid-South on Monday, 17 May 1976. Without consulting an officer, a teller issued Mid-South's official check in exchange for the G and G check. Then, the next day before any checks reached Southern National, G and G withdrew its funds from that bank and prepaid their loan.
By paying the loan and depleting its account at Southern National, G and G rendered its check to Mid-South worthless. Mid-South learned of these events on Wednesday, 19 May, and informed Lowe's that it would not make payment on its cashier's check.
From a judgment granting Lowe's motion for summary judgment as to Mid-South and ordering that the bank honor its cashier's check, defendant appealed.
McDermott Parks, by O. Tracy Parks III, for defendant appellant.Page 367
Cases from other jurisdictions support our holding that issuance of the cashier's check constituted a final acceptance. In Citizens and Southern National Bank v. Youngblood,135 Ga. App. 638,219 S.E.2d 172(1975), the plaintiff bank issued its cashier's check to defendant in exchange for a check drawn on plaintiff by one of its depositors. A stop-payment order on depositor's account had been overlooked, and plaintiff bank tried to recover from defendant. The court ruled that defendant was entitled to receive funds from the cashier's check, stating that,
It is, therefore, the general rule, sustained by almost universal authority, that a payment in the ordinary course of business of a check by a bank on which it is drawn under the mistaken belief that the drawer has funds in the bank subject to such check is not such a payment under a mistake of fact as will permit the bank to recover the money so paid from the recipient of such payment. (citations omitted) Youngblood, at p. 640.
Rosenbaum v. First National City Bank of New York,11 N.Y.2d 845,182 N.E.2d 280(1962), reargument denied11 N.Y.2d 1017(1962), is also similar to our case factually. The distinction is that in Rosenbaum payment was made despite a stop-payment order rather than for the reason that the customer had insufficient funds in its account. There, the court stated that,
The weight of authority holds that when a bank pays a check after and despite receiving a stop-payment order from its depositor it cannot recover on the check from the payee ofPage 368the check. (citations omitted) The same rule should apply with equal or greater force when the bank in payment of the check has issued its own cashier's check to the holder. Rosenbaum, at p. 846.
For the reasons stated above, the judgment below is
Affirmed.
Chief Judge MORRIS and Judge PARKER concur.