United States National Bank of New York v. McNair

114 N.C. 335

• Court: Supreme Court of North Carolina
• Decided: February 15, 1894
• Status: Published

Opinion

Clark, J.:

As between the defendants and the First National Bank of Wilmington the deposit of $4,199.80' would have, been a good set-off in an action by said bank on the defendant’s note for $5,000. 1 Morse on Bank, section 338, and cases there cited. But it would not be a set-off to an action by the plaintiff if said note was assigned before niaturitj' for value and without notice. The' presumption is that it was. It is indeed conceded that the assignment was before maturity and without notice of any equity, but it is denied that the assignment was for value.

It is not controverted that the note was .sent by the First National Bank of Wilmington to the plaintiff with other notes, the whole, aggregating $17,000, which were on November 23, 1891', rediscounted and the proceeds, $16,911.33, placed to the credit of the Wilmington bank, but no money was paid thereon at that time. If that were all the plaintiff' was not a purchaser for value, for it had ¡laid nothing, and to the action by it on the note the defendants could ¡dead the sot-off they had against the original payee.

It further appears, however, that the balance to credit of the Wilmington bank on books of-plaintiff on close of business on November 23d was $28,338.75, including said credit of $16,911.33. There were subsequent payments to check of the Wilmington bank before notice of defendant’s equity, amounting to $19,530.18. There were subsequent credits also, which left a balance due the Wilmington bank on November 28th of $21,279.33. The well-settled rule is that “the.first money in is the first money out.” Boyden v. Bank, 65 N. C., 13. Deducting, therefore, from the $28,338.75 on plaintiff’s books, 23d November, to credit of Wilmington bank the $19,530.14 paid out to its order before November 28th, there appears only $8,808.61 of said balance, which has not been paid. As the full value of all the notes rediscounted on 23d November was $16,-911.33 it follows that $8,102.72 has been paid by plaintiff on said notes.

Thus the plaintiff was a purchaser for a valuable consideration, before maturity and without notice. By the law-merchant the defendants cannot • set up this set-off. 1 Daniel Neg. Inst., section 7585; Cromwell v. County of Sac, 96 U. S., 60. It is true if (as has been said) there had nothing passed, and the plaintiff had simply given the payee credit on its books, this would not have made the plaintiff1 a purchaser for value. Mann v. Bank, 30 Kan., 412; Bank v. Valentine, 18 Hun., 417; Bank v. Newell, 71 Miss., 308. The same might he true if the amount paid was so small as to be merely colorable, or to suggest fraud or notice of defendant’s equities.

But here the' plaintiff has paid nearly half. The balance is a valid indebtedness of the plaintiff to the Wilmington bank, which passes with its other assets to the receiver of that hank to he collected and applied pro rata to- all its creditors, including the defendants, who are creditors to the extent of their deposit. Error.