{ "id": 8551537, "name": "NORTH CAROLINA NATIONAL BANK Executor of the Estate of Jane Gaither Murray, Deceased v. McCARLEY & COMPANY, INC.", "name_abbreviation": "North Carolina National Bank v. McCarley & Co.", "decision_date": "1977-12-21", "docket_number": "No. 773SC132", "first_page": "689", "last_page": "694", "citations": [ { "type": "official", "cite": "34 N.C. App. 689" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "201 S.E. 2d 503", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1974, "opinion_index": 0 }, { "cite": "20 N.C. App. 340", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8552430 ], "year": 1974, "opinion_index": 0, "case_paths": [ "/nc-app/20/0340-01" ] }, { "cite": "100 ALR 2d 670", "category": "reporters:specialty", "reporter": "A.L.R. 2d", "opinion_index": 0 }, { "cite": "87 ALR 2d 638", "category": "reporters:specialty", "reporter": "A.L.R. 2d", "opinion_index": 0 }, { "cite": "45 N.C. L. Rev. 897", "category": "journals:journal", "reporter": "N.C. L. Rev.", "year": 1967, "opinion_index": 0 }, { "cite": "147 S.E. 2d 37", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1966, "pin_cites": [ { "page": "41" } ], "opinion_index": 0 }, { "cite": "266 N.C. 648", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8562499 ], "year": 1966, "opinion_index": 0, "case_paths": [ "/nc/266/0648-01" ] }, { "cite": "191 S.E. 2d 683", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1972, "pin_cites": [ { "page": "691" } ], "opinion_index": 0 }, { "cite": "282 N.C. 44", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8562635 ], "year": 1972, "opinion_index": 0, "case_paths": [ "/nc/282/0044-01" ] }, { "cite": "146 S.E. 2d 390", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1966, "opinion_index": 0 }, { "cite": "266 N.C. 489", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8561250 ], "year": 1966, "opinion_index": 0, "case_paths": [ "/nc/266/0489-01" ] }, { "cite": "479 F. 2d 478", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1309645 ], "year": 1973, "opinion_index": 0, "case_paths": [ "/f2d/479/0478-01" ] }, { "cite": "44 N.C. L. Rev. 654", "category": "journals:journal", "reporter": "N.C. L. Rev.", "year": 1966, "pin_cites": [ { "page": "694" } ], "opinion_index": 0 }, { "cite": "178 S.E. 2d 12", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1970, "pin_cites": [ { "page": "15" } ], "opinion_index": 0 }, { "cite": "10 N.C. App. 51", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8550725 ], "year": 1970, "pin_cites": [ { "page": "55" } ], "opinion_index": 0, "case_paths": [ "/nc-app/10/0051-01" ] }, { "cite": "176 S.E. 2d 161", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1970, "opinion_index": 0 }, { "cite": "277 N.C. 94", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8561932 ], "year": 1970, "opinion_index": 0, "case_paths": [ "/nc/277/0094-01" ] } ], "analysis": { "cardinality": 620, "char_count": 11812, "ocr_confidence": 0.823, "pagerank": { "raw": 9.201709347783905e-08, "percentile": 0.5096951598336428 }, "sha256": "dc9beaba59268ba9473a2b4bf646bea1cfb3c22037c99e0ea4968746eea2eab7", "simhash": "1:3110ddcb6c67ebe6", "word_count": 1956 }, "last_updated": "2023-07-14T20:28:15.830309+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges Morris and Arnold concur." ], "parties": [ "NORTH CAROLINA NATIONAL BANK Executor of the Estate of Jane Gaither Murray, Deceased v. McCARLEY & COMPANY, INC." ], "opinions": [ { "text": "HEDRICK, Judge.\nA 12(b)(6) motion tests the sufficiency of the complaint to state a claim upon which relief can be granted. A complaint may be dismissed pursuant to Rule 12(b)(6) \u201c \u2018if clearly without any merit; and this want of merit may consist in an absence of law to support a claim of the sort made, or of facts sufficient to make a good claim, or in the disclosure of some fact which will necessarily defeat the claim.\u2019 But a complaint should not be dismissed for insufficiency unless it appears to a certainty that plaintiff is entitled to no relief under any state of facts which could be proved in support of the claim. Pleadings are to be liberally construed. Mere vagueness or lack of detail is not ground for a motion to dismiss, but should be attacked by a motion for a more definite statement.\u201d 2A Moore\u2019s Federal Practice, \u00a7 12.08 (1974). Accord, Sutton v. Duke, 277 N.C. 94, 176 S.E. 2d 161 (1970). The principle enunciated in Sutton v. Duke, supra, was succinctly stated in Cassels v. Motor Co., 10 N.C. App. 51, 55, 178 S.E. 2d 12, 15 (1970) as follows:\n\u201cA complaint is sufficient to withstand a motion to dismiss where no insurmountable bar to recovery on the claim alleged appears on the face of the complaint and where allegations contained therein are sufficient to give a defendant sufficient notice of the nature and basis of plaintiffs\u2019 claim to enable him to answer and prepare for trial.\u201d\nThe first portion of plaintiff\u2019s complaint, labeled \u201cFIRST CAUSE OF Action,\u201d is summarized and quoted as follows: The deceased, Jane Gaither Murray, left a will which has been admitted to probate in Carteret County and which designates the plaintiff as executor. During the life of the deceased, her husband, James David Murray, without her authority, delivered certain stock certificates along with stock assignment instruments bearing the forged signature of the deceased to the defendant corporation, a stock broker. The complaint then reads as follows:\n\u201c6. That Defendant knew or should have known from the circumstances surrounding the aforesaid sales of the securities of Jane Gaither Murray that said sales were made without her authority.\n\u201c7. THAT Defendant was under a duty to inquire as to the propriety of the aforesaid transactions, and negligently failed to do so.\n\u201c8. That Defendant thus converted the said securities belonging to Jane Gaither Murray.\u201d\nArticle 8 of the Uniform Commercial Code, as codified in Chapter 25 of the North Carolina General Statutes, confers on the true owner of securities which have been transferred upon an unauthorized endorsement, remedies against the issuer of the securities, G.S. 25-8-311, and against the ultimate purchaser of the securities, G.S. 25-8-311(a), 315. It does not appear that Article 8 provides any right of action in favor of the owner against the broker who consummated the transfer. See Folk, Article Eight: Investment Securities, 44 N.C. L. Rev. 654, 694 (1966). However, the Uniform Commercial Code is by its own terms complementary to the common law except where there is a conflict. G.S. 25-1-103; G.S. 25-8-315, Official Comment 2.\nOn the facts set forth in the allegations in plaintiff\u2019s first claim there clearly exists a common law action of conversion against the defendant. The rule is stated in 12 Am. Jur. 2d, Brokers \u00a7 105 (1964): \u201cAs a general rule, even though a broker may act in the best of faith, if he sells personal property in behalf of a principal who has no title thereto ... he is liable to the true owner for its conversion; ...\u201d See also Southern Ohio Bank v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 479 F. 2d 478 (6 Cir. 1973); Patterson v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 266 N.C. 489, 146 S.E. 2d 390 (1966). While the Code, G.S. 25-8-318, purports to protect a broker who transfers securities at the insistence of a principal who has no right to dispose of them, its protection is only available as a defense with the burden on the defendant to present evidence that it acted in good faith and in accordance with reasonable commercial standards. Southern Ohio Bank v. Merrill Lynch, Pierce, Fenner & Smith, Inc., supra.\nWhen the allegations of plaintiff\u2019s first claim for relief are considered in the light of the foregoing principles of procedure and substance, we are of the opinion that the complaint states a claim for relief against the defendant for the conversion of Mrs. Murray\u2019s securities sold by the defendant without the true owner\u2019s authority.\nThat portion of plaintiff\u2019s complaint denominated as his \u201cSECOND CAUSE OF Action\u201d incorporates all allegations previously stated and, in addition, alleges as follows:\n\u201c2. THAT Defendant, having caused said securities to be sold, issued drafts on which Defendant was maker and payor, payable through Wachovia Bank and Trust Company, N.A. and made payable to Jane Gaither Murray; said drafts being more fully identified in Exhibit A hereto.\n\u201c3. That said drafts were negotiated by indorsements purporting to be the signature of Jane Gaither Murray but which were not, in fact, signed by her.\n\u201c4. Defendant was under a duty to refuse to pay said drafts unless indorsed by the payee, Jane Gaither Murray.\n\u201c5. Defendant did, in fact, pay said drafts upon the unauthorized, non-genuine signatures aforesaid, in violation of the aforesaid duty.\u201d\nDefendant\u2019s status in the context of negotiable instruments law is critical to the question of whether this second portion of plaintiff\u2019s complaint states a claim under Rule 8(a). According to our law, when an instrument declares that it is \u201cpayable through\u201d a bank then such bank is deemed to be a collecting bank which is not authorized to pay the instrument, but only to make presentment to the drawee. G.S. 25-3-120 and Official Comment thereunder; see also First Federal Savings & Loan Assoc. v. Branch Banking and Trust Co., 282 N.C. 44, 191 S.E. 2d 683 (1972). Defendant assumed the status of a drawee when it made a \u201cpayable through\u201d draft with the plaintiff\u2019s intestate as payee. See 2 Anderson on the Uniform Commercial Code \u00a7 3-120:3 (2d Ed. 1971).\nThe Uniform Commercial Code provides in absolute terms that \u201c[a]n instrument is converted when ... it is paid on a forged indorsement.\u201d G.S. 25-3-419(l)(c) (emphasis added). Justice (now Chief Justice) Sharp\u2019s opinion in Modern Homes Construction Co. v. Tryon Bank and Trust Co., 266 N.C. 648, 147 S.E. 2d 37 (1966), which antedated our adoption of the UCC, presaged the above statute and aligned North Carolina with the majority view which allows \u201cthe holder to recover on the theory of a conversion of the check when the drawee pays a check upon a forged or unauthorized endorsement.\u201d Modern Homes Construction Co. v. Tryon, supra at 653, 147 S.E. 2d at 41; see Navir, Contracts, 45 N.C. L. Rev. 897 (1967). Justice Sharp stated the rule as follows:\n\u201cWhen the drawee bank takes a check without the payee\u2019s endorsement, delivers cash in the amount of the check to one unauthorized to receive its payment, and ultimately returns the check to the drawer, the bank has assumed complete control over the check, dealt with it as its own, and withheld it from its rightful owner. Such dealings constitute a tortious conversion of the check, [citations omitted]; and the payee is entitled to recover its value. Prima facie, this is the face value of the paper converted.\u201d (Citations omitted).\nOther authorities clearly support this principle. 2 Anderson on the Uniform Commercial Code, supra at \u00a7 3-419; Annot., 87 ALR 2d 638; Annot., 100 ALR 2d 670. We feel compelled to note that some contrary language appears in First Federal Savings & Loan Assoc. v. Branch Banking and Trust Co., supra at 56-7, 191 S.E. 2d at 691. In First Federal, however, since the plaintiff was not the payee of the draft, there was no allegation of conversion in the plaintiff\u2019s complaint. The conflict is apparently resolved by the different positions which the plaintiffs in the two cases occupy.\nIn the present case the plaintiff has alleged facts sufficient to place itself within the framework of the law above. According to the allegations, the plaintiff as the payee was the victim of a conversion of the draft when it was paid by defendant upon a forged endorsement. The plaintiff is, therefore, entitled to proceed in its effort to prove its allegations.\nWe note that the trial judge in his order dismissing plaintiff\u2019s claims pursuant to defendant\u2019s Rule 12(b)(6) motion made the gratuitous conclusion that \u201c[p]laintiff alleges inconsistent remedies in its first and second cause of action, and an election between the two inconsistent remedies is required by law.\u201d While the plaintiff clearly cannot recover on both claims, Rule 8(e)(2) permits a party to \u201cstate as many separate claims ... as he has regardless of consistency . . . .\u201d See Alpar v. Weyerhaeuser Co., 20 N.C. App. 340, 201 S.E. 2d 503 (1974). The evidence offered in support of the allegations in the complaint will determine upon which claim, if either, plaintiff will recover.\nFor the reasons stated the order dismissing plaintiff\u2019s complaint is reversed and the cause is remanded to the Superior Court of Carteret County for further proceedings.\nReversed and remanded.\nJudges Morris and Arnold concur.", "type": "majority", "author": "HEDRICK, Judge." } ], "attorneys": [ "R. D. Darden, Jr., and Kenneth M. Kirkman, for the plaintiff appellant.", "Speight, Watson and Brewer, by W. W. Speight and W. H. Watson, for the defendant appellee." ], "corrections": "", "head_matter": "NORTH CAROLINA NATIONAL BANK Executor of the Estate of Jane Gaither Murray, Deceased v. McCARLEY & COMPANY, INC.\nNo. 773SC132\n(Filed 21 December 1977)\n1. Trover and Conversion \u00a7 1; Uniform Commercial Code \u00a7 64 \u2014 conversion of securities by stock broker \u2014 sale upon forged signature\nPlaintiff executor\u2019s complaint stated a claim for relief against defendant stock broker for conversion of securities owned by testatrix by selling such securities when the husband of testatrix, without her authority, delivered to defendant broker the certificates with stock assignment instruments bearing the forged signature of testatrix, the provision of G.S. 25-8-318 purporting to protect a broker who transfers securities at the insistence of a principal who has no right to dispose of them being available only as a defense, with the burden on defendant to present evidence that it acted in good faith and in accordance with reasonable commercial standards.\n2. Uniform Commercial Code \u00a7 25; Banks and Banking \u00a7 9.2 \u2014draft \u201cpayable through\u201d bank \u2014 hank as collector \u2014 maker as drawee\nWhere a draft declared that it was \u201cpayable through\u201d a bank, such bank is deemed to be a collecting bank which was not authorized to pay the instrument but only to make presentment to the drawee, G.S. 25-3-120, and defendant stock broker assumed the status of a drawee when it made a \u201cpayable through\u201d draft with plaintiff executor\u2019s testate as payee.\n3. Banks and Banking \u00a7 11.2; Trover and Conversion \u00a7 1; Uniform Commercial Code \u00a7 30 \u2014 payment of forged drafts \u2014 conversion by maker\nPlaintiff executor\u2019s complaint was sufficient to state a claim for relief against defendant stock broker for conversion of drafts where it alleged that defendant issued drafts payable through a bank to plaintiffs testate and that defendant paid the drafts upon the forged indorsements of plaintiff\u2019s testate. G.S. 25-3-419(l)(c).\nAPPEAL by plaintiff from Browning, Judge. Order entered 22 October 1976 in Superior Court, PITT County. Heard in the Court of Appeals 6 December 1977.\nCivil action wherein plaintiff filed a complaint seeking damages of $109,003.22 from the defendant for the alleged conversion of certain securities and the improper payment of the proceeds from the sale of such securities. From an order granting defendant\u2019s motion to dismiss pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure, plaintiff appealed.\nR. D. Darden, Jr., and Kenneth M. Kirkman, for the plaintiff appellant.\nSpeight, Watson and Brewer, by W. W. Speight and W. H. Watson, for the defendant appellee." }, "file_name": "0689-01", "first_page_order": 717, "last_page_order": 722 }