{
  "id": 11272806,
  "name": "FARMERS AND MERCHANTS BANK OF WILLIAMSTON v. GERMANIA LIFE INSURANCE COMPANY",
  "name_abbreviation": "Farmers & Merchants Bank v. Germania Life Insurance",
  "decision_date": "1909-05-25",
  "docket_number": "",
  "first_page": "770",
  "last_page": "776",
  "citations": [
    {
      "type": "official",
      "cite": "150 N.C. 770"
    }
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  "court": {
    "name_abbreviation": "N.C.",
    "id": 9292,
    "name": "Supreme Court of North Carolina"
  },
  "jurisdiction": {
    "id": 5,
    "name_long": "North Carolina",
    "name": "N.C."
  },
  "cites_to": [
    {
      "cite": "137 N. C., 240",
      "category": "reporters:state",
      "reporter": "N.C.",
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        8656059
      ],
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    {
      "cite": "143 N. C., 326",
      "category": "reporters:state",
      "reporter": "N.C.",
      "case_ids": [
        8657443
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      "opinion_index": 0,
      "case_paths": [
        "/nc/143/0326-01"
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  "last_updated": "2023-07-14T18:55:20.077008+00:00",
  "provenance": {
    "date_added": "2019-08-29",
    "source": "Harvard",
    "batch": "2018"
  },
  "casebody": {
    "judges": [
      "Hoke, J., concurs in dissenting opinion."
    ],
    "parties": [
      "FARMERS AND MERCHANTS BANK OF WILLIAMSTON v. GERMANIA LIFE INSURANCE COMPANY."
    ],
    "opinions": [
      {
        "text": "Walker, J.\nThis action was brought to recover $1,250, the amount of a check alleged to have been drawn by Lula Parham, cashier of the .defendant, on the Mercantile Bank of Memphis, Tenn., to the order of E. B. Hall, manager of the defendant, and endorsed by him for value to the plaintiff, and' also the protest fee, $2.50, making, in all,. $1,252.50. The check was presented to the bank on which it had been drawn and payment refused, whereupon it was protested for nonpayment. The defendant denied its liability upon the ground that Lula Parham had no authority to .draw the check, and that it had received no benefit therefrom. It further alleged that E. B. Hall, as manager, in August, 1906, opened an accoimt with the plaintiff, in the defendant\u2019s name, but really for his own benefit, and for many months did a \u201ckiting\u201d business with the plaintiff, depositing with it checks and drafts on other parties, who owed him nothing, and making the same good by checks upon the plaintiff and others, the principal transactions in the way of \u201ckiting\u201d checks having been carried on between the said E. B. Hall, as manager, and the said Lula Parham, as cashier, of the defendant.\nThe court submitted to the jury two.issues, which, with the answers thereto, were as follows:\nI. \u201cIs the defendant indebted to the plaintiff ? If so, in what amount ?\u201d Answer: \u201cTwo hundred and seventy-six dollars and forty-eight cents, with interest from 17 January, 1907.\u201d\n2. \u201cUpon what item of debit appearing in the account of the defendant company with the plaintiff bank was the credit balance of $976.02, dated 16 January, 1907, applied?\u201d Answer: \u201cThe $1,250-check in controversy.\u201d\nThe answer to the first issue was arrived at by deducting the \u201ccredit balance\u201d of $976.02 from the amount of the check, with the protest fee added, the plaintiff having charged the amount of -the check to the defendant when payment of it was refused.\nThere was much evidence introduced tending to show that R. B. Hall, as manager, and Miss Parham, as cashier, of the defendant, were \u201ckiting\u201d checks in their dealings with the plaintiff bank, and while this evidence may be very strong and convincing, we do not think it was of such a conclusive nature as to require the court to instruct the jury, as requested to do by the defendant, that, as matter of law, it charged the defendant with notice of the fact, so as to defeat the plaintiff\u2019s recovery. Frank F. Fagan, cashier of the plaintiff hank, testified that he did not know Hall was \u201ckiting\u201d checks, nor did he know that there was anything wrong in his transactions with the bank. On 13 December, 1906, he wrote the following letter to the defendant:\n\u201cMr. R. B. Hall, manager of your company at Raleigh, N. 0., carries an account at this bank as R. B. Hall, manager Ger-mania Life Insurance Company of New York. We desire, to know if his signature to checks meets with your approval, and if the same is authorized by you. We also would like to know if the signature of Lula Parham, cashier Germania Life Insurance Company, to cheeks drawn on the Mercantile Bank of Memphis, Tenn., is authorized by you. As Mr. Hall is manager of your company for North Carolina and Tennessee, we presume that he has authority to sign your checks, but. we desire this information for the files and records of our bank, and' will very much appreciate a prompt reply.\n\u201cYours truly, FkaNK F. Fagan,\n\"Cashier.\"\nTo this letter he received, 22 December, 1906, the following answer:\n\u201cGeNTlemeN: \u2014 We reply to yours of the 18th inst. in the affirmative, Mr. Hall and Miss Parham being authorized to draw checks, as indicated by you.\n\u201cRespectfully yours, N. S. Wesendonck,\n\"Second Vice President.\"\nThe judge charged the jury fully as to the extent of the authority of R. B. Hall and Lula Parham to draw checks in the name of the defendant, and that they had no authority, as agents, to do a \u201ckiting business,\u201d and that the plaintiff is presumed to have had notice of such lack of authority. He then charged the jury as follows:\n\u201cChecks are always supposed to be drawn upon a previous deposit of funds. If you find from the evidence that the check in controversy was one of a series of kiting checks and that the plaintiff knew or ought to have known this fact, in the exercise of reasonable care as prudent bankers, you will answer the first issue No.\u2019 Knowledge of any facts and circumstances reasonably calculated to put a man on inquiry makes it his duty to make inquiry, and he will be fixed with notice of all facts which such inquiry would have elicited. If you find from the evidence that the plaintiff did not have actual notice of such kiting, or constructive notice, that is, knowledge of such facts and circumstances as would put it upon notice by proper inquiry and investigation \u2014 in other words, if you find that the plaintiff neither knew nor had reasonable ground to believe that Hall was engaged in kiting checks, but, on the contrary, plaintiff reasonably believed that the account with plaintiff was being used by Hall as the company\u2019s account, and not his own private account, for his own benefit, then you will proceed to consider whether the defendant authorized the check in controversy. If the plaintiff has not satisfied you that it neither knew nor had reasonable ground to believe that Hall was engaged in kiting checks and using the deposit for his own personal benefit, you will answer the first issue No.\u2019\n\u201cNow, as to the authority to draw the check in controversy, the burden is upon the plaintiff to satisfy you, by the greater weight of evidence, that Lula Parham had authority to draw the check in controversy. Unless the plaintiff has so satisfied you, you will answer the first issue No.\u2019 \u201d\nThe court then directed the attention of the jury to the facts and circumstances tending to show whether Lula Parham had authority to draw the check in controversy, and whether the defendant had notice that R. B. Hall and Lula Parham were \u201ckiting\u201d checks, and that the check for $1,250 was drawn without the authority of the defendant. The court further instructed the jury as follows:\n\u2022 \u201cThe defendant is bound by such acts of its agents as it expressly authorized, or such acts as ar\u00e9 committed by its agents wj.thin the apparent scope of their authority \u2014 that is, such acts as it reasonably led the plaintiff to believe the agent possessed.\u201d\nThe charge was exceedingly favorable to the defendant and presented its contentions with reference to the issues and evidence in the case as strongly as the law permitted with a due regard to the rights of the plaintiff.\nThe law in regard to the duty and authority of an agent in the transaction of the business of his principal and the liability of the principal for the acts of his agfent was fully explained to the jury with reference to the special facts and circumstances of this case, and the charge in this respect was in accordance with the authorities upon the. subject. Bank v. Hay, 143 N. C., 326, and cases cited therein. The real and vital questions in the case were, whether R. B.'.Hall and Lula Parham had been engaged in a \u201ckiting business,\u201d and if so, whether the fact was known to the .plaintiff, or could have been known by the exercise of reasonable care and diligence. It was conceded that if they had been \u201ckiting\u201d checks, and the check in .controversy was one of the series of such checks, and, further, that the plaintiff knew, or should have known, such to be the case, then there was no liability on the part of the\u2019 defendant-. Upon the evidence, as we view it, these were facts for the jury to find, and the court properly left the matter to the jury as one of fact, instead of instructing them, as matter of law, to answer the first issue in favor of the defendant, upon the assumption that the dealings of R. B. Hall with the plaintiff were not within the seoj)e of his authority as manager of the defendant company and that, in law, \u2022 the plaintiff had notice thereof.- The court properly placed the burden upon the plaintiff of showing the authority of Lula Parham to draw the check, and coiuectly instructed the jury to ascertain whether such authority existed under the facts and circumstances\u2019 of the case as they might find them to be. In other words, whether she had the actual or apparent authority to draw the check, under the evidence and the principles of law concerning the liability of a principal for the act of his agent, as already explained to them.\nAs we have stated, there was very strong evidence .to show that E. B. Hall and Lnla Parham were engaged in kiting transactions \u2014 that is, they were interchanging commercial paper fbr^ the purpose of temporarily raising money or sustaining credit; \u2022 but, on the contrary, the defendant had informed the plaintiff, about ten days before the check for $1,250 was deposited with the plaintiff bank, that E. B. Hall and Lula Parham had authority to draw checks in the name of the defendant as its agents, and Frank F. Fagan, cashier of the plaintiff bank, testified that he did not know that the checks drawn by them respectively were not authorized, nor did he know that there was anything wrong in their transactions with his bank or the bank in Memphis. There was testimony sustaining the contention of each of the parties, and, under the circumstances, it was proper to submit the case to the jury with proper instructions as to the law bearing upon it. The court instructed the jury fully and correctly as to what would constitute notice that E. B-. Hall and Lula Parham were not acting within the scope of their authority as agents of the defendant. 'While the preponderance of the evidence may have been on the defendant\u2019s side, we do not think, if this be so, it authorized peremptory directions to the jury to find in favor of the defendant in answering the issues. If the verdict was against the weight of the evidence, the judge could have set it aside, and if he failed to do so upon proper application, we cannot review his decision here and correct the error. There are few, if any, controverted questions of law in the case, and we have not deemed it necessary, therefore, to cite the authorities which sustain the charge of the court, and have confined our discussion to the pivotal question, whether the case should have been submitted to the-jury to find the facts under proper instructions as to the law, as was done by the court, or whether the court should have charged substantially, as requested by the defendant\u2019s counsel, that, upon the evidence, they should answer the first issue in the negative.\nThe issues were sufficient to present all the controverted matters in the case, and there was no error in rejecting those tendered by the defendant. \u2022 Deaver v. Deaver, 137 N. C., 240.\nBpon a review of the whole case we find no error in the rulings and judgment of. the court.\nNo Error.",
        "type": "majority",
        "author": "Walker, J."
      },
      {
        "text": "Connor, J.,\ndissenting: An examination of tbe record in. tbis case, containing all of tbe evidence, forces me to tbe conclusion tbat, taking tbe whole evidence as true, tbe plaintiff bank was put upon notice tbat Hall and Miss Parbam were \u201cbiting\u201d checks; tbat there was no fund, upon which these checks were drawn, and tbis must have been known to tbe officers of tbe bank. If tbe check sued upon in tbis action was tbe only one drawn by Hall, I should concur in tbe opinion of tbe Court, but it is only one of a series of checks, all of which, when considered together with other admitted circumstances, show to my mind conclusively tbat tbe account is made up of a number of cheeks, all of which were drawn in accordance with tbe system of \u201ckiting\u201d carried on by tbe parties. Tbe authorities cited in defendant\u2019s brief establish its contention tbat tbe checks were not drawn against any fund in bank, but upon other checks crossing each other in tbe mail for tbe purpose of maintaining an apparent balance. I am therefore compelled to dissent from tbe conclusion reached by tbe majority of tbe Court. In consequence of tbe late day of tbe term upon which tbe opinion is filed, I am unable to set out in full and discuss tbe evidence. I can therefore only express, with all possible deference, my dissent.\nHoke, J., concurs in dissenting opinion.",
        "type": "dissent",
        "author": "Connor, J.,"
      }
    ],
    "attorneys": [
      "H. W. Stubbs, Wheeler Martin, H. A. Gilliam and W. W. Clark for plaintiff.",
      "J. W. Hinsdale and Shepherd & Shepherd for defendant."
    ],
    "corrections": "",
    "head_matter": "FARMERS AND MERCHANTS BANK OF WILLIAMSTON v. GERMANIA LIFE INSURANCE COMPANY.\n(Filed 25 May, 1909.)\n1.- Principal and Agent \u2014 Negotiable Instruments \u2014 \u201cKiting\u201d Checks\u2014 Purchaser \u2014 Lack of Authority \u2014 Notice Implied.\nThe \u201ckiting\u201d of checks from one hank to another, a method to sustain a false credit at the banks or to temporarily raise funds, will' not be unified as being within the scope of the authority conferred by a life insurance company upon its general State agent; and a bank having actual or implied notice of such transactions will be presumed to have knowledge of the agent\u2019s lack of authority. .\n2. Principal and Agent \u2014 Negotiable Instruments \u2014 \u201cKiting\u201d Checks\u2014 Authority of Agent \u2014 Evidence\u2014Questions for Jury.\nWhen it appears that a generp.1 State agent of a life insurance company has been \u201ckiting\u201d the company\u2019s checks between banks for his individual purposes, and that one of these checks, purchased by the plaintiff bank/ was drawn by the cashier of the insurance company to the general agent, and by him, as such, endorsed for value, and when there is evidence that both the cashier and general agent had authority to draw checks, and that the bank was a purchaser without notice, the question of notice is for the jury, and their finding the issue in the negative, under correct instructions, will not be disturbed on appeal, though tlje greater weight of the evidence may be to the contrary.\n3. Principal and Agent \u2014 Negotiable Instruments \u2014 \u201cKiting\u201d Checks\u2014 Authority of Agent \u2014 Evidence\u2014Burden of Proof.\nIn an action to recover upon one of a series of \u201ckiting\u201d checks, alleged to have been made by the cashier or general State agent of an insurance company, under authority conferred by his company, and to have been acquired for value by the plaintiff, the burden of proof is on plaintiff to show that the cashier or general agent had the authority alleged.\n4. Verdict Set Aside \u2014 Trial Court \u2014 Discretion\u2014Preponderance of Evidence \u2014 Exception to Verdict \u2014 Appeal and Error.\n\u25a0 It is within the discretion of the trial judge, to set a verdict aside as being against the preponderance of the evidence, and this question will not be considered on appeal upon exception to a verdict and judgment thereon, at least in the absence of gross abuse in the exercise of the discretion.\n5. Issues Sufficient \u2014 Issues Tendered.\nWhen the issues submitted to a jury \u00e1re sufficient to present all the controverted matters in the case, there is no error in refusing issues tendered.\nActioN tried before Biggs, J., and a jury, at June Term, 1907, of Martin.\nDefendant appealed.\nH. W. Stubbs, Wheeler Martin, H. A. Gilliam and W. W. Clark for plaintiff.\nJ. W. Hinsdale and Shepherd & Shepherd for defendant."
  },
  "file_name": "0770-01",
  "first_page_order": 814,
  "last_page_order": 820
}