#### BANK OF WINDSOR v. CLARK PEANUT COMPANY, Inc., and BIRDSONG & COMPANY, Inc.

(Filed 13 March, 1929.)

Bills and Notes — Checks and Drafts — Rights and Liabilities of Banks in Course of Collection — Agency.

A bank that receives for collection drafts from the duly authorized agent of another and advances the money on them, of which the principal receives the benefit, and the drafts are not paid when presented to the drawee bank in due course for collection owing to its insolvency, the bank of deposit may maintain an action against the principal for the money so advanced, when it is found as a fact, by the trial court, to which no exception is taken, that the collecting bank was the agent of the drawee and not the owner of the drafts, on the ground that the principal is liable for the default of his agent.

Appeal by defendants from Midyette, J., at August Term, 1928, of Beetle.

Affirmed.

Action for tbe recovery of money paid by plaintiff to tbe agent of defendants, on drafts drawn by said agent on defendant, Clark Peanut Company, Inc.; said money was used by said agent for tbe purchase of peanuts on account of defendants, as partners. Tbe peanuts purchased by said agent and paid for with said money were shipped to and received by defendants.

Said drafts were duly presented to Clark Peanut Company, Inc., for payment, by tbe United Commercial Bank, of Plymouth, N. 0., agent *731of said Peanut Company, Inc., and paid by said company. Plaintiff, however, bas not received from said United Commercial Bank of Plymouth payment for said drafts.

By consent, a trial by jury was waived, and the facts found by the court. '

From judgment that plaintiff recover of defendants the money paid by it to defendants’ agent, defendants appealed to the Supreme Court.

Winston & Matthews for plaintiff.

Ward & Grimes and MacLean & Bodman for defendants.

CoNNOR, I.

On 5 January, 1925, ~W. A. Tadloek, a resident of Bertie County, North Carolina, drew two drafts, one for $1,419.46, and the other for $1,922.95, both payable to the order of the Bank of Windsor, of Windsor in said county and State, the plaintiff in this action. Both said drafts were drawn on Clark Peanut Company, Inc., of Plymouth, N. C. Both were payable at sight. These drafts were delivered by the said W. A. Tadloek to the Bank of Windsor, on 6 January, 1925. The Bank of Windsor credited the account of said W. A. Tadloek with the full amount of said drafts, and thereafter charged to his account his checks, aggregating the full amount' of said credit. The Bank of Windsor thus paid to W. A. Tadloek the sum of $3,342.41, the amount of said drafts.

On 7 January, 1925, the Bank of Windsor forwarded said drafts, by mail, to the National Bank of Commerce, of Norfolk, Ya., which duly acknowledged receipt of same, and credited the Bank of Windsor with their amount; on 8 January, 1925, the National Bank of Commerce forwarded said drafts, by mail, to the United Commercial Bank of Plymouth, N. 0., for presentment to and collection from Clark Peanut Company, Inc. On 10 January, 1925, the said drafts were duly presented for payment by the United Commercial Bank of Plymouth to Clark Peanut Company, Inc.; on said day Clark Peanut Company, Inc., delivered to said United Commercial Bank of Plymouth its checks, one for $1,419.46, and the other for $1,922.95, both drawn on said bank in payment of said drafts; the said checks were charged to the account of said Clark Peanut Company, Inc., by the said United Commercial Bank, and thereafter delivered to said Clark Peanut Company, Inc., marked “Paid.” At the time said checks were charged to its account the Clark Peanut Company, Inc., had on deposit with the said bank, to its credit, a sum in excess of the amount of said checks, and the said bank had assets in cash and deposits in solvent banks, largely in excess of said amount. Upon its receipt of said checks, the United Commercial Bank delivered the said drafts, marked “Paid,” to Clark Peanut Com*732pany, Inc. Tbe Clark Peanut Company, Inc., thus paid to tbe United Commercial Bank of Plymouth, tbe drafts drawn on it by W. A. Tad-loek, payable to tbe order of tbe Bank of Windsor.

On 13 January, 1925, tbe United Commercial Bank of Plymouth remitted to tbe National Bank of Commerce of Norfolk, from whom it bad received said drafts for presentment and collection, by its check on tbe Seaboard National Bank of Norfolk, for tbe proceeds of said drafts. This check was duly presented for payment by tbe National Bank of Commerce to tbe Seaboard National Bank. Payment of said check was refused by tbe Seaboard National Bank because tbe drawer, United Commercial Bank of Plymouth, bad no funds to its credit with tbe said drawee bank. Tbe National Bank of Commerce thereupon charged tbe Bank of Windsor with tbe amount of said drafts, thus offsetting tbe credit which it bad given said Bank of Windsor when it received said drafts. Tbe Bank of Windsor thus has not received payment for said drafts; tbe amount paid by it to W. A. Tadlock, on account of said drafts, is now due and owing to tbe plaintiff, Bank of Windsor.

On 14 January, 1925, tbe United Commercial Bank of Plymouth closed its doors and ceased to do business. On said day, and for some time prior thereto, it was hopelessly insolvent. A receiver for said bank has been duly appointed.

On 6 January, 1925, tbe day on which tbe drafts drawn by W. A. Tadlock were received by tbe Bank of Windsor and credited to bis account, tbe said W. A. Tadlock was tbe agent of tbe Clark Peanut Company, Inc., and as such agent was authorized to buy peanuts for said company from farmers in Bertie County. As such agent be was authorized to draw on said company for money with which to pay for peanuts bought by him for said company. Tbe drafts drawn by W. A. Tadlock on 5 January, 1925, and deposited by him in tbe Bank of Windsor, on tbe next day thereafter, were drawn and deposited for tbe purpose of procuring money at Windsor with which to pay for peanuts bought by tbe said W. A. Tadlock for tbe defendants, Clark Peanut Company, Inc., and Birdsong & Company, Inc., as partners. Tbe peanuts bought by W. A. Tadlock and paid for by him with tbe money procured from tbe Bank of Windsor on said drafts were shipped to and received by defendants.

For tbe purpose of providing their agent, W. A. Tadlock, with money to pay for said peanuts, defendants authorized tbe said W. A. Tadlock to draw tbe drafts, which tbe Bank of Windsor received as deposits from tbe said W. A. Tadlock, and upon which it paid him tbe money which it now seeks to recover. Tbe Bank of Windsor, tbe National Bank of Commerce, of Norfolk, Ya., and tbe United Commercial Bank of Ply-*733month were all agents of the Clark Peanut Company, Inc., for the collection of said drafts, and for tbe remittance of the proceeds thereof to the Bank of Windsor.

Plaintiff’s right to recover in this action is determined by the finding of the court, to which there was no exception, that the collecting bank was the agent of the drawee, and not agent of the payee or owner of the drafts. Defendants, therefore, and not the plaintiff, are liable for the default of the United Commercial Bank. Plaintiff has not been paid the money which it advanced to W. A. Tadlock, agent of defendants, and which said agent used for the purchase of peanuts which were shipped to and received by defendants. There is no error in the judgment that plaintiff recover said money with interest from the defendants. The judgment is supported by the principle that a principal is liable for the default of his agent, and is

Affirmed.