{ "id": 8628423, "name": "GREAT ATLANTIC AND PACIFIC TEA COMPANY v. GURNEY P. HOOD, Commissioner of Banks, as Liquidating Agent of the BANK OF BEAUFORT", "name_abbreviation": "Great Atlantic & Pacific Tea Co. v. Hood", "decision_date": "1933-11-01", "docket_number": "", "first_page": "313", "last_page": "317", "citations": [ { "type": "official", "cite": "205 N.C. 313" } ], "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": "202 N. C., 388", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8626606 ], "opinion_index": 0, "case_paths": [ "/nc/202/0388-01" ] }, { "cite": "165 Atl., 895", "category": "reporters:state_regional", "reporter": "A.", "opinion_index": 0 }, { "cite": "204 N. C., 353", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8618213 ], "opinion_index": 0, "case_paths": [ "/nc/204/0353-01" ] }, { "cite": "204 N. C., 143", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8613049 ], "opinion_index": 0, "case_paths": [ "/nc/204/0143-01" ] }, { "cite": "204 N. C., 140", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8612999 ], "opinion_index": 0, "case_paths": [ "/nc/204/0140-01" ] }, { "cite": "100 Ind., 516", "category": "reporters:state", "reporter": "Ind.", "opinion_index": 0 } ], "analysis": { "cardinality": 539, "char_count": 11585, "ocr_confidence": 0.46, "pagerank": { "raw": 1.1329240581850794e-07, "percentile": 0.5764212508142367 }, "sha256": "7b9220977d3a4a32f233b16c06b9a7d3cf632fc072ed9bcd2d98c94017825766", "simhash": "1:ce8586e75b02967c", "word_count": 2021 }, "last_updated": "2023-07-14T16:12:31.066060+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "GREAT ATLANTIC AND PACIFIC TEA COMPANY v. GURNEY P. HOOD, Commissioner of Banks, as Liquidating Agent of the BANK OF BEAUFORT." ], "opinions": [ { "text": "OlaeksoN, J.\nThe question involved is succinctly set forth in the 4th paragraph of the complaint, as f.ollows: \u201cThat on Saturday, 12 September, 1931, the plaintiff (through its local manager) at Beaufort, North Carolina, purchased over the counter from the Bank of Beaufort a cheek on the Hanover Bank of New York in the sum of $330.00 and on Monday, 14 September, 1931, it purchased a similar check in the sum of $254.58, and that on each occasion the cash was paid to the Bank of Beaufort for said checks. That the Bank of Beaufort closed its doors on Tuesday, 15 September, 1931, and the two- checks aforesaid on the Hanover Bank of New York were turned down by said bank.\u201d In the distribution of the assets of the insolvent bank, is this a preference? We think not.\nThe statutory order of preference in distribution of the assets of an insolvent bank, is as follows: \u201cThe following shall be the order and preference in the distribution of the assets of any bank liquidation hereunder: (1) Taxes and fees due the Commissioner of Banks for examination or other services; (2) wages and salaries due officers and employees of the bank, for a period of not more than four months; (3) expenses of liquidation; (4) certified checks and cashier\u2019s checks in the hands of third party as a holder for value and amounts due on collections made and unremitted for or for which final actual payment has not been made by the bank; (5) amounts due creditors other than stockholders,\u201d etc. N. C. Code of 1931 (Michie), section 218(c), part subsec. (14).\nIt will be observed that the complaint does not allege that the check was a \u201ccertified check\u201d or \u201ccashier\u2019s check in the hands of third party as a holder for value\u201d or \u201camounts due on collections,\u201d etc., as contemplated by the statute.\nThe transaction is that of debtor and creditor. If it were otherwise in every transaction involving the relationship of debtor and creditor, near to a bank\u2019s going into- liquidation on account of insolvency, it would be claimed a preference \u2014 thus destroying the well recognized maxim that \u201cequality is equity.\u201d\nCiting a wealth of authorities (where there is no statute), the principle is thus stated in Standard Oil Co. v. Veigel (Minn.), 219 N. W., p. 863 (864) : \u201cIt is well settled that the purchase of a bank draft, a cashier\u2019s check or a certified check creates the relation of debtor and creditor between the bank and the purchaser, and that the purchaser is not entitled to a preference over other general creditors of the bank from which it was purchased.\u201d\nThe matter is exhaustively discussed in Harrison, receiver, v. Wright, 100 Ind., 516, the headnote is as follows: \u201cWhen properly filled out with the date, amount, the names of drawer and payee, the following is a banker\u2019s check: . . . \u2018Indianapolis, Ind., ., 1883. No. Pay to the order of., . dollars. , cashier. To the United States National Bank, New York.\u2019 . . . Such a check, drawn upon the drawers\u2019 bank, without words of transfer, and drawn upon no particular designated fund, does not, of itself, either as between the drawer and drawee, or drawer and payee or holder of the check, operate as an appropriation or equitable assignment of a fund in the hands of the drawee. Nor does it operate as an assignment of a part of the drawee\u2019s chose in action against the drawee; and hence the holder of such a check is not entitled to a preference as against the depositors and general creditors of an insolvent drawer.\u201d At pp. 543-544 it is said: \u201cSome of the checks were purchased with cash by persons who were not depositors with the bank; others by depositors giving their cheeks. The court below held that the checks purchased with cash should, for that reason, be paid in full, and that the other checks should share pro rata with the other debts. We can see no substantial reason for such a preference. If the depositors had withdrawn the amount from the bank, and with this purchased the checks, it might well be said that they purchased them with cash. Whether the checks were paid for in cash or by the checks, the bank in each case received the amount of them. . . . There is nothing in the case to create a superior equity in favor of the check-holders as against the depositors and other creditors. No fraud is charged or shown whereby the payees were induced to part with their money for the checks. They were purchased in the usual course of business. The assets of the bank will not pay its debts in full. The depositors deposited their money, relying upon the credit of the bank, that the amounts would be repaid to them when called for. The payees purchased the checks, relying upon the credit of the bank, that the amounts paid for them would be refunded if, for any cause, the checks should not be paid by the drawees. It is a case where equality among the creditors is equity.\u201d Williams v. Hood, Comr., 204 N. C., 140; In re Bank of Pender, 204 N. C., 143; Board of Education v. Hood, Comr., 204 N. C., 353; Bassett v. West Haven Bk. & Tr. Co. (Conn.), 165 Atl., 895.\nThe allegations in section 5 of the complaint is a conclusion of law'. The demurrer to the plaintiff\u2019s pleading admits plaintiff\u2019s allegations of fact, but not inference or conclusions of law. Phifer v. Berry, 202 N. C., 388.\nThere seems to be a conflict of law in the different jurisdictions on the question involved in this action, but we believe the majority opinion is in conformity with the view we take. For the reasons given, the judgment in the court below is\nEeversed.", "type": "majority", "author": "OlaeksoN, J." } ], "attorneys": [ "T. G. Guthrie and Warren & Warren for plaintiff.", "Julius F. Duncan for defendant." ], "corrections": "", "head_matter": "GREAT ATLANTIC AND PACIFIC TEA COMPANY v. GURNEY P. HOOD, Commissioner of Banks, as Liquidating Agent of the BANK OF BEAUFORT.\n(Filed 1 November, 1933.)\n1. Banks and Banking H e \u2014 Complaint held insufficient to state causo of action for preference in insolvent hank\u2019s assets.\nWhere in an action against the receiver of an insolvent bank to have plaintiff\u2019s claim declared a preference in the bank\u2019s assets, the complaint alleges that plaintiff purchased with cash the bank\u2019s check drawn on another bank, which check was -not paid on account of the' later insolvency of drawer bank, and the complaint does not allege that the check was a certified check or a cashier\u2019s check in the hands of a third person as a holder for value, or represented sums collected by the drawer bank and not paid: Held, defendant\u2019s demurrer is properly sustained, the complaint failing to allege facts sufficient to constitute the claim a preference either under the provisions of N. C. Code, 218(c) (14), or under tile trust fund theory, and the allegations of the complaint that the claim constituted a preference may be disregarded on demurrer as a conclusion of law.\n2. Pleadings D e\u2014\nA demurrer admits allegations of fact in the complaint but not inferences or conclusions of law therein.\nAppeal by defendant from Orady, J., at June Term, 1933, of CaRteket.\nReversed.\nTbe allegations of tbe complaint of plaintiff, are as follows:\n\u201c1. That tbe Great Atlantic and Pacific Tea Company was, at all times mentioned, and is now, a corporation created, organized and existing under tbe laws of tbe State of Arizona, and during all of said times and is now engaged in tbe mercantile business in tbe State of. North Carolina and elsewhere, with a branch store in Beaufort, Carteret County, North Carolina.\n2. That tbe Bank of Beaufort was created, organized and existing under tbe banking laws of tbe State of North Carolina, with principal office in Beaufort, Carteret County, North Carolina, and before its suspension was engaged in general banking business at Beaufort, N. 0.\n3. That said Bank of Beaufort, on account of insolvency, suspended business on 15 September, 1931, and was taken over for liquidation by Gurney P. Hood, Commissioner of Banks of tbe State of North Carolina, and in accordance with tbe provisions of tbe banking laws of said State, said Hood, together with H. H. Taylor, former liquidating agent, and bis successor, W. A. Allen, were at tbe times mentioned herein, and are now, in charge of tbe liquidation of tbe assets of said bank.\n4. That on Saturday, 12 September, 1931, tbe plaintiff (through its local manager) at Beaufort, North Carolina, purchased over tbe counter from tbe Bank of Beaufort a check on the Hanover Bank of New York in tbe sum of $330.00 and on Monday, 14 September, 1931, it purchased a similar check in tbe sum of $254.58, and that on each occasion tbe cash was paid to tbe Bank of Beaufort for said checks. That.tbe Bank of Beaufort closed its doors on Tuesday, 15 September, 1931, and tbe two checks aforesaid on tbe Hanover Bank of New York were turned down by said bank.\n5. That tbe plaintiff is advised and informed and believes and so avers, that tbe amount of $584.58, representing tbe amount paid in cash by plaintiff to tbe Bank of Beaufort for tbe two New York checks aforesaid is a preferred lien on tbe assets of tbe Bank of Beaufort in tbe bands of tbe defendant; that said amount is a trust fund and it would be fraudulent and inequitable to permit tbe assets of tbe Bank, of Beaufort to be increased and augmented for tbe benefit of tbe general creditors at tbe expense of this plaintiff.\n6v 'That this plaintiff, in due time, and in proper form, filed with the defendant its claim for $584.58, being the amount paid in cash for the two New York checks, as a preference and lien on the assets of the Bank of Beaufort, in the hands of the defendant; and the defendant, while admitting the correctness of the amount, did, on 12 December, 1932, deny said claim of the plaintiff as a preference and lien on the assets of the Bank of Beaufort.\nWherefore, plaintiff demands judgment against the defendant as follows: (a) That its claim of $584.58 be declared a preference and a lien on the assets of the Bank of Beaufort in the hands of the defendant, (b) That the defendant be directed to approve said claim as a preference and to pay the same, (c) For costs and general relief.\u201d\nThe defendant demurred on the following grounds:\n\u201c1. That said complaint does not state facts sufficient to constitute a cause of action for a preference and lien on the assets of the Bank of Beaufort in the hands of the defendant Commissioner of Banks of the State of North Carolina, in that: (a) It appears upon the face of the complaint that plaintiff\u2019s claim is not within the purview of the preference statute controlling, to wit: Consolidated Statutes (Code, 1931),-section 218(c), subsec. (14); no fact or circumstance being alleged to invoke said statute and/or the construction thereof by the Supreme Court of North Carolina; (b) It appears upon the face of the complaint that item claimed in preference is not 'collection,\u2019 certified or cashier\u2019s cheek in hands of third party for value; (c) Upon the face of the complaint no trust is declared sufficient to raise the application of principle of 'trace\u2019 or 'augmentation\u2019 of assets, or to avoid the application of the statute cited. Wherefore, order appropriate is prayed.\u201d\nThe judgment of the court below was as follows: \"This cause coming on to be heard upon the complaint and defendant\u2019s demurrer, and the court being of the opinion, upon the allegations of the complaint, that a good cause of action is stated, and that upon the facts as alleged, if true, the plaintiff would be entitled to a preference \u2014 it is therefore, ordered and adjudged that the demurrer be overruled, and defendants are allowed 20 days to file answer, if so advised.\u201d\nDefendant excepted, assigned errors and appealed to the Supreme Court.\nT. G. Guthrie and Warren & Warren for plaintiff.\nJulius F. Duncan for defendant." }, "file_name": "0313-01", "first_page_order": 377, "last_page_order": 381 }