Title: Wachovia B. & T. Co. v. American Bank. Ins. Co. of Fla.

State: north-carolina

Issuer: North Carolina Supreme Court

Document:

146 S.E.2d 79 (1966) 266 N.C. 279 WACHOVIA BANK & TRUST COMPANY v. AMERICAN BANKERS INSURANCE COMPANY OF FLORIDA. No. 365. Supreme Court of North Carolina. January 14, 1966. *80 Taylor, Allen & Warren, Goldsboro, for plaintiff appellee. Dees, Dees & Smith, Goldsboro, for defendant appellant. DENNY, Chief Justice. The only assignment of error and the only exception entered by appellant is to the entry of the judgment appearing in the record, which judgment it contends is erroneous because of error made by the court below in interpreting the effect of the facts as set forth in the stipulation of facts. *81 The plaintiff and the defendant agree that the draft involved herein was non-negotiable. It was issued in Cincinnati, Ohio, on 20 December 1963, and contains the following language: "Pay only to Walter E. Bell and Federal Credit Union Eight Hundred Eighty-Four and 00/100 Dollars in full settlement, satisfaction, compromise and discharge of all claims and demands for loss and damage as herein described, to property covered in the policy named below, which is hereby reduced by said amount subject to policy provisions." The draft recites upon its face that it is "Collectible through The First National Bank of Miami, Miami, Florida, upon acceptance by American Bankers Insurance Co. of Florida." Defendant, in its further answer and defense, alleged that the policy issued to Walter E. Bell "did not cover any personal effects that said insured had in said trailer." It appears from the pleadings and the stipulation of facts that the draft in the sum of $884.00 was issued to cover loss of certain personal property burned in the mobile home of Walter E. Bell on 15 November 1963, and that the proof of loss filed with defendant was prepared by an adjuster or other agent of defendant. In the light of the stipulation of facts, the findings of the court below and the conclusion reached, we think the determinative question involved herein is whether or not the draft, having been drawn by a duly authorized agent of defendant, to cover a proof of loss prepared by defendant's duly authorized adjuster or other agent, was subject to acceptance before payment could be demanded. In the case of Cable & Wireless v. Yokohama Specie Bank, 191 Misc. 567, 79 N.Y.S.2d 597, defendant bank, a Japanese corporation, had an agency in New York. It drew a bill of exchange whereby it directed its New York agency to pay to the order of the plaintiff on demand. Before the draft was presented or any demand made for payment, the Superintendent of Banks of the State of New York took possession of the business and property of the Yokohama Specie Bank in New York for the purpose of liquidating the same. Plaintiff filed its proof of claim with the Superintendent. The Superintendent rejected the claim and the action was commenced. The Court said: In First National Bank of Huttig v. Rhode Island Ins. Co., 184 Ark. 812, 43 S.W.2d 535, the president of defendant insurance company drew a draft as follows: In the case of Creditors' Claim & Adjustment Co. v. Larson, 171 Wash. 575, 18 P.2d 844, in discussing a draft similar in form to that set out in the case of First National Bank of Huttig v. Rhode Island Ins. Co., supra, the draft contained the words "upon acceptance" and was signed "Harry Howes, General Adjuster." In discussing the legal principles involved, the Court said: "Our present problem is then reduced to this, Did the drawing of the draft here in question, signed by Harry Howes as general adjuster, constitute, in legal effect, a draft drawn by the insurance company upon itself?" The Court held that it did, and directed that judgment be entered against the insurance company, stating: Ordinarily, a bill of exchange must be accepted by the drawee named therein. However, there is an exception to this rule stated in 10 C.J.S. Bills and Notes § 171, page 646, as follows: In Berenson v. London & Lancashire Fire Ins. Co., 201 Mass. 172, 87 N.E. 687, relied upon by the defendant, a fire had damaged property insured by defendant insurance company. The loss had been tentatively adjusted between the insured and a special agent of the insurance company, whose authority to make payment or sign an instrument fixing its liability was limited to the extent of requiring approval or ratification by the Hartford Agency of defendant insurance company. The Court held that since the special agent's power was limited and subject to the approval of the defendant company, the company was within its right in refusing to accept the draft. In the instant case, it was stipulated that J. D. Murphy was the general agent of the defendant, with authority to draw the draft involved herein. It will be noted that the drafts involved in each of the cases discussed herein were negotiable instruments. Even so, there is nothing in the opinions to indicate that recovery was denied or allowed on the theory of being or not being a holder in due course. Each case turned upon the authority or lack of authority of the maker of the respective drafts. If there was a mistake in issuing the draft involved in the instant case, there is certainly no evidence of bad faith on the part of the insured or of the plaintiff. The proof of claim was prepared and caused to be executed by an agent or adjuster of defendant company. Moreover, the defendant company will be charged with knowledge of the contents of its own policy. The judgment of the court below will be upheld. Affirmed.