#### JOHN H. HALL, Administrator of B. L. BANKS, Deceased, v. GURNEY P. HOOD, Commissioner of Banks, ex. Rel. SAVINGS BANK AND TRUST COMPANY OF ELIZABETH CITY, N. C., MAUD K. BANKS, et al.

(Filed 20 March, 1935.)

1. Limitation of Actions A 1)—

A cause of action against the guarantor on a note accrues upon the maturity of the note and the failure of the maker to pay same according to its tenor. C. S., 405.

2. Limitation of Actions O a — Involuntary payment of note by application of funds of maker in hands of payee to note does not affect running of statute in favor of guarantor on note.

The liquidating agent of a bank wrongfully applied the deposit of an administrator to the payment of a note in the bank’s favor executed by *60the administrator for the estate. Thereafter, the application of the deposit was set aside, and the liquidating agent prayed judgment on the note against the maker and the guarantor of payment thereon. The guarantor of payment pleaded the three-year statute of limitations, O. S., 441 (1), more than three years having elapsed from the maturity of the note. *Held:*The action against the guarantor was barred, there having been no voluntary payment of the note.

Appeal by the defendant Maud K. Banks from *Crammer, J.,*at January Term, 1935, of Pasquotank:.

Reversed.

The defendant Gurney P. Hood, Commissioner of Banks, *ex rel.*Savings Bank and Trust Company of Elizabeth City, N. 0., which is now in his hands for liquidation because of its insolvency, has in his possession as an asset of said Savings Bank and Trust Company a note which is in words and figures as follows:

“$2,000.00. Elizabeth Citt, N. C., 5 December, 1930.

“Without grace, on 3 February, next after date, I promise to pay to the order of Savings Bank and Trust Company of Elizabeth City, N. C., two thousand dollars, at Savings Bank and Trust Company.

“No. 89178 — Due 3 Eeb. JohN H. Hall,

*Administrator of B. L. Bantes.”*

On the back of said note appear the following endorsements:

“Payment guaranteed. Protest', demand, and notice of nonpayment waived. Maud Kramek Banks.”

“Pay to the order of John H. Hall, administrator of B. L. Banks, without recourse on us. Savings Bane and Tkust Company,

*By*A. G. Small, *Liq. Agt*

This note was executed by John H. Hall as administrator of B. L. Banks and endorsed by Maud K. Banks, in renewal of a note for a like amount, which was executed by B. L. Banks and endorsed by Maud K. Banks, and was owned by the Savings Bank and Trust Company at the death of B. L. Banks, on 2 October, 1930.

After the said note came into the possession of the North Carolina Corporation Commission, the predecessor of the defendant Gurney P. Hood, Commissioner of Banks, upon the insolvency of the Savings Bank and Trust Company of Elizabeth City, N. C., A. G. Small, liquidating agent, charged the amount of said note to the account of the plaintiff,, marked the note paid, and tendered the same to the plaintiff, with his endorsement as now appears on the note. The plaintiff declined to accept *61tbe note, contending that the liquidating agent had no right, legal or equitable, to charge the same to his account. On 6 October, 1931, the plaintiff instituted this action for an order of the court directing the defendant Gurney P. Hood, Commissioner of Banks, to restore to his credit on his books the amount which had been wrongfully applied by the liquidating agent as a payment of the note.

On 11 May, 1934, pursuant to an order made in this^action, on the motion of the defendant Gurney P. Hood, Commissioner of Banks, summons was issued against the defendant Maud K. Banks, who was thereby made a party to the action. Thereafter judgment was rendered at May Term, 1934, directing the defendant Gurney P. Hood, Commissioner of Banks, to restore to the credit of the plaintiff on his books the amount which had been wrongfully applied by the liquidating agent in payment of said note.

In his answer to the complaint in this action the defendant Gurney P. Hood, Commissioner of Banks, prays judgment, in the event the court should direct him to restore to plaintiff’s credit the amount applied by the liquidating agent to the payment of said note, that he recover of the plaintiff as maker and of the defendant as guarantor on said note the sum of two thousand dollars and interest.

In her answer to the complaint, in defense of the cross-action alleged in the answer of Gurney P. Hood, Commissioner of Banks, against her, the defendant Maud K. Banks, among other things, says:

“15. That the cause of action, if any, which the defendant Gurney P. Hood, Commissioner of Banks, *ex rel.*Savings Bank and Trust Company of Elizabeth City, N. 0., may have had against this defendant, accrued more than three years prior to the issuing of summons in this action against her, and she pleads this lapse of time in bar of any recovery by the said Gurney P. Hood, Commissioner of Banks, of her in this action.”

On the foregoing facts, which appear in the statement of facts agreed by the parties to the controversy with respect, to said note, the court was of opinion that the cause of action of the defendant Gurney P. Hood, Commissioner of Banks, against the defendant Maud K. Banks is not barred by the three-year statute of limitations, and thereupon rendered judgment that the defendant Gurney P. Hood, Commissioner of Banks, *ex rel.*Savings Bank and Trust Company, recover of the defendant Maud K. Banks the sum of two thousand dollars, with interest thereon from 3 February, 1931.

From said judgment the defendant Maud 3L Banks appealed to the Supreme Court.

*Thompson & Wilson for Gurney P. Hood, Commissioner.*

*Worth & Horner for Maud K. Banlcs.*

*62CONNOR, I.

Tbe cause of action on tbe note involved in tbis action accrued on 3 February, 1931.

Tbe statute of limitations began to run at tbat date against tbe bolder and in favor of both tbe maker and tbe guarantor of tbe note. C. S., 405; *Trust Co. v. Clifton,*203 N. C., 483, 166 S. E., 334.

No voluntary payment has been made on tbe note since tbe cause of action accrued by either tbe maker or tbe guarantor. Tbe wrongful application by tbe liquidating agent of tbe Corporation Commission of tbe sum of $2,000, which be charged to tbe account of tbe maker, was not a voluntary payment of tbe note, and did not stop tbe running of tbe statute of limitations. See *Bank v. King,*164 N. C., 303, 80 S. E., 252. Tbe statute of limitations continued to run against tbe bolder and in favor of tbe guarantor of tbe note, until tbe issuing of summons in tbis action against tbe guarantor on 11 May, 1934.

More than three years having elapsed from tbe date tbe cause of action in tbis note accrued to tbe date of tbe commencement of tbis action, tbe action is barred. C. S., 441 (1). See *Trust Co. v. Clifton, supra.*

There was error in tbe judgment of tbe Superior Court in tbis action. Tbe judgment is

Reversed.