
109 S.E.2d 189 (1959)
250 N.C. 466
STATE PLANTERS BANK
v.
COURTESY MOTORS, INC.
No. 665.
Supreme Court of North Carolina.
June 12, 1959.
*193 Vaughn, Hudson, Ferrell & Carter and Robert G. Stockton, R. M. Stockton, Jr., and Norwood Robinson, Winston-Salem, for plaintiff, appellee.
Womble, Carlyle, Sandridge & Rice and Wade M. Gallant, Jr., Winston-Salem, for defendant, appellant.
PARKER, Justice.
Plaintiff alleges that it is the owner and holder in due course of the cheque sued on, and entitled to enforce payment of it for the full amount against defendant. Defendant stopped payment on its cheque for $11,142.61 issued to Motor Company and duly endorsed in blank by it, and alleges as a defense of this civil action that plaintiff is not the owner and holder in due course of the cheque, but was acting only as a collecting agent for Motor Company, against whom defendant claims it has a good defense.
Pursuant to the provisions of G.S. §§ 1-184, 1-185 the parties waived a jury trial. The Judge's findings of fact are set forth in ten numbered paragraphs. His conclusions of law are set forth in two numbered paragraphs. Defendant has no assignment of error as to the first eight findings of fact.
Defendant does assign as errors the ninth and tenth findings of fact, the two conclusions of law, and the judgment entered. The ninth and tenth findings of fact are in substance as follows: It was the intention of plaintiff and Motor Company, when defendant's cheque for $11,142.61 payable to Motor Company was duly endorsed and delivered by Motor Company to plaintiff, that this cheque would become the exclusive property of plaintiff, that title thereto should pass unconditionally to plaintiff, that such transaction constituted a sale of this cheque to plaintiff for value, and plaintiff became the owner thereof. That this cheque for $11,142.61 is complete and regular on its face; that plaintiff became the holder and owner of this cheque before it was overdue and without notice of any previous dishonor; that plaintiff took this cheque in good faith and for value; that this cheque was endorsed in blank by Motor Company and delivered to plaintiff, and was purchased by plaintiff, who at the time had no notice of any infirmity in this cheque or defect in the title of Motor Company.
There is evidence in the Record to this effect: At the close of business on 17 October 1957 Motor Company had a balance in its account with plaintiff in the amount of $712.62. On that day plaintiff had received cheques amounting to between $11,000 and $12,000 drawn on it by Motor Company. These were cheques Motor Company had mailed from Walnut Cove. Correspondent banks had mailed these cheques to plaintiff. The president of plaintiff at the close of business that day saw the president of Motor Company, and told him if plaintiff honored these cheques, Motor Company would be overdrawn between $11,000 and $12,000. The president of Motor Company asked him how long he would give him to get the money. He replied until 12:30 p. m. the following day, when plaintiff had to pay the cheques or return them. The next morning the president of Motor Company said to the president of plaintiff: "I have got the money in sight, and I have made all the arrangements, and I will have the money here by 12:30 like you demanded it." About one o'clock p. m. on 18 October 1957 Motor Company deposited with plaintiff the cheque for $11,142.61 issued and dated that day by defendant to Motor Company as payee, duly endorsed in blank by it as payee, and received a deposit slip reciting, among other things, that "in receiving items for deposit or collection, this Bank acts only as depositor's collecting agent." This cheque is negotiable in form and regular and complete on its face. All of the *194 proceeds of this cheque for $11,142.61 were used by plaintiff to pay cheques of Motor Company drawn on it, and which were on hand on the morning of 18 October 1957. When the president of Motor Company deposited this cheque about one o'clock p. m. on 18 October 1957, the president of plaintiff told him additional cheques of Motor Company totaling about $10,000 had come in. Plaintiff returned these additional cheques unpaid for lack of funds to pay them. The inference from this evidence is permissible, if not demanded, that at the time this cheque for $11,142.61 was negotiated to plaintiff, it took it in good faith, and had no notice of any infirmity in the instrument, or defect in the title of Motor Company. On 21 October 1957 defendant learned that Wachovia Bank & Trust Company had mortgages totaling $11,195.29 on the Ford automobiles it bought from Motor Company, and stopped payment on its cheque for $11,142.61 issued to Motor Company as payee. On 22 or 23 October 1957 plaintiff received notice that payment of this cheque had been stopped.
The real determinative question presented to the Trial Judge was whether plaintiff is the owner or a collecting agent of this cheque of $11,142.61. The deposit contract is a matter about which plaintiff and Motor Company had a legal right to make their own contract, so long as the rights of third parties are not injuriously affected, and it is not contrary to law or public policy. Clark v. Butts, 240 N.C. 709, 83 S.E.2d 885; 7 Am.Jur., Banks, Section 442. What the contract between them is with respect to the title of this cheque depends on their intention to be determined as a fact from the evidence. Worth Co. v. International Sugar Feed No. 2 Co., 172 N.C. 335, 90 S.E. 295; Sterling Mills v. Saginaw Milling Co., 184 N.C. 461, 114 S.E. 756; Denton v. Shenandoah Milling Co., 205 N.C. 77, 170 S.E. 107; 9 C.J.S. Banks and Banking § 221, p. 473. "Such intention must, however, be determined as of the date when the deposit is made, and not in the light of subsequent events." 7 Am.Jur., Banks, p. 319. "The heart of a contract is the intention of the parties." Jones v. Palace Realty Co., 226 N.C. 303, 37 S.E.2d 906, 907.
There can be no doubt about the fact that Motor Company and plaintiff intended, when this cheque for $11,142.61 was deposited, that the entire proceeds of the cheque should be used by plaintiff immediately upon deposit to pay the cheques of Motor Company, which plaintiff had received the day before from correspondent banks, and had no funds on deposit of Motor Company to pay, and it was so used. All the evidence plainly shows that Motor Company had no funds against which defendant's cheque could be charged back, if it was dishonored or payment upon it stopped. This cheque was for $11,142.61, and Motor Company at the close of business on 19 October 1957 had on deposit with plaintiff $274.35, and thereafter its deposit never exceeded $124.
Although the overwhelming majority of the courts have held that the mere crediting of the proceeds of a cheque to the account of its depositor will not, without more, make the bank a holder in due course of the cheque, it has been held or stated by a large majority of the courts that when the bank permits its depositor to withdraw completely or otherwise completely employ the proceeds of the cheque deposited in advance of collection and prior to receipt of any notice that payment of the cheque has been stopped or that there is any infirmity in the cheque or defect in the title of the person negotiating it, the bank of deposit, in the absence of an agreement to the contrary, has given value for the cheque, and is the owner of it and a holder in due course. Bank v. McNair, 114 N.C. 335, 19 S.E. 361; Latham v. Spragins, 162 N.C. 404, 78 S.E. 282; Standard Trust Co. of New York v. Commercial Nat. Bank, 166 N.C. 112, 81 S.E. 1074; Franklin Nat. Bank v. Roberts Bros. Co., 168 N.C. 473, 84 S.E. 706; Ledwell v. Shenandoah Milling Co., 215 N.C. 371, 1 S.E.2d *195 841; Lowrance Motor Co. v. First Nat. Bank, 5 Cir., 238 F.2d 625, 59 A.L.R.2d 1164; 9 C.J.S. Banks and Banking § 221, pp. 474-475; 10 C.J.S. Bills and Notes § 316b; 8 Am.Jur., Bills and Notes, Section 442; 7 Am.Jur., Banks, Section 452; Annotation 59 A.L.R.2d pp. 1181-1184.
G.S. § 25-31 provides that "where value has at any time been given for the instrument the holder is deemed a holder for value in respect to all parties who became such prior to that time." In Bank of Sutton v. Skidmore, 113 W.Va. 25, 167 S.E. 144, 146, the Court said in respect to a statute similar to G.S. § 25-31: "This rule also antedates the N. I. L. Lord Ellenborough said in 1807 that when paper was left with a banker for collection, he became an agent, but, `If the banker discount the bill or advance money upon the credit of it that alters the case; he then acquires the entire property in it, or has a lien on it pro tanto for his services (sic).' Giles v. Perkins, 9 East, 12, 14." In our copy of English Reports, Full Reprint, 103, p. 477, 478, (King's Bench Book 32), the last word in the quotation from Giles v. Perkins reads advance instead of services.
Defendant contends that the notice upon the deposit slip received by Motor Company, when it deposited the $11,142.61 cheque, reciting that plaintiff acts as a collecting agent in receiving this cheque, and that the cheque is credited to Motor Company's account subject to final payment in cash or solvent credits, prevents the passing of title of this cheque to plaintiff.
The bank may waive such a provision. 7 Am.Jur., Banks, p. 326. In Ledwell v. Shenandoah Milling Co., supra [215 N.C. 371, 1 S.E.2d 844], there were similar recitals in the deposit slip. The Court in awarding a new trial said: "Under the evidence in this cause it clearly appears that the draft in question was originally deposited with the appellant under a written agreement that the bank was to act as collector. This agreement being in writing, it is not subject to contradiction by proof that another and a different agreement was in fact at the time made. There is, however, evidence offered by the appellant from which a jury might permissibly draw the conclusion that after the proceeds of this draft were deposited in the appellant bank they were drawn against by the depositor and the checks were honored by the bank, and that in fact, the proceeds of the draft were actually paid to the depositor. * * * Upon a consideration of the authorities on the subject, we are of the opinion that the appellant has offered sufficient evidence to require the submission of this cause to a jury on the question as to whether the original agreement that the bank should act as collector only was thereafter waived."
In the instant case it clearly appears from the evidence that when the $11,142.61 cheque was deposited with plaintiff the agreement between Motor Company and plaintiff was that all of the proceeds from it were to be used to pay cheques of Motor Company which plaintiff had received the day before, and which Motor Company had no funds on deposit to pay, and were so used, and that Motor Company and plaintiff used the standard form of a deposit slip. Regardless of formal statements on a deposit slip such as that deposits are accepted for collection only, or that items are credited conditionally, or are subject to final payment, if the facts and circumstances surrounding the making of the deposit indicate at the time it was made it was the actual agreement and intention of the parties that the depositor might withdraw completely the deposit, or otherwise completely employ it, and he does so, the title to the item deposited thereupon passes to the bank. Lowrance Motor Co. v. First Nat. Bank, supra; McAuley v. Morris Plan Bank of Virginia, 155 Va. 777, 156 S.E. 418; 9 C.J.S. Banks and Banking § 221, pp. 475-476; Annotations: 99 A.L.R. 497, 59 A.L.R.2d 1181, 1187. "The more recent cases, however, do not regard such statements as conclusive upon the question of title; they take the position that they should be considered in determining whether the parties intended *196 that title to commercial paper should pass to the bank, but they yield to the actual agreement of the parties as evidenced by a course of conduct or otherwise." 7 Am. Jur., Banks, p. 326. See Universal C. I. T. Credit Corp. v. Guaranty Bank & Trust Co., D.C.1958, 161 F.Supp. 790.
Considering the facts and attendant circumstances surrounding the making of the deposit of the cheque sued on and the use made of the entire proceeds of this cheque, and the recitals in the deposit slip, it was an issue of fact for the Trial Judge to determine, a jury trial having been waived, as to whether plaintiff and Motor Company intended by the actual agreement between them, when the cheque was deposited, that title to the cheque sued on should pass to plaintiff, or that plaintiff should receive the cheque as a collecting agent.
There is substantial competent evidence in the Record to support the Court's findings of fact numbered nine and ten. Such being the case, these findings of fact are as binding as the verdict of a jury, and are conclusive on appeal. State ex rel. North Carolina Milk Commission v. Galloway, 249 N.C. 658, 107 S.E.2d 631; St. George v. Hanson, 239 N.C. 259, 78 S.E.2d 885.
First-Citizens Bank & Trust Co. of Dunn v. Raynor, 243 N.C. 417, 90 S.E.2d 894, relied on by defendant, is distinguishable. In that case the bank was not a holder in due course of the cheque sued on, and further the evidence was susceptible of only one construction, and that was that the bank received the cheque as an agent for collection.
The findings of fact support the first conclusion of law that plaintiff is a holder in due course of the cheque for $11,142.61. G.S. § 25-58.
Subject to certain limitations, e. g., when a negotiable instrument is declared void by statute, legal incapacity to contract, fraud in the factum, which are not relevant to the case sub judice, the rule under the law merchant and also under the Uniform Negotiable Instruments Act is that a bona fide holder of a negotiable instrument in due course holds a title valid as against all the world. Reddick v. Jones, 28 N.C. 107; Glenn v. Farmers' Bank, 70 N.C. 191; Ward v. Sugg, 113 N.C. 489, 18 S.E. 717, 24 L.R.A. 280; Planters' Bank & Trust Co. v. Felton, 188 N.C. 384, 391-392, 124 S.E. 849, 854; M. & J. Finance Corporation v. Rinehardt, 216 N.C. 380, 5 S.E.2d 138; 10 C.J.S. Bills and Notes, §§ 482, 499(b), 503, 506(a), (b), (c) and (d); 8 Am.Jur., Bills and Notes, Section 355.
As plaintiff is a holder in due course under our Negotiable Instruments Act of this cheque for $11,142.61, it holds the cheque free from any defect of title of Motor Company and free from any defense available to defendant against Motor Company, and may enforce payment of the cheque for the full amount against defendant. G.S. § 25-63; Federal Reserve Bank of Richmond, Va. v. Atmore, 200 N.C. 437, 157 S.E. 129; Branch Banking & Trust Co. v. Boykin, 192 N.C. 262, 134 S.E. 643; American Nat. Bank v. Starkey, 190 N.C. 867, 129 S.E. 727; 8 Am.Jur., Bills and Notes, Sections 355, 356. For a similar statement of the law by this Court under the law merchant see: Reddick v. Jones, supra; Glenn v. Farmers' Bank, supra; Ward v. Sugg, supra; Planters' Bank & Trust Co. v. Felton, supra.
The findings of fact support the second conclusion of law that defendant is liable to plaintiff for the full amount of this cheque for $11,142.61, with interest.
The findings of fact are sufficient to support the conclusions of law, and the judgment based thereon. Southern Box & Lumber Co. v. Home Chair Co., 250 N.C. 71, 108 S.E.2d 70; Woody v. Barnett, 239 N.C. 420, 79 S.E.2d 789.
All defendant's assignments of error are overruled. The judgment below is
Affirmed.
