Branch Banking & Trust Co. v. Gill

237 S.E.2d 21 (1977)

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Branch Banking & Trust Co. v. Gill

North Carolina Supreme Court
237 S.E.2d 21 (1977)

SC

Facts

Southeastern Farmers Grain Association, Inc. (Southeastern) owned a grain-storage facility that it leased to Farmers Grain Elevator (Elevator). Southeastern received a line of credit from Branch Banking & Trust Company (the bank) (plaintiff). Under the terms of the agreement, Southeastern would deposit grain in the facility for Elevator, in exchange for warehouse receipts, which Southeastern would commit to the bank. At times, Southeastern did not deposit enough grain to cover the receipts committed to the bank. A worker at the warehouse issued 13 such receipts to Southeastern. These receipts were never properly indorsed by Southeastern. The bank was aware of the grain shortage and the improper indorsement of the receipts. Despite this, the bank processed the loan to Southeastern based on the receipts. Subsequently, Southeastern became insolvent. The bank sued Elevator, Southeastern, and others, seeking to recover on the 13 receipts. The trial court found in favor of Elevator and Southeastern. The bank appealed.

Rule of Law

Issue

Holding and Reasoning (Sharp, C.J.)

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