American National Bank v. Morey
69 S.W. 759
Ky. Ct. App.
1902
Check Treatment

Opinion ok .the court by

JUDGE HOBSON

Reversing.

On April 1, 1900. .'Joseph W. .Morey deposited with appellant, tine American National Bank, $150 to the credit oí the appellee, Virginia R. Morey, who was his wife. In the latter part of April. Morey raised a check given him by Belknap & Co. from $800 to $1.800, and drew the money on it from appellant. On May 4th he committed suicide. Appellant' settled with Belknap & Co. for the loss. On May 24th appellee deposited with the bank $72, and this was credited on her pass book underneath the $150 which had theretofore been entered on it. In the month of September, 1900, she was in Chicago, 111., taking lessons with Mrs. Leonide C. lavaron, with the idea of coming back to Louisville, and doing burnt-wood work. On September 15th, when she had been there one week, and expected 1» continue a month longer, slie gave Mrs. Lavaron a check for $30 on appellant, to pay for two weeks’ lessons and materials bought of ‘her. She had previously drawn two checks- for $25 each, which had been paid. When the $30 check reached appellant, it indorsed on it, ‘Tías hut twelve, dollars to her credit," and refused to pay it. The check was returned from Chicago, and, after passing through the hands'of the different indorsers, was returned'by Mrs. Lavaron to appellant. She was among strangers, had no *860friends in Chicago, was very much mortified, had a nervous chill, and finally had to he taken to her mother-in-law, at Englewood, 111. She telegraphed to Louisville, hut appellant persisted in refusing to pay, and finally money was forwarded to her from some relatives in Louisville, with which she paid Mrs. Lavaron, and, as we understand the evidence, returned to Louisville. In November she filed a suit against appellant to recover the balance of her deposit, and also filed this suit to recover damages for the refusal to pay the check of $30, charging that the statement of the defendant returned with the check was false and malicious, made with the intent to injure the plaintiff ; that by reason thereof her credit had been injured. she had been greatly humiliated, and had endured great mental suffering, to her damage in the sum of $1,000. After the suit to recover the deposit was filed, appellant paid to her the balance due as shown by her passbook, $162, and filed answer in the suit for damages, denying the allegations of the petition. That case was tried later, resulting in a verdict and judgment for $600, to reverse which this appeal is prosecuted.

The reason that, the bank did not pay the check was that it conceived the idea that the $150 deposited to appellee’s credit by her husband was his money, and that it had a right to set off against it the $1,000 it had lost by reason of his raising fhe Belknap check. So it charged off the $150 in her account, and credited it to his account. But it gave her no notice of this, and it manifestly had no right to do ■so. as far as the proof shows. The court instructed the jury that if at the time the check was presented to the defendant the plaintiff had money in the bank deposited to her credit sufficient to pay the check, and the defendant refused to honor it, then they should find for her such a sum *861In damages as would fairly compensate her for any loss or impairment of credit she sustained, and for any humiliation or mortification of her feelings she had been subjected to, by reason of the refusal to honor her check; and if the defendant maliciously refused to honor the check, then, in addition to compensatory damages, they might award such additional sum, by way of punitive damages, as in their discretion 'they deemed proper. The propriety of these instructions is the chief question on the appeal. Tn Bank v. Green, 99 Ky., 262 (18 R., 178) 35 S. W., 911, 32 L., R. A., 568, it was held that if a bank refuses to honor the check of its customer without sufficient justification, he has his action for damages against the bank; citing Moss, Bank, section 458. But in that case the measure of damages was not determined. The authorities are uniform that the relation between the bank and the depositor is that of debtor and creditor. They are equally uniform that when the bank fails to honor the check of its depositor, when he lias funds with it sufficient to pay the check, a right of action accrues at once, and that the recovery is not to be limited to nominal damages. Mr. Bishop says the banker for this may be sued in tort, though the wrong is believed to be without name. Bish. Nbneont. Law, section 491. In 5 Am & Eng. Ency. Law, p. 1060, the rule as to the measure of damages is1 thus stated: “The depositor, by proving special loss, is always entitled to recover substantial damages. But if unable to show any special loss or injury, the better opinion seems to be that he would still be entitled to recover such moderate damages as the jury should judge to be a fair and reasonable compensation for the injury which he must have sustained, for it is almost impossible for a check to be dishonored without reflecting upon the. character and credit of the drawer; the extent of *862the injury being within the peculiar province of the jury to determine.” This is taken from the language of Lord Campbell, C. J., in Rolin v. Stewart, 14 C. B., 595, and seems to be supported by the later eases in England and in this country. In Patterson v. Bank, 130 Pa., 419, 18 Atl., 632, 17 Am. St. Rep., 778, a judgment for $300 for dishonoring a check was affirmed. The tidal court charged the jury that the plaintiff was 'entitled to recover substantial damages, and that they might find punitive damages' “if, under all the circumstances in the case, the defendant unnecessarily and unreasonably acted in disregard of the rights of plaintiff, and with partiality against him.” The court said- “A bank is an institution of a quasi public character. It is chartered by the government for the purpose, inter alia, of holding and safely keeping the moneys of individuals and corporations. It receives such moneys U2JOH an implied contract to pay the depositors’ checks upon dema'nd. Individual and corporate business could hardly exist for a day without banking facilities. At the same time, the business of the community would be at the mercy of banks if .they could at their pleasure refuse to honor the depositors’ checks, and then- claim that such action was a mere breach of an ordinary contract, for which only nominal damages could be recovered, unless speeial damages were proved. There is something more than a breaeli of contract in such cases; there is a question of public policy involved, as was said in Bank v. Mason, 95 Pa., 113, 40 Am. Rep., 632; and a breach of the inqdied contract between the hank and its depositor entitles the latter to recover substantial damages. - In this case the jury do not appear to have given more; they evidently did not award punitive damages” In Schaffner v. Ehrman, 1.39 Ill., 109, 28 N. E., 917, 15 L. R. A., 134, 32 Am. St. Rep., 192, a judg*863men! for $450 damages was affirmed, where the dishonor of the cheeks was 'due to a mistake of the bookkeeper in charging the checks of another customer to the account; - It was held that there was no evidence of malic©, and there seems from the report of the case to have been little proof .of special damage. The court laid down as the proper measure of damages a reasonable compensation for the injury the customer must have, received from the dishonoring of his checks. In Bank v. Goos, 39 Neb., 437, 58 N. W., 84, 23 L. R. A., 190, when Coos’ check was dishonored, he was arrested and placed in prison, and newspapers were printed and sold on the streets, publishing the fact. The court reversed a verdict for the plaintiff, on the ground that the pi*oper measure of damages was not given the jury. It held that there could be no punitive damages, that his arrest and imprisonment could not he considered, and that he could only recover such temperate damages as would be a reasonable compensation for the dishonor of the check. Substantially the same rule was laid down in Svendsen v. Bank, 64 Minn., 40, 65 N. W., 1086, 31 L. R. A., 552, 58 Am. St. Rep., 522; J. M. James Co. v. Continental Nat. Bank (Tenn.), 58 S. W., 261, 51 L. R. A., 255, 80 Am. St. Rep., 857; Bank v. Davis, 96 Ga., 334, 23 S. E., 190, 51 Am. St. Rep., 139; There was some evidence as to loss of credit, and, aside from this, the instruction so far as it submitted this as an element of damage, was correct. But there was nothing in the case to indicate actual malice, oppression, or bad motive on the part of the bank, and no instruction should have been given as to punitive damages. None of the cases allow a recovery for humiliation or mortification of feeling where compensatory damages only are allowed, and the instruction 'of the court, in so far as it allowed a recovery for this, was improper. The fact that the plaintiff *864liad a nervous chill when the check was protested and returned to her, and had to be taken to her mother-in-law's, was immaterial, as the nervous chill was not the natural result of the protest of the check, or such a thing as should reasonably have been anticipated from persons of ordinary health ahd strength. On the contrary, the plaintiif may recover for any time she lost, or any expenses she incurred, or for any loss of business or instruction that she sustained, by reason of the dishonor of .ihe check. Her pleading does not appear to have been drawn under the view of the law we have indicated, and on the. return of the case she may have leave to amend her petition, and set out her damages specialty, if she desires to do so. Robinson v. W. U. Tel. Co. (24 R., 452) (68 S. W., 656). The action rests upon the ground that the bank is charged by law with certain duties, and that for a breach of these duties it is liable to the party injured for the damages done him. The measure of these damages is the same as in the case of the breach of other duties imposed by lave

Judgment reversed, and cause remanded for a new trial.