This is a check collection case in which we must decide whether Fleet National Bank (Fleet) is liable for the
1. Background. The trial judge made the following findings of fact. As a reparations payment for a theft committed by the Nazis against Gossels’s family, the German government sent Gossels a check for 85,071.19 euros, drawn on Dresdner Bank in Germany.
Fleet kept a foreign check collection procedures manual, which instructed tellers to tell customers the length of the collection process (four to six weeks), the relevant date for determining the exchange rate, and how the rate would be determined. The Fleet teller did not provide Gossels with any of this information.
On November 11, 1999, Fleet contacted Gossels and told him that there had been a problem with the check collection process. He returned to the bank and met with a manager who asked Gos-sels to indorse the check, which was then sent a second time for collection.
In resolving the сase on appeal, the Appeals Court made note of additional facts that it concluded were supported by the record but not specifically referenced or found by the judge.
After Gossels indorsed the check, Fleet sent the check back to Deutsche Bank for collection; the Dresdner Bank then transferred 85,071.19 euros to Deutsche Bank. After deducting a transaction fee of one hundred euros, Deutsche Bank credited Fleet’s account with 84,971.19 euros. Fleet exchanged the euros for dollars at its retail exchange rate and deposited $81,754.77 into Gossels’s Fleet account on December 15, 1999. Id. at 801. The “retail” exchange rate Fleet offered customers for euros was lower (in dollars) than the “spot” or interbank exchange rate that it was entitled to receive from other banks. Id. See G. L. c. 106, § 3-107.
The judge found that thе value of the euro declined in the interim between October 15,1999, when the check was presented to Fleet, and December 15, 1999, when Fleet received the euros from the Dresdner Bank (through Deutsche Bank). The judge also found that this decline in value amounted to $6,861.68, and
The Aрpeals Court increased the award of damages on the negligent misrepresentation claim by adding another factor into its calculation: the differential between Fleet’s retail and spot exchange rates. It found that on October 15, 1999, Gossels’s check would have been worth $88,616.45 based on the Fleet retail exchange rate and $92,023.80 based on the spot rate. Gossels v. Fleet Nat’l Bank, supra at 801. This rate differential, the Appeals Court held, was detailed on a rate sheet thаt Fleet did not distribute to the public. Id. at 808. Consequently, it awarded Gossels $10,269.03, the difference between what he had received in dollars from Fleet on December 15 ($81,754.77) and what he would have received on October 15 at the spot rate ($92,023.80). Id. at 801, 812b.
2. Discussion. Check collection is governed by the UCC, a statutory framework designed to implement, among other things, a national, uniform system of check collection. G. L. c. 106, § 1-102 (2) (“Underlying purposes and policies of this chapter are . . . to mаke uniform the law among the various jurisdictions”). Where a UCC provision specifically defines parties’ rights and remedies, it displaces analogous common-law theories of liability. National Shawmut Bank v. Vera,
There are several bedrock principles with respect to that framework (and much of the common law that preceded it), two of which bear repeating here. First, the bank customer remains the owner of the check throughout the collection process and bears the risk of collection, including the risk in foreign currency fluctu
a. Negligent misrepresentation. Fleet argues here that the trial judge erred in holding that the bank was liable for making negligent misrepresentations to Gossels. It claims that Fleet did not tell Gossels that the check would be paid in euros, that Gossels presented no evidence of detrimental reliance (as required to make out his claim), and that Gossels was bound by Fleet’s customary check practices. All of these arguments were waived.
In a civil case, after a judgment by the District Court, an “appellant is barred from pursuing in the Appeals Court a clаim of error that it failed to raise at the Appellate Division.” M.G. Perlin & J.M. Connors, Civil Procedure in the Massachusetts District Court § 12.26, at 160 (3d ed. Supp. 2007), citing Brossi v. Fisher,
However, because there are rulings from two courts in this case that sustain Gossels’s negligent misreрresentation claim and impose disclosure obligations on Fleet that we conclude are not required by the UCC, we will proceed to analyze the claim for the purpose of guidance and clarity. In order to recover for negligent misrepresentation a plaintiff must prove that the defendant
As later described, see part 2.c, infra, Fleet was correct when it told Gossels that his indorsement was not required. G. L. c. 106, § 4-205 (1). Therefore, that instruction was not “false” in any way, and could not give rise to any liability. Nor was Fleet required to inform Gossels that his accоunt would be credited in dollars, that he would not receive provisional credit, or that banks were entitled to different exchange rates than customers. These three issues are “bare nondisclosure[s],” which do not trigger liability. Swinton v. Whitinsville Sav. Bank,
b. Conversion. Banks are not liable for conversion when they fail to pay funds that they owe to a customer. Freeman’s Nat’l Bank v. National Tube Works, Inc.,
Additionally, the UCC does not provide any rights or remedies relating to the conversion of funds', rather, the sole conversion
c. General Laws c. 93A. Section 2 of G. L. c. 93A prohibits “unfair or deceptive acts or practices in the conduct of any trade or commerce.” An action is “unfair” if it is “(1) within the рenumbra of a common law, statutory, or other established concept of unfairness; [or] (2) immoral, unethical, oppressive, or unscrupulous.” Milliken & Co. v. Duro Textiles, LLC,
First, Fleet was correct to tell Gossels that he was not required to indorse his check. The depositary bank (in this case, Fleet) becomes the holder of a check and is entitled to collect payment “whether or not the customer indorses the item.” G. L. c. 106, § 4-205 (1). If there was error in the rejection of the check for lack of indorsement, the error was that of Deutsche Bank, for which Fleet is not liable. G. L. c. 106, § 4-202 (c) (no bank
Second, Fleet was not required to tell Gossels that his account would be credited in dollars instead of euros. In the United States, the presumption is that checks will be paid in dollars. 6 W.D. Hawkland & L. Lawrence, Uniform Commercial Code Series § 3-107:1 (rev. art. 3) (1999) (“Where the maker wishes to specify a foreign currency аs the sole medium of payment, that specification must be express”). The receipt that Fleet gave Gossels on October 15 stated that if Gossels received provisional credit, a foreign exchange rate (“FX Rate”) would apply, and if the check was taken for collection only, “Rate and fees [would be] determined at [the] time of settlement.” The receipt put Gos-sels on notice that Fleet would apply an exchange rate to the euros sent from Dresdner; absent a contrary agreement, United States currency is legal tender for all debts. 31 U.S.C. § 5103 (2006).
Third, Fleet was not required to inform Gossels whether he would receive provisional credit or whether the transaction was for collection only. The UCC does not impose such a requirement; it merely states that “before the time that a settlement given by a collecting bank for an item is or becomes final . . . any settlement given for the item is provisional.” G. L. c. 106, § 4-201. Nor does the common law require such disclosure where, like here, there is no effective difference between granting provisional credit and accepting a check for collection only. A provisional credit is not an advance payment of the presented check; rather, it is similar to a loan. Washington Legal Found, v. Texas Equal Access to Justice Found.,
Fourth, the analysis of the rate differential issue is incorrect. Although the Appeals Court found that the retail “rate sheet was to be kept secret from customers,” Gossels v. Fleet Nat’l Bank, supra at 808, this was clearly not the case. At trial, there was undisputed testimony that Fleet customers could call a dedicated telephone number to learn the daily rеtail currency exchange rates.
Fifth, neither the UCC nor the common law imposes liability for the teller’s failure to make the disclosures detailed in the bank’s forеign check collection procedures manual. As described supra, the UCC requires only that collecting banks use ordinary care as they seek to collect settlements on instruments. G. L. c. 106, § 4-202. Elevating a bank’s internal manuals to a set of affirmative disclosure requirements on par with the requirements of the UCC would vitiate the goal of “mak[ing] uniform the law among the various jurisdictions.” G. L. c. 106, § 1-102.
Insofar as Fleet did not violate any of its duties of care or commit an “immoral, unethical, oppressive, or unscrupulous” business practice as required by G. L. c. 93A, Milliken & Co. v. Duro Textiles, LLC,
3. Conclusion. Insofar as Fleet failed to raise its claim of error on the negligent misrepresentation claim before the Appellate Division, and therefore waived its arguments, we affirm the judgment as to Count I.
So ordered.
Notes
Count I of Gossels’s initial complaint alleged breach of contract. The trial judge found Fleet National Bank (Fleet) liable under Count I, but only insofar as it alleged negligent misrepresentation.
Gossels amended his original complaint to add Count IV, which alleged only that “Fleet owes Gossels the sum of 84,971.19 Euros that it received from the Deutsche Bank in November or December 1999 on account of a check of the Dresdner Bank that Gossels had given Fleet to collect.” The Appeals Court concluded that Count IV alleged a violation of G. L. c. 106, § 3-107. Gossels v. Fleet Nat’l Bank,
As explained in its decision, id. at 797 n.l, the Appeals Court issued an initial opinion in the case, that, on reconsideration, was substantially revised.
We acknowlеdge the amicus brief in support of the defendants submitted on behalf of the Massachusetts Bankers Association, Inc.
Dresdner Bank was the payor bank. See G. L. c. 106, § 4-105 (payor bank
In this case, Fleet acted as a “[c]ollecting bank.” G. L. c. 106, § 4-105 (collecting bank is “bank handling an item for collection except the payor bank”).
The judge also found that Gossels asked the teller to collect the total amount of the check in euros. There is no evidence to support this finding. The parties do not dispute (and the Appeals Court held) that the finding is clearly erroneous. Gossels testified only that although he did not “ask Fleet to exchange [the] bank check into dollars,” he “expected [the bank] to collect the Euros.”
Fleet initially charged Gossels a processing fee of thirty dollars, claiming the delay resulted from Gossels’s failure tо indorse the check. When Gossels objected, the manager waived the fee and credited him with $38.25 in “lost interest” due to the delay in collecting the amount of the check.
When a trial judge does not make a specific finding, an appellate court may consider stipulated facts, documentary facts, and facts that are not contested
Neither the judge nor the Appeals Court made specific findings regarding the guaranty from Fleet that was sought by Deutsche Bank. The record reflects that on November 1, 1999, Deutsche Bank sent an electronic message asking Fleet to indemnify Deutsche Bank against any liability resulting from the check because it lacked Gossels’s indorsement. The message said that if Deutsche did not receive Fleet’s confirmation “within 3 days, [Deutsche] shall return the cheque to you.” On November 3, 1999, Fleet electronically sent the requested indemnification to Fleet. Nonetheless, Deutsche Bank returned the check.
General Laws c. 106, § 3-107, states: “Unless the instrument otherwise provides, an instrument that states the amount payable in foreign money may be paid in the foreign money or in an equivalent amount in dollars calculated by using the current bank-offered spot rate at the place of payment for the purchase of dollars on the day on which the instrument is paid.”
The judge reasoned that Gossels would have received the full value of the euros (in dollars) on October 15, 1999, if Fleet had granted him “provisional credit” on that date. She did not, however, take into account that whatever “provisional” credit Gossels may have received (had he asked for it on October 15, 1999) would have been adjusted (downward in this case) to the value of the euros on the date Flеet received payment on the check from the Dresdner Bank. See part 2.c, infra.
An “ [(Instrument” is defined as “a negotiable instrument,” G. L. c. 106, § 3-104 (b), which is further defined as “an unconditional promise or order to pay a fixed amount of money.” G. L. c. 106, § 3-104 (a).
There was testimony that the physical piece of paper was not distributed because rates fluctuated daily, and it could have caused confusion. However, the trial judge made no findings of fact regarding that testimony.
Despite finding in favor of Fleet on Count IV, the Appeals Court calculated damages using the spot rate. The court reasoned that the spot rate was the rate Fleet owed Gossels “[a]bsent an agreement to the contrary . . . .” Gossels v. Fleet Nat’l Bank, supra at 812a. It therefore increased Gossels’s award to $10,269.03. This was error. As § 3-107 clearly states, only the payor bank has a duty to exchange foreign currency to dollars using a spot rate of exchange. “Fleet appropriately followed the provisions of § 3-107.” Gossels v. Fleet Nat’l Bank, supra at 812 n.21.
The judge’s damages award reflects the currency fluctuation that occurred as Gossels waited for his account to be credited. Article 4 of the UCC, and the “Massachusetts rule” that preceded it, place the risk of loss not on the collecting bank, but on the owner of the item. Fabens v. Mercantile Bank,