365 A.2d 1222 | Conn. Super. Ct. | 1976
In this action the facts may be summarized as follows: The plaintiff and the defendant were at all times pertinent to this case commercial banks duly authorized to conduct business in this state and had checking account facilities available for their respective customers. On March 27, 1973, and for some time prior thereto, one A. S. Maisto maintained two checking accounts with the plaintiff. One account was No. 0-41190-6 and was conducted under the name of "Tony's Sunoco," and the other account, No. 0-41233-3, was maintained *642 under the name of "B D Automotive." On the same date A. S. Maisto had an account with the defendant at its office in the town of Cheshire.
Between the hours of 1 p.m. and 2 p.m. on March 27, 1973, Maisto purchased from the defendant an official check, or cashier's check, in the amount of $3446. That cashier's check was paid for with two checks plus cash. One of the checks was in the amount of $2585.50 and was drawn by Maisto on the account No. 0-41190-6 that was maintained with the plaintiff. In order to draw an official check, the defendant's teller had to obtain the approval of an officer. As a result of that requirement, an officer of the defendant bank telephoned the plaintiff bank and was assured by an unknown person in the bookkeeping department that "Maisto's check for an amount over $2500 was good at this time." The defendant then issued its official check to Maisto.
On March 27, 1973, at about 4:15 p.m., that cashier's check together with other items, all of which totaled $9501, were deposited by Maisto with the plaintiff in account No. 0-41233-3, which at the time of deposit was overdrawn to the extent of $21,079.43. That transaction was entered as a check deposit in the plaintiff's bookkeeping record for March 28, 1973, since all banking transactions occurring after 3 p.m. are recorded as received on the next day. The deposit of' $9501 was provisionally credited by the plaintiff to the B D Automotive account, No. 0-41233-3, subject to later withdrawal or reversal of credit, and the overdrawn balance was reduced by that amount.
On March 28, 1973, the plaintiff returned the check in the amount of $2585.50 to the defendant because of insufficient funds. The plaintiff presented the official or cashier's check in the amount *643 of $3446 to the defendant through normal bank collection procedures and the defendant dishonored the check in that it stopped payment thereon. The check was returned to the plaintiff unpaid, remains unpaid to date, and is the subject matter of this action. The signature of the drawer on the cashier's check has been admitted.
The trial court concluded that the plaintiff was a mere holder of the cashier's check because it did not establish that it took the check for value. It also concluded that the defendant established a defense of want of consideration because the $2585.50 check which was one of the items used to purchase the cashier's check was subsequently dishonored. Accordingly, the court rendered judgment for the plaintiff in the amount of $860.50, the difference between the $3446 cashier's check and the $2585.50 check. The plaintiff has appealed from that judgment.
The plaintiff has assigned as error the trial court's refusal to find certain facts, its finding facts without evidence, its overruling the plaintiff's claims of law, and its conclusions. We shall not consider the assignments of error regarding the court's refusal to find certain facts or its finding of facts without evidence because the plaintiff failed to move to correct the finding as required by 567G of the Practice Book.
In its complaint, the plaintiff alleged that the defendant executed and delivered a check drawn upon itself with one A. S. Maisto as payee, and that the plaintiff was the holder of said instrument in that the check was endorsed and delivered by Maisto to it on March 28, 1973. The defendant, in its answer, admitted some of those allegations and set up special defenses, one of which can be construed to allege want of consideration in that it *644 alleged that "the plaintiff used the proceeds of said bank check to pay other obligations of said A. S. Maisto to it." After denying the allegations of the special defenses, the plaintiff, by way of reply, claimed that it was a holder in due course of the official or cashier's check.
Since the signature on the cashier's check has been admitted, the mere production of the instrument would entitle the plaintiff to recover, even if it were a mere holder, unless the defendant sustained its burden of establishing a want or failure of consideration. General Statutes
A cashier's check is a bill of exchange drawn by a bank as drawer upon itself as drawee and made to the order of a payee who, as in this case, may also be the purchaser of the check. Under
It is clear that the defendant bank did establish the failure of consideration for issuance of the cashier's check, because the check drawn on the plaintiff which Maisto transferred in payment for the cashier's check was returned for insufficient funds. That defense of want of consideration would be effective against a party who was not a holder in due course. General Statutes
Since the plaintiff alleged in its reply that it was a holder in due course, it assumed the burden of establishing that it was in all respects a holder in due course. General Statutes
The plaintiff contends that the deposit of $9501 made on March 28, 1973, was a cash deposit. That contention has no merit because the unchallenged finding of the court is that it was a check deposit. The principal issue in this case is whether the provisional credit made by the plaintiff against the *646
B D Automotive account, which was overdrawn in the amount of $21,079.43, constituted value under
Section
In order to comprehend how the plaintiff became a holder for value under the provisions of the statutes referred to, it is necessary to state the parameters of the security interest with relation to the value concept. It is clear that if a depositor's account is not overdrawn and he deposits a check which is credited to his account but not drawn on, then no value is given. See Universal C.I.T. Credit Corporation v. Guaranty Bank Trust Co.,
The reason for that rule is to prevent the hindrance to commercial transactions which would result if depository banks refused to permit withdrawal prior to clearance of checks. By giving the bank a security interest in the amount credited prior to notice of a stop payment order or other notice of dishonor,
While Maisto did not draw upon the deposit of $9501, the deposit was applied to his overdraft or antecedent debt on a provisional basis. Under the circumstances it appears that where the plaintiff applied the deposit, even provisionally, to Maisto's overdrawn account, it gave value and thus cut off the defense of want of consideration. In a leading case, Bath National Bank v. Sonnenstrahl, Inc.,
Section
In the present case, the plaintiff's action in provisionally crediting a $9501 deposit to the antecedent debt of the depositor was an exercise of its common-law right of setoff,
To make a collecting bank a holder for value where it applies a deposit to an overdrawn account is a result consistent with logic and good banking practice. If an account is overdrawn, it is highly doubtful that a bank would pass over an opportunity to erase or reduce the overdraft. That opportunity arises when the customer makes a deposit. The bank credits or sets off the overdraft and waits for final settlement as a holder for value. If the check is dishonored, the bank may then reverse the provisional granting of credit to the overdraft and proceed not only against its customer but also against the drawee bank. If it can proceed against the drawee bank, the latter can then recover from its customer.
The trial court erred in concluding that the plaintiff was not a holder for value when it applied Maisto's deposit, which included the cashier's check in the amount of $3446, to an overdraft in his account, subject to reversal upon dishonor.
There is error, the judgment is set aside and the matter is remanded for a trial limited to the issue of whether the plaintiff took the cashier's check in good faith and without notice that it was overdue, dishonored or that there was any defect or defense.
In this opinion A. ARMENTANO and D. SHEA, Js., concurred.