*1 SHAW, Appellant, Charles R.
UNION BANK AND TRUST
COMPANY, Appellee.
No. 53271. Court of
Supreme Oklahoma. 10, 1981.
Nov.
As Corrected Nov. Ablah, City,
George ap- M. Oklahoma pellant. Jr., Alexander, Crowe, H.
Robert Dun- Thweatt, Swinford, levy, & Bur- Johnson dick, City, appellees. Oklahoma SIMMS, Justice: an order appeals Charles R. Shaw Division, Claims Small Oklahoma Coun- granting ty, in the amount of Trust against Union Bank and Com- $56.26 pany (appellee).
Appellant,
joint
tenant
account, checking account,
safety
de-
Nauman,
posit
with Emma
who died
box
B.
9, 1978,
possession
safety
took
May
deposit
account funds
box
appel-
soon after Nauman’s death. When
requested
remaining
funds in the
lant
account,
the bank informed him of
necessity
release from
obtaining
Tax Commission.
Oklahoma
*2
release,
sequential
Upon
damages
notification of the tax
on or
are proximately
31, 1978, appellant
about May
presented a
caused
dishonor is a
savings withdrawal form which the bank
question of fact to be determined in each
accepted. The bank made out a cashier’s
case.”
Appellee
check but refused to deliver it.
Appellee,
hand,
on the other
contends the
bank then refused to release funds without
damage issue is resolved not by the UCC
a probate of Emma B. Nauman’s estate.
O.S.1971,
but by 23
22:
§
Appellant
attorney
probate
hired an
“The detriment caused
the breach of
proceedings, though they proved unneces-
obligation
to pay money only is
sary since Nauman’s estate was worth less
deemed to be
the amount due
$1,000.
than
obligation,
terms
with interest
June
On
bank released
thereon.”
savings
account funds on which interest
Appellee asserts the action is merely a con-
had
per
accrued at the rate of 5% annum.
tractual one.
Appellant deposited the funds at another
In weighing
argu-
the merits of these
bank for a return of 7.65%.
ments, we must
following
consider the
Appellant’s petition alleged that the fol-
questions: (1) Whether
savings
withdraw-
lowing damages were suffered because of
al order constitutes the wrongful dishonor
appellee’s actions:
4-402;
of an
(2)
item under UCC
Wheth-
§
(1)
$56.26;
Loss of interest of
er a
tort,
dishonor is an action in
(2) The
unnecessary probate
cost of an
an action in
or a new cause of
proceeding ($1000);
action.
(3)
pain
suffering
Mental
resulting
alleged wrongful
from bank’s
dishon-
I.
($25,000);
12A, O.S.1971,
4-104 defines
§
(4)
($125,000).
Exemplary
item as follows:
“
Appellee filed a motion to strike and the
‘Item’
means
instrument
for the
motion,
district court sustained the
thereby
payment money
though
even
it is not
removing
alleged
all
damages except the
negotiable but does not
money.”
include
loss
($56.26).
of interest
The district court
agree
We
appellant’s
contention that
ordered the case transferred to the Small
4-402,
under
§
withdrawal order
Claims Division
where
was en-
Though
is an
commonly
most
tered for appellant for $56.26.1
thought
checks,
personal
of as
an item can
At issue are the types
damages poten-
checks,
(tellers
include bank
cashier’s
tially recoverable
wrongfully
when a bank
checks), notes,
non-negotiable
instru
withholds a
funds.
payable
ments
at
the bank. White and
Summers, Handbook of the Law Under the
Appellant urges that the Uniform Com-
U.C.C., 17-4; Dziurak v. Chase Manhat
§
(UCC) 12A, O.S.1971,
mercial
4-402,
Code
Bank, Y.,
ten
N.
44 N. Y.2d
406 N. Y.S.2d
states the
measure of
available:
(1978);
877 N.E.2d
U.C.C.Rep.
“A payor bank is liable to its customer
427.
proximately
Bank,
Coleman v. The
dishonor of an item. When the
Brotherhood State
Kan.App.,
dishonor
through
Kan.App.2d
occurs
mistake
“(2)
pay money.
The definition of ‘item’ is similar to
118, except
former 6
Okl.St.Ann. §
“.
..
the business of the community
the Commercial Code added the words
mercy
would be at the
they
of banks if
*3
though
negotiable’
‘even
not
to make cer-
pleasure
could at their
refuse to honor
apply
tain that the rules of this Article
to
checks,
their
and then claim
all
usually
instruments
handled
banks
that such action was the
breach
mere
of
in the collection channels.”
an ordinary
only
contract for which
nomi-
recovered,
nal
could be
unless
II.
special damages
proved.
were
There is
problematic
More
than whether a
something more than a breach of contract
qualifies
withdrawal order
as an item under
question
in such cases. There is a
question
catego-
the UCC is the
of how to
public policy involved .. . and a breach of
wrongful
rize
dishonor. The UCC refuses
implied
the
contract between the bank
relegate
to
wrongful dishonor either to an
depositor
and its
entitles the latter to
action in tort or to an action on contract.
damages.”
p.
recover substantial
[E.A.]
“The
the
drawee for dishonor
citing Patterson v. Marine
has sometimes been stated as one for
632, Am.St.Rep.
Pa.
18 A.
contract,
breach of
neg-
sometimes as for
Appellee’s
proper
maxim “A
analysis of
ligence or other
duty,
breach of a tort
begins
the instant case
in the
ends
and sometimes as for defamation. This
realm of contract law” does not conform
attempt
action does not
to specify a theo-
interpretation
wrongful
with the UCC’s
ry.
‘Wrongful
dishonor’ excludes
hybrid
dishonor as a
cause of
action.
permitted
justified dishonor,
as where
Commentary
Digest
U.C.C.
Law&
Cum.
the drawer
no
has
credit extended
the
Supp.1980,
4-402(A)(2), points out that
drawee, or where the draft lacks a neces-
4-402 does not answer the
issue
sary
properly
endorsement or
is not
wrongful
grounded
whether
dishonor is
presented.”
Comment, 12A,
U.C.C.
depositor,
the contract
bank and
between
402(2). [E.A.]
obligation
on the bank’s
to administer the
“Wrongful dishonor is different
from
care,
depositor’s account with due
or on the
‘failure to
ordinary
exercise
care in han-
slandering
prohibition
law’s
of anoth-
dling
item,’
an
and the measure of dam-
er’s credit.
ages
section,
is that stated in this
not that
simply
“It
creates a cause of action and
4-103(5).”
stated
Section
Com-
U.C.C.
any inquiry
theory
into the
be-
eschews
ment, 12A, 4-402(4).
cause of action.
be it. The
hind that
So
Appellee
largely
rests its case
on the con-
problem
extent of
this creates is that the
tention
that
withdrawal was
normally
.
a
recoverable
not an item. Applying
logic,
this
if there is
function of the cause of action asserted.”
item,
no
wrongful
there is no
dishonor and
Summers, supra, postulate
White and
appellee
merely
is liable
for the
breach
specify
does not
obligation
i.e.,
that because the UCC
pay money,
the amount
plus
wrongful
due
whether
dishonor sounds in tort
disagree.
interest. We must
Even
the draftsmen intended to al-
pre-Code
in the
Commercial National
Latham, Okl.,
Bank v.
low
for mental distress and other
29 Okl.
The cases sufficient the restriction of the action in contract are funds remained in decedent’s debt, convincing. These not cases stand for account to cover the the refusal pay relationship general rule that between a the executor constituted dishonor. liable, only bank and is contractual. That Defendant was not for the bal- accounts, general apply special rule does not to the ance of the but consequential damages proximately wrong- situation of dishonor. For exam ple, Sebring Deposit Corp., Federal Ins. ful conduct. Okl., (1968) deals with 401 P.2d possibility awarding punitive As to the obligation pay money only. breach of an damages, 4-402 expressly neither allows The facts involve a failed state bank and nor them. Appellee disallows states cor- duty of the court to order the bank to rectly generally punitive damages are depositors, interest to not the bank’s not obliga- recoverable for the breach of an Sebring failure to honor *4 O.S.1971, arising tion from contract. 23 holds that the issue interest is controlled Wrongful dishonor, 9. by as defined the § O.S.1971, 22, by supra, 23 but the case in § is more U.C.C. than a mere breach of con- way wrongful no that intimates the dishon- Albuquerque tract. Loucks v. National obliga
or of an item is a mere breach of an 76 N.M. U.D.C.Rep. 418 pay money only. tion to (1966), punitive P.2d 191 holds that ages
Under
4-402 a bank is liable for dam-
are allowable when the conduct of the
§
intentional, fraudulent,
ages proximately
“maliciously
bank is
wrongful
caused
the
words, oppressive,
recklessly,
dishonor of
In other
committed
or with
gears
disregard
a wanton
damages
4-402
the measure of
§
not
Palmer,
rights.”
item,
to the face value of
Northshore Bank v.
Tex.
the dishonored
Civ.App.,
718, U.C.C.Rep.
525 S.W.2d
injury
depositor.
but to the
sustained
(1975) interpreted
allowing
the U.C.C. as
Digest,
Cum.Supp.,
U.C.C.
4—§
punitive recovery
reasonably
if
related to
402(A)(5).
Where the
dishonor is
damages.
actual
damages
Punitive
mistake,
were
attributable to
the U.C.C. limits
not allowed in Wallick v. First
Bank
State
damages proved.3
to actual
Mo.,
Farmington,
The trial court in This view has been Commercial National Bank v. codified in 4-402. § Latham, supra, jury instructed the as follows: difficulty proving 3. Because of the that an your plaintiff, “If verdict is for the the meas- injury dishonor, “proximately by wrongful was caused” a first, repayment ure of her formerly the law allowed necessarily expend- her of whatever sum was proof without under “the trader’s rule”. The collecting money ed in the matter of customer, especially depositor, a commercial deposit bank, to her in credit and such presumed injured. U.C.C.Digest, was to be fairly other and further sum as will and rea- Cum.Supp., 4-402(A)(5). § sonably compensate any injury her for to her standing any worry, credit and and for humil- See, Commentary Digest, U.C.C. and Law iation, injury feelings by and to her reason of 4-402(A); U.C.C.Digest, Cum.Supp. the failure of the defendant bank to honor the 4-402(A)(2), and 18 ALR 3d deposit. draft for her said lie, dishonor, by wrongful puni- but I cannot accede exposition to its of the depositor’s recovery tive cannot be awarded for dis- limits.
honor caused mistake.” surviving joint tenant [depositor] account sought to recover dam- Appellant alleges petition here in his that ages from the bank’s refusal to wrongful, bank “acted in a mali- honor his withdrawal petition order. The cious, grossly negligent and manner in re- unmistakably upon single declares cause fusing to Appellant release the funds.” of action in alleges tort. It that because given opportunity should be prove deposit in suit had been cleared for allegations. these release the state tax authority, its with- Therefore, we hold the trial court erred holding by “wilful, the bank constituted a sustaining defendant’s motion to strike the wrongful, malicious grossly negligent” and allegations consequential punitive act. damages allowable under U.C.C. 4-402 in plaintiff’s petition. We set aside the order I the trial court and A remedy against the bank Division, Small Claims and remand to the refusal to his honor order of District Court trial on the merits. payment just is not a breach of a express implied, will bank
IRWIN, J., BARNES, J., C. V. C. depositor, order, any or his amount that HODGES, HARGRAVE, JJ., DOOLIN and deposit.1 not does exceed the balance on As *5 concur. “quasi public of institutions character” engaged calling places banks are OPALA, J., concurring part, dissenting in duty them under a common-law to exercise part. in obeying in care their customers’ mandates.2 banker/depositor relationship The embodies OPALA, Justice, concurring part in and obligations. two distinct clusters of Its con- dissenting part: in origin gives sensual rise to a ex- press implied, or which in turn creates a presents questions: (a) The case but two law creditor/debtor bond.3 The itself addi- Does a against have a tort claim tionally yet affixes to it another attribute— his banker for refusal to honor an Anglo-American that of status. In the le- order for deposit? withdrawal of funds on gal tradition a refusal to banker’s so, (b) And if then What elements of dam- honor a customer’s order for withdrawal of age are recoverable? deposited funds is both a breach of contract The appeal judg- is from a duty and a tortious breach of a status-based ment that confined his to lost in- depositor may of care. The elect between plea terest and denied his for other dam- an ex contractu and one ex delicto.4 action ages alleged to have been occasioned chosen, recovery If is limited the former be harmful event. While I concur in the the amount of the dishonored order to court’s view that an ex delicto action does wrongly disobeyed, with interest from the Latham, 88, approach 4. The status Commercial Bank v. 29 116 to the banker’s tort lia- Okl. 197, (1911); Witter, Valley bility may early P. 198 Nat. Bank v. its in the have antecedents 491, 414, (1942). 58 Ariz. 121 English regarded P.2d 418 law which merchants and money-lenders occupying special “a status” as Latham, supra 2. Commercial Nat. Bank v. note Graveson, legal day. in Status order of the 1; 419, Patterson v. Marine 130 Pa. 18 A. (University Law of London the Common 31 (1889); Williams, 633 Marzetti v. Eng.Rep. 1 Barn. Holden, 1953); History The Athelone Press & Adol. Rolin v. Negotiable English in the Law Instruments Steward, Eng.Rep. 14 C.B. (University The Athelone London 1955). Press Newkirk, 3. Brown v. Eastman National Bank of Okl. 291 P2d 55 ALR2d 971. pain suffering, slander —for mental em- and refusal.5 Should date of demand barrassment, humiliation, pursued, composition mortification, remedy latter be may entirely be compensable reparation worry injury feelings or other to the different.6 reputation harm to one’s which was inflict- wilfully ed or with malice.9 In contrast adoption of the Uniform Commercial The slander, tort actions with an element of had no effect in 19617 Code UCC] [Code past respect course taken this court range remedies available under legal depositor’s injury to the loss for a norms of to the common-law from the actionable dishonor of his own depositor wronged dishonor. bank’s withdrawal order confines his abridge Nor did the Code his freedom statutorily those elements which are autho- theories among choose the various delictual litigation rized in for conversion.10 If the (of credit), slander liability negligence, — met, depos- criteria of 28 9 are conversion other wilful and malicious O.S.1971 § may type rem- itor in the respect harm. With to the latter action addition- recovery, the ally punitive damages.11 edies and to his theories of recover pre-Code body precedent re- Oklahoma I leave all those of the would undisturbed mains unaffected and continues in force.8 depositor’s alleged items of which depositor’s petition clearly and un- applicable, are under the terms of 23 O.S. “wilful, mistakably rests his claim on a ma- actions, to conversion as well as grossly negligent” licious or tort. The alle- punitive damages, those for but would gations are sufficient to state ex delicto petition strike from his all references to against cause of action the bank. There pain suffering”. “mental This is so striking peti- was hence error in from the against because his claim the bank for ac- tion all of the tort-related items of recov- tionable dishonor of his own withdrawal ery. order theory cannot be rested on a akin to slander.
II
Pre-Code Oklahoma case law distin-
guishes types between two of actions for
delictual dishonor. One of these is for the
bank’s refusal to demand
when the order is in the hands a third- holder;
party payee or the other action is dishonor of the direct with-
drawal In order. the former class the law
recognizes impeachment of the custom-
er’s credit may follow as a natural conse- dishonor;
quence it hence al-
lows recovery a manner akin to that in —in Stockton, 120, see First Nat. Bank v. cases collected in the Okl. Annotation of 638, Witter, (1926); Valley P. supra dishonoring Nat. Bank v. of bank to check in 206, note 1. 126 ALR 218-219. Latham, supra 6. Commercial Bank v. note 1. 64; 10. 23 First O.S.1971 Nat. Bank v. Stock ton, 5; also, supra note see McKinnon v. Mon seq. 7. 12A O.S.1971 1-101 et §§ Co., 170, arch Loan 111 Okl. 239 P. following 8. The comment 12A O.S.1971 Co., Watson v. Stockton Morris Plan which deals with the measure of Cal.App.2d (Cal.App. 93 P.2d bank”, “payor for pressly dishonor ex- 1939) 1939). (Cal.App. and 86 P.2d attempt notes that the Code “does not specify theory” liability. Neundorf, Okl., 11. Fuller v. 293 P.2d Latham, supra 9. Commercial Nat. Bank v. note 1; 1; Valley Witter, supra Nat. Bank v. note