Spearing v. Whitney-Central Nat. Bank

On the Merits. In July, 1910, plaintiff was the executive and administrative head of the Sewanee Military Academy, at Sewanee, Tenn. His duties as such involved the receipt and expenditure of a considerable sum of money annu *611 ally. The item alone of uniforms for cadets required the disbursement of several thousand dollars every year. Plaintiff had been a depositor of the defendant bank and its predecessor for nearly 30 years. On July 1, 1910, the plaintiff had at his credit in said institution a balance of $83.08. Plaintiff having made arrangements with his brother, J. Zach Spearing, Esq., of the city of New Orleans, for the deposit of $1,123.90 to his credit in defendant bank not later than July 5, 1910, drew on said bank his four different checks one for $500 to order of the First National Bank of Shreveport, one for $33.75 to the order of W. J. Feeley & Co., one for $150 to the order of the Bank of Sewanee, Tenn., and one for $20 to the order of the Feehheimer Bro. & Co. On July 5, 1910, J. Zach Spearing drew a check on the defendant bank for $1,123.96 to the order of Joseph H. Spearing. This check was signed, “J. Zach Spearing, p. pro. M. McPeake,” and was indorsed “For deposit Joseph H. Spearing per M. McPeake.” The check was handed to the receiving teller of the defendant bank, and was correctly entered on the deposit slip as “Deposited by Joseph H. Spearing.” The deposit, however, was through error or mistake of an assistant bookkeeper placed to the credit of J. Zach Spearing. The bank had two depositary departments, one for city and the other for country depositors. The deposit in question was made in the city department, and the bookkeeper, not finding the name of Joseph H. Spearing on his ledger, jumped to the conclusion that the deposit was intended for J. Zach Spearing, the only Spearing whose name appeared on his books. On July 8, 1910, the check for $500 was duly presented to defendant bank for payment, which was refused for want of sufficient funds of the drawer. The check was duly protested, and notice of dishonor mail-1 ed to the First National Bank of Shreveport and to J. H. Spearing. The other three checks were duly presented to defendant bank for payment on July 11, 1910, which was refused for want of sufficient funds of the drawer. The three checks were duly protested, and notice of dishonor mailed to the drawer, payee, and other indorsers. Plaintiff, having received notice of the dishonor of the check for $500, wired J. Zach Spearing for an explanation. Mr. Spearing being absent, his office representative carried the message to the defendant bank, and its officers made an investigation, and discovered the error in the account of the plaintiff. On the same day the defendant wired plaintiff, as follows: “Referring your telegram date to J, Zaeh Spearing, check five hundred refused through error. Have wired parties to whom check was returned to forward us for payment with all costs.” Defendant also on the same day wrote to plaintiff, as follows: “We beg to advise that upon investigation we find that Mr. J. Zach Spearing’s office deposited with us on the 5th inst. $1,123.96, for your credit, which deposit through error on the part of our bookkeeping department, was credited to the account of Mr. J. Zach Spearing. This error was discovered only to-day, after we had started an investigation in connection with three checks of yours, for $150, $33.75 and $20 respectively. Tou may have received notice of the nonpayment of these items, but they have not left our hands and we have paid them with all costs thereon, and have wired each of the sending banks that the items were protested through error on our part and that they are now paid. We have also telephoned the First National Bank of Shreveport, La., holding the $500 item and Mr. Bayersdoffer, their vice president, has answered us that the same would be promptly forwarded us for payment. “Upon discovery of our error, we promptly wired you that we were taking the necessary steps to correct our error and protect the checks drawn by you. “It is most humiliating and embarrassing to us that an error of this kind has occurred in our institution, and we most humbly apoligize for any annoyance that you may have been caused in the premises. We feel assured, *613 however, that you realize that try as hard as we may, errors will sometimes crop in. “We await your further valued favors and remain,” etc. It appears that the three checks protested on July 11, 1910, had not been returned, and on the next day were paid by the defendant bank, which wired and wrote the three sending banks and the plaintiff that the checks had been protested through error, and had been paid. On the same day the defendant bank telephoned the First National Bank of Shreveport, La., that the check for $500 had been protested through error, and would be paid on presentation. But the original payees of the other three checks to whom notices of dishonor had been sent were never notified that the checks had been protested through error. [1] The protest of the four checks was the result of a clerical error on the part of the bookkeeper of the defendant, which was not known to its offices until July 12, 1910. This error, however, was an act of negligence, for which the defendant must respond in damages. The extent of that responsibility must be determined from the evidence adduced on the trial of the case. The authorities cited by counsel on both sides announce the rule that where a check of a merchant or trader has been protested for want of funds, although occasioned by a mere mistake in bookkeeping, more than nominal damages may be given without proof of actual loss or damage. Schaffner v. Ehrman, 139 Ill. 109 , 28 N. E. 917 , 15 L. R. A. 134, 32 Am. St. Rep. 192 ; Svendsen v. Bank of Duluth, 64 Minn. 40 , 65 N. W. 1086 , 31 L. R. A. 552, 58 Am. St. Rep. 522 ; James Co. v. Continental National Bank, 105 Tenn. 1 , 58 S. W. 261 , 51 L. R. A. 255, 80 Am. St. Rep. 857 ; Third Nat. Bank v. Ober, 178 Fed. 678 , 102 C. C. A. 178 . Where the depositor is not a merchant or trader, there is no such presumption. The common-law rule seems to be that such depositor must allege and prove special damages, and then will be entitled to recover substantial damages. Schaffner’s Case, 139 Ill. 109 , 28 N. E. 917 , 15 L. R. A. 137. But the same case cited 3 Am. & Eng. Ency. Law, p. 226, as follows: “The depositor, by proving special loss, may recover special damages from the bank for its breach of duty, but, if unable to do so, he may recover such temperate damages as will be a reasonable compensation for the injury he has sustained. * * * “Where a bank refuses to honor a check of its depositor without legal cause, the latter is entitled to recover substantial damages [citing Patterson v. Marine Nat. Bank, 130 Pa. 419 , 18 Atl. 632 , 17 Am. St. Rep. 778 , and other authorities].” In 5 Cyc. 535, published in 1902, the general rule is thus stated: “If the bank neglect or refuse to pay to the order of a depositor, where the latter has sufficient funds on deposit and no other good excuse exists, the depositor can maintain an action against the bank for the money, and is entitled to recover substantial damages for such refusal.” All the common-law authorities agree that nominal damages may be recovered in every ease of neglect or refusal to pay the check of a depositor where he had sufficient funds on deposit in the bank to meet the check. In the leading case of Rolin v. Steward, 14 O. B. 595, an action for damages for the wrongful dishonor of a check was likened to “an action for slander of a person in the way of his trade.” See James Company v. Continental Nat. Bank, 105 Tenn. 1 , 58 S. W. 261 , 51 L. R. A. 258, 259, 80 Am. St. Rep. 857 , as to analogy between the two actions. Such wrongful dishonor is just as efficient in imputing dishonesty or insolvency to the customer as if either had been charged against him by word of mouth. Ib. In the case at bar, the action is founded on quasi slander, without intentional wrong, and is governed by the rule that: “Every act whatever of man that causes damage to another obliges him by whose fault it happened to repair it.” C. C. 2315. *615 Under this broad principle of equity, there can be no question of plaintiff’s right to recover any damages, whether special or general, that he has alleged and proved. Plaintiff’s action is for general damages, which have been defined “to be such as the jury may give when the judge cannot point out any measure by which they are to be assessed, except the opinion and judgment of a reasonable mán.” Rolin v. Steward, supra; Schaffner Case, 139 Ill. 109 , 28 N. E. 917 , 15 L. R. A. 137, 32 Am. St. Rep. 192 . The plaintiff, not being a merchant or trader, must prove that he has sustained injury to his credit and reputation as a business man. This we think he has done by showing the nature of his business, the wrongful dishonor of his checks by the defendant bank, and that notices of dishonor were sent to all the indorsers on the four checks, including the original payees, to whom plaintiff had given them in the usual course of business. The vice president of the First National Bank of Shreveport testified that, considering the reputation and position of the drawer, he did not think that the credit of the plaintiff had been injured by the dishonor of his check for $500. This opinion is based on the premise that the reputation and position of the drawer-was too good to be injured by the dishonor of his checks. The cashier of the Sewanee Bank testified that on July 7, 1910, the check of plaintiff for $150 was placed to his credit and drawn against, and that about July 12, 1910, he received notice of its dishonor. The witness describes the effect of notice on him as follows: “The said notice of protest was a great surprise to me, as up to that date Mr. Spearing, though a comparative stranger to me personally, had with us all the credit he desired; that the effect of the receipt of said notice of protest was, of course, to make me seriously doubt the business methods of one who would deposit a check against a bank in which he did not have funds with which to pay it and then draw checks against that deposit, thus overdrawing his account with us.” The same witness further testified: “I have not received at any time a notice by wire or letter from the Whitney-Central National Bank or any one representing the said bank, to the effect that said check for $150 was protested through error of said Whitney Bank, or that said Spearing had funds in said Whitney Bank to credit of his account suffi-. cient to pay said check.” Wm. J. Feeiey, to whose firm the check for $33.75 was issued, testified as follows: “The matter did not come to my knowledge until some time later after the check was protested, and our firm received notice from a notary public in New Orleans of the protesting of the check about the dishonor of the same that the bank had refused to pay it. I have never received notice of any kind from the bank. The effect of notice of the dishonor of a check under the circumstances mentioned in interrogatory 1 is that immediately a record was made on our books that no further credit is to be extended to the party whose check is dishonored. * * * We do not care to do business with anybody who sends us worthless checks. The credit of such a person is destroyed at once with this concern.” The natural effect of the dishonor of a check is to damage the credit and reputation of the drawer in business circles. That the plaintiff was injured by the dishonor of his four checks is a logical inference from the evidence before us. The fact of dishonor was made known to bankers and business men in several cities, and in the small town of Sewanee where the drawer resides, must have occasioned very unfavorable comments on his reputation as a business man. [2] That the dishonor was the result of clerical error, and that the bank attempted to repair the injury, is no excuse, but may be considered in mitigation of damages. Under the circumstances of the case, we consider an award of $300 damages as reasonable. It is therefore ordered that the judgment below be reversed, and it is now ordered that the plaintiff, Joseph H. Spearing, do have and recover of the defendant, the Whitney-Central National Bank, the sum of $300, with 5 per cent, per annum interest thereon from the date of this decree, and all costs.