Indiana Nat. Bank v. Chapman, 4-683A191

Citation482 N.E.2d 474
Decision Date04 September 1985
Docket NumberNo. 4-683A191,4-683A191
PartiesThe INDIANA NATIONAL BANK, Appellant (Defendant Below), v. William Earl CHAPMAN, Appellee (Plaintiff Below).
CourtCourt of Appeals of Indiana

Robert J. Wicker, Van Valer, Wicker & Williams, Greenwood, for appellant.

William W. Knowles, Raymond L. Faust, Baker Orbison Bales & Knowles, Carmel, Thomas G. Brenton, Brenton & Brenton, Danville, for appellee.

MILLER, Presiding Judge.

The Indiana National Bank is before us appealing the trial court's denial of its motion for a directed verdict which resulted in a jury verdict in favor of William Earl Chapman. The complained of deed occurred

when a loan officer with the Bank released information pertaining to Chapman's automobile loan account to a state policeman who was conducting an arson investigation involving Chapman's car. Chapman was subsequently charged with fourth degree arson; however, the charges were later dismissed. Chapman then filed this action alleging four alternative theories of recovery: (1) invasion of privacy, (2) slander, (3) breach of implied contract, and (4) negligence. The jury found in Chapman's favor on all theories, awarding him $39,750.00 actual damages and $50,000 punitive damages. After carefully examining the evidence and reviewing the law with respect to a bank's liability for releasing information to police conducting an investigation, we find the trial court erred in not granting the bank's motion for directed verdict and reverse.

FACTS

The facts most favorable to the judgment are as follows:

On October 16, 1974, William Chapman entered into an installment loan note and security agreement with the Indiana National Bank which provided for a 1973 Mercury as security for the loan. This agreement provided for payments of $199.67 per month commencing on November 15, 1974 and on the 15th day of each month thereafter for 35 months.

Chapman testified that very early in the loan period a payment was lost "by the bank or somebody." Thus, he made what he though was a current payment. The Bank claimed he was a month behind. Chapman and the Bank representative, Greg Austin, argued quite a bit about the loan. Chapman stated that Austin would call him every month to tell him he was over a month late in making his payment, but that Austin did not want to see his payment book which was stamped for each payment received. Finally, Chapman told Austin that, if he wanted to come and get the car, it was fine, and Chapman would see him in court.

On August 6, 1977, Chapman wanted to sell the car, so he placed a "for sale" sign in the window of the car and left it on the parking lot of a shopping center near his home. The next day, Sunday, Chapman discovered the car was gone. He called the Marion County Sheriff's Department to report the theft. On Monday Chapman called his insurance carrier to report the loss.

Chapman then left town for a week and upon his return was contacted by Sergeant Kenneth York of the State Police, who advised him the car had been recovered and took his statement. York had become involved with the case after Chapman's car had been found in a burned-out condition by an Indiana conservation officer. York felt the crime did not fit any normal vehicle theft pattern and that the arson attempt might be "an insurance job."

On August 15, 1977, after learning that Chapman's car was financed there, York telephoned the Indiana National Bank. He spoke with two people in the automobile loan department, a Mr. Lambert and Greg Austin. York identified himself as a State Police Officer and stated that he was seeking to learn the financial condition of Chapman's account as a possible motive in the arson case. In response to York's questions, one of the men, probably Austin, told York that the account had been designated for repossession but that Chapman had made a payment on August 2, 1977 to keep it from being repossessed. Austin told York, however, that payments were still due for July 15, 1977 and August 15, 1977. York testified that it was important to him that Chapman had just made a payment to keep the car from being repossessed and on that particular day, August 15, another payment was due. York felt that this financial condition, along with the other evidence he had, was enough to go to the prosecutor for a screening for probable cause of arson.

Chapman was subsequently charged with fourth degree arson. At trial Robert Purdue of the Bank testified as to the status of Chapman's account. Another witness, Bob According to Sergeant York's recollection, the reason for dismissal was:

Buis, a claim representative from Chapman's insurance company, testified that while Chapman had filed a loss report, he had never filed a claim. At this point in the trial the prosecutor, Charles Gantz, moved for dismissal of the case against Chapman "for the reason that uh certain information upon [sic] which the state was [sic] believed to be true and accurate uh has not materialized and for this reason we feel that it is in the interest of justice and fair play that this matter be discharged, dismissed."

"Okay, on March the 15th, 1978, reading from my report here, during Mr. Chapman's trial, Mr. Perdue [sic] of Indiana National Bank armed with the account history gave an entirely different view of the account on the witness stand, stating that it had never been more than twenty-three days past due. After consulting with the prosecutor, the defense attorney and myself, we decided the prosecutor would move for dismissal with prejudice to the charge."

Charles Gantz was the prosecutor in the arson case against Chapman. Mr. Gantz's recollection of the reason for the dismissal of Chapman's criminal charge was that certain information pertaining to Mr. Chapman's car loan, as it came out on the witness stand, was not as the state had believed it to be. The expectation as to what the Bank's testimony would be, Gantz recalled, arose through conversations between York and the Bank. Gantz further stated the change in the Bank's testimony "completely destroyed the state's case."

In this civil action, despite motions for directed verdicts against all four of Chapman's theory, the jury returned a verdict of actual damages of $39,750.00 and punitive damages of $50,000.00, indicating on the verdict form that the damages were based on all four theories. 1

DECISION

A directed verdict in favor of the defendant is proper only when there is absence of evidence or reasonable inferences in favor of the plaintiff upon the issue in question. Large v. Gregory (1981), Ind.App., 417 N.E.2d 1160. Here, the jury returned a verdict for Chapman based on all four theories of liability. Therefore, we must address the trial court's denial of the bank's motion for directed verdict with respect to each theory.

I. Invasion of Privacy

In Continental Optical Co. v. Reed (1949), 119 Ind.App. 643, 86 N.E.2d 306, the court defined the right of privacy as:

"The unwarranted appropriation or exploitation of one's personality, the publicizing of one's private affairs with which the public has no legitimate concern, or the wrongful intrusion into one's private activities, in such manner as to outrage or cause mental suffering, shame, or humiliation to a person of ordinay sensibility."

Id. 86 N.E.2d at 308. See also 27 I.L.E. Torts Sec. 8 (1959).

The aspect of legitimate public concern is particularly important to the case at bar which involves law enforcement efforts. The facts surrounding the Bank's communication of the status of Chapman's loan account are not in dispute. At the time of the communication, Sergeant York was a state police officer conducting an arson investigation in which Chapman was a suspect. York identified himself to the Our decision that legitimate inquiry into Bank records by law enforcement officials does not give rise to a private right of action for invasion of privacy is buttressed by cases that have addressed such inquiry in connection with fourth amendment claims.

Bank's loan officer and asked questions about the status of Chapman's automobile loan. The Bank's answers were in response to a legitimate law enforcement inquiry and thus a matter of legitimate public concern. Chapman does not dispute this point. Such a communication is not an invasion of privacy under Continental Optical.

In Leonard v. State (1968), 249 Ind. 361, 232 N.E.2d 882, our supreme court noted that a bank has lawful possession of bank records, and a person cannot claim an illegal search and seizure by police since fourth amendment rights are personal rights. 2

In U.S. v. Miller (1976), 425 U.S. 435, 96 S.Ct. 1619, 48 L.Ed.2d 71 copies of checks, deposit slips, and other bank records were obtained through a subpoena duces tecum which the defendant claimed was defective. The United States Supreme Court reversed a lower court ruling that such bank records were in a "zone of privacy" protected by the fourth amendment. The court said the checks and deposit slips were the business records of the bank and not the private papers of the respondent.

The court also stated that all documents obtained by the police contained only information voluntarily conveyed to the banks and exposed to their employees in the ordinary course of business. The court concluded there is no legitimate expectation of privacy in such documents. Miller 425 U.S. at 442, 96 S.Ct. at 1624.

A similar situation was addressed in Cox v. State (1979), 181 Ind.App. 476, 392 N.E.2d 496, where a check and deposit slip were obtained from Cox's bank by police without a search warrant. Cox sought to suppress the bank documents under the fourth amendment as the fruits of an illegal search. The court, citing U.S. v. Miller, supra, held that there is no legitimate expectation of privacy in such records and consequently no fourth amendment protection. Cox, 392 N.E.2d at 497.

Further comment on a related subject was offered by our supreme court in In re Order for...

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