Northshore Bank v. Palmer, 1177

• Decision Date: 09 July 1975
• Docket Number: No. 1177,1177
• Citation: 17 UCCRep.Serv. 488,525 S.W.2d 718
• Parties: 17 UCC Rep.Serv. 488 NORTHSHORE BANK, Appellant, v. James T. PALMER, Appellee. (14th Dist.)
• Court: Texas Court of Appeals

Page 718

525 S.W.2d 718

17 UCC Rep.Serv. 488

NORTHSHORE BANK, Appellant, v. James T. PALMER, Appellee.

No. 1177.

Court of Civil Appeals of Texas Houston (14th Dist.).

July 9, 1975.

Rehearing Denied July 30, 1975.

T. D. Smith, William E. Heitkamp, Houston, for appellant.

John Bennett Lay, Bennett Lay, Kucera, Lay & Lang, Houston, for appellee.

CURTISS BROWN, Justice.

James T. Palmer (Palmer or appellee) brought suit against Northshore Bank (Bank or appellant) for the wrongful dishonor of several checks. Trial was to a jury which answered special issues paraphrased as follows: (1) That someone other than Palmer endorsed his name on a $275 check; (2) That thereafter, Bank intentionally refused payment of checks written by Palmer; (3) That the bank attempted to collect on overdraft resulting from the charge-back against the account of the $275 check and insufficient check fund charges resulting from its dishonor of Palmer's checks after it knew or should have known that the endorsement was a forgery; (4) That Palmer had suffered actual damages of $2,000; (5) That Palmer was entitled to punitive damages of $3,500; and (6) That the dishonor of the checks was not a result of a mistake. A Texas Rules of Civil Procedure 301 motion for judgment notwithstanding the verdict or in the alternative to disregard the answer to special issues four and five was filed by the Bank. The trial court overruled this motion and entered judgment for Palmer for $5,500.

Liability for the wrongful dishonor of an item is governed by Tex.Bus. & Com.Code § 4.402, V.T.C.A. (UCC 1968) which provides:

A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. When the dishonor occurs through mistake liability is limited to actual damages proved . If so proximately caused and proved damages may include damages for an arrest or prosecution of the customer or other consequential damages. Whether any consequential damages are proximately caused by the wrongful dishonor is a question of fact to be determined in each case.

Appellant attacks the submission and answers to the special issues on damages. Its attack on the actual damages contends that the trial court erred in overruling its Rule 301 motion. The answer to special issue number four is attacked on a factual sufficiency basis as well. In connection with this issue the jury was instructed as follows:

In connection with this issue you are instructed that you may take into consideration for finding actual damages the sum of money, if any, not repaid to James T. Palmer by Northshore Bank after Northshore Bank charged the check, payable in the amount of $275.00, dated October 18, 1971, marked as Pltf's. Ex. 1 against his account, the damage to the credit and reputation of James T. Palmer, if any, mental anguish suffered by James T. Palmer, if any, the time lost by James T. Palmer from his employment and schooling, if any, on the occasion or occasions in question.

Appellant did not object to the instruction. Tex.R.Civ.P. 274. The gist of its argument with regard to the 301 motion is that the 'actual damages' were established conclusively as to two of the elements: (1) the sum of money not repaid to Palmer after the charge-back and (2) the loss of time from employment and schooling. The Bank claims there was no evidence as to mental anguish or damage to credit and reputation. Given the lack of objection to the instruction in this case, loss of credit and mental anguish were properly considered here as 'consequential' damages.

There was testimony by Palmer that he had lost approximately one week of time from school and work. At the time the Bank dishonored the checks, Palmer was in the process of becoming certified as a pipe welder. There was oral and documentary evidence as to the approximate salary he was making at that time. There was also testimony by an officer of the bank as well as bank records to show that in addition to the charge-back of the $275 forged instrument, Palmer was charged $15 for checks drawn on insufficient funds. This was supplemented by evidence of humiliation, embarrassment and of having been turned down for credit for the first time in his life. Given this evidence, the trial court did not err in overruling the Rule 301 motion. Eubanks v. Winn, 420 S.W.2d 698 (Tex.Sup.1967); Leyva v. Pacheco, 358 S.W.2d 547 (Tex.Sup .1962). Further, after reviewing the entire record under appropriate standards, we believe that there was factually sufficient evidence to support the jury's finding on actual damages.

Appellant cites State Nat. Bank of Iowa Park, Tex. v. Rogers, 89 S .W.2d 825 (Tex.Civ.App.--Fort Worth 1935, no writ), as authority for the proposition that a depositor may not recover exemplary damages for wrongful dishonor. This case was decided before the enactment of Section 4.402, Supra, and is not applicable. The authors of the code did not attempt to specify whether the bank's liability sounds in contract or tort. See Comment 2 to Section 4.402, Supra. We think that the liability is 'statutory' and more in the nature of tort than contract. The jury did not find...