Ma v. Community Bank

• Decision Date: 08 June 1982
• Docket Number: No. 80-2806,80-2806
• Citation: 686 F.2d 459
• Parties: Jack MA, a subject of the Republic of China, Plaintiff-Appellant, v. The COMMUNITY BANK, a Wisconsin banking corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 459

686 F.2d 459

Jack MA, a subject of the Republic of China, Plaintiff-Appellant, v. The COMMUNITY BANK, a Wisconsin banking corporation Defendant-Appellee.

No. 80-2806.

United States Court of Appeals, Seventh Circuit.

Argued March 2, 1982.

Decided June 8, 1982. ^*

Jack Ma, pro se.

Robert C. Burrell, Borgelt, Powell, Peterson & Frauen, S. C., Milwaukee, Wis., for defendant-appellee.

Before BAUER, CUDAHY and POSNER, Circuit Judges.

CUDAHY, Circuit Judge.

At its inception, this diversity case involved a relatively uncomplicated dispute. The plaintiff, Jack Ma, owned three Savings Certificates of Deposit ("SCD's") in the amount of $10,000.00 each, which were stolen from him on September 27, 1971. The defendant bank, issuer of the SCD's, refused to issue new certificates to Ma unless he agreed to execute a Bond of Indemnity, which would cost him $600.00. Ma refused to purchase the bond, primarily because before he had purchased any SCD's from the bank, he had been assured by an officer of the bank that if the certificates were ever lost or stolen, he need only notify the bank and new certificates would be issued to him immediately. Because Ma refused to buy the bond, the bank refused to issue replacement certificates, refused to release the principal, and withheld some (though not all) interest on the principal. The result of this dispute is the instant lawsuit, which is now in its ninth year.

In March 1967, Ma came to the United States ¹ to pursue an education, enrolling at St. Norbert's College in DePere, Wisconsin. He opened a passbook savings account at the defendant bank, through Gerald Gerbers, then the head teller at the bank. Ma asked Gerbers about time deposits, and Gerbers informed Ma that the bank offered SCD's, which carried higher interest rates than passbook savings accounts, with penalties for early withdrawal. Ma specifically inquired about the "safety" of an SCD in the event his certificate was lost or stolen. Gerbers assured him that the SCD was safe because it was not negotiable, and that if his certificate were ever lost or stolen he need only notify the bank, and a replacement certificate would be issued to him. Satisfied, Ma purchased an SCD in the amount of $4,000.00.

Ma stayed in DePere for one and one-half years. During that time he regularly transacted business at the bank, often with Gerbers, making deposits into and withdrawals from his savings account, and purchasing additional SCD's. In September 1968, Ma moved to California, but continued to do business with the bank through the mail. He cashed SCD's when they matured, purchased new ones, and received regular interest checks from the bank. In September 1971, Ma moved to New York, where his SCD certificates were stolen shortly after his move. Each SCD was in the amount of $10,000.00, each was payable to Jack Ma, and each stated it was non-negotiable.

Ma immediately notified the bank by telephone of the theft, and later wrote to the bank, notifying it of his loss and his new address, and requesting that his interest checks and new certificates be sent to him. In response, the bank informed Ma that it would send him replacement certificates and his periodic interest checks only if he purchased an indemnity bond in the amount of $50,000.00. Ma discovered, however, that no bonding company in New York would sell him a bond because he was a foreign student without assets in this country. He so informed the bank, and offered to travel to Wisconsin if necessary to obtain new certificates. The bank made no response to this offer. Instead, in February 1972, the bank notified Ma that it had found a bonding company in Wisconsin willing to sell him the required bond for $600.00, and persisted in its request that Ma purchase the bond. Unwilling to purchase the bond, Ma sought advice from various people, including a law professor at New York University Law School, his former physics professor at St. Norbert's College in DePere, attorneys in Milwaukee and Green Bay, an Assistant Regional Director of the FDIC, and numerous public officials. He was consistently advised to take legal action against the bank. ²

During this period, the bank sent Ma periodic interest checks due on the SCD's even though Ma refused to purchase the bond of indemnity. However, the bank withheld eighteen interest checks until May 1973. When he received the checks, he had difficulty depositing some or all of them into his New York bank account because they were so out of date by the time he received them.

Ma filed this lawsuit on August 10, 1973. ³ His amended complaint recited his purchase and the subsequent theft of the SCD's, and alleged seven "causes of action": (1) The bank refused to return the $30,000 to him or to reissue the certificates, despite his demand. (2) When the bank sent him the withheld interest checks in May 1973, it refused to pay compound rather than simple interest. (3) Ma was humiliated and embarrassed because of the difficulties he experienced in depositing the overdue interest checks. (4) As for the interest checks that were sent to Ma in timely fashion, the bank should have paid compound rather than simple interest rates. (5) The bank knew Ma as one of its customers and had told him that if his certificates were lost or stolen they would be replaced immediately, but later fraudulently denied knowing him and made unreasonable and unlawful demands on him to prevent him from recovering his $30,000. (6) The bank intentionally withheld Ma's money and refused to pay proper interest on it, with the result that Ma was harmed in his living style and suffered loss of business opportunities, and the bank knew or should have known this result would follow from its action. (7) The bank wrongfully converted Ma's $30,000.00 to its own use.

The bank's defense was, in essence, that its insistence on an indemnity bond was proper because of an identification problem. The bank contended it had no way of knowing that the Jack Ma who had requested new certificates was the same Jack Ma who owned the SCD's. The bank also maintained that because the SCD's were automatically renewable if not cashed upon maturity, the only interest due was that stated in the SCD's: simple interest at 5% per year, payable quarterly.

On January 15 and 16, 1976, Ma was deposed by the bank's attorneys and several bank employees were deposed by Ma's attorney. One of the employees testified she recognized Ma as a customer of the bank. Nonetheless, the bank continued to deny that it could be sure Ma was the owner of the SCD's. The district court, finding the bank employee's recognition of Ma dispositive, entered an order granting summary judgment in Ma's favor on the issue of his entitlement to the $30,000.00. On February 13, 1976, the court ordered the bank to turn over $29,025.22 to Ma. ⁴

On October 21, 1977 (after numerous disputes, most of which concerned discovery matters and are not pertinent here), the district court entered an order disposing of four of Ma's causes of action. With respect to the first cause of action, although Ma's demand for return of the $30,000.00 was moot in light of the summary judgment granted on February 13, 1976, the court held that a claim was stated, in that if the bank had agreed not to require a bond of indemnity when Ma bought the SCD's, its later insistence on the bond would amount to a breach of contract. The breach of contract claim was reserved for trial. The court read the second cause of action as a claim for interest on the withheld interest checks and concluded that if the checks were wrongfully withheld, the bank should pay interest on them. Accordingly, this claim was also reserved for trial. The court granted summary judgment for the bank on Ma's third cause of action, his claim of humiliation when he tried to deposit the untimely-paid interest checks. ⁵ The court held, first, that the bank did not cause any humiliation Ma may have suffered because Ma could see the dates that appeared on the checks. ⁶ Moreover, the court found that Ma was in fact permitted to deposit the checks into his New York account, upon condition that he allow time for them to clear before making withdrawals. The court found this arrangement insufficiently humiliating to support a claim for damages. The district court also granted summary judgment to the bank on Ma's fourth cause of action, his claim that he should have been paid compound interest on the wrongfully withheld $30,000.00. The court held that because the SCD's provided for automatic renewal at the same interest rate, no compound interest was due. The court found that the fifth cause of action stated a claim that the bank fraudulently induced Ma to purchase the SCD's by assuring him that if they were lost or stolen they would be reissued immediately, without telling him a bond would be required. This claim was accordingly reserved for trial. The court regarded Ma's sixth and seventh causes of action as a single charge of conversion, and dismissed them because the claim of conversion was no different from the breach of contract claim. Finally, the court addressed Ma's demand for punitive damages and for damages for lost business opportunities, holding neither type of damages recoverable. Punitive damages are not recoverable for mere breach of contract, the court held. Moreover, while agreeing that a breach of contract may amount to a tort, and that punitive damages might be recoverable for some torts, the court found that "(t)he facts of this case do not show the requisite conduct necessary to sustain the award of punitive damages." Regarding Ma's claim of lost business opportunities, the court denied such damages because they were speculative, because they were not within the contemplation of the parties, and because Ma did not exercise ordinary diligence in minimizing his losses.

Two other pretrial matters are pertinent to this appeal. The first is Ma's request for trial by jury, filed on...