Allied Auto Sales, Inc. v. President, Directors & Co. of Farmers Bank of Del.

• Decision Date: 26 January 1966
• Citation: 216 A.2d 666,59 Del. 192
• Court: Supreme Court of Delaware
• Parties: , 59 Del. 192 ALLIED AUTO SALES, INC., Plaintiff Below, Appellant, v. The PRESIDENT, DIRECTORS AND COMPANY OF the FARMERS BANK OF the State of DELAWARE, Defendant Below, Appellee.

Page 666

216 A.2d 666

9 Storey 192, 59 Del. 192

ALLIED AUTO SALES, INC., Plaintiff Below, Appellant, v. The PRESIDENT, DIRECTORS AND COMPANY OF the FARMERS BANK OF the State of DELAWARE, Defendant Below, Appellee.

Supreme Court of Delaware.

Jan. 26, 1966.

Nathan P. Michlin, Wilmington, for plaintiff below, appellant.

James T. McKinstry, of Richards, Layton & Finger, Wilmington, for defendant below, appellee.

CAREY and HERRMANN, JJ., and MARVEL, Vice Chancellor, sitting.

HERRMANN, Justice:

This is an action for the recovery of the amount of a check as to which the plaintiff depositor unsuccessfully attempted to stop payment, and in payment of which the defendant bank issued its cashier's check.

These facts are undisputed:

The plaintiff was engaged in the used automobile business and maintained a regular checking account with the defendant bank. In the course of its business, the plaintiff's president, Samuel Woloshin, issued a check payable to the order of Solomon Klein, covering the purchase of an automobile. Immediately after Klein left the plaintiff's place of business, Woloshin, having become suspicious that Klein had sold him a stolen vehicle, telephoned the defendant's nearby branch office and directed the branch manager to refuse payment of the check. This telephone conversation took place sometime between 2:00 and 2:20 P.M. Klein was at the branch office at the time of the telephone call. He was thereupon informed that the plaintiff's check, which he was then tendering, would not be cashed because he was not a customer of the bank. After Klein left with the check, the branch manager immediately telephoned Woloshin, told him of the status of the matter, and suggested that Woloshin call the bookkeeping department at the main Wilmington office of the defendant bank if he wished to stop payment of the check. Immediately thereafter, Woloshin telephoned the defendant's main Wilmington office, spoke with a clerk in the bookkeeping department, and told her he wanted payment on the check stopped, giving her the reason therefor, and stating the urgency of the situation. Shortly after 2:30 P.M., Klein presented the plaintiff's check to a teller at the defendant's main Wilmington office, located more than a mile from the branch office at which the check was first presented. Klein was referred to the assistant cashier who telephoned the supervisor of the bookkeeping department (located in the same building) to ascertain whether the check was good. The reply was that there were sufficient funds in the plaintiff's account to cover the check and that there was no stop payment order. The supervisor was then informed by the assistant cashier that the check was being paid, and he was instructed to have the amount of the check held against the account. In compliance with Klein's request, the assistant cashier issued a cashier's check to Klein in payment of the plaintiff's check. At about 2:45 P.M., after the issuance of the cashier's check and the departure of Klein, the supervisor of the bookkeeping department learned of Woloshin's stop payment order 'in the usual course of the banking procedures' of the defendant. The next day, Klein presented the cashier's check at the defendant's Smyrna branch; and it was paid. This suit followed.

The plaintiff's basic contentions are that the defendant wrongfully failed to stop payment on the check pursuant to the plaintiff's stop payment order; that, therefore, it was incumbent upon the defendant to countermand its cashier's check in order to forestall ultimate payment to Klein. The Superior Court granted the defendant's motion for summary judgment. The plaintiff appeals.

Negligence is the crux of the first facet of the plaintiff's claim, the issues being whether the defendant exercised due and reasonable care and diligence under the circumstances and, if not, whether such failure was the proximate cause of the plaintiff's loss. National Dredging Co. v. President, etc., of Farmers Bank of State of Delaware, 6 Pennewill 580, 69 A. 607, 16 L.R.A.,N.S., 593 (1908); Thomas v. First National Bank of Scranton, 376 Pa. 181, 101 A.2d 910 (1954).

The question before us on the...