Buckley v. Trenton Saving Fund Soc.

• Decision Date: 11 August 1988
• Citation: 111 N.J. 355,544 A.2d 857
• Parties: , 57 USLW 2119, 6 UCC Rep.Serv.2d 1040 Joseph E. BUCKLEY, Jr., Plaintiff-Appellant and Cross-Respondent, v. TRENTON SAVING FUND SOCIETY, Defendant-Respondent and Cross-Appellant.
• Court: New Jersey Supreme Court

Page 355

111 N.J. 355

544 A.2d 857, 57 USLW 2119, 6 UCC

Rep.Serv.2d 1040

Joseph E. BUCKLEY, Jr., Plaintiff-Appellant and Cross-Respondent, v. TRENTON SAVING FUND SOCIETY, Defendant-Respondent and Cross-Appellant.

Supreme Court of New Jersey.

Argued Jan. 4, 1988.

Decided Aug. 11, 1988.

Joseph E. Buckley, Jr., pro se.

Michael J. Nizolek, Trenton, for defendant-respondent and cross-appellant (Backes, Waldron & Hill, attorneys).

Hugo M. Pfaltz, Jr., Summit, for amicus curiae New Jersey Council of Sav. Institutions (Pfaltz & Woller, attorneys; Alice Mildred Haller, on the brief).

Dennis R. Casale, Princeton, for amicus curiae New Jersey Bankers Ass'n (Jamieson, Moore, Peskin & Spicer, attorneys; Dennis R. Casale, Kevin L. Lilly, and Michael J. Mann, on the brief).

The opinion of the Court was delivered by

POLLOCK, J.

The fundamental question in this case is whether a customer may recover against a drawee bank for mental anguish and punitive damages caused by the bank's wrongful dishonor of the customer's check drawn payable to a third party. The Law Division dismissed the claim of plaintiff, Joseph E. Buckley, Jr., for punitive damages, but submitted his claim for mental anguish to the jury, which returned a verdict for $25,000 in favor of Buckley and against Trenton Saving Fund Society (the bank). The Appellate Division affirmed the dismissal of the punitive damages claim, and reversed and remanded the claim for mental anguish. 216 N.J.Super. 705, 524 A.2d 886 (1987). We granted plaintiff's petition for certification, 108 N.J. 211, 528 A.2d 31 (1987), and defendant's cross-petition, id. at 212, 528 A.2d 31. We now find that plaintiff may not recover for either punitive damages or his alleged mental anguish. Accordingly, we modify the judgment of the Appellate Division and remand the matter to the Law Division for the entry of a judgment dismissing the complaint.

-I-

Consistent with an air of informality that pervaded the trial, plaintiff, an attorney, represented himself and was his sole witness. His testimony was a narration of his version of the facts, which included hearsay statements and purported admissions by the bank, as well as legal argument. Similarly, the bank's case consisted of the testimony of two officers, neither of whom was directly involved in the events that gave rise to the suit. Neither party introduced the signature cards or any other written evidence of the contract pertaining to the checking account. Many of the relevant facts, however, are undisputed.

In 1975 plaintiff, then on the verge of taking the bar examination, opened a checking account in his name with the bank. At about the same time, he obtained a mortgage for the purchase of a home in Trenton as tenants by the entirety with his wife, Linda. He requested that in the event of an overdraft the bank not return his checks unpaid, but advise him that there were insufficient funds in the account.

From 1979 through 1982, over thirty checks drawn on his account were returned to plaintiff for insufficient funds, and on various occasions he was delinquent in his mortgage payments. Some of the overdrafts were attributable to checks drawn by his wife, who signed plaintiff's name as the drawer. In 1981 plaintiff separated from his wife. As part of their separation agreement, plaintiff agreed to pay his wife $150 per week to support her and their four children.

On January 14, 1984, Mrs. Buckley tried to cash one of plaintiff's $150 support checks at the bank's Robbinsville branch, where neither she nor he maintained an account. According to the bank, Mrs. Buckley was unknown at that branch, and it refused to cash the check because she did not maintain an account there and could not otherwise identify herself. The reason for the requirement that the presenter maintain an account at the branch of presentment was to enable the bank to verify the presenter's signature from bank records.

In its answer, the bank admitted the allegation in the complaint that "[w]hen the check was presented, defendant's manager personally recognized Mrs. Buckley as she had at previous times paid similar checks." At trial, however, a bank officer explained that it was at the Ewing branch, not the Robbinsville branch, where Mrs. Buckley was known. The officer related that when told she could not cash the check at the Robbinsville branch, Mrs. Buckley replied, "[n]o problem, I'll go to the Ewing branch and cash it tomorrow." Unfortunately, neither Mrs. Buckley nor anyone from the Robbinsville branch testified at trial, so the record does not contain the testimony of the participants in the transaction.

According to plaintiff, his parents called him about the dishonor of the check, and he called Mrs. Watson, the manager of the Ewing branch. Mrs. Watson agreed that in the future Mrs. Buckley could cash checks at both the Ewing and Robbinsville branches. Two months later, however, on March 9, the bank, apparently the Robbinsville branch, again refused to cash one of the support checks for Mrs. Buckley, and she later cashed it at the Ewing branch.

Plaintiff testified further that after both events, his wife, with whom he was engaged "in earnest divorce negotiations," berated him. Also, his parents, sister, best friend, and children spoke to him about the event. After the March transaction, his friends and relatives did not accept his explanation that the refusal to cash the check was due to the bank's error. Although plaintiff testified that his mother, father, and best friend continued to refuse to talk to him, he did not call any of these potential witnesses at trial. In addition, he did not offer any medical testimony to support his claim for mental anguish or emotional distress. He neither asserted nor proved a claim for monetary loss.

Plaintiff's reaction to his ex-wife's difficulties in cashing checks was to sue the bank for intentional and negligent infliction of emotional distress arising out of the dishonor of the checks, fraud, invasion of privacy, and punitive damages. The trial court dismissed his claims for fraud and invasion of privacy, and plaintiff has not pursued those claims on appeal. Further, plaintiff stipulated to the dismissal of his claim for the negligent infliction of emotional distress. The court denied the bank's motion to dismiss the plaintiff's claim for intentional infliction of emotional distress and charged the jury:

[W]hen a bank dishonors a check of its customer and wrongfully refuses to pay it when presented for payment, that bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. Whether any consequential damages are proximately caused by the wrongful dishonor is a question of fact to be determined in each case.

* * *

* * *

Now, one aspect of damages that is before you under the facts of this case has to do with emotional distress that has been testified to by plaintiff, Mr. Buckley. And I instruct you that in this case there can be, if you're satisfied by the proof, and you find that there was a dishonor of the checks by the--on the part of the defendant, I charge you that as one element of damages, and that you can reach one for intentional infliction of emotional distress.

Now, what is meant by that in the law is that one who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another is subject to liability for such emotional distress. Now, liability may exist where the conduct exceeded all bounds usually tolerated by decent society and where the actions are especially calculated to cause and do cause mental distress of a very serious kind.

So, in this case, if you find that there was a wrongful dishonor of the plaintiff's check, and you find that the plaintiff is entitled to recover damages, you may consider as an element of damage, such intentional infliction of emotional distress as would be--correspond to that definition I've given you.

No specific interrogatories were submitted to the jury, which returned a general verdict awarding plaintiff $25,000 in damages. The trial court denied the bank's motion for judgment notwithstanding the verdict.

In reversing and remanding, the Appellate Division ruled that the trial court failed "to delineate the distinction between mistake and an intentional breach or willful, wanton or reckless misconduct." 216 N.J.Super. at 715, 524 A.2d 886. The court also criticized the trial court's charge on proximate cause, noting that although the jury may have concluded that the bank intentionally dishonored plaintiff's checks, the dishonor may not have proximately caused plaintiff's emotional distress. Ibid. Consequently, the Appellate Division remanded the matter to the Law Division for a new trial. In reaching that result, however, the Appellate Division affirmed the trial court's ruling that plaintiff could not recover punitive damages. Id. at 715-16, 524 A.2d 886.

-II-

The resolution of this appeal requires us to consider the nature of a cause of action for wrongful dishonor of a check and the requirements for recovering for emotional distress for such a dishonor. At the center of the analysis is section 4-402 of the Uniform Commercial Code, pertaining to a bank's liability to a customer for wrongful dishonor. N.J.S.A. 12A:4-402 (section 402). We begin with the nature of the cause of action.

An action for wrongful dishonor sounds in both tort and contract. Some describe it as a tort action, R. Anderson, Anderson on the Uniform Commercial Code § 4-402.3 at 150 (3d ed. 1982) (Anderson), but others view it as sounding in contract, N.J.S.A. 12A:4-402, New Jersey Study Comment. Still others say the characterization as tort or contract does not make any difference. J. White & R. Summers, Handbook of the Law Under the Uniform Commercial Code § 17-4 at 675 (2d ed. 1980) (White & Summers). When drafting the Uniform Commercial Code (the Code), the commissioners on uniform state laws did...