Capital Bank v. Schuler

• Decision Date: 26 October 1982
• Docket Number: No. 81-92,81-92
• Citation: 421 So.2d 633,35 A.L.R.4th 976
• Parties: , 34 UCC Rep.Serv. 1287 CAPITAL BANK, Appellant, v. Lee SCHULER, Appellee.
• Court: Florida District Court of Appeals

Page 633

421 So.2d 633

35 A.L.R.4th 976, 34 UCC Rep.Serv. 1287

CAPITAL BANK, Appellant, v. Lee SCHULER, Appellee.

No. 81-92.

District Court of Appeal of Florida,

Third District.

Oct. 26, 1982.

Rehearing Denied Dec. 6, 1982.

Greenberg, Traurig, Askew, Hoffman, Lipoff, Quentel & Wolff and Sue M. Cobb, Miami, for appellant.

Dixon, Dixon, Hurst, Nicklaus & Webb and James A. Dixon, Jr., Miami, for appellee.

Before BASKIN, DANIEL S. PEARSON and FERGUSON, JJ.

DANIEL S. PEARSON, Judge.

Mrs. Schuler drew check no. 102, payable to one Charles Mouyos in the amount of $700, on her checking account at Capital Bank. Believing that this check was lost, Schuler cashed another check in the amount of $750 and gave Mouyos $700 in cash. Unbeknownst to Schuler, Mouyos had deposited the $700 check in his account at another bank. The check, having run its course through normal banking channels, arrived at Capital Bank at a time when Schuler had insufficient funds in her account to cover it. Accordingly, the check was stamped "insufficient funds" and returned to the Federal Reserve Bank of Miami, the last endorser.

Eleven days later, Schuler placed a stop-payment order on the $700 check she had issued to Mouyos. On the stop-payment form provided by Capital, Schuler specified the correct account number, check number, and payee. She placed a question mark in the space provided for the date of the check. She wrote--incorrectly and, as will be seen, significantly--that the amount of the check as to which she sought to stop payment was $750.

About ten days after Schuler wrote the stop-payment order, check no. 102 was presented to Capital Bank for payment and, there then being sufficient funds in Schuler's account, paid by Capital. The next day, a Capital Bank clerk, while in the process of hand sorting checks for filing and return to the last endorser, noticed the stop-payment order for check no. 102 and, failing to notice that the check had been paid, stamped the check "Payment Stopped." Schuler's account was then erroneously credited $700 and the check forwarded to the Federal Reserve Bank. ¹ Months later, due to an unexplained delay in the system, the Federal Reserve Bank returned check no. 102 to Capital. Capital Bank, recognizing that it paid the check, debited Schuler's account $700, reversing the erroneous credit. This debit created an overdraft in Schuler's account of $379.68. Capital sued to collect this debt. Schuler counterclaimed for the wrongful payment of a check over a stop-payment order, abuse of process, and gross negligence in breach of contract. ² The jury rejected the bank's claim and awarded Schuler damages of $15,320.32. Capital appeals from the judgment entered thereon.

The Bank contends that it was entitled to a directed verdict on its claim and Schuler's counterclaim. It says that, as a matter of law, it could rightfully make payment despite the stop-payment order since the order failed to describe the check with certainty as required by Section 674.403(1), Florida Statutes (1977), and was, therefore, neither valid nor binding. ³ Because we conclude that the Bank is correct in this contention and neither waived the protection afforded it by the statute nor was estopped by its conduct from relying on the statute, we do not reach the Bank's other grounds for reversal which go to the extent and nature of damages awarded Schuler.

I.

Section 4-403 of the Uniform Commercial Code (1978) provides:

"A customer may by order to his bank stop payment of any item payable for his account but the order must be received at such time and in such manner as to afford the bank a reasonable opportunity to act on it prior to any action by the bank with respect to the item ...."

The code provision, unlike Section 674.403(1), Florida Statutes (1977), does not separately address how the check is to be described, that question being subsumed in the broader phrase that the stop-payment order must be made "in such manner as to afford the bank a reasonable opportunity to act on it." ⁴ A 1965 report of the Uniform Commercial Code Committee, Report On Variations To Code In Adopting States, Report # 2 of the Permanent Editorial Board for the U.C.C. (West 1965), indicates that the Code's framers intended to place no greater burden on the depositor in describing the check than that which is found in the Code. In its report the Committee examined modifications to the Code made in California (requiring, as Florida, that the check be described with "certainty") and the District of Columbia (requiring that the check be "specifically described") and rejected each version as going beyond the "fixed policy" represented by the Code provision. It is apparent, then, that the policy of the Code is not that the check be specifically described or described with certainty, but only that the description be such as to afford the bank "a reasonable opportunity to act on it." In this respect, the Code effected no significant change in the existing common law respecting stop-payment orders, under which the duty of the customer was to describe the item with "reasonable accuracy." See, e.g., Hawkland, Stop Payment Orders Under the Uniform Commercial Code, 3 U.C.C.L.J. 103 (1970). Thus it is that in states which have adopted the Code as written, common law cases construing "reasonable accuracy" may be looked to to determine whether under the Code provision the check was described "in such manner as to afford the bank a reasonable opportunity to act on it." See Sherrill v. Frank Morris Pontiac-Buick-GMC, Inc., 366 So.2d 251 (Ala.1978).

But, as we have said, Florida has not adopted the Code provision as written. Instead, our legislature saw fit to require that the stop-payment order shall not be effective and may be disregarded unless it "describes with certainty the item on which payment is to be stopped." Fundamental rules of statutory construction require that where a statute materially changes the language of the uniform act upon which it is patterned, we must presume that the legislature intended the change to have meaning. Wheaton v. State, 420 So.2d 604 (Fla. 3d DCA 1982) (Case No. 81-1907, opinion filed July 27, 1982); see Carlile v. Game & Fresh Water Fish Commission, 354 So.2d 362 (Fla.1977).

Certainty is defined as freedom from any doubt; a sure thing, belief in which is based on thorough examination of all evidence. American Heritage Dictionary of the English Language 220 (1979). Thus, the requirement of "certainty" found in Section 674.403(1) does not permit us to say "close enough" and judicially make "certainty" the equivalent of "reasonable accuracy" or judicially muddle the clear and unequivocal meaning of the word by adding the antecedent "reasonable." ⁵ We must instead conclude that our legislature in enacting Section 674.403(1) intended to place a greater burden on the depositor in describing the check in a stop-payment order than that which existed at common law and that which exists in the Uniform Commercial Code. ⁶ We must further conclude that the instant stop-payment order being in error as to the amount of the check failed to describe it with certainty and was neither effective nor binding. Cf. Rimberg v. Union Trust Co. of the District of Columbia, 12 U.C.C. R.S. 527 (D.C.Sup.Ct.1973) ($250 check described as $235 on stop-payment order was not specifically described as required by D.C. statute).

In arriving at these conclusions, we do not overlook the fact that Section 674.403(1) contains the Code language that the order must be served upon and received by the bank "in such manner as to afford the bank a reasonable opportunity to act on it." By including both this language and the antecedent certainty requirement, the Florida Legislature has, in our view, determined that a bank cannot be deemed to have a reasonable opportunity to act on a stop-payment order unless the item is described with certainty. If the description of the item is uncertain, the opportunity afforded the bank to act is not reasonable.

But even if, arguendo, we were to read the "reasonable opportunity" clause of the statute as qualifying the "certainty" requirement, rather than the converse, we would still be compelled to conclude that under the circumstances of the present case the bank was not afforded a reasonable opportunity to act on the stop-payment order.

The undisputed evidence in the present case reveals that the computerized systems used by Florida banks require that the first bank to get a check write the amount of the item in magnetic ink. All banks thereafter, including the payor bank, use the amount of the check as the key feature of identification. When a customer stops payment, the computer is given the description of the check in terms of the amount. If the customer is mistaken as to the amount, the computer will not be able to effectuate the stop order. This process is designed to provide the most efficient service to the greatest number of customers at the least cost.

Thus, whether or not an uncertain description of the date, check number or name of payee would nonetheless afford the bank a reasonable opportunity to act on the order, it is undisputed that the amount of the check is critical, and an error in this regard will mean that the bank has no reasonable opportunity to act on the order.

"[T]he kind of information that is needed by the bank often will depend on its size, its technology, and the like and that therefore the resolution of specific fact situations under one set of circumstances may not be valid for another." Hawkland, supra, at 117.

Where, then, the bank has adopted a procedure for flagging checks pursuant to stop orders, the reasonableness of which is not challenged, that procedure is a factor, if not the controlling factor, in determining whether the bank was afforded a reasonable opportunity to act.

"To a certain extent, the validity of stop orders should depend on the procedures that the drawer uses to...