Capital City First Nat. Bank v. Lewis State Bank, BB--87
| Decision Date | 19 January 1977 |
| Docket Number | No. BB--87,BB--87 |
| Citation | 341 So.2d 1025 |
| Parties | 21 UCC Rep.Serv. 183 CAPITAL CITY FIRST NATIONAL BANK, a National Banking Corporation, Appellant, v. LEWIS STATE BANK, a Florida Banking Corporation, Appellee. |
| Court | Florida District Court of Appeals |
C. Gary Williams, of Ausley, McMullen, McGehee, Carothers & Proctor, Tallahassee, for appellant.
John D. Buchanan, Jr., of Henry & Buchanan, P.A., Tallahassee, and Charles W. Pittman, of MacFarlane, Ferguson, Allison & Kelly, Tampa, for appellee.
Between June 19 and 25, 1974, two checks drawn by the distressed Commonwealth Corporation on uncollected funds were, as one witness put it, 'floating around Tallahassee looking for a home.' Both checks, totaling $150,000, were drawn by Commonwealth to the order of Commonwealth on its account at Florida State Bank of Tallahassee. Commonwealth deposited the first check, for $10,000, in its account at appellant Capital City First National Bank on June 19, and received credit which Commonwealth immediately used. The second check, for $140,000, was similarly deposited at Capital City the next day, June 20. Florida State, the payor bank, dishonored the two checks and gave notice of dishonor following an intervening weekend, on June 24 and 25. Between their deposit and subsequent dishonor, the checks were handled by appellee Lewis State Bank, which accepted Florida State's dishonor of the checks, rescinded its prior charges to Florida State's account at Lewis, and sued Capital City, the depositary bank which refused to recognize Florida State's dishonor of the checks.
The issue is whether the loss properly falls on Capital City, as held by the circuit court, or on Lewis. Resolution of that issue is controlled by whether Florida State timely dishonored the checks before midnight of the banking day following 'presentment' to Florida State. That determination in turn depends on whether delivery of the checks to Lewis and Lewis' handling of them in its proof and transit department on June 20 and 21 was in effect presentment to Florida State, commencing the period for payment or dishonor and rendering tardy Florida State's notices of dishonor on June 24 and 25. The trial court held that presentment to Florida State did not occur when Lewis received the checks and that Lewis' handling of the checks in its proof and transit department on June 20 and 21 was only as an 'intermediary collecting bank,' not as Florida State's agent to receive presentment. Capital City appeals from the adverse judgment on the principal matter in issue and Lewis cross-assigns error in the trial court's refusal to award interest.
Some of the pertinent statutes are § 673.504, F.S.1973, 'How presentment made' '(1) Presentment is a demand for acceptance or payment made upon the . . . payor by or on behalf of the holder.
'(2) Presentment may be made:
(a) By mail, in which event the time of presentment is determined by the time of receipt of the mail; or
(b) Through a clearing house; or
(c) At the place of acceptance or payment specified in the instrument . . ..
'(3) (Presentment) may be made:
(b) To any person who has authority to make or refuse the acceptance or payment.'
Sec. 673.506, F.S.1973, 'Time allowed for acceptance or payment':
'(1) Acceptance may be deferred without dishonor until the close of the next business day following presentment. . . .'
Sec. 673.508(2), F.S.1973, 'Notice of dishonor':
'Any necessary notice (of dishonor) must be given by a bank before its midnight deadline (the next banking day, § 674.104(h)) . . ..'
Sec. 674.107, F.S.1973, 'Time of receipt of items':
'(1) For the purpose of allowing time to process items, prove balances and make the necessary entries on its books to determine its position for the day, a bank may fix an afternoon hour of two p.m. or later as a cut-off hour for the handling of money and items and the making of entries on its books.
'(2) Any item . . . received on any day after a cut-off hour so fixed or after the close of the banking day may be treated as being received at the opening of the next banking day.'
Sec. 674.202(2), F.S.1973, 'Responsibility for collection; when action seasonable':
'A collecting bank taking proper action before its midnight deadline (the next banking day, § 674.104(h)) following receipt of an item . . . acts seasonably . . ..'
Sec. 674.204, F.S.1973 'Methods of sending and presenting; sending direct to payor bank':
'(2) A collecting bank may send:
(a) Any item direct to the payor bank;
'(3) Presentment may be made by a presenting bank at a place where the payor bank has requested that presentment be made.'
The odyssey of the second or $140,000 check deposited to Commonwealth's account at Capital on June 20 was at every stage a banking day later, but otherwise identical to, that of the first or $10,000 check deposited Wednesday, June 19. The issues in the case may conveniently be discussed in terms of the first check. As the depositary bank, Capital had initial control of the manner of presentment of that check to the payor bank, Florida State. Capital might have physically delivered the check for presentment over the counter at Florida State; it might have mailed the check to Florida State for presentment; or it might have included the check in the sack of other checks delivered the night of June 19 to the Federal Reserve Bank of Jacksonville, which would have granted Capital City provisional credit on the morning of June 20 and made presentment to Florida State that morning. If by either of those methods Capital City had forwarded the check for ultimate presentment, and presentment had occurred on Thursday, June 20, Florida State's deadline to dishonor the check would have been midnight of the following day, Friday, June 21, and the check would by law then be deemed finally paid and not subject to dishonor by Florida State on the following banking day, Monday, June 24. Capital City did not so route the check, but sent it the morning of Thursday, June 20, together with other checks held on Tallahassee banks, for handling in the local clearinghouse which Tallahassee banks employ to exchange and provisionally credit items requiring presentment in Tallahassee.
The heart of Capital City's position in this case is the assertion, well documented in this record, that a depositary bank which holds and has granted a depositor credit for a check drawn on another bank has as its primary purpose speedy presentment for payment by the payor. But, the record likewise demonstrates, that purpose may be overridden in favor of a slower method when distance or collection expense are substantial factors. It would not do to mail a check directly for presentment to a New York bank payor, for example, because the mails would delay use of the funds by the depositary bank, which may obtain them provisionally be negotiating the check to a nearby intermediary collecting bank. While a check thus negotiated goes its slower way to New York, the bank of deposit may enjoy use of the provisional credit granted by the collecting bank. The bank of deposit might hasten both provisional and final credit by dispatching an airborne courier to New York with the check, but collection costs would soar.
To serve common objectives of obtaining speedy provisional and final credit, at low collection cost, Tallahassee banks before 1928 instituted a clearing arrangement for locally destined checks. It replaced checkbearing couriers criss-crossing the town bent on presentment and obviated unsporting delays accomplished by banks which paid their local obligations with checks on accounts at distant banks. Four Tallahassee banks thenceforth adhered to a local clearinghouse arrangement whereby each day, at sites rotating among the participants, representatives of the four would meet, provisionally exchange and balance their mutual obligations, and give or receive net payments.
In time a solution was found for the cumbersome assembly of representatives of a growing number of participant banks and for delays in obtaining provisional credit caused by setting daily clearings with checks which themselves required collection. In 1968 the bank which is now Barnett Bank of Tallahassee undertook, for a fee, to collect accumulated checks from banks twice daily, to prepare a settlement sheet and to communicate to each participant bank the amount of its net provisional credit or obligation. Acting as the clearinghouse, Barnett Bank of Tallahassee by telephone caused provisional charges and credits to be made in the accounts of participating banks at Barnett Bank of Jacksonville. That was done following the morning clearing--we are not here concerned with the afternoon clearing--by noon or 12:30 each day. The clearinghouse then delivered the checks in batches to appropriate payor banks.
The recent advent of sophisticated computerized banking services both simplified and, as this case testifies, complicated the Tallahassee clearinghouse arrangement. The computer's speed and economy in sorting items, proving balances, identifying individual accounts and posting charges and credits made it desirable for all Tallahassee banks with which we are concerned to engage computer services; but, while Capital City and Lewis among others invested in the hardware and human skills necessary for computerized banking, others, including the relatively new Florida State Bank, did not. Those that did sold their computer services to those that didn't. Thus, Lewis sold services to Florida State, and undertook by contract with Florida State to receive and process Florida State checks, including checks endorsed and forwarded for collection by the Federal Reserve Bank of Jacksonville, checks presented over the counter at Florida State and checks delivered through the Tallahassee clearinghouse by other local banks for presentment to Florida State. Florida State furnished Lewis records of its...
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