Central Nat. Bank of Houston v. Martin

• Decision Date: 04 November 1965
• Docket Number: No. 14671,14671
• Citation: 396 S.W.2d 218
• Parties: CENTRAL NATIONAL BANK OF HOUSTON, Appellant, v. Joe R. MARTIN, d/b/a Martin Mortgage Company, Appellee.
• Court: Texas Court of Appeals

Page 218

396 S.W.2d 218

CENTRAL NATIONAL BANK OF HOUSTON, Appellant, v. Joe R. MARTIN, d/b/a Martin Mortgage Company, Appellee.

No. 14671.

Court of Civil Appeals of Texas, Houston.

Nov. 4, 1965.

Rehearing Denied Dec. 2, 1965.

Dow, Dow, Cogburn & Dow, Abraham P. Friedman, Houston, for appellant.

Herman W. Mead, Houston, for appellee.

WERLEIN, Justice.

This suit was brought by appellant, Central National Bank of Houston, against appellee, Joe R. Martin, d/b/a Martin Mortgage Company, to recover the sum of $350.00, being the amount paid to appellee in the form of a cashier's check which appellant issued to him upon presentation at the bank of a $350.00 check drawn by one Charles C. Walker on his account in said bank, and made payable to appellee, who endorsed it in blank. Appellee by cross-action asked for judgment over and against Walker in the event appellant recovered against him. When appellant rested, the court granted appellee's motion for judgment and dismissed appellee's cross-action against Walker. The trial was non-jury.

The check of Walker was dated March 20, 1964, and was delivered to appellee about 10 o'clock in the morning on such date. On the same day at about 1:05 p. m., Walker called at the bank and in writing stopped payment on the check, using the bank's stop-payment form which provides, among other things:

'The undersigned agrees to hold the Bank harmless for said amount, as well as for all expenses and costs incurred by this Bank through refusing payment of above check and further agrees to hold the Bank free of all liability should payment be made contrary to this request, if such payment is made through inadvertence, accident or oversight.'

On March 23, 1964, Martin took the check to appellant Bank and got a cashier's check therefor, which he deposited to his account in the First State Bank of Bellaire. Thereafter appellant's assistant cashier, Mr. James White, contacted Martin and informed him that the check had been paid over a stop-payment order and in effect requested the return of the money which request was refused.

The trial court was not requested to file findings of fact and conclusions of law, and did not do so. Hence, we are unable to determine exactly upon what basis the trial court rendered judgment in favor of appellee when appellant concluded its evidence. The court recites in its judgment that at the conclusion of the evidence adduced by the plaintiff, the defendant moved for an instructed verdict and the court, after hearing the evidence and argument of counsel, did so grant said motion of the defendant, Joe R. Martin. The motion of appellee, entitled 'Defendant's Motion for Instructed Verdict' states, among other things, that appellant offered no proof that it had been damaged in any way; that no proof was offered that appellant did or did not charge the account of Mr. Walker for the amount of the check in question; and that the only documentary evidence offered by appellant in support of its position was the stop-payment order which contained a 'hold harmless clause in behalf of the bank and requires the depositor to indemnify them, no matter how the check is made, if the check is paid over the stop-payment order.' It seems likely, therefore, that the court entered judgment in favor of appellee based upon its conclusion that appellant had shown no damage because it could charge the account of Mr. Walker with the amount of the check in question, in view of the provision in the stop-payment order hereinabove set out.

Article 342-712 of the Texas Banking Code of 1943 provides, among other things, that:

'The person primarily obligated to pay an item may at any time prior to presentment thereof for payment instruct the bank by or through which the same is payable not to pay such item, and shall each sixty (60) days thereafter renew such instructions. No bank shall be legally obligated to regard such instructions or renewals unless the same are in writing, dated, signed, and describe the item with certainty. After receipt of stop payment instructions in the form above provided prior to presentment for payment of the item, a bank shall exercise reasonable diligence not to pay the same, and if it thereafter negligently pays the item it shall be liable for the damages sustained in a sum not exceeding the amount of such item. * * *'

Appellant's assistant cashier, Mr. White, testified that the cashier's check was issued in error because someone had overlooked the flag on the sheet 'where they called in to verify the check.' Appellant pleaded the stop-payment order and alleged that 'notwithstanding the foregoing, Plaintiff's employees erroneous-issued Plaintiff's cashier's check in exchange for the check of Charles C. Walker. * * *' Appellant neither pleaded any exculpatory ground or reason for its carelessness, nor did it undertake to excuse its conduct at the trial. It is our view that under the undisputed facts and as a matter of law, appellant negligently paid the check in question, and became liable to the drawer of the check, Mr. Walker, for the amount thereof unless the provision in the stop-payment order, hereinabove set out, releases appellant from its liability to Walker and gives it the right to charge his account with the amount of the check.

In 9 C.J.S. Banks and Banking § 344, p. 695, appears the following summary of the law relating to this subject.

'According to some authorities the common-law liability of the bank for paying a check or order in disregard of the drawer's countermand, infra § 353, may be limited by contract. Under this view a stipulation releasing the bank from liability for paying as a result of inadvertence or accident, in spite of the stop payment order, constitutes a valid contract, which is not void as against public policy. The consideration for such a stipulation is held to spring from the mercantile relation of the parties and the reciprocal rights and obligations which the law attaches to that relation, and it was held to be immaterial, in the absence of fraud, that the drawer did not read such a stipulation where it was printed on a card which he signed at the time he...