Ferrato v. Webster Bank

• Decision Date: 15 January 2002
• Docket Number: (AC 20913)
• Citation: 789 A.2d 472,67 Conn. App. 588
• Court: Connecticut Court of Appeals
• Parties: CHARLES FERRATO ET AL. v. WEBSTER BANK

67 Conn. App. 588

789 A.2d 472

CHARLES FERRATO ET AL. v. WEBSTER BANK

(AC 20913)

Appellate Court of Connecticut.

Argued September 11, 2001.

Officially released January 15, 2002.

Mihalakos, Dranginis and Shea, Js.

Linda N. Mayo, for the appellant (defendant).

Stephen G. Silverberg, for the appellees (plaintiffs).

Opinion

SHEA, J.

The defendant, Webster Bank, appeals from the judgment of the trial court awarding the plaintiffs, Charles Ferrato, then a Hartford County deputy sheriff, and Hartford Fire Insurance Company, $87,131.56 in damages because Webster Bank's predecessor in interest, Eagle Federal Savings Bank (Eagle Bank),¹ failed to comply with a bank execution served pursuant to General Statutes § 52-367a. On appeal, the defendant claims that the court improperly (1) concluded that funds erroneously credited to a banking customer's account constituted a debt due the account holder by the bank and were subject to execution pursuant to § 52-367a,² (2) concluded that Eagle Bank's stop-payment order with respect to these funds was untimely because it occurred after the midnight deadline imposed by § 52-367a³ and (3) failed to render judgment in favor of the plaintiffs in the amount of $9901.88. We agree with the defendant and reverse in part the judgment of the trial court.

The following facts are relevant to our disposition of this appeal. On June 25, 1997, Hartford Fire Insurance Company obtained a judgment for $59,308.60 against Par Painting, Inc., a Connecticut corporation and an account holder at Eagle Bank. On December 5, 1997, the court issued a bank execution against Par Painting, Inc., demanding $68,885.42, an amount that included postjudgment interest and the statutory fees allowed the serving officer. On January 13, 1998, Rotha Contracting Company, Inc., another customer of the bank, requested that the proceeds of a certificate of deposit that it owned be deposited into the Rotha Contracting Company, Inc., checking account. An Eagle Bank employee mistakenly caused the proceeds, amounting to $109,792.99, to be deposited into the Par Painting, Inc., account. Ferrato served the execution on Eagle Bank before noon on January 15, 1998. The Par Painting, Inc., account showed a balance of $119,694.87 at the bank's closing time on that date. On January 21, 1998, Eagle Bank issued and mailed to Ferrato a teller's check for $68,885.42 in full payment of the execution. That same day, but subsequent to mailing its check, Eagle Bank discovered its accounting error. The bank corrected the error by debiting the Par Painting, Inc., account by $109,792.99 and crediting the same amount to the Rotha Contracting Company, Inc., account.⁴ The next day, January 22, 1998, Eagle Bank stopped payment on the check and so informed Ferrato, who nevertheless deposited the check into his trustee account in March, 1998. The check was dishonored as a stopped payment item and was returned to Ferrato. It later became an exhibit at the trial of this case.

At trial, the plaintiffs claimed that the right of the bank to correct its error expired at midnight on January 16, 1998, pursuant to § 52-367a.⁵ The court agreed and rendered judgment against the defendant as follows:

"Amount of check on which payment was stopped: $68,885.42;

"Interest from 1/19/98 to 12/29/98 under General Statutes § 37-3a (10 percent times 344 days): $6492.21;

"12 percent interest re offer of judgment dated 12/ 30/98 through 3/31/00: $10,372.45;

"12 percent interest re offer of judgment dated 4/1/00 through 5/31/00 (61 days): $1381.48 [Total] $87,131.56."

I

The defendant first claims that the court improperly (1) concluded that the $109,792.99 mistakenly deposited into the judgment debtor's account constituted a debt due the judgment debtor by the defendant and (2) rendered judgment for the plaintiffs in the amount of $87,131.56. Specifically, the defendant claims that the court failed to recognize that § 52-367a conditions a bank's obligation to pay the amount demanded by an execution on the existence of an indebtedness of the bank to the judgment debtor. We agree with the defendant and reverse the judgment of the trial court. The threshold question before us is whether the entire nominal balance of the judgment debtor's account constituted a debt due from the defendant to the judgment debtor and was subject to execution pursuant to § 52-367a. Our analysis of this issue is guided by well established principles of statutory construction. "Statutory construction is a question of law and therefore our review is plenary.... [O]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature.... As with any issue of statutory interpretation, our initial guide is the language of the statute itself." (Citations omitted; internal quotation marks omitted.) Herbert S. Newman & Partners, P.C. v. CFC Construction Ltd. Partnership, 236 Conn. 750, 755-56, 674 A.2d 1313 (1996). "If the words of a statute are unambiguous, we assume that they express the legislature's intent." Stein v. Hillebrand, 240 Conn. 35, 40, 688 A.2d 1317 (1997).

Section 52-367a authorizes a judgment creditor to execute against any debts due from any banking institution to a judgment debtor that is not a natural person. This statute provides in relevant part that "[i]f any such banking institution upon which such execution is served and upon which such demand is made is indebted to the judgment debtor, it shall pay to such officer, in the manner and at the time hereinafter described, the amount of such indebtedness not exceeding the amount due on such execution, to be received and applied on such execution by such officer...." General Statutes § 52-367a.

In our view, the plain language of § 52-367a expresses the legislature's intent to condition a bank's obligation to comply with a service of execution on the existence of a debt owed to the judgment debtor by the banking institution on which the execution is served. Thus, the bank's obligation is not absolute, but rather it is limited by the amount of the bank's indebtedness to the judgment debtor. This interpretation is in accord with our Supreme Court's comments on a definitional subsection of the postjudgment procedures statutes. "Although [General Statutes] § 52-350a (16) defines `property' broadly to encompass `any real or personal property in which the judgment debtor has an interest which he could assign or transfer, including ... any present or future right or interest ... [and] any debt, whether due or to become due,' it does not specify what constitutes [a] ... `debt.' While it is reasonable to infer from this language the legislature's intent to allow a judgment creditor to execute against all forms of a judgment debtor's assets, it would be unreasonable to infer an intent to encompass property in which a judgment debtor lacks any cognizable interest whatsoever." Fleet Bank Connecticut, N.A. v. Carillo, 240 Conn. 343, 349, 691 A.2d 1068 (1997).

The defendant asserts, and we agree, that the judgment debtor did not have any cognizable interest in the funds erroneously credited to its account. "Deposits... create the relation of debtor and creditor between the bank and the depositor." Alexiou v. Bridgeport-People's Savings Bank, 110 Conn. 397, 399, 148 A. 374 (1930). "[A] bank is indebted to its account holders for the amount of the funds that they have deposited...." (Citations omitted; emphasis added.) Frigon v. Enfield Savings & Loan Assn., 195 Conn. 82, 87, 486 A.2d 630 (1985). A debt is "[t]hat which is due from one person to another, whether money, goods, or services; that which one person is bound to pay to another, or to perform for his benefit; thing owed; an obligation or liability ... that of which payment is liable to be exacted.... Debt contemplates not only an obligation upon the debtor to pay, but a reciprocal right on the part of the creditor to enforce payment...." (Citations omitted; internal quotation marks omitted.) Lenox Realty Co. v. Hackett, 122 Conn. 143, 146, 187 A. 895 (1936).

The requirements and obligations imposed by § 52-367a simply do not apply to any portion of a depositor's account that does not represent a debt due from the bank to the depositor. In the present case, the defendant was indebted to Par Painting, Inc., only for $9901.88, the total amount of the judgment debtor's deposits on the date of the execution. The $109,792.99 erroneously credited to its account was not a debt due the judgment debtor and was not subject to execution. The defendant, therefore, was not bound to pay this sum to the judgment debtor, and the judgment debtor had no right to enforce payment of that sum. Accordingly, § 52-367a does not authorize execution against funds erroneously credited to the judgment debtor's account.

We conclude that the court improperly rendered judgment for the plaintiffs in the amount of $87,131.56 because this figure included the funds erroneously deposited in the account, which funds were not subject to execution under § 52-367a.

II

The defendant next challenges the court's conclusion that Eagle Bank's stop-payment order was untimely because it occurred after the midnight deadline imposed by § 52-367a. We conclude that the defendant's action was timely with respect to that amount actually owed to a third party account holder and credited to the judgment debtor in error.

We determined in part I that § 52-367a does not authorize execution against funds that do not constitute a debt owed by the bank to the judgment debtor. Therefore, because the defendant lacked authority to issue to the plaintiffs funds that improperly were deposited in the judgment debtor's account, the midnight deadline ...