First-Wichita Nat. Bank v. Steed, FIRST-WICHITA

• Decision Date: 24 January 1964
• Docket Number: No. 16478,FIRST-WICHITA,16478
• Citation: 374 S.W.2d 932
• Parties: TheNATIONAL BANK, Appellant, v. Bruce M. STEED et al., d/b/a Steed Motor Company, Appellees.
• Court: Texas Court of Appeals

Page 932

374 S.W.2d 932

The FIRST-WICHITA NATIONAL BANK, Appellant, v. Bruce M. STEED et al., d/b/a Steed Motor Company Appellees.

No. 16478.

Court of Civil Appeals of Texas, Fort Worth.

Jan. 24, 1964.

Stayton M. Bonner, Wichita Falls, for appellant.

Anderson & Connell, and Jack Connell, Wichita Falls, for appellees.

MASSEY, Chief Justice.

Unlike the law in certain other states, a bank in Texas, which through its own negligence or mistake delivers to the payee named on a check the amount for which it was drawn, at a time when the bank should not have paid the check (because the drawer had executed a 'stop-payment' order, did not have an account, etc.), is entitled to maintain and recover upon an action for restitution of and from the payee, in an amount limited only to the extent that benefits have been received by the payee at the expense of the bank. (Emphasis supplied.) The theory is that the party who received the benefits was unjustly enriched thereby, and as of the moment when the benefits were mistakenly or negligently conferred the law does not look beyond him who received the same in the determination of whether he was unjustly enriched. At and after such time, however, in the event an innocent payee has so changed his position in good faith, trust and belief of the validity of the payment that either he or the payor bank must suffer loss, the fact that the bank has been negligent in creating the situation does become important in that the bank in turn becomes liable in damages to the innocent payee for his resultant loss due to the change of position. See Restatement of the Law, Restitution, p. 232, 'Mistake, Including Fraud', Sec. 59, 'Lack of Care by Transferor'.

In a case based upon circumstances of considerable analogy, the Austin Court of Civil Appeals rendered a decision in complete accord with what we have stated in the preceding paragraph. The Austin Court found additional support to be existent for the payee's right to recover damages from the bank under Art. 342-712, Vol. 1A, Vernon's Ann.Civ.St., of the Texas Banking Code of 1943. Capital National Bank in Austin v. Wootton, 1963 (Tex.Civ.App., Austin), 369 S.W.2d 475, writ dism.

Of particular importance in the Wootton case, supra, was recognition of the fact that in Texas the payee was not a 'holder in due course' because he was the payee named in the instrument. In other words, the check not having been negotiated it was subject to the same defenses as if nonnegotiable and would be dischargeable by any act which would discharge a simple contract for payment of money. See Texas' Negotiable Instruments Act, Art. 5935 (Secs. 51-59, incl. of the Act). See cases under 6 Tex.Dig., Bills & Notes, k338, 'Due course of business'.

Giving consideration to the statement of facts and findings of the jury on the special issues submitted, the case under examination may be briefly stated. In making such statement the First-Wichita National Bank of Wichita Falls, appellant herein, will be referred to as the bank,--the appellees, Bruce M. and Thad Steed, d/b/a Steed Motor Company, will be referred to as the payee and also as the motor company and treated as inanimate,--and the drawer of the check, one Herman F. Gumpert, will be referred to by name.

On or about July 23, 1960, Gumpert, having some $4,800.00 on deposit in his checking account at the bank, entered into a transaction with the motor company. By the terms of the transaction he delivered a 'trade-in' automobile, a check for $350.00, and an installment note for $2,000.00 to the motor company, receiving in exchange a new or nearly new Rambler automobile. The $2,000.00 note was secured by a chattel mortgage on the Rambler automobile. This occurred on a week end. Before banking hours on the morning of Monday, July 25, 1960, Gumpert decided that he wanted to rescind the transaction,-by agreement if possible. He went to the used car lot of the motor company, but when he was unable to find the salesman with whom he had dealt he told no one else that he wanted to cancel the deal. He did, however, go to the bank and execute a 'stop-payment' order on the $350.00 check; then, in an abundance of caution, he withdrew the bulk of his money on deposit so that only $119.10 remained in his account. Apparently he continued to use the Rambler automobile.

Afterward, but on the same morning of Monday, July 25, 1960, the motor...