General Finance Corporation v. Milwaukee Western Bank, 61-C-314.
| Decision Date | 26 October 1965 |
| Docket Number | No. 61-C-314.,61-C-314. |
| Citation | 246 F. Supp. 646 |
| Parties | GENERAL FINANCE CORPORATION, Plaintiff, v. MILWAUKEE WESTERN BANK, Defendant. |
| Court | U.S. District Court — Eastern District of Wisconsin |
T. L. Tolan, Jr., and Samuel J. Recht, Milwaukee, Wis., for plaintiff; Brady, Tyrrell & Bruce, Milwaukee, Wis., of counsel.
Maxwell H. Herriott, Lester S. Clemons and James A. Urdan, Milwaukee, Wis., for defendant.
This is an action to recover the face value of certain checks and of a draft of which plaintiff was the payee and acceptor, respectively. Jurisdiction is based on diversity of citizenship. The question of damages has been severed, and the liability questions have been submitted on cross motions for judgment and on stipulated facts. On oral argument, counsel for the parties agreed that the stipulation of facts covered all facts relevant and material to the cause.
Plaintiff, General Finance Corporation, hereinafter referred to as "General," is a Delaware corporation having its principal place of business in the State of Illinois. It is duly licensed to do business in the State of Wisconsin.
Defendant, Milwaukee Western Bank, hereinafter called "Western," is a banking corporation, organized and existing under the banking laws of the State of Wisconsin. Its place of business and office as a bank is located more than one mile from the Milwaukee Clearing House, of which it is an associate member.
Jewel Motor Sales, hereinafter called "Jewel," was a partnership engaged in the sale of automobiles in Milwaukee, Wisconsin. It was a depositor of Western at all times relevant to this action and was adjudicated bankrupt in August of 1961. The First Wisconsin National Bank of Milwaukee, hereinafter referred to as the "First," maintains a bank in Milwaukee, Wisconsin. It is a member of the Milwaukee Clearing House.
Liability as to these claims is predicated on the provisions of the Wisconsin Bank Collection Code, Section 220.15(3), Wisconsin Statutes, the "Deferred Posting" provision, in effect at the time of the transactions. Involved are two groups of checks totalling $46,700 and $44,400, respectively. The sequence of events in respect to the two groups is similar, except that the occurrences involving the second group took place one business day later than those of the first group, which occurrences are set forth here.
The checks, of which General was the payee, Jewel the payor, and Western the drawee bank, were dated November 6, 1960. General deposited these checks with the First and was given credit therefor in its checking account on November 9, 1960.
On November 10, 1960, at 9:30 a. m., the First presented the checks to Western by messenger at the first clearing of the Milwaukee Clearing House. The checks were then brought to Western about 10:00 a. m. on that day. In accordance with the deferred posting practice of Western, the checks were posted to the Jewel account on November 11, 1960, as of November 10, 1960. The posting resulted in substantial overdrafts, and the checks were reversed back out and marked "RT" for return.
Between 10:00 and 11:30 a.m. on November 11, before Western knew that an overdraft entry would result from the deferred posting, Jewel came to Western and stopped payment on the November 6, 1960, checks.
About 4:00 p.m., and before the close of business on November 11, 1960, the day after Western received the items, it notified the Return Item Department of the First by telephone that payment on the November 6, 1960, checks had been stopped and that they would be returned on November 14, 1960, the next business day. Western further inserted the checks in a "Return Item" envelope addressed to the First, which was immediately placed in the vault of Western with all other Clearing House items to be exchanged at the 9:30 a.m. clearing of the next business day.
The First did not object to the proposed return. No written notification was given, but the checks were in fact returned to the First on November 14, 1960, the next business day, and the return was accepted by the First. Upon return of the checks, the First cancelled the credit it had previousy extended to plaintiff thereon.
The manner of return of these items was usual and customary and in accordance with the Clearing House rules then applicable to Milwaukee banks located, like Western, more than a mile from the Clearing House.
The Wisconsin Deferred Posting law, Section 220.15(3) of the Wisconsin Statutes, insofar as applicable here, provides as follows:
* * *"
The question presented in Claims 1 and 2 is whether the manner of revocation followed by Western, that is, telephone notification to the First, placing the checks with items to be returned to the Clearing House on the next business day after receipt by Western, followed by presentment to the First by Clearing House messenger on the following morning, constitutes revocation of credit in respect to the Jewel checks in compliance with Section 220.15(3), Wisconsin Statutes. Are the Jewel checks to be deemed "dispatched in the mails or by other expeditious means not later than midnight of the bank's next business day" after receipt of the items? The consequence of failure to revoke is, of course, that the bank must be deemed bound to pay the items.
The Florida and Texas statutes construed and applied in Central Bank and Trust Company v. General Finance Corporation, 297 F.2d 126 (5th Cir.1961), General Finance Corporation of Florida v. Central Bank and Trust Company, 264 F.2d 869 (5th Cir.1959), and City State Bank v. National Bank of Commerce, 261 S.W.2d 749 (Tex.Civ.App.1953), respectively specified the particular manner in which a bank may be bound to pay or for revocation of credit. There was no provision for an optional, undefined method of revocation as found in the language of the Wisconsin Statutes—"dispatched * * * by other expeditious means." In these cases failure to comply with the literal statutory terms resulted in liability. The decisions in these cases furnish no authority as to the question here presented.
A pertinent construction of an Indiana statute, similar in wording to the Wisconsin law, is found in First National Bank of Elwood v. Universal C.I.T. Credit Corporation, 132 Ind.App. 353, 170 N.E.2d 238 (1960). There the drawee bank received the item on Monday, February 8, 1954. By letter deposited in the mail on or before February 9, it advised the forwarding bank of its acceptance of the item, and then, on Saturday, February 13, 1954, returned it by mail for revocation of credit. Thus, revocation was attempted five days after receipt of the item and four days after the period provided by the statute. After considering...
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General Finance Corporation v. Milwaukee Western Bank
...caused any loss to plaintiff. The learned district court in a well-reasoned opinion reported as General Finance Corporation v. Milwaukee Western Bank, D.C., E.D. Wisc., 246 F.Supp. 646 (1965), fully stated the facts and issues and carefully construed the applicable law. We are in complete a......