Gossels v. Fleet Nat. Bank

• Citation: 69 Mass. App. Ct. 797,872 N.E.2d 1112
• Decision Date: 22 August 2007
• Docket Number: No. 05-P-1796.,05-P-1796.
• Parties: C. Peter R. GOSSELS v. FLEET NATIONAL BANK.<SMALL><SUP>1</SUP></SMALL>
• Court: Appeals Court of Massachusetts

872 N.E.2d 1112

69 Mass. App. Ct. 797

C. Peter R. GOSSELS v. FLEET NATIONAL BANK.¹

No. 05-P-1796.

Appeals Court of Massachusetts, Suffolk.

Argued October 10, 2006.

Decided August 22, 2007.

C. Peter R. Gossels, Boston, pro se.

Michael C. Gilleran, Boston, for the defendant.

Present: GREENBERG, SMITH, & GELINAS, JJ.

GELINAS, J.

The plaintiff C. Peter R. Gossels filed a complaint in the Boston Municipal Court against the defendant Fleet National Bank² (Fleet), claiming breach of contract, conversion, and violation of G.L. c. 93A, arising from Fleet's processing of a check, drawn in a foreign currency, that Gossels presented to Fleet. He later amended the complaint to add a fourth count essentially alleging that Fleet failed to follow the provisions of G.L. c. 106, § 3-107. Following a bench trial, the trial judge found that Fleet was liable for negligent misrepresentation,³ resulting in damages of $6,861.68. The trial judge explicitly found for Fleet on the G.L. c. 93A claim. The judge ruled that Fleet's check collection practices were in compliance with G.L. c. 106, § 3-107. The judge made no mention of the breach of contract or conversion counts in her memorandum of decision. Judgment entered for Gossels on the breach of contract count (but only "insofar as it alleges [n]egligent [m]isrepresentation"), and for Fleet on the remaining counts.

On appeal, the Appellate Division of the Boston Municipal Court affirmed. Both Gossels and Fleet appeal to this court.

The facts as found by the trial judge are uncontested. Gossels received a check from the German government for 85,071.19 euros, drawn on Dresdner Bank of Germany.⁴ On October 15, 1999, he took the check to a branch of Fleet at 75 State Street in Boston and presented it to the international teller. Gossels, an account holder at Fleet, did not request that the euros be exchanged for dollars.

At this point, the international teller failed to inform Gossels either that Fleet could pay Gossels only in dollars, or that Fleet paid international checks at a "retail exchange rate" several percentage points lower than the interbank "spot rate" for foreign currency. Had Gossels known this information, he would have taken the check to another bank.⁵

As Gossels started to endorse the check, the international teller also incorrectly instructed Gossels not to endorse the check, stating that no endorsement was required for checks drawn on a foreign bank.

The teller then took the check and gave Gossels a preprinted receipt; in so doing, the teller failed to check either of two boxes on the form, one indicating that "provisional credit" would be given to Gossels, the other that the check was accepted for "collection only." The judge found that if Fleet had given Gossels provisional credit for the check, then the funds in dollars would have been credited to Gossels on or shortly after October 15, 1999.⁶ If the check was accepted for collection only, that would have resulted in a delay of credit pending Fleet's receipt of payment by the drawee bank of the amount of the check.

Fleet maintains for teller instruction a manual of foreign check collection practices. The manual instructed tellers to inform the customer that receipt of payment by a customer for a foreign check would take four to six weeks, and that an exchange rate would be applied, based on the date of Fleet's receipt of the funds from the foreign bank. Moreover, the manual instructed tellers to advise the customer of the approximate date on which the exchange rate would be determined. The international teller in this case failed to provide Gossels with any of this information.

Fleet, as collecting bank, sent the check to its global collection department, which sent it with a collection letter dated October 20, 1999, to Fleet's foreign correspondent bank in Germany, Deutsche Bank. On November 11, 1999, Gossels received a notice from Fleet that the check had been returned unpaid because it lacked an endorsement.⁷ Gossels immediately walked to the Fleet branch at 75 State Street in Boston and told the manager that the international teller had instructed him not to endorse the check. The manager asked Gossels to endorse the check, credited his account for $38.25 in lost interest,⁸ and waived the $30.00 fee that Fleet had charged Gossels for failing to endorse the check. After Fleet and Deutsche Bank repeated the collection process with the check, which now bore Gossels's endorsement, Dresdner Bank debited the funds from the appropriate account and sent 85,071.19 euros to Deutsche Bank, which (apparently on December 14 or 15, 1999) credited 84,971.19 euros to Fleet's account at Deutsche Bank (100 euros having been deducted as a collection fee).

On December 15, 1999, Gossels received notice from Fleet that it had credited his account with check proceeds in the amount of $81,754.77, which was based on the December 15, 1999, retail exchange rate offered by Fleet for 84,971.19 euros. The same number of euros would have been worth $88,616.45 based on the October 15, 1999, retail exchange rate offered by Fleet, or $92,023.80 based on the October 15, 1999, spot rate offered by Dresdner Bank.⁹

After further communication, and a complaint to the Massachusetts Attorney General, on September 22, 2000, Gossels sent Fleet a thirty-day demand letter under G.L. c. 93A, § 9(3). Fleet did not respond. Gossels then initiated the suit that is the subject of this appeal.

Contract claim. We first address Gossels's argument that the trial judge erred in failing to find that Fleet was in breach of its contract with him with respect to the check.

Under the terms of the Uniform Commercial Code (code)¹⁰ applicable to the transaction, Fleet became Gossels's agent when he passed the check to Fleet, and Fleet accepted the check, for collection. See G.L. c. 106, § 4-201(a). Nothing in the evidence suggests that either had a contrary intent. "Unless a contrary intent clearly appears and before the time that a settlement given by a collecting bank for an item is or becomes final, the bank, with respect to the item, is an agent or sub-agent of the owner of the item.... This provision applies regardless of the form of indorsement or lack of indorsement...." Ibid. Whether Fleet, as the depositary bank, accepted the check for provisional credit to Gossels's account, or merely took the check for collection, Fleet is a collecting bank. See G.L. c. 106, § 4-105(5). See also Official Comment 4 to Uniform Commercial Code § 4-201, 2B U.L.A. 46-47 (Master ed.2002). Fleet stated as much by declaring, on the receipt given to Gossels when the bank accepted the check for collection, that it was "an agent for collection on [Gossels's] behalf." We conclude that the trial judge was correct to treat the action under the theory of a tort claim.

In the first count of his complaint, Gossels alleged that "Fleet breached its Agreement with Gossels by failing to `act in good faith' to collect the euro proceeds from the check that it had accepted from Gossels...." We think this count, and the supporting factual material in the complaint incorporated by reference, was a sufficient pleading that Gossels is entitled to relief against Fleet for breach of its fiduciary duty to Gossels as his agent for the collection of the instrument. In most cases, breach of a fiduciary duty is a tort, and not a breach of contract. See Kirley v. Kirley, 25 Mass.App.Ct. 651, 654, 521 N.E.2d 1041 (1988) (noting growing common-law trend to declare "that a breach of fiduciary duty is a tort"), quoting from Mack v. American Fletcher Natl. Bank & Trust Co., 510 N.E.2d 725, 738-739 (Ind. Ct.App.1987). The usual argument, absent here, is whether a contract or a tort period of limitations is applicable to the action, and in those circumstances, we look to the "gist" of the action to make that determination. See, e.g., Barber v. Fox, 36 Mass. App.Ct. 525, 529, 632 N.E.2d 1246 (1994) ("gist of the action" was that defendants failed to do as promised; plaintiff's claim of breach of fiduciary duty, though sounding in tort, was governed by contract statute of limitations). The fact that, as here, the relationship is established primarily by statute rather than by agreement, further supports the view that the claim is one of tort and not of contract. See Kirley, supra at 653, 521 N.E.2d 1041.

Gossels was the principal in the transaction. "In those cases where some period of time elapses between the final payment of the item by the payor bank and the time that the settlement of the collecting bank is or becomes final, ... the continuance of the agency status of the collecting bank necessarily carries with it the continuance of the owner's status as principal." Official Comment 5 to Uniform Commercial Code § 4-201, 2B U.L.A. 47 (Master ed.2002).

Fleet, as agent under § 4-201, was not a general agent, the agency status being limited to collecting items. See United States for Use & Benefit of Westinghouse Elec. Corp. v. Sommer Corp., 580 F.2d 179, 183 (5th Cir.1978) (Westinghouse). See also Official Comment 1 to Uniform Commercial Code § 4-201, 2B U.L.A. 45 (Master ed.2002) (section 4-201 was placed in code to govern risk of loss of item while being collected; agency status of § 4-201 is limited to that of "agent for collection"). For example, a collecting bank is not the sort of agent whose knowledge of collateral facts is imputed to the owner of the collection item. See Westinghouse, supra, citing 3 R. Anderson, Uniform Commercial Code § 4-201:1-9 (2d ed.1971). The bank's duties as agent include presenting the item, or sending it for presentment, notifying its transferor of nonpayment or dishonor, and settling with the principal when it receives final payment. Westinghouse, supra.

The code specifies that use of ordinary care is required with respect to certain aspects of collection. See G.L. c. 106, § 4-202.¹¹ The code's enumeration of areas requiring ordinary care is not exclusive,...