Grenada Bank v. Lester

• Decision Date: 11 July 1921
• Docket Number: 21923
• Citation: 126 Miss. 442,89 So. 2
• Court: Mississippi Supreme Court
• Parties: GRENADA BANK v. LESTER

89 So. 2

126 Miss. 442

GRENADA BANK v. LESTER

No. 21923

Supreme Court of Mississippi

July 11, 1921

1. BANKS AND BANKING. Bank wrongfully failing to honor check liable for substantial damages.

Where a bank fails to honor a check drawn upon it by a depositor, who has sufficient funds therein to cover the check, it is liable for substantial damages to the injured depositor as reasonable compensation for the wrong inflicted.

2. BANKS AND BANKING. Wrongful dishonor of check will not justify damages for embarassment and humiliation, unless characterized by malice or opression.

A wrongful dishonor of a check by a bank will not justify damages for "embarrassment and humiliation" of injured depositor, unless characterized by malice or opression, warranting punitive damages.

HON. E D. DINKINS, Judge.

APPEAL from circuit court of Yalobusha county, HON. E. D. DINKINS Judge.

Action by William Lester against the Grenada Bank. Judgment for plaintiff, and defendant appeals. Reversed and remanded.

Judgment reversed, and case remanded.

Stone &amp Stone, for appellant.

Of course, it is a well-established rule of law that the failure to pay money when same is due and payable that the injured party may recover principal and lawful interest thereon. But the courts seem to hold that in an action against a bank for the wrongful refusal to honor a check of a depositor, there being sufficient funds, etc., that the rule of damages is an exception to the general rule, in that the injured party is entitled to something more than nominal damages, that is temperate damages. This without any allegation of special damages. This we admit is recognized as the law. In cases wherein the depositor is a trader or merchant. We also submit that it is a well-recognized rule of law that if the depositor be not a trader, then, in order for him to recover more than nominal damages, he must first allege and prove special damages. We submit that in the case at bar the appellee, William Lester, is not a trader or merchant, he being a young man of tender years, a minor whose check or receipt or contract would not be recognized in a court of law. Also in his complaint there is no allegation of special damages nor proof of any. Therefore, we submit that the appellee is entitled to recover only nominal damages.

In an action against a bank for damages for illegally refusing to pay a check, when there was money sufficient on deposit to meet it, the depositor being a non-trader, in order to recover anything more than nominal damages, he must allege and prove special damages. In Schaffner v. Ehrman, 139 Ill. 109, 15 L. R. A. 134, 28 N.E. 917, which is an action against a bank for refusing to pay a check, etc., wherein the depositor was a trader, Judge CRAIG in the dissenting opinion said that the action, although in form one in tort, was really founded upon contract and that no actual damage was proved, and there was no evidence tending to prove malice, fraud or oppression and there should be no recovery for more than nominal damages. Also Burroughs v. Tradesmen's National Bank, supra, in which it was held that when the action was brought as for a breach of contract and the failure of the bank to pay the check, was not charged as wilful or intentional, and there was no proof of special damages, the plaintiff was entitled to recover only nominal damages. Again, in T. B. Clark & Co. v. Mt. Morris Bank, supra affirmed in 181 N.Y. 533, 73 N.E. 1133, it was held that a depositor may sue either in tort or on the contract; but if in tort only nominal damages may be recovered where no special damage was alleged or proven, and there is entire absence of legal malice on the part of the bank. Also quoting from the note to the case of Commercial National Bank v. Lathan, 29 Okla. 88, 116 P. 197, Anno. Cases 1913A: "Though it is admitted by the authorities that the right to recover substantial damages does not depend on the depositor's occupation, there is a distinction between an ordinary depositor and a depositor who is a merchant or a trader. If the depositor is a merchant or trader it will be presumed without further proof that substantial damages have been sustained; but if the depositor is not a merchant or trader, there is no such presumption of substantial injury, and a recovery should be a nominal one unless he alleges and proves some special damages. St. Louis Third National Bank v. Ober, 178 F. 679, 102 C. C. A. 178; Spearing v. Whitney's Central National Bank. 129 La. 607, 56 So. 548; Western National Bank v. White (Tex.), 131 S.W. 828; First National Bank v. Stewart, 85 So. 530; S. M. Jones & Co. v. Bank, 80 A. S. R. 857.

We think that in the case at bar the judgment of the lower court should be reversed, because the trial judge was in error when he refused to grant appellant an instruction that the jury should find for nominal damages only. In 5 R. C. L. 549: "There is authority to the fact, however, that the depositor whose check has been wrongfully dishonored unless he alleges and proves special damages is limited in his recovery to nominal damages. And to the same effect, note 7, Anno. Cases, 820, and other cases cited, supra.

Second, the verdict for five hundred dollars is erroneous because it is for more than nominal damages. In order to recover anything more than nominal damages, the plaintiff if he be not a trader or merchant, must allege and prove special damages. In Rolin v. Stewart, 14, C. B. 595, 78 E. C. L. 595, a leading case on this subject, sets forth the rule as follows: "It cannot be denied that if one who is not a trader were to bring an action against a bank for dishonoring a check at a time when it had funds of customers in his bank sufficient to meet it, and special damages were alleged and proved, the plaintiff would be entitled to recover substantial damages," cited in First National Bank v. Stewart, 85 So. 530. In the case at bar the plaintiff was not a trader and there is no allegation of special damages nor was there any proven.

Third, the trial judge erred in granting for the plaintiff the instruction in which the jury was instructed to consider "embarrassment and humiliation, if any, suffered by reason of the dishonor of his check." This point is well covered in the brief by Messrs. Caldwell & Caldwell, and we do not care to submit further argument on this point.

We submit that the weight of authority is with us on the proposition, if the depositor or injured party is not a trader, that he must first allege and prove special damages, and unless he does this, he is limited in his recovery to nominal damages. See First Nat'l. Bank v. Stewart, supra.

Caldwell & Caldwell, for appellants.

There is no doubt that the law is settled that when a bank has money to the credit of a depositor and fails to pay a check drawn on the deposit, that the bank is liable for such damages as will compensate the party fully for the damage sustained, by reason of the dishonor of the check. The contention of the appellant in this case is that in the case of a nontrader that he is required to prove actual damages before any can be assessed against the bank for failure to pay. In the case of a trader, the authorities generally hold that damages will be presumed without further proof and substantial damages will be awarded by mere proof of a failure to pay a check. Where the party, as in this case, is not a trader, there is no presumption of substantial injury and his recovery should have been a nominal one, unless he proves some special damage. 5 R. C. L. 549-50.

Where a bank refuses to pay a depositor's check who has funds in the bank and the depositor was not a merchant or trader, special damages will not be presumed, but must be proved as no loss of credit or other special damages would ordinarily follow the dishonor of the check of a person not engaged in business, and nominal damages and protest fees should only be allowed. Third National Bank v. Ober, 102, C. C. A. 178, F. 678.

The last named case is in the note in Ann. Cas. 1913, and we think that this states the law fairly and the opinion shows that it was well considered.

In the case at bar no special damages were proved and the appellee is a young man who had not had a bank account before this time and no witness testified that his credit had been impaired. The check was given to his father and his credit was not impaired by its return to him. The cashiers of the two banks through which it passed, that of Charleston and of Oakland, both testified that his credit was not impaired with either bank and the occasion of the dishonor was fully explained to the appellee and according to the witness, Mr. Horton, he was fully satisfied with the explanation. As soon as the error was discovered, everything was done that could be done to right the wrong that had been done and we submit that only nominal damages should have been awarded.

No malice was shown to have existed except in the father of the appellant who seems to have been very much incensed and angry because of the mistake made by the cashier of the Bank of Oakland. Where there is no evidence of malice, the only damages to be recovered are those that will compensate for the injury done.

We respectfully submit that in view of all the evidence that the giving by the court of the instruction asked for by the plaintiff was error in which the jury was directed to consider "embarrassment and humiliation, if any suffered by the plaintiff by reason of the dishonor of his check." In the case of American National Bank v. Morey, 113 Ky, 857, 69 S.W. 759, 101, A. S. R. 379, the court instructed the jury, "that if at the time the check was presented to the defendant the plaintiff had money in the bank deposited to her credit sufficient to pay the...