Jacobs v. Citibank, N.A.

CourtNew York Court of Appeals
Writing for the CourtCOOKE; COOKE; SIMONS
Citation61 N.Y.2d 869,474 N.Y.S.2d 464
Decision Date28 February 1984
Parties, 462 N.E.2d 1182, 37 UCC Rep.Serv. 1648 Howard L. JACOBS, P.C., et al., Appellants, v. CITIBANK, N.A., Respondent.

Page 464

474 N.Y.S.2d 464
61 N.Y.2d 869, 462 N.E.2d 1182, 37
UCC Rep.Serv. 1648
Howard L. JACOBS, P.C., et al., Appellants,
v.
CITIBANK, N.A., Respondent.
Court of Appeals of New York.
Feb. 28, 1984.

[61 N.Y.2d 870]

Page 465

[462 N.E.2d 1183] Lester L. Levy and Rosa Borenstein, New York City, for appellants.

Donald L. Cuneo, Henry Weisburg and Cole R. Capener, New York City, for respondent.

[61 N.Y.2d 871] OPINION OF THE COURT

MEMORANDUM.

The order of the Appellate Division, 92 A.D.2d 786, 459 N.Y.S.2d 781, should be affirmed, with costs.

Plaintiffs issued checks on their own accounts which were returned for insufficient funds and also deposited third-party checks to their accounts which were dishonored by the drawee bank because of insufficient funds of the drawer. Pursuant to agreements entered into by plaintiffs when they opened their accounts, charges were imposed upon plaintiffs by defendant to cover the cost of processing the overdrafts. It is these charges which plaintiffs challenge on this appeal.

Plaintiffs' initial claim that the imposition of these charges constitutes a breach by defendant of the terms of the parties' agreements because they exceed the actual cost of processing the overdrafts is without merit. When plaintiffs opened their accounts, each of them agreed to pay the charges specified for the services listed in the agreement, including the processing of overdrafts. Plaintiffs also agreed that those charges would be subject to change. Inasmuch as plaintiffs do not now contend that they were not notified of subsequent changes in the schedule of fees, they cannot be heard to say that defendant breached the agreements.

It is also claimed by plaintiffs that subdivision B, paragraph 4 of the account agreements, which vests defendant with discretion to determine what amount is necessary to compensate itself for services rendered, was violated by defendant because it charged more than was necessary to cover the cost of processing checks drawn on other banks and deposited by plaintiffs in their Citibank accounts which were later dishonored by the drawee bank. The short answer to this claim is that the account agreements very plainly authorize the defendant, not plaintiffs or the courts, to decide what amount of compensation is necessary. In the absence of some showing that the charges imposed were grossly disproportionate to processing costs usually incurred by banks in the community or otherwise imposed in bad faith, the defendant's determination will not be disturbed. To grant the relief requested by plaintiffs [61 N.Y.2d 872] would be to impose a limit on the amount Federally chartered banks can charge for processing overdrafts. This is a task more properly left to the Comptroller of the currency who has decided that "[a]ll charges to customers should be arrived at by each bank on a competitive basis". (12 CFR 7.8000[a].)

Plaintiffs next...

To continue reading

Request your trial
19 practice notes
  • Perdue v. Crocker National Bank, S.F. 24591
    • United States
    • United States State Supreme Court (California)
    • 18 Julio 1985
    ...(Alcorn v. Anbro Engineering, Inc., supra, 2 Cal.3d 493, 496, 86 Cal.Rptr. 88, 468 P.2d 216.) 12 In Jacobs v. Citibank, N.A. (1984) 61 N.Y.2d 869, 474 N.Y.S.2d 464, 462 N.E.2d 1182, the New York Court of Appeals upheld a summary judgment for defendant bank in a suit attacking NSF check char......
  • Appert v. Morgan Stanley Dean Witter, Inc., No. 11–1095.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • 8 Marzo 2012
    ...Morgan Stanley's actual costs or were at least not grossly disproportionate to those costs. Appert relies on Jacobs v. Citibank, N.A., 61 N.Y.2d 869, 474 N.Y.S.2d 464, 462 N.E.2d 1182 (1984) to support her position. (The parties agree that New York law applies to Appert's claims.) Our readi......
  • Video Trax, Inc. v. Nationsbank, N.A., No. 97-1586-CIV.
    • United States
    • United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Southern District of Florida
    • 10 Diciembre 1998
    ...do business and that the terms of the agreements with [Defendant] were unreasonably favorable to the bank." Jacobs v. Citibank, N.A., 61 N.Y.2d 869, 872, 474 N.Y.S.2d 464, 462 N.E.2d 1182 (N.Y. 1984) (upholding summary judgment for the defendant bank in a suit attacking NSF check charges). ......
  • Leon M. Reimer & Co., PC v. Cipolla, No. 94 CV 7073.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • 6 Junio 1996
    ...client. These features mark the agreement as a penalty clause, and penalty clauses are not enforceable. Jacobs v. Citibank, N.A., 61 N.Y.2d 869, 474 N.Y.S.2d 464, 462 N.E.2d 1182 (1984); Fifty States Mgt. Corp. v. Pioneer Auto Parks, Inc., 46 N.Y.2d 573, 415 N.Y.S.2d 800, 389 N.E.2d 113 (19......
  • Request a trial to view additional results
19 cases
  • Perdue v. Crocker National Bank, S.F. 24591
    • United States
    • United States State Supreme Court (California)
    • 18 Julio 1985
    ...(Alcorn v. Anbro Engineering, Inc., supra, 2 Cal.3d 493, 496, 86 Cal.Rptr. 88, 468 P.2d 216.) 12 In Jacobs v. Citibank, N.A. (1984) 61 N.Y.2d 869, 474 N.Y.S.2d 464, 462 N.E.2d 1182, the New York Court of Appeals upheld a summary judgment for defendant bank in a suit attacking NSF check char......
  • Appert v. Morgan Stanley Dean Witter, Inc., No. 11–1095.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • 8 Marzo 2012
    ...Morgan Stanley's actual costs or were at least not grossly disproportionate to those costs. Appert relies on Jacobs v. Citibank, N.A., 61 N.Y.2d 869, 474 N.Y.S.2d 464, 462 N.E.2d 1182 (1984) to support her position. (The parties agree that New York law applies to Appert's claims.) Our readi......
  • Video Trax, Inc. v. Nationsbank, N.A., No. 97-1586-CIV.
    • United States
    • United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Southern District of Florida
    • 10 Diciembre 1998
    ...do business and that the terms of the agreements with [Defendant] were unreasonably favorable to the bank." Jacobs v. Citibank, N.A., 61 N.Y.2d 869, 872, 474 N.Y.S.2d 464, 462 N.E.2d 1182 (N.Y. 1984) (upholding summary judgment for the defendant bank in a suit attacking NSF check charges). ......
  • Leon M. Reimer & Co., PC v. Cipolla, No. 94 CV 7073.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • 6 Junio 1996
    ...client. These features mark the agreement as a penalty clause, and penalty clauses are not enforceable. Jacobs v. Citibank, N.A., 61 N.Y.2d 869, 474 N.Y.S.2d 464, 462 N.E.2d 1182 (1984); Fifty States Mgt. Corp. v. Pioneer Auto Parks, Inc., 46 N.Y.2d 573, 415 N.Y.S.2d 800, 389 N.E.2d 113 (19......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT