Moore v. State Bank of Burden

• Decision Date: 05 December 1986
• Docket Number: No. 59132,59132
• Parties: Rodney A. MOORE, next of kin of Kathleen A. Grubb, Deceased, and Administrator of the Estate of Kathleen A. Grubb, Deceased, Appellant, v. The STATE BANK OF BURDEN, A Kansas Banking Corporation; Wayne E. Temple and Ruby M. Temple; both Individuals, Appellees.
• Court: Kansas Supreme Court

Page 1205

729 P.2d 1205

240 Kan. 382

Rodney A. MOORE, next of kin of Kathleen A. Grubb, Deceased and Administrator of the Estate of Kathleen A Grubb, Deceased, Appellant, v. The STATE BANK OF BURDEN, A Kansas Banking Corporation Wayne E. Temple and Ruby M. Temple; both Individuals, Appellees.

No. 59132.

Supreme Court of Kansas.

Dec. 5, 1986.

Review Denied March 9, 1987.

Syllabus by the Court

1. Summary judgment is proper where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The benefit of all inferences which may be drawn from the admitted facts must be given to the party against whom judgment is sought. When summary judgment is challenged on appeal, an appellate court must read the record in the light most favorable to the party who defended against the motion for summary judgment.

2. This court has defined conversion as the unauthorized assumption or exercise of the right of ownership over goods or personal chattels belonging to another to the exclusion of the other's rights. Generally an action for conversion will not lie for the recovery of an ordinary debt or account. It is well recognized that the relationship between a general depositor and his or her bank is that of creditor and debtor, and money deposited, unless segregated into a special account and designated to be kept separate, becomes the property of the bank.

3. One who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another may be liable for such emotional distress based upon what has come to be referred to as the tort of outrage. To establish such a cause of action, proof of four elements is required: (1) The conduct of the defendant must be intentional or in reckless disregard of the plaintiff; (2) the conduct must be extreme and outrageous; (3) there must be a causal connection between the defendant's conduct and the plaintiff's mental distress; and (4) the plaintiff's mental distress must be extreme and severe.

4. Conduct sufficient to support an action for outrageous conduct must be beyond the bounds of decency and utterly intolerable in a civilized society.

5. Liability for extreme emotional distress has two threshold requirements which must be met and which the court must, in the first instance, determine: (1) Whether the defendant's conduct may reasonably be regarded as so extreme and outrageous as to permit recovery; and (2) whether the emotional distress suffered by plaintiff is in such extreme degree the law must intervene because the distress inflicted is so severe that no reasonable person should be expected to endure it.

6. Some of the rules relating to determination of fraud are stated and applied.

7. It is well settled that punitive damages are imposed to punish a wrongdoer for malicious, vindictive, or willful and wanton invasion of the plaintiff's rights, with the purpose being to restrain and deter others from the commission of like wrongs. An award of punitive damages, which generally requires an award of actual damages, is not designed to compensate the plaintiff for the wrong. No one has the right to maintain an action for the mere purpose of inflicting punishment upon a wrongdoer, and if a party has no cause of action independent of his claim for punitive damages he has no cause of action at all.

Steven L. Cranford, Wichita, argued the cause and P. David Egan, Wichita, was with him on the briefs for appellant.

Steven D. Gough, of Kahrs, Nelson, Fanning, Hite & Kellogg, Wichita, argued the cause and Linda S. Parks, of the same firm, was with him on the brief for appellees.

HOLMES, Justice:

Rodney A. Moore, administrator of the estate of Kathleen A. Grubb, appeals from an order of summary judgment granted in favor of the defendants, The Kansas State Bank of Burden (Bank), Wayne E. Temple, and Ruby M. Temple, in an action based upon an alleged illegal setoff of funds by the Bank.

On August 10, 1983, Kathleen A. Grubb filed a petition naming the Bank and Wayne E. Temple, its president, as defendants. She contended that the Bank had illegally declared a setoff against certain Social Security funds in the amount of $504.00 transmitted to the Bank for credit to the account of Mrs. Grubb. At the time of the setoff she was in default upon an automobile loan owed the Bank in the amount of $358.78 plus interest. The amount set off by the Bank from the funds of Mrs. Grubb was $447.18, which included interest to the date of setoff. The original petition asserted three causes of action based upon fraud, conversion, and the tort of outrage.

Thereafter, on November 4, 1983, Mrs. Grubb filed an action, based upon the same factual allegations, in the United States District Court for the District of Kansas, against the same two defendants and Ruby M. Temple, who was also an officer of the Bank. Subsequently, a first amended complaint was filed in the federal court action by Rodney A. Moore, in his alleged representative capacity, asserting causes of action based upon fraud, conversion, outrage, invasion of privacy; and violations of the Kansas Uniform Commercial Code, the Kansas Uniform Consumer Credit Code, the Kansas Consumer Protection Act, the federal Social Security Act, the federal Electronic Funds Transfer Act, and the Racketeer Influenced and Corrupt Organizations Act. In each case the plaintiff sought damages of nearly $1,400,000.00.

Mrs. Grubb died December 15, 1983, and thereafter this action appears to have been carried on by Rodney A. Moore as "next of kin of Kathleen A. Grubb, Deceased, and Administrator of the Estate of Kathleen A. Grubb, Deceased" although the record does not reflect that he was ever properly substituted as the party plaintiff or that there was any attempt to comply with the provisions of K.S.A. 60-225 and 60-269. On January 28, 1985, a pretrial questionnaire was filed in the Cowley County District Court action in which the appellant stated, "If this action is ultimately prosecuted [in the Cowley District Court], amendments to the pleadings will be made to conform to the Complaint filed in U.S. District Court, copy attached." The record before us does not reflect that any amended petition was ever filed or that Ruby M. Temple was ever made a party defendant in this action. However, the trial court and the parties appear to have proceeded upon all the various theories asserted in the federal court action. It was agreed by the parties that discovery would be pursued in the federal court action and that all such discovery would also be utilized in the state court action. Following completion of the federal court discovery, the defendants moved for summary judgment in this case while Rodney A. Moore moved to have the action dismissed without prejudice.

The trial court, in its memorandum opinion, greatly condensed the facts, stating:

"In April, 1978, the State Bank of Burden made a loan to Kathleen A. Grubb. At this same time, Ms. Grubb opened a checking account with the bank. Ms. Grubb received Veteran Administration and Social Security benefits on a monthly basis. She signed authorizations for both agencies to make direct deposits of these funds to her checking account with the Burden bank. Apparently there is no record of these ever being affirmatively revoked.

"In July, 1979, Ms. Grubb was extended another loan by the bank for the purchase of a car. Later, in July 1981, this car was involved in an accident. Ms. Grubb had failed to maintain insurance coverage to cover the loan. In approximately September, 1981, Ms. Grubb defaulted on the outstanding note. At that time there was $358.78 principal balance remaining. It is disputed if notice of default was given to the debtor. There followed a period of time that the checking account was not used.

"In July, 1983, the bank received, through its ordinary course of business, a wire transfer of $252.00 to be applied to Ms. Grubb's account. The source of the transfer was the Social Security Administration. In August the bank received another such transfer. These were credited to Ms. Grubb's old checking account.

"Although not indicated as such on any document, the original Social Security funds were widow's benefits for the support of a minor child, whereas the funds received in 1983 were benefits for Ms. Grubb's disability.

"No bank statement concerning this wire transfer was sent to Ms. Grubb in July, 1983. Ms. Grubb discovered where her July and August payments had been sent and contacted the bank by telephone demanding they be sent to her. She was advised by the bank's Vice President that it might exercise its right of set-off. (K.S.A. 9-1206.)

"The next day, August 5, 1983, Ms. Grubb's attorney again made demand for the money. The bank conferred with its attorney and was advised it could legally exercise the set-off. On August 8 or 9, the bank set-off $447.18 and sent a statement to Ms. Grubb reflecting that transaction. On August 31, 1983, statements for July and August were sent to plaintiff."

The court then granted the defendant's motion for summary judgment on the tort claims of the plaintiff based upon conversion, invasion of privacy, outrageous conduct, and fraud, and also as to plaintiff's claim for punitive damages. The plaintiff's motion to dismiss the action without prejudice as to the claims based upon alleged violations of the Kansas Uniform Commercial Code, the Kansas Consumer Protection Act, the Social Security Act, the Electronic Funds Transfer Act, the Racketeer Influenced and Corrupt Organizations Act, and the Kansas Uniform Consumer Credit Code was sustained. Rodney A. Moore has appealed the granting of partial summary judgment on behalf of the defendants.

Summary judgment is proper where the pleadings, depositions, answers to interrogatories, and admissions...