Perdue v. Crocker Nat. Bank

CourtCalifornia Court of Appeals
Writing for the CourtRACANELLI
Citation141 Cal.App.3d 200,190 Cal.Rptr. 204
PartiesPaul PERDUE, Plaintiff and Appellant, v. CROCKER NATIONAL BANK, Defendant and Respondent. Civ. 46808. A0 13838.
Decision Date25 March 1983

Page 204

190 Cal.Rptr. 204
141 Cal.App.3d 200
Paul PERDUE, Plaintiff and Appellant,
v.
CROCKER NATIONAL BANK, Defendant and Respondent.
Civ. 46808.
A0 13838.
Court of Appeal, First District, Division 1, California.
March 25, 1983.
As Modified on Denial of Rehearing April 22, 1983.

For Opinion on Hearing, see 216 Cal. Rptr. 345, 702 P. 2d 503.

Page 206

Gary J. Near, Steven M. Kipperman, Stephen Kaus, Kaus & Kerr, Mark M. Garay, Garay & Foreman, San Francisco, for plaintiff and appellant.

William Alsup, Ellen Borgersen, San Francisco, Paul Flum, Oakland, Morrison & Foerster, San Francisco, for defendant and respondent.

E. Robert (Bob) Wallach and David B. Baum, Sidney M. Wolinsky, San Francisco, for amicus curiae, Ralph Santiago Abascal, et al.; Victoria J. De Goff and Richard Sherman, Berkeley, of counsel.

Manuel Glenn Abascal, Howard M. Klepper, Manuel Glenn Abascal, A Law Corp., Berkeley, for amicus curiae, Manuel Glenn Abascal, pro se.

Ronald R. Glancz, L. Robert Griffin, Litigation Div., Comptroller of the Currency, Administrator of Nat. Banks, Washington, D.C., for amicus curiae, Comptroller of the Currency.

Weyman I. Lundquist, David P. Kincaid, Heller, Ehrman, White & McAuliffe, San Francisco, for amicus curiae, Wells Fargo Bank, Nat. Bank.

RACANELLI, Presiding Justice.

Appellant Paul Perdue, a depositor with respondent Crocker National Bank (Crocker), filed a purported class action below challenging the validity of charges assessed by Crocker against its depositors for processing checks drawn on commercial checking accounts without sufficient funds. Thereafter, Crocker's general demurrer was sustained without leave to amend and a judgment of dismissal entered. This appeal ensued.

We examine the complaint before us under established principles governing review of a judgment of dismissal based upon a claimed failure to state a valid cause of action. (E.g. Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 170, 164 Cal.Rptr. 839, 610 P.2d 1330; Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 496, 86 Cal.Rptr. 88, 468 P.2d 216.)

Page 207

The complaint asserts five causes of action alleging in substance that Crocker's customary practice in dealing with a check drawn by a depositor on an account lacking sufficient funds ("NSF check") is either to honor and pay it as an overdraft or to dishonor and return it to the payee's bank; that in either event Crocker assesses a special handling charge ("NSF charge") against the account of its depositor-maker. It is further alleged that appellant has periodically drawn NSF checks on his Crocker checking account which Crocker--in either honoring or dishonoring such checks--has assessed a special handling charge of $6 for processing each NSF check.

I.

The gravamen of the first three causes of action for declaratory relief and unjust enrichment is that Crocker lacked any contractual or statutory authority to impose charges for NSF checks. The first cause of action seeks a declaration that the signature card signed by appellant upon opening his account, which contains an agreement that the account shall be "subject to all applicable laws, to the Bank's present and future rules, regulations, practices and charges " does not constitute a valid contract to serve as a basis for imposing NSF charges. (Emphasis added.) In the second cause of action, appellant seeks a declaration that the signature card constitutes an unenforceable contract of adhesion. In the third cause of action for unjust enrichment, damages are sought by way of a refund of the difference between the charges assessed and Crocker's actual cost in processing the NSF charges.

We will conclude that neither theory survives critical analysis. [Appellant concedes the third cause of action is viable only if one of the first two causes of action is valid.]

We consider the validity of the several causes of action in a sequence convenient for discussion.

II.

The courts have long recognized that a bank signature card serves as a contract between the depositor and the bank for the handling of the account. (See Bullis v. Security Pac. Nat. Bank (1978) 21 Cal.3d 801, 811-812, 148 Cal.Rptr. 22, 582 P.2d 109; Blackmon v. Hale (1970) 1 Cal.3d 548, 556, 83 Cal.Rptr. 194, 463 P.2d 418; Manti v. Gunari (1970) 5 Cal.App.3d 442, 450-451, 85 Cal.Rptr. 366; Torrance N. Bk. v. Enesco F. Credit Union (1955) 134 Cal.App.2d 316, 320-321, 285 P.2d 737; Larrus v. First National Bank (1954) 122 Cal.App.2d 884, 889-890, 266 P.2d 143; Faulkner v. Bank of Italy (1924) 69 Cal.App. 370, 374-375, 231 P. 380.) The fact that the signature card itself does not indicate the amount of Crocker's NSF charges does not negate the contractual nature of such charges, particularly where, as here, the bank's rules and regulations specifying the charges are incorporated into the signature card agreement. (State v. San Francisco Sav. etc. Soc. (1924) 66 Cal.App. 53, 61, 225 P. 309; Larrus v. First Nat. Bank, supra, 122 Cal.App.2d at pp. 889-890, 266 P.2d 143.)

Moreover, since appellant acknowledges he had notice of the bank's scheduled charges for processing NSF checks ($6 per check), the argument advanced is patently untenable. Under the terms of the subsisting agreement, Crocker has express contractual authority to assess its scheduled service charges whenever its depositor, including appellant, presents an NSF check.

A similar contention was raised and implicitly rejected in Hoffman v. Security Pacific Nat. Bank (1981) 121 Cal.App.3d 964, 176 Cal.Rptr. 14, involving a depositor's claim that the bank's imposition of service charges for processing an NSF check constituted unlawful liquidated charges on the theory that the agreement contained in the signature card to pay scheduled service charges amounted to an implied covenant by the depositor not to write overdrafts. In upholding a judgment of nonsuit, the court reasoned as follows: "Plaintiff failed to establish any such custom or any agreement

Page 208

on the depositors' part not to write overdrafts. Moreover, statutes governing the obligations of banks and their depositors, which are incorporated into and become part of the contract between a bank and its depositors [citations], treat an overdraft as an application for advance credit rather than as a breach of an express or implied covenant. California Uniform Commercial Code section 4401 specifically authorizes a bank to pay overdrafts and to charge customers' accounts to recover amounts paid, even when payments result in overdrafts on the account. While a bank has a statutory obligation to honor any check drawn by a depositor for an amount not exceeding the balance in his account, and while the depositor has a contractual obligation to pay a service charge when he presents a NSF check, the depositor has no statutory or contractual obligation to refrain from drawing checks for amounts in excess of the balance in his account. (Cal.U.Com.Code, § 4401.) In brief, plaintiff did not and could not prove that the depositors breached an obligation to Bank when they negotiated NSF checks. Accordingly, the service charge they agreed in advance to pay for presenting such an overdraft was not a penalty under former Civil Code section 1670." (Id., p. 969, 176 Cal.Rptr. 14; emphasis added.) (Accord Shapiro v. United California Bank (1982) 133 Cal.App.3d 256, 184 Cal.Rptr. 34.)

Nor do we find merit in appellant's further argument that the signature card is an illusory contract because it permits the bank unilaterally to fix the NSF charges and to make future changes at will. It is well established that an agreement which reserves the power to one party to vary a term is not thereby rendered illusory or otherwise void for lack of mutuality. (See Vanguard Investments v. Central Cal. Fed. Sav. & Loan Ass'n (1977) 68 Cal.App.3d 950, 958, 137 Cal.Rptr. 719; Powell v. Central Cal. Fed. Sav. & Loan Ass'n (1976) 59 Cal.App.3d 540, 549, 130 Cal.Rptr. 635 [loan agreement permitting...

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1 practice notes
  • In re Wolensky's Ltd. Partnership, Bankruptcy No. 92-01435. Adv. No. 93-0025.
    • United States
    • United States Bankruptcy Courts. District of Columbia Circuit
    • November 2, 1993
    ...impending death makes the contingency more certain to occur, it does not ultimately change the value of the policy to the creditors. 190 Cal.Rptr. at 204. Even if this court were to follow the narrower rationale of these cases, the issue of Sullivan's state of mind at the time of the transf......
1 cases
  • In re Wolensky's Ltd. Partnership, Bankruptcy No. 92-01435. Adv. No. 93-0025.
    • United States
    • United States Bankruptcy Courts. District of Columbia Circuit
    • November 2, 1993
    ...impending death makes the contingency more certain to occur, it does not ultimately change the value of the policy to the creditors. 190 Cal.Rptr. at 204. Even if this court were to follow the narrower rationale of these cases, the issue of Sullivan's state of mind at the time of the transf......

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