Reynolds-Wilson Lumber Co. v. Peoples Nat. Bank
Decision Date | 30 April 1985 |
Docket Number | REYNOLDS-WILSON,No. 58271,58271 |
Citation | 699 P.2d 146 |
Parties | 40 UCC Rep.Serv. 1319, 1985 OK 32 LUMBER COMPANY, d/b/a T R Cattle Company, an Oklahoma corporation, Plaintiff-Appellant, v. The PEOPLES NATIONAL BANK, Kingfisher, Oklahoma, Defendant-Appellee. |
Court | Oklahoma Supreme Court |
Gary A. Bryant, Messrs. Mock, Schwabe, Waldo, Elder, Reeves & Bryant, Oklahoma City, for plaintiff-appellant.
Harold Logsdon, Messrs. Baker, Logsdon & Phelps, Kingfisher, for defendant-appellee.
The plaintiff-appellant, Reynolds-Wilson Lumber Company, d/b/a T R Cattle Company [hereinafter "TRC"], is the payee of a $150,000 sight draft drawn against the account of Perdue & McCarthy Cattle Company [hereinafter "P & M"] with the defendant-appellee, The Peoples National Bank, Kingfisher, Oklahoma [hereinafter "PNB"]. TRC sought to recover the amount of the draft on a theory of absolute or strict liability arising from PNB's alleged breach of a statutory duty under 12A O.S. 1981 §§ 4-301 and 4-302 either to honor or return the draft before PNB's midnight deadline. The trial court, sitting without a jury, made written findings of fact and conclusions of law, and rendered judgment thereon for PNB. The Court of Appeals reversed the trial court's judgment. We agree with the Court of Appeals but grant certiorari to revise its opinion.
The basic facts are not in dispute. TRC sold some cattle to P & M. In accordance with a pre-existing practice which had developed in previous dealings between TRC and P & M, an employee of TRC prepared a draft, dated February 22, 1980, payable to the order of "T R Cattle Co." in the amount of $150,000, and specified thereon that it was in "part payment 3000 hd $ $50.00/hd". The draft was signed "Perdue & McCarthy Cattle Co., By: Bernice Stephenson" (Ms. Stephenson being the TRC employee who prepared the draft). The draft bore the printed legend: "Value received and charge to account of", below which was written in longhand the following:
The draft was on the face of an envelope. There were no papers or documents placed in the envelope, which was sealed.
After the draft was prepared, it was deposited the same day in TRC's bank account with the Union State Bank of Carrizo Springs, Texas, [hereinafter "USB"], and USB immediately gave TRC provisional credit for the item.
USB mailed the draft directly to PNB, together with an accompanying "collection letter". These were received by PNB before the end of its business day on Friday, February 29, 1980. The USB "collection letter" was addressed to PNB; it indicated that USB's depositor was TRC and that the accompanying draft was drawn by P & M on "you", i.e., on PNB.
On the same day the draft and "collection letter" were received, PNB's cashier contacted a principal of P & M by telephone, advised that the draft had been received, and told him that P & M "needed to wire funds that very day" to pay the draft. The PNB cashier was advised that funds were not then available, but should be by the following Monday, March 3.
Later, on February 29, the manager of TRC telephoned the PNB cashier. They discussed the fact that P & M did not have funds to cover the draft that day, but should have sufficient funds by Monday. TRC's manager then told the PNB cashier to hold the draft until the following Monday, and pay it then.
On the following Monday, March 3, (which was PNB's next business day), P & M did not deposit any funds to its account with PNB to cover the draft. During that day, the TRC manager again telephoned the PNB cashier. TRC's manager was advised that no funds had been deposited to P & M's account with PNB that day. They discussed that the P & M principal with whom the PNB cashier had communicated the preceding Friday was "out of town". The TRC manager did not instruct the PNB cashier to hold the draft any further, nor was there any discussion concerning further retention of the draft by PNB.
PNB did not return the draft prior to midnight, March 3. On the following Friday, March 7, the P & M principal, with whom PNB's cashier had been dealing, returned from his out-of-town trip and advised PNB in person that funds were not available to pay the draft. PNB then returned the draft unpaid to USB, which received it on March 12.
The draft was subsequently mailed by USB to PNB a second time, along with a letter from USB's attorney demanding payment. These were received by PNB on March 20, 1980. The next day, PNB's attorneys responded by letter to USB's attorney, taking the position that PNB had orally advised TRC the day the draft was received that it "could not be honored" (it is not clear whether the receipt referred to in this letter was PNB's initial receipt of February 29, or second receipt on March 20). PNB's attorneys also advised that unless they could be furnished with "persuasive authority" to the contrary, their advice to PNB would be to decline the demand for payment. The draft was not returned by PNB, and USB subsequently sent out a "tracer" to locate the draft. The "tracer" was received by PNB on April 17, and the draft returned unpaid by PNB to USB that same day.
The judgment of the trial court for PNB and against TRC was predicated on several conclusions of law. To these contested conclusions we now turn.
The trial court's principal conclusion was that PNB was not a payor bank which, under 12A O.S. 1981 § 4-302(a), became accountable for the draft when it retained it beyond midnight of March 3, 1980. Rather, the trial court held that the draft was drawn "through or at " PNB rather than on PNB, and that PNB was therefore only a collecting and presenting bank, obligated to make collection in accordance with the "collection letter" which accompanied the draft. The court further ruled that (a) under 12A O.S.1981 § 3-504 presentment could only be made by mail or in person, not by phone; (b) that presentment did not occur until March 7, when a principal of P & M came to PNB; (c) that the draft was dishonored by P & M on March 7; and (d) that PNB's return of the draft on March 7 was within the time required after the presentment and dishonor which had occurred on that date.
The trial court's legal conclusion that PNB was not a payor bank is incorrect. A "payor bank" is one by which an item is payable as drawn or accepted. 12A O.S.1981 § 4-105(b). It includes a drawee bank. Official Comment 2 to § 4-105. The question then is whether the draft in question was drawn on PNB as sole drawee or as co-drawee with P & M, or, as the trial court concluded, drawn on P & M as sole drawee, payable "at or through" PNB.
The trial court cited no decisional authority for its conclusion that PNB was not a payor bank. On the other hand, the cases which have been decided under the Uniform Commercial Code in other jurisdictions hold that designations such as that utilized here, to-wit:
result in both P & M and PNB being drawees, with the further result that PNB is a payor bank. See Pecos County Bank v. El Paso Livestock Auction Co., Inc., 586 S.W.2d 183 [Tex.Civ.App.1979]; Farmers Cooperative Livestock Market, Inc. v. Second National Bank of London, 427 S.W.2d 247 [Ky.App.1968]; New Ulm State Bank v. Brown, 558 S.W.2d 20 [Tex.Civ.App.1977] and Engine Parts v. Citizens Bank of Clovis, 92 N.M. 37, 582 P.2d 809 [1978].
as creating co-drawees.
PNB does not attempt to distinguish these cases, but instead simply brushes them aside because they were decided in other jurisdictions. We find them persuasive, however, in the absence of any Oklahoma decisions on the point, and in view of the policy of the Oklahoma Uniform Commercial Code " * * * to make uniform the law among the various jurisdictions * * * ". 12A O.S.1981 § 1-102(2)(c).
As previously noted, the trial court concluded without citation of decisional authority that the draft here in issue was payable "through or at " PNB, but was not drawn on PNB, with the result that PNB was a collecting bank but not a payor bank. But to be a "payable through" or "payable at" item, it must expressly so state on its face. See 12A O.S.1981 §§ 3-120 and 3-121. The draft here nowhere states that it is payable "through" or "at" PNB. Applicable rules of construction dictate that the bank in such cases be held at least a co-drawee and payor, absent express designation to the contrary. As stated in Engine Parts, supra, at 813:
"To make a draft payable 'through' or 'at' a bank, and thus designate the bank as a mere conduit for payment and not as a 'payor' bank directly ordered to pay, the drawer of the draft, must expressly write the word 'through,' 'pay through,' 'at,' 'payable at,' or similar words before the name of the bank on the instrument itself."
The trial court apparently considered two other factors as indicating that PNB was a collecting and presenting bank but not a payor. First, it emphasized that the letter from USB accompanying the draft when it was received by PNB on February 29 was a "collection letter". Thus, the court stated in its Conclusion of Law No. 4 that ...
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