Smith v. First Union Nat. Bank of Tennessee
| Citation | 35 UCCRep.Serv.2d 1309,958 S.W.2d 113 |
| Parties | 35 UCC Rep.Serv.2d 1309 Royce T. SMITH, individually and on behalf of all others similarly situated, Plaintiffs-Appellants, v. FIRST UNION NATIONAL BANK OF TENNESSEE, Defendant-Appellee. |
| Decision Date | 28 May 1997 |
| Court | Court of Appeals of Tennessee |
Gordon Ball, Knoxville, J. Kenneth Porter, Newport, for Plaintiffs-Appellants.
William S. Lockett, Jr., Kennerly, Montgomery & Finley, P.C., Knoxville, Carl N. Patterson, Jr., Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., Raleigh, NC, for Defendant-Appellee.
Royce T. Smith (plaintiff) filed this action against First Union National Bank of Tennessee (bank) ostensibly as a class action. 1 In his complaint the plaintiff seeks damages for what is alleged to be unfair, deceptive and unlawful practices of the bank in the way and manner it handles multiple checks drawn on the plaintiff's checking account and presented for payment on the same banking day when the aggregate of the checks exceeds the balance in the plaintiff's account. Specifically, the plaintiff asserts that the bank honors checks in such a fashion as to maximize the fees charged by the bank for checks returned for insufficient funds. The basic premise of the plaintiff is that the plaintiff honors the largest check (in amount) first rather than honoring the checks in a way that maximizes the number of checks that can be paid. Plaintiff asserts that the bank's action results in a greater number of checks being returned for insufficient funds and, hence, greater fees are generated by the bank and charged to its customers.
The plaintiff charges that the bank is guilty of breach of contract (breach of depository agreement) and of common-law bad faith as well as violation of T.C.A. §§ 47-4-303(2), 47-1-203, 47-1-102(3) and 47-4-103(1). 2 Additionally, the plaintiff charges the defendant with violation of the Tennessee Consumer Protection Act, T.C.A. § 47-18-101, et seq.
The bank responded with a motion to dismiss pursuant to Rule 12.02(6). The basic thrust of the bank's motion is that T.C.A. § 47-4-303(b) expressly authorizes the practice about which the plaintiff complains.
After argument in the trial court, the trial judge announced his findings from the bench. He reluctantly sustained the motion to dismiss. This appeal resulted. We affirm the action of the trial court.
The plaintiff charges that the court was in error by dismissing the case either under Rule 12.02(6), Tennessee Rules of Civil Procedure or Rule 56, Tennessee Rules of Civil Procedure. After our review of the record and the order entered by the trial court, we believe that it is clear that the case was dismissed pursuant to Rule 12.02(6) rather than on motion for summary judgment. While the trial judge did say that he had read the entire record before the motion was called for hearing, there is no indication that he considered any evidence. 3 The complaint was clearly dismissed for failure to state a claim upon which relief can be granted pursuant to Rule 12.02(6) Tennessee Rules of Civil Procedure. In any event, if we find that the complaint fails to state a claim upon which relief can be granted, the question of whether the dismissal was pursuant to Rule 12 or Rule 56 is moot.
A Rule 12.02(6) motion to dismiss for failure to state a claim upon which relief can be granted tests only the sufficiency of the complaint, not the strength of a plaintiff's proof as does, for example, a motion for a directed verdict. Merriman v. Smith, 599 S.W.2d 548, 560 (Tenn.App.1979). The failure to state a claim upon which relief can be granted is determined by an examination of the complaint alone. Wolcotts Fin. Serv., Inc. v. McReynolds, 807 S.W.2d 708, 710 (Tenn.App.1990). The basis for the motion is that the allegations contained in the complaint, considered alone and taken as true, are insufficient to state a claim as a matter of law. Cornpropst v. Sloan, 528 S.W.2d 188, 190 (Tenn.1975); Shelby County v. King, 620 S.W.2d 493, 494 (Tenn.1981); Shipley v. Knoxville Journal Corp., 670 S.W.2d 222, 223 (Tenn.App.1984). The motion admits the truth of all relevant and material averments contained in the complaint but asserts that such facts do not constitute a cause of action. League Cent. Credit Union v. Mottern, 660 S.W.2d 787, 789 (Tenn.App.1983). In scrutinizing the complaint in the face of a Rule 12.02(6) motion to dismiss, courts should construe the complaint liberally in favor of the plaintiff, taking all allegations of fact therein as true. Fuerst v. Methodist Hospital South, 566 S.W.2d 847, 848--49 (Tenn.1978); Holloway v. Putnam County, 534 S.W.2d 292, 296 (Tenn.1976). The motion should be denied unless it appears that the plaintiff can prove no set of facts in support of her claim that would entitle her to relief. Fuerst, 566 S.W.2d at 848.
Christy C. Cook by and through her next friend, Janice Uithoven v. Spinnaker's of Rivergate, Inc., and Tri-M Management, Inc., 878 S.W.2d 934 (Tenn.1994).
The trial judge believed that the bank was statutorily allowed to do the acts about which the plaintiff complains. The court dismissed all claims including those alleged to be a violation of the provisions of the Tennessee Consumer Protection Act. The court noted in his opinion, announced from the bench, that since the law permitted the bank to do the acts about which the plaintiff complains, the Tennessee Consumer Protection Act did not apply.
T.C.A. § 47-4-303(b) is pivotal to the issue presented here. It provides in pertinent part as follows:
47-4-303. When items subject to notice, stop-payment order, legal process, or setoff--Order in which items may be charged or certified. (a) Any knowledge, notice, or stop-payment order received by, legal process served upon, or setoff exercised by a payor bank comes too late to terminate, suspend, or modify the bank's right or duty to pay an item or to charge its customer's account for the item if the knowledge, notice, stop-payment order, or legal process is received or served and a reasonable time for the bank to act thereon expires or the setoff is exercised after the earliest of the following:
* * * *
* * *
(b) Subject to subsection (a), items may be accepted, paid, certified, or charged to the indicated account of its customer in any order convenient to the bank. 4
Paragraph 7 to the official comments to the above section provides as follows:
7. As between one item and another no priority rule is stated. This is justified because of the impossibility of stating a rule that would be fair in all cases, having in mind the almost infinite number of combinations of large and small checks in relation to the available balance on hand in the drawer's account; the possible methods of receipt; and other variables. Further, the drawer has drawn all the checks, the drawer should have funds available to meet all of them and has no basis for urging one should be paid before another; and the holders have no direct right against the payor or bank in any event, unless of course, the bank has accepted, certified or finally paid a particular item, or has become liable for it under Section 4-302. Under subsection (b) the bank has the right to pay items for which it is itself liable ahead of those for which it is not. (Emphasis ours).
The official comments, while not binding, are very persuasive in interpreting the statute to which they apply. The comments give some insight into the intent of the overall scheme of the statute as contemplated by the General Assembly in adopting the language of the statute. Further T.C.A. § 47-1-102 provides in pertinent part as follows:
47-1-102. Purposes--Rules of construction--Variation by agreement--. (1) Chapters 1-9 of this title shall be liberally construed and applied to promote its underlying purposes and policies. In any dispute as to the proper construction of one or more sections of chapters 1-9 of this title, the Official Comments pertaining to the corresponding sections of the Uniform Commercial Code, Official Text, as adopted by the National Conference of Commissioners on Uniform State Laws and the American Law Institute and as in effect on the date of enactment of the sections in this state, shall constitute evidence of the purposes and policies underlying such sections, ...
We should note that an "item" as that term is used in the above is defined in T.C.A. § 47-4-104 as follows:
Definitions and index of definitions--(a) as used in this chapter, unless the context otherwise requires:
* * * *
* * *
(9) "Item" means an instrument or a promise or order to pay...
To continue reading
Request your trial
-
In re Checking Account Overdraft Litigation
...the court that a statutorily authorized procedure constitutes an act of bad faith and unfair dealing); Smith v. First Union Nat'l Bank, 958 S.W.2d 113 (Tenn.Ct.App.1997) (holding that in light of the UCC, the bank had discretion to pay items in a manner convenient to it and the court could ......
-
Pendleton v. Mills
...no cause of action arises from these facts. Winchester v. Little, 996 S.W.2d 818, 821-22 (Tenn.Ct.App.1998); Smith v. First Union Nat'l Bank, 958 S.W.2d 113, 115 (Tenn.Ct.App.1997). Accordingly, courts reviewing a complaint being tested by a Tenn. R. Civ. P. 12.02(6) motion must construe th......
-
Pendleton v Mills, 00-03097
...of action arises from these facts. Winchester v. Little, 996 S.W.2d 818, 821-22 (Tenn. Ct. App. 1998); Smith v. First Union Nat'l Bank, 958 S.W.2d 113, 115 (Tenn. Ct. App. 1997). Accordingly, courts reviewing a complaint being tested by a Tenn. R. Civ. P. 12.02(6) motion must construe the c......
-
Permobil v. American Exp. Travel
...federal or state law, and thus none are exempt from the TCPA. Additionally, the defendants' reliance on Smith v. First Union Nat'l Bank of Tennessee, 958 S.W.2d 113 (Tenn.Ct. App.1997), is misplaced. In that case, the plaintiff asserted a TCPA claim against a bank, arguing that the bank's p......
-
Defining "breach of the Peace" in Self-help Repossessions
...Id. 75. See, e.g., Pride Hyundai, Inc. v. Chrysler Fin. Co., 369 F.3d 603, 613 (1st Cir. 2004); Smith v. First Union Nat'l Bank of Tenn., 958 S.W.2d 113, 116 (Tenn. Ct. App. 76. U.C.C. § 9-609 cmt. 3. 77. See supra Part I.A. 78. See supra Part I.A. 79. U.C.C. § 9-609. 80. Id. 81. Consumer C......
-
ANOTHER TRIP AROUND ARTICLE 2 REMEDIES: WHY THE U.C.C. PRECLUDES SELLERS FROM RECOVERING MARKET PRICE DAMAGES IN EXCESS OF RESALE DAMAGES.
...Comments to the UCC, while not binding, are useful and persuasive in interpreting the UCC."); Smith v. First Union Nat'l Bank of Tenn., 958 S.W.2d 113, 116 (Tenn. Ct. App. 1997) ("The official comments, while not binding, are very persuasive in interpreting the statute to which they apply."......