Suburban Trust Co. v. Waller

• Decision Date: 07 December 1979
• Docket Number: No. 274,274
• Citation: 408 A.2d 758,44 Md.App. 335
• Parties: SUBURBAN TRUST COMPANY v. Maurice WALLER.
• Court: Court of Special Appeals of Maryland

Page 335

44 Md.App. 335

408 A.2d 758

SUBURBAN TRUST COMPANY v. Maurice WALLER.

No. 274.

Court of Special Appeals of Maryland.

Dec. 7, 1979.

Francis J. Ford, Rockville, for appellant.

David J. Frantz, Washington, D. C., with whom were David B. Lamb and Lamb, Halleck & Keats, Washington, D. C., on the brief, for appellee.

Argued before GILBERT, C. J., and MELVIN and WEANT, JJ.

GILBERT, Chief Judge.

Street and Smith ¹ would have probably entitled this case as, "The Bank That Talked Too Much." The matter presents us with a novel question of the existence and scope of a bank's duty of confidentiality concerning the affairs of its depositors. ²

The appellee, Maurice Waller (Waller) deposited $800 in his account at the Suburban Trust Company (Bank). Because of the actions of a security official, Waller was arrested on a charge of robbery with a dangerous and deadly weapon. The facts surrounding the deposit led a jury in the Circuit Court for Montgomery County to withdraw, in the form of a verdict in favor of Waller, $50,000 from the Bank's coffers and transfer it to Waller's treasury. Understandably upset by the judgment entered on the jury's verdict, the Bank has appealed in an effort to divest itself of what it apparently sees as an unjust liability.

THE FACTS.

Waller, in February 1976, opened an account at the Bank's Langley Park branch. About a month later, March 16, 1976, he attempted to have an income tax refund check cashed there, but that attempt was rebuffed because the balance in his account was insufficient to "cover" the check. He, along with Marvin Turner, a fellow employee of Waller who also wanted a check cashed, went to the United States Treasury Department in the District of Columbia. The checks were cashed, and Waller and his companion returned to the Bank, where Waller made a deposit of $800. Simultaneously, Turner deposited an identical amount in a new account. The money was in fifty and one hundred dollar bills, and the serial numbers printed thereon were sequential.

The employee ³ who handled Waller's deposit was a teller-trainee. Believing the transaction involving large sequentially numbered bills to be of an unusual nature, he called the matter to the attention of Mrs. Bane, who, together with her duties at her own teller station, was charged with supervising the trainees' work. Mrs. Bane, in turn, notified the assistant manager, James Jones, who contacted the security department. Jones spoke to William Brandt, an assistant security officer for the Bank. Brandt was asked if the serial numbers on the bills were on any of the "warning lists that the Bank receives periodically." The security officer told Jones that he would check out the matter. Pending information from Brandt, Assistant Manager Jones instructed Mrs. Bane to withhold the bills from circulation.

Brandt first contacted the Federal Bureau of Investigation in order to ascertain whether the serial numbers had appeared on that agency's "N.C.I. register." ⁴ The reply, we infer, was in the negative. Brandt, seemingly unsatisfied with stopping at that point, began to call the local law enforcement agencies. When he contacted the Montgomery County Police Department, he spoke to Corporal Howell. The police officer testified ⁵ that Brandt asked him if there had been any large cash robberies recently. Howell replied that in a recent "residential robbery" $3,000 in fifty and one hundred dollars bills had been taken. He then read the descriptions of the suspects to Brandt, who replied that they were "similar to two individuals who had come in the Suburban Trust Bank, the branch at Langley Park." Brandt then disclosed to Howell Waller's name, address, description, and employment, as well as the information concerning his deposit of that morning. Subsequently, the Bank's surveillance photographs were also made available to the police. ⁶

Howell turned over the information that had been furnished by Brandt to Detective Ingels, who was the person who obtained Waller's photographs from Brandt. The pictures were shown to the victim of the residential robbery, one Brody, who tentatively identified Waller as one of the perpetrators of the crime. The police then acquired a different photograph from Waller's employer. Brody then positively identified Waller as one of the robbers. Waller was arrested and criminally processed. Ultimately, the victim retracted the identification, and the charges against Waller were dropped.

He then filed suit alleging that the bank had (1) invaded his privacy and (2) breached an implied condition of their contract, I. e., the obligation of confidentiality. ⁷ The case proceeded to trial, where, at the close of Waller's evidence, the trial judge directed a verdict against him on the count for invasion of privacy and on the matter of punitive damages. ⁸ Following the presentation of the Bank's defense, the court directed a verdict in favor of Waller on the issue of liability, leaving the assessment of damages to the jury.

Attempting to cancel the "withdrawal" made by the jury, the appellant impugns the judgment on three grounds:

I. The trial court erred in failing to rule as a matter of law that the Bank's limited disclosure to the police was reasonable.

II. The trial court erred in failing to rule as a matter of law that the Bank's actions were not the proximate cause of Waller's alleged damages.

III. The trial court erred in instructing the jury that it could award damages for loss of reputation where there was no adequate evidence presented on the issue.

THE LAW.

I.

At common law, the relationship of a bank to its customer was not considered to be fiduciary in nature, but rather as that of a debtor and his creditor, Foley v. Hill, 2 H.L.Cas. 28 (1848); Watts v. Christie, 11 Beav. 546 (1849); 1 Morse, A Treatise on the Law of Banks and Banking § 289 (6th ed. 1928), "the rights of the depositor and the liability of the bank being contractual." ⁹ Taylor v. Equitable Trust Co., 269 Md. 149, 155, 304 A.2d 838, 842 (1973). The appellate decisions of this State have consistently followed that view. See University National Bank v. Wolfe, 279 Md. 512, 514, 369 A.2d 570, 571 (1977); Keller v. Frederickstown Savings Institution, supra, 193 Md. at 296, 66 A.2d at 925-26; Pritchard v. Myers, 174 Md. 66, 76, 197 A. 620, 625 (1938); Hardy v. Chesapeake Bank,51 Md. 562, 585, 34 Am.Rep. 325, 328 (1879); Horwitz v. Ellinger, 31 Md. 492, 503 (1869); 5 A, Michie, Banks and Banking § 1 (1973). ¹⁰

Modern society virtually demands that one maintain a bank account of some sort. "In a sense a person is defined by the checks he writes. By examining them . . . (one) get(s) to know his doctors, lawyers, creditors, political allies, social connections, religious affiliation, educational interests, the papers and magazines he reads, and so on Ad infinitum." California Bankers Association v. Shultz, 416 U.S. 21, 85, 94 S.Ct. 1494, 1529, 39 L.Ed.2d 812, 854 (1974) (Douglas, J., dissenting). The message of Mr. Justice Douglas in Shultz is clear: If it is true that a man is known by the company he keeps, then his soul is almost laid bare to the examiner of his checking account. More recently, these revelations have been recorded and preserved under compulsion of law. See 12 U.S.C. § 1829b; 31 C.F.R. 103.31-103.34 (1978). Patently, the vital information placed within the bank's control presents potential sources of use as well as abuse. ¹¹

Courts have recognized the special considerations inherent in the bank-depositor relationship and have not hesitated to find that a bank implicitly warrants to maintain, in strict confidence, information regarding its depositor's affairs.

The seminal case with respect to a bank's obligation of "strict confidence" appears to be Tournier v. National Provincial and Union Bank of England, 1 K.B. 461 (1923). In that case the plaintiff overdrew his account and after agreeing to make good the overdraft, failed to perform. The bank called Tournier's employer and in the course of the conversation, disclosed that "one cheque (coming through the bank payable to the plaintiff) . . . (had) gone to the credit of a bookmaker's account." As a result of the bank's garrulity, Tournier found himself without employment.

A three-judge panel of the English Court of Appeal held that the bank had breached its implied contractual duty of nondisclosure. Lord Justice Scrutton explained:

"The contract is alleged in the claim as 'implied' and . . . implied terms are a question of law for the Court. . . . The Court will only imply terms which must necessarily have been in the contemplation of the parties in making the contract. Applying this principle to such knowledge of life as a judge is allowed to have, I have no doubt that it is an implied term of a banker's contract with his customer that the banker shall not disclose the account or, transactions relating thereto, of his customer . . . ." ¹² Id. at 480.

The decisions of appellate courts in this country are generally in accord with Tournier. The Supreme Court of Idaho, in Peterson v. Idaho First National Bank, 83 Idaho 578, 588, 367 P.2d 284, 290 (1961), opined:

"It is inconceivable that a bank would at any time consider itself at liberty to disclose the intimate details of its depositors' accounts. Inviolate secrecy is one of the inherent and fundamental precepts of the relationship of the bank and its customers or depositors. This high ethical standard is recognized by the defendant bank in the instant case, as outlined in the manager's deposition.

It is implicit in the contract of the bank with its customer or depositor that no information may be disclosed by the bank or its employees concerning the customer's or depositor's account . . . ."

5 A, Michie, Banks and Banking § 1 (1973) states, "Bank depositors have the right of secrecy and a bank is under an implied obligation to keep secret its records of accounts, deposits and withdrawals." See also Burrows v....