Wood v. Central Bank of the South
| Decision Date | 03 November 1982 |
| Citation | 435 So.2d 1287 |
| Parties | 37 UCC Rep.Serv. 205 Dr. W. Graham WOOD v. CENTRAL BANK OF THE SOUTH. Civ. 3299-X. |
| Court | Alabama Court of Civil Appeals |
George W. Royer, Jr. of Butler, Potter & Royer, Huntsville, for appellant.
William W. Sanderson, Jr. of Lanier, Shaver & Herring, Huntsville, for appellee.
This is an appeal from a judgment rendered against defendant Dr. Graham Wood and for plaintiff Central Bank of the South for breach of an indemnity agreement contained in an instrument signed by the defendant wherein he sought to have payment stopped on a cashier's check purchased by the defendant and payable to a third party. The case below was heard ore tenus.
In October of 1978 Dr. Wood purchased cashier's check number 001973 in the amount of $6,000 from the Gurley Branch of Central Bank of the South (Central) payable to Ken Walker and delivered it to Walker.
In September of 1979 the bank's branch manager informed Wood by telephone that the check to Walker was outstanding. Wood subsequently signed a form prepared by the bank requesting that payment be stopped on the check and a replacement check issued. The nature of the agreement between Wood and Central is the subject of this dispute. In the agreement, Wood represented to Central that the cashier's check was lost and that he was entitled to the proceeds thereof. It also contained the following pertinent provisions:
In response to Wood's execution of statement of loss and agreement of indemnity, Central's branch manager notified the other offices of the alleged loss and issued to Wood its cashier's check for $6,000 as a replacement of the "lost" check. Wood subsequently received payment of the latter check.
About April of 1980 Walker attempted to cash the original cashier's check at his bank in Pennsylvania. The bank refused to cash the check, apparently because Central refused to verify it. Walker then called Central and asked why the check could not be cashed. He was informed of the stated loss and directed to contact Wood. Walker contacted an attorney and was told that the check should be payable. He then deposited it in his checking account and it was honored through normal banking channels.
On or about September 19, 1980, internal auditors for Central discovered that the check to Walker had been paid. Wood was informed that the check had been cashed and that according to the agreement he would have to repay the bank $6,000. Wood refused.
On January 5, 1982, Central initiated an action against Wood alleging that he owed the bank $6,000 under the September 11, 1979, indemnity agreement. The bank also claimed attorney's fees and interest due. Judgment was rendered for the bank for $6,000 on April 21, 1982. On May 21, 1982, Wood filed notice of appeal. Central cross-appeals, claiming error in the failure to award interest and attorney's fees.
The first issue is whether the court abused its discretion in finding for the plaintiff. In cases heard ore tenus, the judgment will be reversed only where it is plainly and palpably wrong, or where the trial court misapplied the law to the facts. Alabama Farm Bureau Mutual Insurance Co. v. Davis, 354 So.2d 15 (Ala.Civ.App.1978). There must be no credible evidence in the record to support the court's findings. Gann & Lewis Roofing Co. v. Sokol, 359 So.2d 815 (Ala.Civ.App.1978). If there is disputed evidence, the trial court's findings of fact are presumed correct. Campbell v. Campbell, 371 So.2d 55 (Ala.Civ.App.1979). We have carefully reviewed the record and find no abuse of discretion. Although the evidence is often in conflict, there is evidence to support the trial court's findings. Under the presumption of correctness given cases of this nature, we find no abuse of discretion in the trial court's findings of fact.
Wood contends that the trial court misapplied the law to the facts in two instances: (1) in granting judgment for the bank on an agreement which the bank itself breached; and (2) in granting judgment for the bank on an agreement the bank intentionally breached.
Wood claims that Central breached the agreement by making payment on the cashier's check and therefore is precluded from recovering on that agreement. This argument hinges upon the court's interpretation of the agreement.
A cashier's check is the obligation of the bank which issues it; it is not an item payable from a customer's account within the meaning of § 7-4-403, Code of Alabama 1975. A cashier's check is accepted in advance by the act of its issuance and is not subject to a stop payment order. Walker v. Sellers, 201 Ala. 189, 77 So. 715 (1918); Dziurak v. Chase Manhattan Bank, N.A., 44 N.Y.2d 776, 406 N.Y.S.2d 30, 377 N.E.2d 474 (1978). Such a rule is necessary to insure the public's confidence in and reliance upon our banking system. Moon Over the Mountain, Ltd. v. Marine Midland Bank, 87 Misc.2d 918, 386 N.Y.S.2d 974 (N.Y.Civ.Ct.1976).
Wood contends that whether or not the bank could legally ignore his stop payment order is irrelevant, since Central agreed to stop payment in a separate, written instrument. Central now seeks to enforce the indemnity provision of that agreement, and Wood contends the agreement should fail for lack of consideration. Wood argues that Central did not keep its end of the bargain, and therefore should not be able to force him to keep his end.
Central contends that the payment to Wood of the $6,000 was adequate consideration for the agreement. We agree. The instrument in question clearly states that the replacement check is consideration for the indemnity agreement, along with the agreement to stop payment.
Central's payment of the cashier's check did not constitute a breach of the agreement. The agreement must be analyzed in terms of the nature of a cashier's check, and it is in the nature...
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