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(— Ark. —, 211 S. W. 919.)

others which followed, telling the jury what circumstances they might consider in ascertaining the extent of the injury. Our statute puts the burden of proof on the plaintiff as the party having the affirmative of the issue, and this instruction was in line with that statute.

It would have been proper for the

court, if asked, to instruct the jury that it was not essential for the damages to be proved by direct evidence, and might be proved by circumstances; but no such instruction was asked for. That was, however, the effect of the last oral instruction given by the court.

Smith, J., concurs in these views.

ANNOTATION.

Liability of bank to depositor for dishonoring check.

I. Generally, 947.

II. Check of trader:

a. General rule, 948.

b. Illustrations, 949.

c. Rule in New York, 953. III. Check of nontrader, 954.

1. Generally.

In most of the cases passing on the liability of a bank to a depositor for dishonoring his check, the courts draw a sharp distinction between the check of a trader and that of a nontrader. See the following subdivisions of this note. In a few cases, however, the courts have failed to observe this distinction, or to disclose in the opinion the status of the depositor in this respect.

In Atlanta Nat. Bank v. Davis (1895) 96 Ga. 334, 51 Am. St. Rep. 139, 23 S. E. 190, it was held that the plaintiff was entitled to recover substantial damages against a bank which had refused to honor his check, although he had sufficient funds in the bank to pay the check. It was held that it was not necessary for the plaintiff to prove special damages in order to recover substantial damages in such a case, as such damages would naturally follow the dishonor of a check by a bank, although they would probably not be susceptible of independent distinct proof. The court made no distinction as to the rule of damages, whether the plaintiff was a trader or a nontrader, and it is not apparent whether the depositor was a trader.

In Hilton v. Jesup Bkg. Co. (1907) 128 Ga. 30, 11 L.R.A. (N.S.) 224, 57 S. E. 78, 10 Ann. Cas. 987, it was held

that the plaintiff was entitled to recover "temperate damages" for a wrongful refusal of the defendant bank to pay his check, although the plaintiff had sufficient money in the bank to pay the check. It was held, also, that the bank was liable in "temperate damages" without proof by the plaintiff of any actual damages. It would seem that the plaintiff in this case was engaged in business, but the court, in stating the rule of damages applicable, made no distinction between the cases in which the depositor was a trader and those in which he was not a trader.

In Birchall v. Third Nat. Bank (1884) 15 W. N. C. (Pa.) 174, it was not stated whether the plaintiffs were traders, and, in stating the rule, the court disregarded any distinction between traders and nontraders, merely saying that in an action against a bank for a failure to honor a check, where the account in the bank was sufficient to meet the check the plaintiffs were entitled to substantial damages.

In Patterson v. Marine Nat. Bank (1889) 130 Pa. 419, 17 Am. St. Rep. 778, 18 Atl. 632, it was held that the defendant bank was liable in substantial damages for a refusal to pay a check of the plaintiff, and in paying over the plaintiff's account to a third person. Such damages would be presumed, it was held, to result from the breach of contract by the defendant. It was said that a bank is a quasi public institution, and that it would be against public policy to allow it to refuse to pay the checks of depositors and yet be liable in nominal damages only. No distinction was made in this

case between depositors who were traders and those who were not, as to the rule of damages.

In Nadel v. People's Bank (1916) 66 Pa. Super. Ct. 396, it was held that the plaintiff was entitled to recover substantial damages for the imputation on his financial credit caused by the refusal of the bank to honor his checks, when he had sufficient funds in the bank to pay them. Whether the plaintiff was a trader does not appear from the opinion.

11. Check of trader.

a. General rule.

It is generally held that a bank is liable in substantial damages to a depositor who is engaged in trade or business, for dishonoring his check when he has sufficient funds in the bank to pay the check, and special damages need not be shown. Substantial damages are presumed to follow such breach of contract, as a necessary and natural consequence.

Arkansas. See the reported case (MCFALL v. FIRST NAT. BANK, ante,, 940).

California.

Siminoff v. Jas. H. Goodman & Co. Bank (1912) 18 Cal. App. 5, 131 Pac. 939; Reeves v. First Nat. Bank (1912) 20 Cal. App. 508, 129 Pac. 800.

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Wiley v. Bunker

Massachusetts. Hill Nat. Bank (1903) 183 Mass. 495, 97 N. E. 655.

Minnesota. Svendsen v. State Bank (1896) 64 Minn. 40, 31 L.R.A. 552, 58 Am. St. Rep. 522, 65 N. W. 1086; Peabody v. Citizens State Bank (1906) 98 Minn. 302, 108 N. W. 272.

Montana. - - Crites v. Security State

Bank (1915) 52 Mont. 121, 155 Pac. 970; Ward v. State Bank (1916) 52 Mont. 328, 157 Pac. 573.

Nebraska. Bank of Commerce v. Goos (1894) 39 Neb. 437, 23 L.R.A. 190, 58 N. W. 84; First Nat. Bank v. Railsback Bros. (1899) 58 Neb. 248. 78 N. W. 512.

Oklahoma.-Weller v. Western State Bank (1907) 18 Okla. 478, 90 Pac. 877; Commercial Nat. Bank v. Latham (1911) 29 Okla. 88, 116 Pac. 197, Ann. Cas. 1913A, 999.

Tennessee.-J. M. James Co. v. Continental Nat. Bank (1900) 80 Am. St. Rep. 857, and note, 105 Tenn. 1, 51 L.R.A. 255, 58 S. W. 261.

England.-Rolin v. Steward (1854) 14 C. B. 595, 139 Eng. Reprint, 245, 2 C. L. R. 759, 23 L. J. C. P. N. S. 148, 18 Jur. 536; Larios v. Gurety (1873) L. R. 5 P. C. 346; Fleming v. Bank of New Zealand [1900] A. C. 577, 69 L. J. C. P. N. S. 120, 83 L. T. N. S. 1, 16 Times L. R. 468. But see Marzetti v. Williams (1830) 1 Barn. & Ad. 415, 109 Eng. Reprint, 842, 9 L. J. K. B. 42, 3 Eng. Rul. Cas. 746.

"Such a recovery is a judicial recognition of the right, and an admonition that it cannot be invaded with impunity. The relation of banker and depositor is one of contract. The right of the latter is that, to the extent of his credit balance, subject thereto, his checks drawn and presented according to the customs and usages of the business shall be promptly honored. For a breach of this right an action for damages will lie. If the depositor is a merchant or trader, it will be presumed, without further proof, that substantial damages have been sustained." Third Nat. Bank v. Ober (1910) 102 C. C. A. 178, 178 Fed. 678.

"It is true that no special damages. were sought, and that there was no claim that the refusal to pay the checks was the result of ill will or malice, but it does appear that the plaintiffs were established in business, and where this is so the great weight of authority is to the effect that the wrongful dishonor of a check raises the presumption that the drawer has sustained substantial damage, the

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amount of which it is the duty of the court or the jury to fix. Many of the adjudicated cases liken this sort of suit to an action for slander of a person in business, regarding it as a slander by acts, and hold that since the improper refusal to pay the check of a depositor will invariably injure him in his business, and that as a rule it will be impossible to prove the amount of the damage, the law must of necessity fitting itself to conditions presume that he is entitled to reasonable compensation for the injury." Reeves v. First Nat. Bank (1912) 20 Cal. App. 508, 129 Pac. 800. "It is held by the authorities that in such a case the plaintiff's recovery is not limited to nominal damages, but he is entitled to recover general compensatory damages [citing authorities]. The case of Patterson v. Marine Nat. Bank (1889) 130 Pa. 419, 17 Am. St. Rep. 778, 18 Atl. 632, seems to place the right to recover more than nominal damages in such a case on the ground of public policy, but the other cases place it rather on the ground that the wrongful act of the banker in refusing to honor the check imputes insolvency, dishonesty, or bad faith to the drawer of the check, and has the effect of slandering the trader in his business. We are of the opinion that the recovery of more than nominal damages can, on sound principle, be sustained on the latter ground, where the drawer of the check is a merchant or trader. To refuse to honor his check is a most effectual way of slandering him in his trade, and it is well settled that to impute insolvency to a merchant is actionable per se, and general damages may be recovered for such a slander." Svendsen v. State Bank (1896) 64 Minn. 40, 31 L.R.A. 552, 58 Am. St. Rep. 522, 65 N. W. 1086.

"The best authorities support the rule that the jury may give such temperate damages as they believe to be reasonable compensation for the injury which must necessarily result from the act of the defendant." Peabody v. Citizens State Bank (1906) 98 Minn. 302, 108 N. W. 272.

b. Illustrations.

In Siminoff v. Jas. H. Goodman & Co. Bank (1912) 18 Cal. App. 5, 121 Pac. 939, it was held that a bank was liable in substantial damages for a refusal to honor the checks of a merchant depositor, who had sufficient money in the bank to pay all the checks presented, and that such a refusal must be presumed to injure the credit of a depositor engaged in trade, the fact that the depositor was a trader taking the place of proof of special damage.

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In Schaffner v. Ehrman (1891) 139 Ill. 109, 15 L.R.A. 134, 32 Am. St. Rep. 192, 28 N. E. 917, it was held that a bank was liable in substantial damages to a depositor, who was a merchant, for a wrongful refusal to honor his check. It was held that the plaintiff need not show actual damages in order to recover substantial damages in such a case, as a wrongful refusal to honor a check drawn on the bank by a person engaged in a mercantile business would be equivalent to a slander in the way of his trade, and the fact that he was a trader would take the place of proof of special damages.

In Metropolitan Supply Co. v. Garden City Bkg. & T. Co. (1904) 114 Ill. App. 318, it was held that a bank was liable in substantial damages to a corporation for a refusal to honor its check, when the corporation had sufficient funds in the bank to make payment of the check. It was held that, in such a case, nominal damages would not be a sufficient reparation for the injury sustained by the plaintiff in respect of its business credit, good name, and reputation, the court saying: "No reason is apparent why the law will not, in the case of a corporation as well as of an individual, presume, without proof of special dam

ages, that, by the dishonor of its check, it has sustained special or substantial damages. While the wrong was unintentional, the refusal to pay was intentional and without just excuse, and the presumption of legal malice follows."

In First Nat. Bank v. Kansas Grain Co. (1898) 60 Kan. 30, 55 Pac. 277, it was held that although a depositor had a right of action against a bank which had dishonored his checks, the award of only $2 as actual damage must be considered as being nominal damages only, and therefore would not be sufficient to carry an award of exemplary damages of $200. It was, therefore, held that the judgment of the lower court as to exemplary damages must be reversed.

In Winkler v. Citizens State Bank (1913) 89 Kan. 279, 131 Pac. 597, it appeared that the defendant bank had refused payment of the plaintiff's check, although the plaintiff had an amount in the bank sufficient to meet the check. The plaintiff had recovered actual and exemplary damages in the court below. It was held that, as there was no proof of malice or ill will in the refusal to pay the check, the amount of the judgment should be reduced by striking out the amount of the exemplary damages.

In Levin v. Commercial Germania Trust & Sav. Bank (1913) 133 La. 492, 63 So. 601, it appeared that the plaintiff was a merchant and drew a check on the defendant bank, payment of which was refused on the ground that the plaintiff had no account with the bank. The plaintiff

wood dealer, although he had sufficient funds in the bank to make payment of the checks. It was held that, as the plaintiff was a trader, substantial damages would be presumed from that fact, and judgment of the lower court for the plaintiff for $10,000 was affirmed.

had more than a sufficient amount in the bank to pay the check. It was held that the plaintiff, being a merchant or trader, was entitled to recover more than nominal damages for the refusal of the bank to honor his check; but, as the plaintiff had recovered $30 in the court below, it was held that he had been fully compensated.

In Svendsen v. State Bank (1896) 64 Minn. 40, 31 L.R.A. 552, 58 Am. St. Rep. 522, 65 N. W. 1086, it was held that the plaintiff, a merchant, was entitled to recover substantial damages for a wrongful refusal by the defendant bank to honor his check, without proof of special damages. It was held that the right of action in such a case to recover compensatory damages, without proof of actual damage, was analogous to a slander of a merchant in his trade, which was actionable per se, as a refusal to honor a check in such a case would impute insolvency, bad faith, or dishonesty to the drawer of the check.

In Wiley v. Bunker Hill Nat. Bank (1903) 183 Mass. 495, 97 N. E. 655, it appeared that the defendant bank had refused payment of several checks of the plaintiff, who was a coal and

In Peabody v. Citizens State Bank (1906) 98 Minn. 302, 108 N. W. 272, it appeared that the plaintiff had an account at the First Bank of Utica. He drew a check against this account in favor of a third person, and in the ordinary course of business the check was delivered to the defendant bank. The plaintiff's account was sufficient to meet the check. The assistant cashier of the defendant bank, Knapp, who was also a notary, took the plaintiff's check, with many others, to the First Bank of Utica. The plaintiff's check was not presented for payment. Knapp demanded payment of all the checks, but did not actually present any for payment. The bank did not have sufficient cash on hand to meet all the checks, but had money in another bank, which was sent for. Knapp refused to wait until this money arrived, and would not accept a check which he knew was good in payment. Before leaving the bank, Knapp gave the cashier a list of the names and amounts of the checks, but made no new demand for payment after the list was made. The money was soon thereafter offered to Knapp in payment of the checks, by a messenger from the bank, but he refused to

accept it, and, although payment was several times thereafter tendered, he also refused such offers and protested all the checks, including the plaintiff's. It was held that the bank was liable in substantial damages for wrongfully protesting the plaintiff's check, as it had not been presented by the defendant bank in good faith for payment, and payment had not been refused by the plaintiff's bank. It was held that, as the plaintiff was a trader, he might recover damages without proving special injury.

In Crites v. Security State Bank (1916) 52 Mont. 121, 155 Pac. 970, it was held that the plaintiffs were entitled to recover substantial damages for the refusal of the defendant bank to pay their check, when there were sufficient funds in the bank to meet the check. Through an error, a deposit previously made by the plaintiffs was credited to another depositor, and hence the plaintiff's account was apparently insufficient to meet the payment. It was held that the plaintiffs were entitled to substantial damages without putting in proof of any tangible loss, such damages being presumed, as the plaintiffs were merchants; but were not entitled to recover any amount more than was necessary to vindicate them for the possible imputation upon their solvency and credit, and therefore the verdict of the jury was reduced from $500 to $200. It is stated in the opinion, however, that the present rule in this class of cases is that the damages are limited to those actually proved.

In Ward v. State Bank (1916) 52 Mont. 328, 157 Pac. 573, it was held that the plaintiff, a merchant, was entitled to recover substantial damages from a bank for a wrongful refusal to honor his check, and that it was not necessary for the plaintiff to submit any evidence of tangible loss.

In Bank of Commerce v. Goos (1894) 39 Neb. 437, 23 L.R.A. 190, 58 N. W. 84, it appeared that the plaintiff had drawn a check against his account at the defendant bank which the bank refused to pay. The payee of the check, who was the city treasurer, then had the plaintiff arrested and put

in jail for obtaining a tax receipt by false pretenses, but he was shortly thereafter released on bail. The plaintiff sought to recover damages for the disgrace of the imprisonment, and the publication of it in the papers, and also for his loss of business standing and credit. It was held that the plaintiff might recover only those damages which would ordinarily and reasonably follow the dishonor of a check. It was therefore held that the judgment of the lower court must be reversed, for the reason that the plaintiff had so intermingled the charges and proof as to the arrest, imprisonment, and publication, and what account the newsboys gave of the occurrence, that it was impossible for the jury to ascertain the damages which were solely traceable to the refusal to pay the plaintiff's check.

In First Nat. Bank v. Railsback Bros. (1899) 58 Neb. 248, 78 N. W. 512, it appeared that the bank had dishonored the plaintiff's check, he being a merchant, although the plaintiff had sufficient funds in the bank to pay it. It was held that the bank was liable in general damages, though the plaintiff, from the nature of the case, was unable to prove special damages or any actual loss.

In Weller v. Western State Bank (1907) 18 Okla. 478, 90 Pac. 877, it was held that a bank was liable in substantial damages for a refusal to honor a check when the depositor had sufficient funds to pay it. It was also held that it was not necessary that the plaintiff should prove any damage to have been sustained, as it would be presumed that the dishonoring of a check would injuriously affect a merchant's credit.

In Reinisch v. Consolidated Nat. Bank (1911) 45 Pa. Super. Ct. 236, it was held that a bank was liable in substantial damages to a merchant for refusing to honor his checks, though there were not sufficient funds on hand at the bank to meet all the checks presented. It appeared that seventeen checks were presented for payment at the same time, and it was held that the bank should have paid as many

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