(- Ark. - , 211 8. W. 919.) others which followed, telling the court, if asked, to instruct the jury jury what circumstances they might that it was not essential for the damconsider in ascertaining the extent ages to be proved by direct evidence, of the injury. Our statute puts the and might be proved by circumburden of proof on the plaintiff as

stances; but no such instruction was the party having the affirmative of asked for. That was, however, the the issue, and this instruction was

effect of the last oral instruction in line with that statute.

given by the court. It would have been proper for the Smith, J., concurs in these views.

ANNOTATION.

a

Liability of bank to depositor for dishonoring check. I. Generally, 947.

that the plaintiff was entitled to reII. Check of trader:

cover “temperate damages" for a. General rule, 948.

wrongful refusal of the defendant b. Illustrations, 949.

bank to pay his check, although the c. Rule in New York, 953. III. Check of nontrader, 954.

plaintiff had sufficient money in the

bank to pay the check. It was held, 1. Generally.

also, that the bank was liable in “tem

perate damages" without proof by the In most of the cases passing on the plaintiff of any actual damages. It liability of a bank to a depositor for

would seem that the plaintiff in this dishonoring his check, the courts

case was engaged in business, but the draw a sharp distinction between the

court, in stating the rule of damages check of a trader and that of a non

applicable, made no distinction betrader. See the following subdivi

tween the cases in which the depositor sions of this note. In a few cases,

was a trader and those in which he however, the courts have failed to

was not a trader. observe this distinction, or to disclose In Birchall V. Third Nat. Bank in the opinion the status of the de

(1884) 15 W. N. C. (Pa.) 174, it was positor in this respect.

not stated whether the plaintiffs were In Atlanta Nat. Bank V. Davis traders, and, in stating the rule, the (1895) 96 Ga. 334, 51 Am. St. Rep. 139, court disregarded any distinction be23 S. E. 190, it was held that the tween traders and nontraders, merely plaintiff was entitled to recover sub- saying that in an action against a bank stantial damages against a bank which for a failure to honor a check, where had refused to honor his check, al- the account in the bank was sufficient though he had sufficient funds in the to meet the check the plaintiffs were bank to pay the check. It was held entitled to substantial damages. that it was not necessary for the plain- In Patterson v. Marine Nat. Bank tiff to prove special damages in order

(1889) 130 Pa. 419, 17 Am. St. Rep. to recover substantial damages in

778, 18 Atl. 632, it was held that the such a case, as such damages would defendant bank was liable in substannaturally follow the dishonor of a tial damages for a refusal to pay a check by a bank, although they would check of the plaintiff, and in paying probably not be susceptible of inde

over the plaintiff's account to a third pendent distinct proof. The court

person. Such damages would be premade no distinction as to the rule of sumed, it was held, to result from the damages, whether the plaintiff was breach of contract by the defendant. a trader or a nontrader, and it is not It was said that a bank is a quasi pubapparent whether the depositor was a lic institution, and that it would be trader.

against public policy to allow it to In Hilton v. Jesup Bkg. Co. (1907) refuse to pay the checks of depositors 128 Ga. 30, 11 L.R.A.(N.S.) 224, 57 and yet be liable in nominal damages S. E. 78, 10 Ann. Cas. 987, it was held only. No distinction was made in this

case between depositors who were Bank (1915) 52 Mont. 121, 155 Pac. traders and those who were not, as to 970; Ward v. State Bank (1916) 52 the rule of damages.

Mont. 328, 157 Pac. 573. In Nadel v. People's Bank (1916) 66 Nebraska. Bank of Commerce v. Pa. Super. Ct. 396, it was held that the Goos (1894) 39 Neb. 437, 23 L.R.A. plaintiff was entitled to recover sub- 190, 58 N. W. 84; First Nat. Bank v. stantial damages for the imputation Railsback Bros. (1899) 58 Neb. 248. on his financial credit caused by the 78 N. W. 512. refusal of the bank to honor his Oklahoma.-Weller v. Western State checks, when he had sufficient funds Bank (1907) 18 Okla. 478, 90 Pac. 877; in the bank to pay them. Whether the Commercial Nat. Bank v. Latham plaintiff was a trader does not appear (1911) 29 Okla. 88, 116 Pac, 197, Ann. from the opinion.

Cas. 1913A, 999.

Tennessee.-J. M. James Co. v. ConII. Check of trader.

tinental Nat. Bank (1900) 80 Am. St.

Rep. 857, and note, 105 Tenn. 1, 51 a. General rule.

L.R.A. 255, 58 S. W. 261. It is generally held that a bank is

England.-Rolin v. Steward (1854) liable in substantial damages to a de

14 C. B. 595, 139 Eng. Reprint, 245, 2 positor who is engaged in trade or business, for dishonoring his check

C. L. R. 759, 23 L. J. C. P. N. S. 148, 18

Jur. 536; Larios v. Gurety (1873) L. R. when he has sufficient funds in the

5 P. C. 346; Fleming v. Bank of New bank to pay the check, and special

Zealand [1900] A. C. 577, 69 L. J. C. P. damages need not be shown. Substan

N. S. 120, 83 L. T. N. S. 1, 16 Times tial damages are presumed to follow

L. R. 468. But see Marzetti v. Wilsuch breach of contract, as a néces

liams (1830) 1 Barn. & Ad. 415, 109 sary and natural consequence.

Eng. Reprint, 842, 9 L. J. K. B. 42, 3 Arkansas.--See the reported case

Eng. Rul. Cas. 746. (MCFALL V. FIRST NAT. BANK, ante,

"Such a recovery is a judicial recog940).

nition of the right, and an admonition California. Siminoff v. Jas. H.

that it cannot be invaded with impuGoodman & Co. Bank (1912) 18 Cal.

nity. The relation of banker and deApp. 5, 131 Pac. 939; Reeves y. First

. Nat. Bank (1912) 20 Cal. App. 508, positor is one of contract. The right

of the latter is that, to the extent of 129 Pac. 800.

his credit balance, subject thereto, his. Illinois, Schaffner V. Ehrman

checks drawn and presented accordir: (1891) 139 Ill. 109, 15 L.R.A. 134, 32

to the customs and usages of the busiAm. St. Rep. 192, 28 N. E. 917; Metro

ness shall be promptly honored. For politan Supply Co. v. Garden City Bkg.

a breach of this right an action for & T. Co. (1904) 114 Ill. App. 318.

damages will lie. If the depositor Kansas.-Winkler v. Citizens State

is a merchant or trader, it will be preBank (1913) 89 Kan. 279, 131 Pac.

sumed, without further proof, that 597.

substantial damages have been susLouisiana. — Spearing v. Whitney

v

tained.” Third Nat. Bank V. Ober Cent. Nat. Bank (1911) 129 La. 607,

(1910) 102 C. C. A. 178, 178 Fed. 678. 56 So. 548; Levin v. Commercial Ger

"It is true that no special damages mania Trust & Sav. Bank (1913) 133

were sought, and that there was no La. 492, 63 So. 601. Massachusetts. Wiley v. Bunker

claim that the refusal to pay the Hill Nat. Bank (1903) 183 Mass. 495,

checks was the result of ill will or 97 N. E, 655.

malice, but it does appear that the Minnesota.-Svendsen v. State Bank

plaintiffs were established in business, (1896) 64 Minn. 40, 31 L.R.A. 552,

and where this is so the great weight 58 Am. St. Rep. 522, 65 N. W. 1086; of authority is to the effect that the Peabody v. Citizens State Bank (1906) wrongful dishonor of a check raises 98 Minn. 302, 108 N. W. 272.

the presumption that the drawer has Montana. - Crites v. Security State sustained substantial damage, the

amount of which it is the duty of the

b. Illustrations, court or the jury to fix. Many of the In Siminoff v. Jas. H. Goodman & adjudicated cases liken this sort of

Co. Bank (1912) 18 Cal. App. 5, 121 suit to an action for slander of a per- Pac. 939, it was held that a bank was son in business, regarding it as a liable in substantial damages for a slander by acts, and hold that since refusal to honor the checks of a merthe improper refusal to pay the check chant depositor, who had sufficient of a depositor will invariably injure money in the bank to pay all the him in his business, and that as a rule checks presented, and that such a reit will be impossible to prove the fusal must be presumed to injure the amount of the damage, the law must credit of a depositor engaged in trade, of necessity – fitting itself to con- the fact that the depositor was a tradditions presume that he is entitled er taking the place of proof of special to reasonable compensation for the damage. injury." Reeves v. First Nat. Bank In Reeves v. First Nat. Bank (1912) (1912) 20 Cal. App. 508, 129 Pac. 800. 20 Cal. App. 508, 129 Pac. 800, it ap

"It is held by the authorities that peared that the defendant bank had in such a case the plaintiff's recovery refused to pay certain checks of the is not limited to nominal damages, but plaintiffs, who were merchants. It he is entitled to recover general com- was held that the bank was liable in pensatory damages [citing authori. tort in substantial damages for this ties). The case of Patterson v. Ma- wrongful refusal, and that damages rine Nat. Bank (1889) 130 Pa. 419, 17

would be presumed from the fact that Am. St. Rep. 778, 18 Atl. 632, seems

the plaintiffs were established in busi

ness. to place the right to recover more than

In Schaffner v. Ehrman (1891) 139 nominal damages in such a case on the

Ill. 109, 15 L.R.A. 134, 32 Am. St. Rep. ground of public policy, but the other

192, 28 N. E. 917, it was held that a cases place it rather on the ground

bank was liable in substantial damthat the wrongful act of the banker

ages to a depositor, who was a merin refusing to honor the check imputes chant, for a wrongful refusal to honor insolvency, dishonesty, or bad faith

his check. It was held that the plainto the drawer of the check, and has tiff need not show actual damages in the effect of slandering the trader in order to recover substantial damages his business. We are of the opinion in such a case, as a wrongful refusal to that the recovery of more than nomi- honor a check drawn on the bank by a nal damages can, on sound principle, person engaged in a mercantile busibe sustained on the latter ground, ness would be equivalent to a slander where the drawer of the check is a in the way of his trade, and the fact merchant or trader. To refuse to hon

that he was a trader would take the or his check is a most effectual way

place of proof of special damages. of slandering him in his trade, and it

In Metropolitan Supply Co. v. Garis well settled that to impute insolv

den City Bkg. & T. Co. (1904) 114 Ill.

App. 318, it was held that a bank was ency to a merchant is actionable per

liable in substantial damages to a se, and general damages may be re

corporation for a refusal to honor its covered for such a slander.” Svend

check, when the corporation had suffisen v. State Bank (1896) 64 Minn. 40,

cient funds in the bank to make pay31 L.R.A. 552, 58 Am. St. Rep. 522, 65 ment of the check. It was held that, N. W. 1086.

in such a case, nominal damages would “The best authorities support the not be a sufficient reparation for the rule that the jury may give such tem- injury sustained by the plaintiff in perate damages as they believe to be respect of its business credit, good reasonable compensation for the in- name, and reputation, the court sayjury which must necessarily result ing: “No reason is apparent why the from the act of the defendant.” Pea- law will not, in the case of a corporabody v. Citizens State Bank (1906) 98 tion as well as of an individual, preMinn, 302, 108 N. W. 272.

sume, without proof of special damages, that, by the dishonor of its check, wood dealer, although he had sufficient it has sustained special or substantial funds in the bank to make payment damages. While the wrong was unin- of the checks. It was held that, as the tentional, the refusal to pay was in- plaintiff was a trader, substantial tentional and without just excuse, and damages would be presumed from that the presumption of legal malice fol- fact, and judgment of the lower court lows."

for the plaintiff for $10,000 was afIn First Nat. Bank v. Kansas Grain firmed. Co. (1898) 60 Kan. 30, 55 Pac. 277, In Svendsen v. State Bank (1896) it was held that although a depositor 64 Minn. 40, 31 L.R.A. 552, 58 Am. had a right of action against a bank St. Rep. 522, 65 N. W. 1086, it was which had dishonored his checks, the held that the plaintiff, a merchant, award of only $2 as actual damage was entitled to recover substantial must be considered as being nominal damages for a wrongful refusal by the damages only, and therefore would not defendant bank to honor his check, be sufficient to carry an award of ex- without proof of special damages. It emplary damages of $200. It was, was held that the right of action in therefore, held that the judgment of such a case to recover compensatory the lower court as to exemplary dam- damages, without proof of actual ages must be reversed.

damage, was analogous to a slander of In Winkler v. Citizens State Bank a merchant in his trade, which was (1913) 89 Kan. 279, 131 Pac. 597, it actionable per se, as a refusal to honor appeared that the defendant bank had a check in such a case would impute refused payment of the plaintiff's insolvency, bad faith, or dishonesty check, although the plaintiff had an to the drawer of the check. amount in the bank sufficient to meet

In Peabody v. Citizens State Bank the check. The plaintiff had recov- (1906) 98 Minn. 302, 108 N. W. 272, ered actual and exemplary damages

it appeared that the plaintiff had an in the court below. It was held that,

account at the First Bank of Utica. He as there was no proof of malice or ill

drew a check against this account in will in the refusal to pay the check,

favor of a third person, and in the the amount of the judgment should be

ordinary course of business the check reduced by striking out the amount of

was delivered to the defendant bank. the exemplary damages.

The plaintiff's account was sufficient In Levin v. Commercial Germania

to meet the check. The assistant cashTrust & Sav. Bank (1913) 133 La.

ier of the defendant bank, Knapp, who 492, 63 So. 601, it appeared that the

was also a notary, took the plaintiff's plaintiff was a merchant and drew a

check, with many others, to the First check on the defendant bank, pay

Bank of Utica. The plaintiff's check ment of which was refused on the

not presented for payment. ground that the plaintiff had no ac

Knapp demanded payment of all the count with the bank. The plaintiff

checks, but did not actually present had more than a sufficient amount in

any for payment. The bank did not the bank to pay the check. It was

have sufficient cash on hand to meet held that the plaintiff, being a mer

all the checks, but had money in anchant or trader, was entitled to re

other bank, which

sent for. cover more than nominal damages for

Knapp refused to wait until this monthe refusal of the bank to honor his

ey arrived, and would not accept a check; but, as the plaintiff had re- check which he knew was good in covered $30 in the court below, it was payment. Before leaving the bank,

. held that he had been fully compen- Knapp gave the cashier a list of the sated.

names and amounts of the checks, but In Wiley v. Bunker Hill Nat. Bank

made no new demand for payment (1903) 183 Mass. 495, 97 N. E. 655, after the list was made. The money it appeared that the defendant bank was soon thereafter offered to Knapp had refused payment of several checks in payment of the checks, by a messenof the plaintiff, who was a coal and ger from the bank, but he refused to

was

was

accept it, and, although payment was - in jail for obtaining a tax receipt by several times thereafter tendered, he false pretenses, but he was shortly also refused such offers and protested thereafter released on

bail. The all the checks, including the plaintiff's. plaintiff sought to recover damages It was held that the bank was liable for the disgrace of the imprisonment, in substantial damages for wrongfully and the publication of it in the papers, protesting the plaintiff's check, as it and also for his loss of business standhad not been presented by the defend- ing and credit. It was held that the ant bank in good faith for payment, plaintiff might recover only those and payment had not been refused by damages which would ordinarily and the plaintiff's bank. It was held that, reasonably follow the dishonor of a as the plaintiff was a trader, he might check. It was therefore held that the recover damages without proving spe- judgment of the lower court must be cial injury.

reversed, for the reason that the plainIn Crites v. Security State Bank tiff had so intermingled the charges (1916) 52 Mont. 121, 155 Pac. 970, it and proof as to the arrest, imprisonwas held that the plaintiffs were en- ment, and publication, and what actitled to recover substantial damages count the newsboys gave of the ocfor the refusal of the defendant bank currence, that it was impossible for to pay their check, when there were the jury to ascertain the damages sufficient funds in the bank to meet which were solely traceable to the rethe check. Through an error, a de- fusal to pay the plaintiff's check. posit previously made by the plaintiffs In First Nat. Bank V. Railsback was credited to another depositor, Bros. (1899) 58 Neb. 248, 78 N. W. 512, and hence the plaintiff's account was it appeared that the bank had disapparently insufficient to meet the honored the plaintiff's check, he being payment. It was held that the plain- a merchant, although the plaintiff had tiffs were entitled to substantial dam- sufficient funds in the bank to pay it. ages without putting in proof of any It was held that the bank was liable in tangible loss, such damages being pre

general damages, though the plaintiff, sumed, as the plaintiffs were mer- from the nature of the case, was unchants; but were not entitled to

able to prove special damages or any recover any amount more than was nec

actual loss. essary to vindicate them for the possible imputation upon their solvency

In Weller v, Western State Bank and credit, and therefore the verdict

(1907) 18 Okla. 478, 90 Pac. 877, it of the jury was reduced from $500 to

was held that a bank was liable in $200. It is stated in the opinion, how

substantial damages for a refusal to ever, that the present rule in this class

honor a check when the depositor had of cases is that the damages are lim

sufficient funds to pay it. It was also ited to those actually proved.

held that it was not necessary that the In Ward v. State Bank (1916) 52

plaintiff should prove any damage to Mont. 328, 157 Pac. 573, it was held have been sustained, as it would be that the plaintiff, a merchant, was en

presumed that the dishonoring of a titled to recover substantial damages check would injuriously affect a merfrom a bank for a wrongful refusal to chant's credit. honor his check, and that it was not In Reinisch V. Consolidated Nat. necessary for the plaintiff to submit Bank (1911) 45 Pa. Super. Ct. 236, it any evidence of tangible loss.

was held that a bank was liable in In Bank of Commerce v. Goos (1894) substantial damages to a merchant for 39 Neb. 437, 23 L.R.A. 190, 58 N. W. refusing to honor his checks, though 84, it appeared that the plaintiff had there were not sufficient funds on drawn a check against his account at hand at the bank to meet all the checks the defendant bank which the bank presented. It appeared that seventeen refused to pay. The payee of the checks were presented for payment at check, who was the city treasurer, the same time, and it was held that then had the plaintiff arrested and put the bank should have paid as many