ALLISON V. FIRST NAT'L BANK, 1973-NMCA-083,
85 N.M. 283, 511 P.2d 769 (Ct. App. 1973)
CASE HISTORY ALERT: affected by
1973-NMSC-089
DONALD K. ALLISON, Plaintiff-Appellee,
Cross-Appellant
vs.
FIRST NATIONAL BANK IN ALBUQUERQUE, Defendant-Appellant,
Cross-Appellee
No. 1110
COURT OF APPEALS OF NEW MEXICO
1973-NMCA-083, 85 N.M. 283, 511 P.2d 769
June 06, 1973
Appeal from the District Court of Bernalillo County, Fowlie, Judge
Petition for Writ of Certiorari Granted July, 1973
COUNSEL
ROBERT M. ST. JOHN, REX D. THROCKMORTON, RODEY, DICKASON, SLOAN, AKIN & ROBB, Albuquerque, New Mexico, Attorneys for Appellant.
DALE WALKER, PETER GALLAGHER, GALLAGHER & WALKER, Albuquerque, New Mexico, Attorneys for Appellee.
JUDGES
SUTIN, Judge, wrote the opinion.
I CONCUR:
Ramon Lopez, J., Wood, Chief Judge, dissents
OPINION
{*284} SUTIN, Judge.
A. The statute of limitations did not run.
A cashier's check is a draft drawn by the bank upon itself which is accepted by the act of issuance.* * * A cashier's check is a primary obligation of the bank,* * * and is an obligation to pay which ordinarily cannot be countermanded. It is issued by an authorized officer of a bank, directed to another person, evidencing the fact that the payee is authorized to demand and receive from the bank, upon presentation, the amount of money represented by the check.* * * [Emphasis added]
A cashier's check is a bill of exchange, drawn by the bank upon itself, and is accepted by the act of issuance.* * * [Emphasis added]
The substance of a certificate of deposit and of bank drafts, cashier's checks, certified checks and money orders thus appear to be the same. Each is issued in consideration of the placing, or transfer or deposit of money or credit, in or to a bank. Each is a negotiable instrument pledging the credit of the bank to the holder. And in each case the relationship of debtor and creditor arises between the holder and the bank.
(2) A writing which complies with the requirements of this section is
(a) a "draft" ("bill of exchange") if it is an order;
* * * * * *
(c) a "certificate of deposit" if it is an acknowledgment by a bank of {*286} receipt of money with an engagement to repay it;
B. Plaintiff was entitled to a damages for defendant's wrongful dishonor of plaintiff's checks.
6. That on September 30, 1968, defendant bank refused to honor the above numbered cashier's checks.
{*287} 7. That defendant's dishonor of said checks was wrongful in that the checks had not been paid and were not void. [Emphasis added]
8. The plaintiff has not shown any consequential loss or damage resulting to him by reason of the refusal of First National Bank in Albuquerque to pay in 1968 the cashier's checks issued to him in March, 1953, and is entitled to actual damages of $5,000.00.
A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. When the dishonor occurs through mistake liability is limited to actual damages proved. If so proximately caused and proved damages may include damages for an arrest or prosecution of the customer or other consequential damages. Whether any consequential damages are proximately caused by the wrongful dishonor is a question of fact to be determined in each case. [Emphasis added]
Damages for Wrongful Dishonor. A payor bank is liable to its customer for the damages proximately caused by the wrongful dishonor of an item. The damages may include consequential damages (such as those sustained in connection with an arrest and prosecution), provided they are proximate damages. Whether the consequential damages are proximately related to the wrongful dishonor is a question of fact and not of law.
I CONCUR:
Ramon Lopez, J., Wood, Chief Judge, dissents
DISSENT
WOOD, Chief Judge (dissenting).
A. Disagreement with the majority opinion.
B. The limitation period had run under the UCC.
{*289} {41} No time for payment is stated in the five cashier's checks involved. They were payable on demand. Section 50A-3-108, N.M.S.A. 1953 (Repl. Vol. 8, pt. 1).
{42} A cashier's check is frequently defined in terms of a bill of exchange. A cashier's check has also been referred to as analogous to a negotiable note payable on demand. See State of Pa. v. Curtiss Nat. Bank of Miami Springs, Fla., 427 F.2d 395 (5th Cir. 1970); Walker v. Sellers, 201 Ala. 189, 77 So. 715 (1918); 2 Anderson, Uniform Commercial Code § 3-104:18 (2d Ed. 1971). Defendant issued the cashier's checks; thus, it is either an acceptor or maker of the cashier's checks.
{43} Section 50A-3-122, N.M.S.A. 1953 (Repl. Vol. 8, pt. 1) provides a cause of action against a maker or acceptor of a demand instrument accrues "... upon its date or, if no date is stated, on the date of issue." The date of issue was March 7, 1953; demand for payment was in 1968. Under the UCC the limitation period of § 23-1-3, supra, had run.
{44} 2 Anderson, supra, § 3-122:5(2) states: "The statute of limitations as to an action against a certifying bank or bank issuing a cashier's check runs from the date of the check, or if undated, from the date of issue, rather than from the making of a demand for payment." Under the UCC, special rules apply to certificates of deposit. See 2 Anderson, supra, § 3-122:5(3) and § 3-122:7; I Hawkland, A Transactional Guide of the Uniform Commercial Code § 2.050102 (1964).
C. The UCC is not applicable.
{45} The UCC was enacted in New Mexico in 1961 and became effective at the end of 1961. Laws 1961, ch. 96, § 10-101. Laws 1961, ch. 96, § 10-102(2) provides that transactions validly entered into before the effective date, "* * * and the rights, duties and interests flowing from them remain valid thereafter and may be terminated, completed, consummated or enforced as * * * permitted by any statute * * * appealed by this Act as though such repeal * * * had not occurred." New Mexico's NIL (Negotiable Instruments Law) was repealed by Laws 1961, ch. 96, § 10-102(1). Thus the applicable statute is the NIL, and not the UCC.
D. The NIL.
{46} The NIL does not expressly refer to cashier's checks. Sections 50-1-1 to 50-5-7, N.M.S.A. (Orig. Vol. 8). The NIL does refer to bills of exchange (§ 50-3-1, supra), and promissory notes (§ 50-4-1, supra). Certified checks are referred to in terms applicable to bills of exchange. See §§ 50-4-4 and 50-4-5, supra. Section 50-1-17(V), supra, states: "Where the instrument is so ambiguous that there is doubt whether it is a bill or note, the holder may treat it as either at his election. * * *"
{47} Since a cashier's check has been defined as a bill of exchange, but also considered analogous to a promissory note, I would consider that plaintiff had an election under § 50-1-17(V), supra. There being nothing indicating such an election, I consider the cashier's checks under both categories - as bills of exchange and as promissory notes.
{48} In doing so, it should be kept in mind that the cashier's checks were also demand instruments under the NIL. Section 50-1-7, supra. It should also be kept in mind that defendant was primarily liable on the cashier's checks it issued. Perry v. West, 110 N.H. 351, 266 A.2d 849 (1970); 2 Anderson, supra, § 3-104:18.
{49} In Dean v. Iowa-Des Moines Nat. Bank & Trust Co., 227 Iowa 1239, 281 N.W. 714 (1938) modified on other grounds, 227 Iowa 1239, 290 N.W. 664 (1940), a cashier's check was treated as a bill of exchange. Dean held that defendant was primarily liable; that the liability was created "from and after issuance;" that at all times after issuance there was a duty to pay. "So far as the statute of limitations is concerned a cause of {*290} action had accrued." Atlantic Nat. Bank of West Palm Beach v. Havens, 45 So.2d 342 (Fla. 1950), holds that the statute of limitations on cashier's checks begins to run on the date of issue. Under these decisions, a cause of action on cashier's checks treated as bills of exchange accrued when the checks were issued in 1953.
{50} Schoonover v. Caudill, 65 N.M. 335, 337 P.2d 402 (1959) states:
"... the statute of limitations begins to run against the ordinary demand note from the date of its execution, rather than from the time of demand...."
Under Schoonover, if treated as promissory notes, a cause of action accrued on the cashier's checks when issued in 1953.
{51} Under either theory permitted by § 50-1-17(V), supra, the statute of limitations had run.
{52} 2 Anderson, supra, § 3-122:1, refers to the "Official Code Comment" concerning what is our § 50A-3-122, supra. This comment is that the statutory provision for accrual of causes of action is new. This new provision, however, "* * * follows the generally accepted rule that actions may be brought on a demand note immediately upon issue, without demand, since presentment is not required to charge the maker under the original Act [the NIL] or under this Article.* * *"
{53} Hawkland, supra, states:
"Since presentment is not necessary to charge persons who are primarily liable on negotiable instruments, the statute of limitations starts to run in favor of the maker of a promissory note and the acceptor of a draft or check the moment these instruments mature. In the case of a demand instrument, the statute of limitations starts to run at the moment the paper is issued, because no demand for payment is needed to charge primary parties.
These basic rules have been continued by...." § 50A-3-122, supra. [My emphasis].
{54} The above texts are to the effect that the UCC provisions for accrual of causes of action are, generally speaking, no more than a continuation of basic or general rules applicable under the NIL.
{55} On the basis of the above cited cases and texts, I would hold the statute of limitations began to run on the cashier's checks on the date of issue.
E. Cashier's checks as certificates of deposit.
{56} I have previously pointed out that a special rule applies to certificates of deposit under the UCC. New Mexico adopted a special rule for certificates of deposit in 1901. Bank of Commerce v. Harrison, 11 N.M. 50, 66 P. 460 (1901) held the statute of limitations does not begin to run on a certificate of deposit until there has been a presentment and demand for payment. See also Luna v. Montoya, 25 N.M. 430, 184 P. 533 (1919).
{57} Plaintiff would apply the rule for a certificate of deposit to a cashier's check. This contention is based on the similarity of the instruments. A cashier's check is similar to a promissory note; a certificate of deposit is similar to a promissory note; thus, a cashier's check and a certificate of deposit are similar. See 2 Anderson, supra, §§ 3-104:18 and 3-104:25.
{58} My answer to this contention is: (1) Bank of Commerce v. Harrison, supra, adopted the special rule for certificates of deposit on the basis that the certificates were similar to deposits of money. Harrison, supra, did not involve and did not consider, cashier's checks. (2) A special rule is applied to certificates of deposit because they are "* * * regarded by most depositors as a mere receipt or a savings-account passbook.* * *" Hawkland, supra. (3) The record in this case does not establish that cashier's checks are considered similar to deposits; plaintiff did not so testify and there is no evidence as to customary usage as to cashier's checks. 2 Anderson, supra, § 3-104:18 states cashier's checks are "* * * frequently taken out by parties who desire to have the money represented by the check in that form rather than to carry cash.* * *" Further, the bank's obligation "* * * is like that of the maker of a demand promissory note." 2 Anderson, supra, § 3-104:18. Thus, there {*291} is no basis for equating the purpose of a cashier's check with the purpose of a certificate of deposit.
{59} On the basis of the foregoing, I dissent.