Abramowitz v. Bank of America

Plaintiff instituted this action to recover damages for the wrongful dishonor of a check drawn by him upon his account with the defendant bank at a time when he had standing to his credit an amount in excess of the face of the' check. Prom a judgment in favor of plaintiff, defendant appeals, and for the reasons hereinafter stated, we are affirming the judgment.

The check in question was drawn in favor of the vendor under a conditional sales contract, pursuant to which plaintiff

The precise question with which we are confronted is one of first impression in this state, and the authorities elsewhere are neither harmonious nor particularly helpful. (See annotations in 4 A.L.R. 947 ; 13 A.L.R. 305 ; 34 A.L.R. 205 ; 58 A.L.R. 732 ; 126 A.L.R. 206 ; 153 A.L.R. 1035 .)

The rule at common law was that substantial damages—“temperate in amount”—were recoverable against a bank for wrongfully dishonoring a check of its depositor; but a distinction was made between traders and nontraders, in that in the case of the former it was presumed, without further proof, that substantial damages had been sustained, “the rule proceeding upon the fact commonly recognized that the credit of a person engaged in such a calling is essential to the prosperity of his business and that the dishonoring of his checks was plainly calculated to impair such credit and to inflict a most serious injury.” (8 Cal.Jur.2d p. 52, § 88; see also 9 C.J.S., p. 778, § 365.) And such was the rule in this state (Siminoff v. Jas. H. Goodman & Co. Bank (1912), 18 Cal.App. 5 , 11 et seq. [ 121 P. 939 ]) until the enactment in 1917 of Civil Code, section 3320, which reads as follows: “No bank shall be liable to a depositor because of nonpayment through mistake or error, and without malice, of a check which should have been paid unless the depositor shall allege and prove actual damage by reason of such nonpayment and in such event the liability shall not exceed the amount of damage so proved. ’ ’

This statute is substantially identical with that formulated and sponsored by the American Bankers’ Association, and which has been adopted in a number of states (1 Paton’s Digest (1940 ed.) pp. 1117-1118), the purpose and effect of which were to abolish the distinction obtaining at common law

The problem, therefore, is as to what is comprehended by the words “actual damage” as used in section 3320. Relevant to the solution of this problem is a determination as to the character of the action here involved. Defendant’s argument proceeds upon the thesis that the action is only upon contract, but we do not agree. While it is true that plaintiff might have brought his action upon contract, he was not restricted to this remedy. The prevailing view and that obtaining in this state is that in such circumstances he may, as plaintiff has done here, sue for damages for the injury resulting from the refusal to pay the check, in which case the action sounds in tort. (See Allen v. Bank of America, supra, 58 Cal.App.2d 124 , 127, and compare Rubino v. Utah Canning Co. (1954), 123 Cal.App.2d 18 , 23-24 [ 266 P.2d 163 ].)

From the foregoing, it would appear to necessarily follow that the rule of damages applicable is that prescribed by Civil Code, section 3333, unless it be that Civil Code, section 3302, which provides that “The detriment caused by the breach of an obligation to pay money only, is deemed to be the amount due by the terms of the obligation, with interest thereon,” is controlling here. In Hartford v. All Night & Day Bank (1915), 170 Cal. 538 , 540-541 [ 150 P. 356 , L.R.A. 1916A 1220], decided prior to the enactment of section 3320, it was held that section 3302 prescribes the measure of recovery in cases of this character, but this view was expressly rejected in Siminoff v. Jas. H. Goodman & Co. Bank, supra, 18 Cal.App. 5 , 14, which although decided prior to the Hartford case and a petition for hearing was denied by the Supreme Court, is not mentioned in the latter case. And in Allen v. Bank of America, supra, 58 Cal.App.2d 124 , 131, it was held that “recoverable items of damage” were pleaded in a complaint alleging that by reason of the wrongful dishonor of plaintiff’s cheek, business transactions which were being negotiated by plaintiff with others “which would have returned to him gains and profits” failed of consummation. (P. 126.) Whatever may have been the rule prior to the enactment of section 3320, we are of the view that section 3302 is without application to actions of the character here

While, there are decisions in this state which under take to declare that the measure of damages for breach of contract are substantially the same as for tort (Siminoff v. Jas. H. Goodman & Co. Bank, supra, 18 Cal.App. 5 , 15; Ruzanoff v. Retailers Credit Assn. (1929), 97 Cal.App. 682 , 687 [ 276 P. 156 ]), this statement is not accurate, for as the contrasting language of sections 3300 and 3333 clearly indicates, and as our Supreme Court has observed, there is a recognized distinction between the measure of damages in tort cases and that obtaining in actions for breach of contract, in that damages not even anticipated are recoverable in' tort while only such damages as were reasonably contemplated by the parties at the time of entering into the agreement are recoverable for a breach thereof. (Hunt Bros. Co. v. San Lorenzo Water Co. (1906), 150 Cal. 51 , 56 [ 87 P. 1093 ]; Bartlett v. Federal Outfitting Co. (1933), 133 Cal.App. 747 , 750-751 [ 7 L.R.A.N.S. 913 ]; Zvolanek v. Bodger Seeds, Ltd. (1935), 5 Cal.App.2d 106 , 108 [ 42 P.2d 92 ]; Lacy Mfg. Co. v. Gold Crown Min. Co. (1942), 52 Cal.App.2d 568 , 574 [ 126 P.2d 644 ].) We find it necessary to emphasize this distinction because of the insistence of defendant that damages for the loss of plaintiff’s automobile are not recoverable because they may not be said to have been reasonably contemplated by the parties at the time the bank account was opened, as well as its bearing upon the discussion which follows.

We have concluded that the rule of damages applicable here is that prescribed by section 3333, Civil Code, and that the trial court was warranted in finding that the loss of the automobile resulted proximately from the wrongful dishonor of plaintiff’s cheek. “ [T]he issue of proximate cause is essentially one of fact” (Mosley v. Arden Farms Co. (1945), 26 Cal.2d 213 , 219 [ 157 P.2d 372 , 158 A.L.R. 872 ]) except where but one conclusion may reasonably be drawn from the facts. (Gallichotte v. California Mut. Bldg. & Loan Assn. (1935), 4 Cal.App.2d 503 , 509 [ 41 P.2d 349 ].) The latter is not the situation here.

We are confirmed as to the correctness of this view by a reading of the Supreme Court’s decision in Union Const. Co. v. Western Union Tel. Co. (1912), 163 Cal. 298 , 311-312 [ 125 P. 242 ]. That was an action for damages for delay in delivering a telegram. The evidence disclosed that as a result

Defendant, however, contends that a different result is dictated by Hartford v. All Night & Day Bank, supra, 170 Cal. 538 , and Bearden v. Bank of Italy (1922), 57 Cal.App. 377 [ 207 P. 270 ], wherein it is held that the arrest of the plaintiff for the offense of issuing a check without sufficient funds was not the proximate result of the defendant bank’s wrongful refusal to honor the check. As previously noted, however, the Hartford case was decided prior to the enactment of section 3320, and the District Court of Appeal, in the Bearden case, seemingly was not mindful of the fact that section 3320 had been enacted in the meantime, for no mention thereof appears in its opinion. Moreover, it would appear that both courts assumed that the action before it was one in contract, for otherwise section 3302 could in no event be applicable as it was there held. We need not, however, undertake to consider the soundness of the conclusion there reached. See, however, Collins v. City Nat. Bank & Tr. Co. (1944), 131 Conn. 167 [ 38 A.2d 582 , 153 A.L.R. 1030 ] in view of section 3320, which is a legislative recognition that a depositor whose check is wrongfully dishonored may thereby sustain “actual damage” beyond the amount of the check. The loss of plaintiff’s automobile was no less the proximate result of the dishonor of the check than the detriment occasioned by the delay in the delivery of the telegram which was held recoverable in Union Const. Co. v. Western Union Tel. Co., supra. Indeed, unless damages in cases of this character are to- be confined to the amount of the cheek, if the detriment occasioned by the loss of property proximately resulting from the wrongful dishonor of a check is not recoverable as “actual damage,” section 3320 is in effect rendered meaningless, for it is difficult to conceive of a situation wherein a loss could be sustained more directly related to the dishonor of a check than that sustained by plaintiff here.

The judgment is affirmed.

Bishop, Acting P. J., concurred.

Respondent’s petition for a rehearing denied on March 22, 1955.