Liberty National Bank & Trust Co. of Louisville v. Pep Services, Inc.

HOWERTON, Judge. The appellant, Liberty Bank, appeals from a summary judgment dismissing its claim against Pep Services, Inc. for transactional errors between the bank’s teller and an employee of Pep while the employee was obtaining cashier’s checks for Pep payable to Gulf Oil Corporation. The facts are not disputed, and the basic question is who, as a matter of law, must bear the loss as between Liberty Bank and Pep. Pep had an agreement with Gulf Oil Company to staff Gulf’s gasoline stations, collect the money from the individual stations, and send that money to Gulf. In order to facilitate this agreement Pep worked out an arrangement with Liberty to deposit the money there and receive cashier’s checks payable to Gulf. The problem began when an agent for Pep presented various receipts totaling $3,733.43 to Liberty. Liberty then gave the agent five separate cashier’s checks payable to Gulf totaling $3,733.43, plus an additional check to Gulf for the amount of $3,733.43. Only $3,733.43 was deposited at that time. Gulf was given the entire sum of $7,466.86. Less than a month later, a Pep employee deposited with Liberty $1,798.80, and the bank issued two cashier’s checks for $1,798.80 each. Gulf received both checks and credited Pep’s account for $3,597.60. The court found that the total amounts paid to Gulf were due Gulf. For purposes of establishing the facts in this case, both parties apparently assume that the bank employee was negligent and the Pep employee, or employees, pocketed the difference between the amount given to the bank and the amount issued and given to Gulf in the cashier’s checks. Both parties submitted the case to the trial court for summary judgment. Liberty’s argument is that it mistakenly issued additional cashier’s checks for amounts it had not received, so that Gulf and Pep were unjustly enriched; therefore, equity requires that Pep return the money. Liberty cites Allen Lumber Company v. Howard, 254 Ky. 778, 72 S.W.2d 483 (1934). No one disputes that Liberty mistakenly wrote additional checks for money it had not received. However, Pep’s account with Gulf Oil Company is now balanced. Therefore, if Pep were to return the additional money to Liberty, Pep would suffer a loss. There is no indication that Pep’s employee was only given one-half of the amount due Gulf, and that the employee cheated the bank for and on behalf of the employer. The accepted fact is that both Liberty and Pep are innocent parties. Because of the mistake made by the bank’s teller in issuing the additional checks for money not received, an agent of Pep was afforded an opportunity to abscond with money that was not deposited. As between two innocent parties, equity also provides the principle that “the decision should be against the party who has the weaker equity or the one who was in better position by reasonable diligence or care to have averted the loss which now must be borne by the one or the other.” Louisville Asphalt Company v. Cobb, 310 Ky. 126, 129, 220 S.W.2d 110, 112 (1949). The trial court applied this principle and granted a summary judgment in favor of Pep. We are in agreement with the trial court’s reasoning that “[t]o hold Pep Services, Inc. liable would call upon it to respond for the bank’s error or negligence.” There being no genuine issues of material fact in dispute, and the trial court having applied the correct law, we affirm the summary judgment granted by the trial court. CR 56. REYNOLDS, J., concurs.