Svendsen v. State Bank

CANTY, J. During the time covered by the transactions hereinafter mentioned plaintiff was carrying on a mercantile business in Duluth, and the defendant was carrying on a banking business in that city. Plaintiff was a customer of the defendant, and kept a deposit in its bank, which he was in the habit of drawing out by means of checks, and which was held by the bank for the purpose •of paying such checks. He had drawn on the bank a check for $42.15 in favor of one firm, and another for $54.60 in favor of another firm. These checks came through the clearing house, and were on October 20, 1893, presented for payment to the bank, and payment was refused for want of funds, though the plaintiff then had on deposit in the bank, subject to his check, the sum of $235.22. The checks were returned through the clearing house to the holders thereof. The reason why the bank refused to honor the checks was that it had by mistake charged up to plaintiff’s account a note for [42] |300, made by him, and held by it, which was not yet due, but which the bank by mistake supposed was due. This action was brought to recover damages for the refusal to pay the checks. Plaintiff did not allege or prove any special damages, but claimed to be entitled to recover substantial general damages. The court below on the trial ruled against him on this point, and ordered a verdict in his favor for nominal damages, to which he excepted, and from an order denying a new trial he appeals. 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. Rolin v. Steward, 14 C. B. 595; Schaffner v. Ehrman, 139 Ill. 109, 28 N. E. 917; Bank of Commerce v. Goos, 39 Neb. 437, 58 N. W. 84; Patterson v. Marine Nat. Bank, 130 Pa. St. 419, 18 Atl. 632; 3 Am. & Eng. Enc. Law, 225; 1 Sutherland, Dam. § 77. The ca.se of Patterson v. Marine Nat. Bank, supra, 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. Townshend, Sland. & L. § 191; Odger, Libel & S. 80 (78). . Respondent’s position that an action of tort cannot be maintained in such a case as this, and that plaintiff’s only remedy is an action on contract, in which only nominal damages can be recovered, is not sustained by the authorities. The case of Marzetti v. Williams, 1 B. & Ad. 415, cited by him, was an action in tort. The amount of the verdict is not reported, but it is very evident that it was only for a nominal amount, and the only question before the court was whether or not the defendant was entitled to a nonsuit because the action should have been brought [43] on contract, not in tort. The court held against the defendant on that point, and what is said beyond this is merely obiter, and was so regarded in the subsequent case of Rolin v. Steward, supra. In Prehn v. Royal Bank, L. R. 5 Exch. 92, the only question was whether plaintiffs -were entitled to recover of the bank certain sums which they had paid to save their credit by procuring money elsewhere-to pay bills drawn by them on the bank, and to prevent the bills-from going to protest after the bank had notified them that it would not pay these bills, although it had funds in its hands for that purpose. It was held that they could recover the full sum so paid by them to preserve their credit, and the authority of Rolin v. Steward was expressly recognized. The case of Brooke v. Tradesmen’s Nat. Bank, 69 Hun, 202, 23 N. Y. Supp. 802, was an action by the receiver of an insolvent whose check had been wrongfully dishonored by the bank. The plaintiff was forced to concede that he could not maintain an action of tort, or recover any damages but such special damages as he alleged and could prove, in an action for breach-of a contract. These are all the cases cited which have any bearing on the case. These are the only questions raised worthy of consideration. It necessarily follows from the foregoing conclusions -that the order appealed from must be reversed. So ordered.