Case Title: Willard Given & Associates, P.C. v. First Wyoming Bank-East Cheyenne

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1985-09-05T00:00:00Z

Document:
Willard Given & Associates, P.C. v. First Wyoming Bank-East Cheyenne1985 WY 131706 P.2d 247Case Number: 84-306Decided: 09/05/1985WILLARD GIVEN & ASSOCIATES, P.C., WILLARD W. GIVEN AND JAMES B. GIVEN, APPELLANTS (PLAINTIFFS), 

v. 

FIRST WYOMING BANK-EAST CHEYENNE, APPELLEE (DEFENDANT AND THIRD-PARTY PLAINTIFF), 

HAROLD WALTERS AND JANICE WRIGHT, (DEFENDANTS AND THIRD-PARTY PLAINTIFFS). 

ROBERT LARSON, AN INDIVIDUAL, AND CHARLES HUNTER, AN INDIVIDUAL, (THIRD-PARTY DEFENDANTS).
Supreme Court of Wyoming
WILLARD GIVEN & 
ASSOCIATES, P.C., WILLARD W. GIVEN AND JAMES B. GIVEN, APPELLANTS (PLAINTIFFS), 

v. 

FIRST WYOMING BANK-EAST CHEYENNE, APPELLEE (DEFENDANT AND THIRD-PARTY 
PLAINTIFF), 

HAROLD WALTERS AND JANICE 
WRIGHT, (DEFENDANTS AND THIRD-PARTY PLAINTIFFS). 

ROBERT LARSON, AN 
INDIVIDUAL, AND CHARLES HUNTER, AN INDIVIDUAL, (THIRD-PARTY 
DEFENDANTS).

Rehearing Denied 
September 30, 1985.

 
 
Appeal from the District 
Court, LaramieCounty, Gary P. Hartman, 
J.

 
 
John J. Maier, 
Torrington, and James A. Stemmler, member in good standing, State Bar of 
Missouri, St. Louis, Missouri, signed the brief on behalf of appellants; oral 
argument by Mr. Stemmler.

John C. Patton 
and Royann Fransen of Carmichael, McNiff & Patton, Cheyenne, signed the 
brief on behalf of appellee First Wyoming Bank-East Cheyenne; oral argument by 
Mr. Patton.

A brief was 
filed, signed by Kenneth G. Vines of Vines, Rideout, Gusea & White P.C., 
Cheyenne, on 
behalf of third-party defendants.

Before THOMAS, C.J., and 
ROSE, ROONEY, BROWN and CARDINE, JJ.

ROONEY, 
Justice.

[¶1.]     This appeal is from a 
judgment in favor of appellee-defendant after a trial to the court. 
Appellants-plaintiffs instituted the action against appellee1 for failure to honor a check drawn 
on the account of appellant Willard Given & Associates, P.C. (hereinafter 
referred to as "WGA") upon which the payee was altered and for failure to honor 
it when presented a second time personally by appellant James B. Given for the 
purpose of obtaining a cashier's check.2 Appellants inartfully word the 
issues on appeal: 

1. "DID THE TRIAL COURT 
ERR IN HOLDING THAT FAILURE OF CONSIDERATION WAS A GOOD DEFENSE OF DEFENDANT 
BANK [APPELLEE] REGARDING ITS REFUSAL TO HONOR ITS CASHIER'S CHECK, SINCE 
FAILURE OF CONSIDERATION IS AN AFFIRMATIVE DEFENSE WHICH WAS NOT PLEADED BY 
DEFENDANT BANK [APPELLEE]?"

2. "DID THE TRIAL COURT 
ERR IN HOLDING THAT FAILURE OF CONSIDERATION WAS A GOOD DEFENSE OF DEFENDANT 
BANK [APPELLEE] REGARDING ITS REFUSAL TO HONOR ITS CASHIER'S CHECK, SINCE 
FAILURE OF CONSIDERATION IS AN AFFIRMATIVE DEFENSE WHICH WAS NOT PROVED BY 
DEFENDANT BANK [APPELLEE]?"

[¶2.]     We 
affirm.

PLEADING FAILURE OF 
CONSIDERATION

[¶3.]     As already noted, the 
complaint was premised on failure to honor a check drawn on the account of WGA 
when presented to appellee on two occasions, not the failure to honor a 
cashier's check, i.e., a check drawn on the account of appellee bank itself. 
Although the evidence reflected that appellee had indicated that a cashier's 
check would be issued to Given or to the Equality State Bank upon the second 
presentation, the cashier's check never was issued3 and therefore the refusal 
complained of was the refusal to issue it as promised rather than any refusal to 
honor the cashier's check. The complaint did not allege a breach of contract to 
which an affirmative defense could properly be made.

[¶4.]     Evidence concerning the 
promise to issue the cashier's check and the question of consideration was 
presented and received at trial without objection, and the court considered the 
case with reference thereto. Rule 15(b), W.R.C.P., provides in pertinent 
part:

"(b) Amendments to conform to the evidence. - 
When issues not raised by the pleadings are tried by express or implied consent 
of the parties, they shall be treated in all respects as if they had been raised 
in the pleadings. Such amendment of the pleadings as may be necessary to cause 
them to conform to the evidence and to raise these issues may be made upon 
motion of any party at any time, even after judgment; but failure so to amend 
does not affect the result of the trial of these issues. * * 
*"

[¶5.]     The record reflects 
full exploration of the promise and consideration by the parties, and none of 
them were prejudiced by the failure to join issue thereon in the pleadings, as 
these issues were tried by implied or express consent of the parties and treated 
as if raised in the pleadings. Title 
Guaranty Company of Wyoming v. Midland Mortgage 
Company, Wyo., 451 P.2d 798, 801 
(1969).

PROVING FAILURE OF 
CONSIDERATION

[¶6.]     Again, this issue as 
worded by appellants is not accurate in that the cashier's check was never 
issued and therefore could not be dishonored. WGA had an account with appellee 
upon which checks could be drawn by appellant Willard W. Given, appellant James 
B. Given, Robert Larson and Charles Hunter. When an operating agreement between 
WGA on the one side and Larson and Hunter on the other side was terminated, 
appellant James B. Given wrote a check, presigned by Willard W. Given, on the 
account in the amount of $10,324.57 with appellee as payee. He deposited it in a 
WGA account at the Equality State Bank on August 16, 1982, after scratching out 
the payee "First Wyoming Bank East" and writing above it "Equality State Bank." 
When the check was presented to appellee, it refused to honor the check, 
stamping it "refer to maker." On August 20, 1982, appellant James B. Given 
learned that the check had not been honored and asked appellee for an 
explanation. He was told that if he again presented the check, appellee would 
exchange it for a cashier's check. He then secured the check and again presented 
it to appellee.

[¶7.]     In the meantime, Hunter 
and Larson learned of the attempt by Willard W. Given and James B. Given to 
withdraw the $10,324.57 from the account and requested appellee to stop payment 
from the account. Appellee refused to do so unless a lawsuit was filed, 
whereupon Hunter and Larson did file an action against WGA to prevent payment 
from the account. Appellee filed an interpleader for a court order concerning 
disposition of the funds in the account; the funds were ultimately distributed 
pursuant to a settlement of the interpleader petition. Since then an accounting 
between Willard W. Given and James B. Given on one side and Hunter and Larson on 
the other side over termination of the operating agreement between them has been 
accomplished and settled in another lawsuit.

[¶8.]     Appellants do not 
contest, on appeal, the district court's holding that appellee's refusal to pay 
the altered check did not constitute a wrongful dishonor.4 Rather, in the appeal they contend 
the court erred in not finding the bank liable for refusal to issue the 
cashier's check. More specifically, appellants complain that appellee did not 
sufficiently prove failure of consideration to justify the refusal to issue the 
cashier's check.

[¶9.]     When appellee agreed 
with James B. Given to issue a cashier's check, it was with the obvious 
expectation that the WGA account would be debited for the amount of the check. 
When the joint signatories of the account disagreed as to the disposition of the 
funds in the account, which disagreement resulted in a lawsuit, appellee was 
placed in the position of potential liability regardless of which of the two 
alternatives it followed. If it issued the cashier's check and charged the 
account (making sure that the altered check was returned without payment), 
Hunter and Larson could contend that appellee acted improperly in the face of 
their lawsuit, and in the face of their stop-payment order against the check 
with an altered payee.5 If it failed to issue the cashier's 
check, appellants could contend, as they do in this action, that appellee's 
failure caused damage to them. Appellee did that normally done under such 
circumstances when it interpleaded the matter in the pending 
lawsuit.

[¶10.]  The disposition of the funds in the WGA 
account under the settlement eliminated the consideration contemplated for the 
issuance of the cashier's check. There was no other available money for payment 
of it. Therefore, the consideration for the issuance of the cashier's check as 
contemplated when appellee agreed to issue it was no longer available. Thus, the 
refusal to issue the cashier's check was justified. A contract must be supported 
by consideration to be valid and legally enforceable, 17 C.J.S. Contracts, § 71; 
Miller v. Miller, Wyo., 664 P.2d 39, 40 
(1983).

[¶11.]  The trial court reached this result in a 
different fashion, but we can affirm the decision for any proper reason 
appearing in the record. Valentine v. 
Ormsbee Exploration Corporation, Wyo., 665 P.2d 452 (1983). The trial court 
accepted an exception recognized by some courts that, absent estoppel, a bank 
may stop payment on its cashier's check where it was issued without 
consideration and where it has its own defense, not that of the customer. The 
court then concluded that

"* * * if a bank may stop 
payment on a cashier's check under certain circumstances, it could refuse to 
issue the same after agreeing to do so, when these same circumstances 
arose."

[¶12.]  We do not believe it necessary in this 
case to determine the propriety of stopping payment on a cashier's check which 
has been issued, leaving that determination for another day and another 
case.

[¶13.]  The simple situation in this case is that 
there was no money available to pay for the cashier's check, and the appellee 
bank had no obligation to issue it without receiving the contemplated 
consideration. The uncontradicted evidence established the fact that the money 
contemplated to be the consideration for issuance of the cashier's check was no 
longer available.

[¶14.]  Affirmed.

1 Two of appellee's 
officers were also named defendants but were dismissed from the case by 
appellants at the conclusion of the trial. Issues relative to third-party 
defendants were not appealed.

2

"A cashier's check is a 
bill of exchange, drawn by the bank upon itself, and is accepted by the act of 
issuance. While the only apparent basic or factual difference between a 
cashier's check and the ordinary check is that the ordinary check is drawn on 
one other than the drawer, while in a cashier's check both the drawer and the 
drawee are the same, there are certain differences, some radical, in the 
incidents and consequences of the two types of checks. A cashier's check is a 
primary obligation of the bank, rather than the depositor, as in the case of an 
ordinary check, and a promise to pay which ordinarily cannot be countermanded. 
It is issued by the 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. Cashier's 
checks, from their peculiar character and general use in the commercial world, 
are regarded substantially as the money which they represent, a rule that is not 
extended to ordinary checks of the depositor drawn on his bank." 10 Am.Jur.2d 
Banks § 544 (1963).

"A cashier's check, since 
it is merely a bill of exchange drawn by a bank upon itself and is accepted in 
advance by the act of its issuance, is not subject to countermand like an 
ordinary check; the relations of the parties to such an instrument are analogous 
to those of the parties to a negotiable promissory note payable on demand. Thus, 
since a cashier's check is presumably purchased for a sufficient consideration, 
it is ordinarily beyond the power of the purchaser or the bank issuing it to 
stop payment thereon. Once the cashier's check is negotiated to a holder in due 
course, the credit and resources of the payee are no longer primarily involved; 
it is then a primary obligation of the bank, and upon presentment of the check 
for payment, the bank must honor the check. * * *" 10 Am.Jur.2d Banks § 643 
(1963).

3 Section 34-21-302(a), 
W.S. 1977 (U.C.C. § 3-102(1)(a) (1977)), reads in pertinent 
part:

"(a) In this article 
unless the context otherwise requires:

"(i) `Issue' means the 
first delivery of an instrument to a holder or a remitter;" (Emphasis 
added.)

"This article" 
refers to Article 3, Commercial Paper, of the U.C.C. Section 34-21-101 et seq., 
W.S. 1977.

4 The district court 
referred to § 34-21-363(a), W.S. 1977, which recites when an instrument is 
dishonored, and to § 34-21-366, W.S. 1977, which lists evidence creating a 
presumption of dishonor; and it quoted the following from the official comment 
to § 3-510 of the U.C.C. (§ 34-21-366, W.S. 1977):

"`. . . [T]he provision 
only applies where the stamp or writing states reasons for refusal which are 
consistent with dishonor. Thus the 
following reasons for refusal are not evidence of dishonor, but of justifiable 
refusal to pay or accept.

* * * * * 
*

"Payee 
altered'" (Emphasis in 
original.)

The district 
court also quoted the following from Brady on Bank Checks, (5th ed., 1979), § 
18.1:

"`[r]eturn for such 
reasons [altered payee, etc.] should not be regarded as dishonor since the 
returning bank is, in effect, saying that the check concerned is not a proper or 
valid order on the bank; but, on the other hand, the bank is in no way declaring 
that it is refusing payment of a valid item in proper 
form.'"

5 The attorney for Hunter 
and Larson conveyed a verbal stop-payment order for them to the bank for this 
check on August 20, 1982, the day the lawsuit was filed. The funds were 
distributed through settlement of the lawsuit by September 1, 1982, within 
fourteen days of the verbal stop-payment order. Section 34-21-472, W.S. 1977, 
provides that an oral stop-payment order by a bank customer is binding only for 
fourteen days unless confirmed in writing within that 
period.