Title: American SEC. Bank v. Kaneshiro
Citation: 688 P.2d 254
Docket Number: 9697
State: Hawaii
Issuer: Hawaii Supreme Court
Date: September 26, 1984

688 P.2d 254 (1984) AMERICAN SECURITY BANK, a Hawaii corporation, Plaintiff-Appellee, v. Daryl W. KANESHIRO, and T &amp; K, Inc., dba Something Fishy, Defendants-Appellants. No. 9697. Supreme Court of Hawaii. September 26, 1984. *255 Robert Mark Grinpas, Lihue, for defendants-appellants. Calvin K. Murashige, Lihue (Shiraishi &amp; Yamada, Lihue, of counsel), for plaintiff-appellee. Before LUM, C.J., and NAKAMURA, PADGETT, HAYASHI and WAKATSUKI, JJ. PADGETT, Justice. This is an appeal by a Daryl W. Kaneshiro and T &amp; K, Inc., from a judgment entered as a result of the granting of a motion for summary judgment in favor of American Security Bank. With respect to T &amp; K, Inc., we affirm. With respect to Daryl W. Kaneshiro, we reverse and remand. On summary judgment, the question is whether there were genuine issues of material fact. Appellant Kaneshiro by affidavit and deposition produced evidence of the following facts: (1) He was the guarantor of a $5,000 line of credit arrangement between the appellee and the appellant corporation. (2) Appellant Kaneshiro was the principal in the corporation. (3) He was the person who dealt with appellee on the corporation's banking matters. (4) He made a determination to sell the corporation's business. (5) A $15,000 down payment deposit toward the purchase price of that sale was to be made to the corporation on approximately July 15, 1981. (6) He instructed appellee's employee Cecilia Ramones to use that money, when deposited by the corporation, to pay off the line of credit. (7) She agreed. (8) Later, when she was contacted by appellant Kaneshiro, she informed him that his instructions had been carried out. (9) Appellant Kaneshiro subsequently proceeded, as principal of the corporation, to make disbursements from the corporation's account for other debts on which he was not a guarantor. (10) Eventually the corporation's monies ran out and then it was discovered that the line of credit had not been paid off. Those facts, if proved at trial, would establish a good legal defense to the guarantee sued upon. While there is no provision in the Uniform Commercial Code dealing expressly with the handling of deposits made on special instructions, the Code does provide in HRS § 490:1-103 that in the absence of an express provision in the Code, the general principles of the law merchant and of equity are applicable. The law is clear that: First City Nat. Bank v. Long-Lewis Hardware, 363 So. 2d 770, 772 (Ala. Civ. App. 1978). As has been said: Hudson United Bank v. House of Supreme, Inc., 149 N.J. Super. 153, 373 A.2d 438, 440 (1977). A bank cannot knowingly accept a deposit for a particular purpose and then act to defeat the purpose for which that deposit was made. 10 Am.Jur.2d, Banks § 342 at 306-07 (1963). In *256 an article appearing at 8 A.L.R. 4th, Special Bank Deposits Attachment, § 7 at 1006 (1981), it is stated: Based on the record in this case, appellant Kaneshiro certainly had raised genuine issues of material fact, including the issue of whether there was a deposit for a special purpose. Accordingly, it was error for the court below to enter summary judgment against him. Reversed and remanded for further proceedings consistent herewith.