Opinion ID: 1807004
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Heading Rank: 5

Heading: ( FAB v. DONNA BADNERS )

Text: Mrs. Donna Badners (the widow of Mr. Badners) sued FAB, claiming that FAB had wrongfully dishonored the draft sent by Prudential. The jury returned a verdict in favor of Mrs. Badners and against FAB and awarded damages in the amount of $12,185. FAB appeals, basically contending that the jury verdict in favor of Mrs. Badners was against the great weight of the evidence and is due to be reversed. First, it contends that there was no wrongful dishonor; second, it contends that the draft authorization contained an exculpatory clause releasing the bank from liability for wrongful dishonor; and, third, it contends that the damages claimed by Mrs. Badners were not proximately caused by any wrongful dishonor. In 1973 Thomas Badners signed an agreement authorizing Prudential to draw drafts on the Badnerses' checking account at FAB. That authorization specifically referred to account number XX-XXX-XX as being the account that would be drafted. That arrangement continued, and drafts were drawn monthly on that account, from 1973 until March 14, 1984, when the account was closed. On and after that date, the drafts were charged against a new account that Mr. Badners had opened following his divorce from Carole Tindal. However, Prudential was never notified of any change in the accounts. After March 1984, because the drafts were on a closed account, they were directed to Dorothy Bruhn, an assistant vice-president at FAB. She manually changed the account number against which the drafts were drawn. Ms. Bruhn told Mr. Badners what she was doing. In June 1986, after having manually drafted the new account for over 25 months, FAB did not pay the Prudential draft, but, rather, dishonored it. Ms. Bruhn testified that she thought the draft should have been paid and that she could not explain why it was not. It is undisputed that Mr. Badners had sufficient funds in his account to pay the draft. An action for wrongful dishonor is authorized by § 7-4-402, Ala.Code 1975. Generally speaking, a wrongful dishonor must arise out of some agreement with the bank. See, generally, Annot. 88 A.L.R.4th 568 (1991). Normally, that agreement would be found on the signature card, which usually incorporates or includes the terms of the deposit agreement, or in some other agreement with the bank, e.g., a draft authorization. Here, the draft authorization lists the number of a closed account, but one of FAB's assistant vice-presidents undertook to manually change the monthly draft to an open account for over 25 consecutive months, all of this with the knowledge and approval of Mr. Badners. Under these circumstances, we hold that an implied-in-fact agreement did exist between FAB and Mr. Badners by which FAB was to continue paying the Prudential drafts out of his new account. `An implied contract arises where there are circumstances which, according to the ordinary course of dealing and common understanding, show a mutual intent to contract. Such a contract must contain all the elements of an express contract, which rests on consent, and is to every intent and purpose an agreement between the parties, and it cannot be found to exist unless a contract status is shown.' Radiology Associates, P.A. v. St. Clair Timber Co., 563 So.2d 1020, 1021 (Ala. 1990) (quoting Broyles v. Brown Engineering Co., 275 Ala. 35, 38, 151 So.2d 767, 770 (1963)). An implied-in-fact contract may be found from circumstances showing that a mutual agreement had been reached. Radiology Associates, at 1021. This principle of law applies with equal force to banking agreements. (See Boyett v. Oakes, 518 So.2d 37 (Ala.1987), where a jury verdict in favor of a customer was affirmed where there was testimony that the bank officer orally agreed to honor an overdraft and that the bank then failed to do so.) We also find no merit in FAB's argument that an exculpatory clause in the draft authorization releases it from any liability. Section 7-4-103(1), Ala.Code 1975, prohibits clauses that seek to exculpate a bank from responsibility for its own failure to exercise ordinary care. Finally, FAB contends that the dishonor of the Prudential premium draft did not proximately cause Mrs. Badners to suffer a monetary loss. We disagree. The wrongful dishonor of the Prudential draft by FAB caused the forfeiture of Mr. Badners's life insurance policy, which he was obligated to keep in force under the terms of the divorce judgment. As a result, Tindal sued Mrs. Badners, both individually and as executrix of Mr. Badners's estate. In connection with that action, Tindal recorded a lis pendens notice against certain real property owned by Mrs. Badners, to secure her claim against Mr. Badners's estate. That action was ultimately resolved in favor of Mrs. Badners, but not before the existence of the lis pendens had resulted in the cancellation of a contract to sell certain real property. The jury obviously concluded that the loss of the first sale of the Badners property was proximately caused by FAB's wrongful dishonor and that the appropriate damages were the difference between the sales price as originally contracted and the price for which the property was ultimately sold. The jury's verdict is presumed to be correct, and that presumption is strengthened by the trial court's denial of the motion for a new trial. Thorne, supra. Reviewing the evidence in a light most favorable to the prevailing party, we find sufficient evidence to support the jury verdict.