Court Opinion

ID: 7013770
Source: CourtListenerOpinion
Date Created: 2022-07-24 04:14:33.040813+00
Date Added: 2024-06-11T16:10:17.865208
License: Public Domain

NOONAN, Circuit Judge,
concurring:
I concur in the opinion of the court and add two points:
First. Social Security recipients would almost certainly be denied overdraft privileges if Plaintiffs prevailed. No bank would be willing to become vulnerable to class action suits because it paid overdrafts and then reimbursed itself from the deposit of a Social Security check. Under Plaintiffs’ theory, not only would it be illegal for a bank to offset an overdraft by a direct deposit from the Treasury to the customer’s account, but it would be equally illegal for the bank to accept the customer’s own deposit of his/her Social Security check and then pay the overdraft. The proceeds of the customér’s own deposit would be Social Security money. Philpott v. Essex County Welfare Board, 409 U.S. 413, 417, 93 S.Ct. 590, 34 L.Ed.2d 608 (1973). Consent by a Social Security recipient to reimburse a state agency from Social Security does not permit the state agency to sue to reach his Social Security check after he has deposited it. The funds on deposit after the check has cleared are “readily withdrawable and retained the quantity of ‘moneys’ within the provision of § 407.” Id.
The proceeds of a Social Security check in the circumstances of this case, were they seen to be protected from legal process under Philpott, would be equally prevented, according to Plaintiffs’ argument, from being used by the bank to pay an overdraft. Persons dependant on Social Security would therefore be likely denied overdraft protection. The consequences for them would be serious in charges by the bank on their checks on which the bank denied payment or charges by payees of the dishonored checks. To strip the persons dependant on Social Security of overdraft protection is not to aid but to injure them.
Second. Plaintiffs’ position appears to rest on a misapprehension of how the banking system actually operates. When a customer, including a beneficiary of Social Security, deposits a check, the check does not instantly put funds in the customer’s account. The bank’s receipt of payment of the check will not take place at once, but only when the check is cleared. Nonetheless, normally, the customer can withdraw at least a portion of the amount deposited from the bank as soon as the check is deposited. The bank extends the customer credit until the check clears. Under Plaintiffs’ theory, a bank could not engage in this customary courtesy with a customer depositing a Social Security check: the bank would put itself in the position, impossible were Plaintiffs’ argument accepted, of offsetting the customer’s debt at the moment the Social Security check cleared and funds from the Treasury were actually credited to the customer’s account.