Court Opinion

ID: 9772156
Source: CourtListenerOpinion
Date Created: 2023-08-29 17:08:55.011009+00
Date Added: 2024-06-11T15:42:26.517030
License: Public Domain

DIXON, Judge,
dissenting.
I respectfully dissent. I believe that the trial court erroneously granted summary judgment on Count III of plaintiff Rigby Corporation’s petition.
Plaintiff pleaded in Count I a variety of wrongful actions by the defendant Banks. Among those claims was an assertion that the payor Bank improperly failed to pay checks drawn by Rigby which were received by the Bank for payment prior to the maturation of the note. The pleading asserts that the payor Bank improperly exercised the right of setoff by refusing payment upon these checks. These allegations of Count I were incorporated by reference into Count III.1 Factually, there is no doubt that checks received on Friday, *550October 22, and Monday October 25, 1976, were dishonored by the payor Bank. The Banks assert that since the return of these checks was within the time permitted under the clearing house rules and prior to the midnight deadline these checks were not finally paid and were therefore subject to dishonor. That assertion misconstrues § 400.4-213(1), RSMo 1978, which reads as follows:
(1) An item is finally paid by a payor bank when the bank has done any of the following, whichever happens first:
(a) paid the item in cash; or
(b) settled for the item without reserving a right to revoke the settlement and without having such right under statute, clearing house rule or agreement; or
(c) completed the process of posting the item to the indicated account of the drawer, maker or other person to be charged therewith; or
(d) made a provisional settlement for the item and failed to revoke the settlement in the time and manner permitted by statute, clearing house rule or agreement. Upon a final payment under subparagraph (b), (c) or (d) the payor bank shall be accountable for the amount of the item.
While it is true that § 400.4-213(l)(b) allows the bank any time it has under the settlement rules to determine whether to finally settle for a check, the right to revoke the settlement is dependent upon whether or not final payment has occurred under any of the other provisions of the section set forth above, particularly subsection (c), which refers to the posting of the item. The definition of posting is contained in § 400.4-109, RSMo 1978, and reads as follows:
The “process of posting” means the usual procedure followed by a payor bank in determining to pay an item and in recording the payment including one or more of the following or other steps as determined by the bank:
(a)verification of any signature;
(b) ascertaining that sufficient funds are available;
(c) affixing a “paid” or other stamp;
(d) entering a charge or entry to a customer’s account;
(e) correcting or reversing an entry or erroneous action with respect to the item.
(Emphasis supplied).
Any one or more of the steps set forth above may constitute a posting. Posting in the U.C.C. sense is final payment. Once the check is finally paid, no right of setoff against that check can exist. The majority opinion carefully explicates that if there was an acceleration of the note and an early setoff, a cause of action would exist under the good faith provisions of the U.C.C. On the other hand, if the setoff was not made prior to payment of the checks, and the payor Bank dishonored the Rigby Corporation’s checks after those checks had been finally paid, then a cause of action for wrongful dishonor arises under § 400.4-402, RSMo 1978.
A case precisely in point on this theory of recovery is Raymer v. Bay State National Bank, 384 Mass. 310, 424 N.E.2d 515 (1981). In Raymer, the bank set off its depositor’s account against a revolving loan and consequently dishonored certain of the depositor’s checks after the checks had already been posted. Even though the posting was completed before the midnight deadline for return of the checks, the court held that the dishonor was wrongful because the setoff had come after the completion of posting. Id. 424 N.E.2d at 519. The theory of wrongful dishonor and the priority of setoff are carefully and fully explained in leading texts concerning the code sections in question. See 7 R. Anderson, Uniform Commercial Code § 4-402:8-:13 (3d ed. 1985); 5A Michie on Banks and Banking § 233 (1983).
Adverting now to the factual issue posed by this case as to whether there was a posting of the checks, the principle governing our review must be remembered. The Banks were defendants and received summary judgment in their favor. This neces*551sarily means that irrefutable proof must exist that plaintiffs can show no cause of action. The majority opinion recites the same principle of review. The plaintiff need not make out its case by proof. The pleading does that and only when the mov-ant shows irrefutable proof which converses an element of the plaintiffs case or proving an affirmative defense defeating the claim can a defendant prevail on a pleaded cause of action. E.O. Dorsch Electric Co. v. Knickerbocker Construction Co., 417 S.W.2d 936, 938 (Mo.1967); Miller v. Kruetz, 643 S.W.2d 310, 312 (Mo.App.1982).
In the instant case, to show that the Rigby checks had not been posted prior to dishonor, the payor Bank would have had to have shown by unassailable proof that in accordance with its usual and ordinary practices with respect to posting checks, no decision had been made to pay the checks, nor had any record been made of payment. The payor Bank presented no proof regarding its normal and usual practice of posting checks. Mo.Ann.Stat. § 400.4-303 Uniform Commercial Code comment 3 (Vernon 1965) sets forth a variety of factual examples of posting procedures. No proof of the process by which the payor Bank normally and usually reached its decision to pay is presented in this record. In fact, all agree that the processes in this case involved unusual activity including keeping the bookkeeping department open late on Monday, October 25th, to accommodate the pay- or Bank’s exercise of setoff to the amount which had been in the account on Friday morning, the 22nd of October.
The payor Bank dishonored Friday, October 22nd checks in the amount of $51,-364.69 and Monday, October 25th checks in the amount of $35,297.98. The evidence concerning these checks raises a very serious fact question concerning their status as “paid” items. The Bank’s witness said the checks were presented, posted and entered. Presentment is normally shown by a date stamp affixed to the check, which often in normal practice is combined with a “paid” stamp. Exhibits filed in the case show that the account of plaintiff was reduced by the amount of the checks presented. The Bank reversed these processes by the issuance of credit memoranda. Significantly, the process of “posting” for the Friday checks appears to have been complete in every respect. The data processing of those checks was completed sometime over the weekend. A “Monday morning balance” was determined and entered in the account. The witness Regnier, the officer of the payor Bank who testified to these matters, constantly referred in his testimony to the “posting” of the checks.
While this record may not prove the affirmative proposition that the payor Bank wrongfully exercised a right of setoff, in violation of § 400.4-303(l)(d), RSMo 1978, it certainly does not show by unassailable proof that the checks had not been posted and thus not finally paid.2
It was the position of the Banks in the brief and oral argument that the right to dishonor checks is governed by the clearing house rules. The Banks cite and rely on West Side Bank v. Marine National Exchange Bank, 37 Wis.2d 661, 155 N.W.2d 587 (1968), which interpreted the part of the process of posting which allows “correcting or reversing an entry or erroneous action” to mean that a bank has not completed its process of posting until the clearing house deadline for returning checks has passed. Until that time, says West Side Bank, the bank may as part of its posting process determine to reverse an entry whether that entry was erroneously made or not. In Raymer v. Bay State *552National Bank, the West Side Bank case was referred to and was not followed. Raymer, 424 N.E.2d at 520. The author of Raymer noted the array of commentary which has criticized the West Side Bank decision. It was also noted that West Side Bank had not considered the setoff provisions of the code. In Raymer the trial court found that Bay State’s usual procedure was to complete posting by 6 a.m. on the morning following receipt of the item. Id. at 519. Raymer is sound authority for the proposition that is critical in this case. Raymer was authored by Justice Robert Braucher, a principal author, editor, and advisor in the creation of the Uniform Commercial Code.
The brief of the Rigby Corporation does not advance the analysis set forth above with respect to the acceleration and the right of setoff. There cannot be the slightest doubt that Count III was directed to the payor Bank’s improper actions in asserting its rights to collect by setoff. The plaintiff Rigby Corporation has properly conceived the underlying theory of improper setoff, but it has failed to recognize the true reason for such impropriety.3
This case demonstrates the difficulty encountered in the use of summary judgment procedures in a factually complex setting. When an extensive record such as in the instant case is resolved by summary judgment, it is very difficult to review adequately and tends to absorb extraordinary time and thus contravenes principles of judicial economy. A comparison of the trial court opinion and the majority opinion demonstrates that in order to properly review all of the contentions on appeal the majority was required to go far beyond what the trial court considered. In fact, the trial court opinion does not fully and finally dispose of the issues; it is only because of the catch-all language of the formal order sustaining the motion for summary judgment on “all grounds” that there is even a semblance of finality.
I would reverse and remand for a trial on the issues presented in Count III.
APPENDIX
First Amended Petition for Damages

Count I

13. On or about January 23, 1976, a promissory note was executed ... in the amount of One Million Four Hundred Fifty Thousand Dollars ($1,450,000.00), _ And the provision and duties of said promissory note and security agreement imposed upon Boatmen’s Bank and Trust Co. of Kansas City the duty and obligation of good faith as provided for in Sections 400.-1-208 and 400.1-203, RSMo 1978.
21. [Pjrior to October 25, 1976, defendants Boatmen’s Bank and Trust Co. of Kansas City and Boatmen’s Bancshares, Inc., acting by and through their officers, directors, agents, servants and representatives, ....
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(D) Secretly planned to and on October 25, 1976, did unlawfully and tortiously offset and convert unto themselves, prior to the maturity of plaintiff Rigby Corporation’s note to defendant Boatmen’s Bank and Trust Co. of Kansas City, all funds on deposit in plaintiff Rigby Corporation’s accounts with defendant Boatmen’s Bank and Trust Co. of Kansas City, ....
(F) Planned to and actually seized and applied all funds in plaintiff Rigby Corporation’s bank accounts prematurely and prior to the maturity of plaintiff Rigby Corporation’s note dated October 25, 1976, at the close of business on October 25,1976, when said note actually became due and payable.

*553
Count III

32. Plaintiffs Rigby Corporation and Ingram Enterprises, Inc. incorporate by reference each and every allegation set forth in Counts I and II with the same force and effect as if fully set out herein.
33. That in dealings with plaintiff Rig-by Corporation, defendants Boatmen’s Bank and Trust Co. of Kansas City and Boatmen’s Bancshares, Inc. owed plaintiff Rigby Corporation the duty of good faith and honesty in fact as provided for in Sections 400.1-203 and 400.1-208, RSMo 1978.
34. Defendants Boatmen’s Bank and Trust Co. of Kansas City and Boatmen’s Bancshares, Inc. willfully, intentionally, knowingly and tortiously breached said duty and obligation of good faith owed to plaintiff Rigby Corporation and acted in bad faith and with malice and by reason of such breach the plaintiff Rigby Corporation sustained damages as heretofore more specifically set forth in paragraph 27 of this petition.

. The concurrence questions whether the issue was pleaded. The verbatim portions of the pleadings asserting this theory are included in the appendix to this dissent.

. The position of the dissent is that the so-called matured right of setoff accruing on Monday, October 25th, at the close of business could not be utilized to dishonor checks from Friday, October 22nd, and Monday, October 25th, unless there was unassailable proof that they had not been “posted" or otherwise paid. Setoff was so utilized and thus was an acceleration of the right of setoff and not the exercise of a matured right of setoff. That the Banks did not undertake the mechanics of setoff until after the close of business on Monday, October 25th, does not control. The effect of the setoff was to dishon- or checks that may have already been “paid” in the U.C.C. sense and thus wrongfully accelerate the right of setoff.

. The concurrence urges that the issue raised in the dissent was not briefed. The dissent concedes its analysis is not contained in the briefs. Rigby did contend that "Boatmen’s implemented collection procedures on a note which was neither due nor mature ... the actions on October 25, 1976, must be viewed as an acceleration." The Banks understood “acceleration" was claimed as to the setoff process and argued that there was no "factual predicate" for the claim. The dissent cannot accept the narrow view adopted in the concurrence as to the issues presented.