Court Opinion

ID: 9613344
Source: CourtListenerOpinion
Date Created: 2023-08-22 04:16:20.829835+00
Date Added: 2024-06-11T18:03:28.176492
License: Public Domain

BERMAN, Judge,
dissenting.
Respectfully, I dissent.
I would affirm the judgment of the trial court, but upon a different concept of the case than that under which the trial court proceeded, and upon which the majority premises its decision to reverse.
In my view, the rights and duties of the parties to this litigation are not to be determined by general negligence principles. See G & R Corp. v. American Security & Trust Co., 523 F.2d 1164 (D.C.Cir.1975). Instead, specific provisions of the Uniform Commercial Code,1 or, in their absence, general contract principles govern. G & R Corp., supra.
Section 4-4-401(1), C.R.S.1973, provides in part that “[a]s against its customer, a bank may charge against his account any item which is ... properly payable from that account . ... ” (emphasis added) By negative implication, a bank may not charge against its customer’s account any item which is not “properly payable” therefrom. G & R Corp., supra; Ford Motor Credit Co. v. United Services Automobile Ass’n v. Chase Manhattan Bank (N.A.) v. Chemical Bank New York Trust Co., 11 U.C.C.Reptr. 361 (N.Y.Civ.Ct., 1972); Mortimer Agency, Inc. v. Underwriters Trust Co., 73 Misc.2d 970, 341 N.Y.S.2d 75 (1973); W. R. Grimshaw Co. v. First Nat. Bank & Trust Co. of Tulsa, 18 U.C.C.Reptr. 734 (Okla.App., 1976), reversed on other grounds, 563 P.2d 117 (Okla.1977); Cincinnati Ins. Co. v. First Nat. Bank of Akron, 63 Ohio St.2d 220, 407 N.E.2d 519 (1980); J. White & R. Summers, Uniform Commercial Code § 17-3.
What is “properly payable” is established by, inter alia, the terms of the deposit agreement. G & R Corp., supra. Here, the majority upholds the trial court’s finding that the bank violated the terms of the deposit contract in debiting the four drafts in issue against the partnership account. Thus, the majority in effect concedes that these drafts were not “properly payable” within the meaning of § 4-4-401(1).
The question, therefore, becomes one of what legal consequences flow from an improper payment. As to that question, Judge Tamm, speaking for the United States Court of Appeals, D.C. Circuit, has observed:
*1300“The U.C.C., by design or oversight, has omitted any specific section granting a customer the right to demand that his bank recredit his account for items improperly paid. The existence of such a right, however, is strongly urged by the negative implications of section 4-401(1). . . ."
G & R Corp., supra; see also J. White & R. Summers § 17-3, supra.
Furthermore, the general common law rule required a bank to recredit its customer’s account for any item improperly paid. Stone & Webster Engineering Corp. v. First Nat. Bank & Trust Co. of Greenfield, 345 Mass. 1, 184 N.E.2d 358 (1962); Wiley v. Manufacturers Hanover Trust Co., 6 U.C.C. Reptr. 1083 (N.Y.Sup.Ct., 1969); W. R. Grimshaw, supra; Cincinnati Ins. Co., supra. Indeed, such was the pre-U.C.C. Colorado rule. See Denver Electric v. Phipps, 143 Colo. 530, 354 P.2d 618 (1960).
Thus, § 4 —4-401(1) has, by implication' (see discussion, supra), merely codified the Colorado and general common law rule. Stone & Webster Engineering, supra; Wiley, supra; W. R. Grimshaw, supra; Cincinnati Ins. Co., supra; see also § 4-1-103, C.R.S.1973, and Official Comment 1. thereto. Nor is a contrary interpretation of that section warranted, for, as Judge Tamm has noted, no overriding policy considerations tempt one to supply to banks, in cases such as this, a protection not specifically provided by the drafters of the U.C.C. See G & R Corp., supra. Thus, the bank in the instant case should be required to recredit the partnership account in the amount of the drafts here in question. See G & R Corp., supra; Stone & Webster Engineering, supra; W. R. Grimshaw, supra; Cincinnati Ins. Co., supra; J. White & R. Summers § 17-3, supra.2
Because the counterclaim the trial court allowed was, as the majority notes, in the exact amount of the four drafts here involved, the allowance of the counterclaim is equivalent in this case to a recrediting of the partnership account. Since in my opinion such a recrediting (or its equivalent) is required, the allowance of the counterclaim should be affirmed. Given such a result, the bank should be permitted to seek restitution of the amount of these drafts from the payee. In turn, to avoid unjustly enriching the partnership, any legitimate claims of the payee creditor that may have been discharged as a result of the bank’s improper payment must be restored as against the partnership. In other words, the partnership should be entitled to view the effect of these drafts as a nullity, and the parties should be restored to the status quo ante. See Denver Electric, supra.
At trial, no assertion was made that the partnership later ratified the bank’s payment of these drafts. Thus, any question as to ratification may not here be considered. C.R.C.P. 59(f).
The judgment should be affirmed.

. §§ 4-1-101 to 4-11-102, C.R.S.1973.

. But cf. Middle States Leasing Corp. v. Manufacturers Hanover Trust Co. v. Federal Reserve Bank of New York, 62 App.Div.2d 273, 404 N.Y.S.2d 846 (1978); McIsaac v. Bank of New York, 74 App.Div. 717, 425 N.Y.S.2d 678 (1980).