Court Opinion

ID: 9725120
Source: CourtListenerOpinion
Date Created: 2023-08-26 11:31:16.384727+00
Date Added: 2024-06-11T13:11:42.120317
License: Public Domain

HANSON, J.,
(dissenting).
The ultimate issue here is whether the defendant bank or the plaintiff despositor should sustain loss of a check negligently paid by the bank in disregard of the depositor’s timely and valid order to stop payment. The failure of the bank to honor the stop payment order is unexplained. Likewise, there is no evidence to show the bank exercised, or attempted to exercise, ordinary or reasonable care in the matter. Instead, the bank seeks to exonerate itself from all liability for its negligent conduct by reason of the following two provisions written in fine print on the reverse side of the depositor’s signature card:
*573I. “This bank will not be liable for any amount paid on any forged or altered item including forged indorsements, nor for any missing cancelled check, nor for any difference of account, unless written notice thereof is delivered to this bank within 10 days after date of .mailing or delivering the depositor’s statement; and if the depositor fails to give such notice,, or if any statement or cancelled checks are lost in transit, the bank’s record of the account shall be accepted as correct,” and
II. “Any request for stop payment must be made in writing on a form prescribed by this bank, and this 'bank will not be liable in any way for refusing payment of the item nor for paying the item through accident or oversight.”
The Depositor’s Contract was written and prepared by the bank. Its provisions serve to limit, restrict, or entirely exonerate the bank from its common law duties and responsibilities to its depositors. As such it should be construed most strongly against the bank and most liberally in favor of its depositors. People’s Gin Co. v. Canal Bank & Trust Co., 168 Miss. 630, 144 So. 858, 146 So. 308; Franklini v. Bank of America Nat. Trust & Sav. Ass’n, 31 Cal. App.2d 666, 88 P.2d 790; 5 Zollman Banks & Banking, Sec. 3404, p. 377.
The two contractual provisions are patently incompatible and cannot reasonably be conjointly construed together in favor of the bank. The second provision deals expressly and exclusively with stop payment requests. It purports to relieve the bank from all liability “in any way * * * for paying the item through accident or oversight.” This absolute exemption from liability is inconsistent with the 10-day notice of any difference of account clause. In other words, the difference of account clause allows a depositor ten days of grac'e. If he gives the bank notice of any difference of account within that period the bank is liable. Thus, the “difference of account” clause obviously was never intended to apply to checks paid by the bank in disregard of a stop payment request. The express provision *574which purports to relieve the bank from all liability for failure to honor a request to stop payment precludes application of the general inconsistent “difference of account” clause in accord with the elementary rule of construction that the express mention of one thing implies the exclusion of another. This ancient rule of “expressio unius est exclusio alterius” applies to the construction of contracts as well as statutes. Maytag Company v. Alward, Iowa, 112 N.W.2d 654.
In my opinion the remaining stipulation which purports to release the bank of all liability for negligently paying a check after receiving a request to stop payment is contrary to public policy and void.
There is little freedom of contract between a depositor and a bank. Their bargaining positions are not equal. A depositor must accept the services of a bank on its terms or not at all. We have said that commercial banking is affected with public interest. Wall v. Fenner, 76 S.D. 252, 76 N.W.2d 722. Banks are franchised and statutorily protected against open competition. Most communities of this state have only one bank. Charters are sparingly granted only after a showing of public convenience and necessity. McKinnon et al. v. State Banking Commission et al., 78 S.D. 407, 103 N.W.2d 179. It would logically follow that banks, like common carriers, public utilities, and other franchised businesses a]ffected with a public interest, should not be allowed to relieve themselves from all liability for negligent conduct by contract. This was the conclusion reached by the Nebraska court in the case of Hernandez v. First Nat. Bank of Omaha, 125 Neb. 199, 249 N.W. 592, wherein the court held that a bank was affected with a public interest and “It would seem against public policy to permit a bank under these circumstances to contract against liability for the negligence of its officers and agents.”
Other courts 'have considered the validity of similar stipulations. Some courts have upheld validity in the following cases:
*575MASSACHUSETTS—Tremont Trust Co. v. Burack (1920), 235 Mass. 398, 126 N.E. 782, 9 A.L.R. 1067.
NEW YORK—Gaita v. Windsor Bank (1929), 251 N.Y. 152, 167 N.E. 203, but see Montano v. Springfield Gardens Nat’l Bank, 207 Misc. 840, 140 N.Y.S.2d 63 and Capritta v. Nat’l Com. Bk. & Trust Co., 26 Misc.2d 71, 206 N.Y.S.2d 726.
INDIANA—Hodnick v. Fidelity Trust Co. (1932), 96 Ind. App. 342, 183 N.E. 488.
Early annotators have referred to these cases as the “weight of authority” 175 A.L.R. 78 and,, more recently, as the “slight preponderance of authority”, 1 A.L.R.2d 1155. However, numerous recent cases have swung the pendulum in the 'opposite direction. Today the decided weight of authority holds such stipulations invalid either as against public policy or for lack of consideration in the following cases:
CALIFORNIA—Hiroshima v. Bank of Italy (1926), 78 Cal. App. 362, 248 P. 947.
OHIO—Speroff v. First Central Trust Co. (1948), 149 Ohio St. 415, 79 N.E.2d 119, 1 A.L.R.2d 1150.
SOUTH CAROLINA—Carroll v. South Carolina Nat. Bank (1947), 211 S.C. 406, 45 S.E.2d 729.
CONNECTICUT—Calamita v. Tradesmens Nat. Bank (1949), 135 Conn. 326, 64 A.2d 46.
NEW JERSEY—Reinhardt v. Passaic-Clifton Nat. Bank & Trust Co. (1951), 16 N.J.Super. 430, 84 A.2d 741, affirmed on opinion below 9 N.J. 607, 89 A.2d 242.
PENNSYLVANIA—Thomas v. First Nat. City Bank of Scranton (1954), 376 Pa. 181, 101 A.2d 910, reversing Superior Court opinion reported in 173 Pa.Super. 205, 96 A.2d 196.
ALABAMA—The Commercial Bank v. Hall (1957), 266 Ala. 57, 94 So.2d 198.
*576Since 1926 Indiana has been the only court to uphold the validity of a contract stipulation relieving a bank from liability for payment of a check in disregard of a stop payment order. Seven courts have declared them invalid. Sound reasoning dictates we should do likewise.
It is interesting to note the Uniform Commercial Code reflects the prevailing view on this question. According to Section 4-103 Subsection 1 thereof “* * * no agreement can disclaim a bank’s responsibility for its own lack of good faith or failure to exercise ordinary care or can limit the measure of damages for such lack or failure * *
I would accordingly reverse the judgment appealed from. '
BIEGELMEIER, J., concurs in dissent.