Appeal, No. 280, Jan. T., 1953, from judgment of Superior Court, Feb. T., 1953, No. 8, reversing judgment of Court of Common Pleas of Lackawanna County, Sept. T., 1951, No. 550, in case of E. J. Thomas v. First National Bank of Scranton. Judgment of Superior Court reversed.
William J. Oliver, for appellant.
C. H. Welles, 3rd, with him Welles & Mackie, for appellee.
Before Stern, C.j., Stearne, Jones Bell, Chidsey and Arnold, JJ.
OPINION BY MR. JUSTICE ALLEN M. STEARNE
The appeal raises the question whether or not a commercial bank is absolved from liability to its depositor because of its payment of a depositor's check after the bank had received notice from the depositor not to pay it. The depositor, in seeking to stop payment of his check, had executed and left with the bank a printed paper (supplied by the bank) titled "Request to Stop Payment of Check". Among the terms of the paper was a provision which constituted a release of the bank from all liability where, in violation of such notice, the bank pays the check through "inadvertence, accident or oversight". Payment of the check was made by the bank under those circumstances. The proceeding is in the nature of a Case Stated as provided by Rule 1007 (3) of the Pennsylvania Rules of Civil Procedure. The court below decided that the bank was liable and entered judgment for plaintiff. On appeal the Superior Court reversed the judgment. An allocatur was allowed.
First National Bank of Scranton, the defendant, is a federal commercial bank in which E. J. Thomas, the plaintiff, is a depositor. The depositor drew a check on his account October 12, 1950 and on October 13, 1950 went to defendant bank to stop payment, whereupon a clerk handed him a printed paper marked "Request to Stop Payment of Check", which he signed and left with the bank. In the paper requesting the bank to stop payment are the words: "... Should the check be paid through inadvertence, accident or oversight, it is expressly agreed that the Bank will in no way be held responsible. The Bank receives this request upon the express condition that it shall not be in any way liable for its act should the check be paid by it in the course of its business. The undersigned
agrees to be legally bound hereby." On October 16, 1950, despite the notice, the check was paid by the bank "through inadvertence, accident or oversight" and the amount of the check charged against plaintiff's account. Plaintiff demanded that defendant refund this amount, which defendant refused to do.
At law, a bank has the status of a debtor of the depositor and impliedly agrees to repay the deposit on demand or on order of depositor:9 C.J.S. Banks and Banking sec. 330; Prudential Trust Company's Assignment, 223 Pa. 409, 72 A. 798. Payment by the bank of the check after notice to stop its payment was failure to exercise due care, precaution and vigilance. This constituted negligence, even though the failure to exercise proper care had been due to "inadvertence, accident or oversight". There are many definitions of negligence. Perhaps the one most frequently quoted is that of Judge COOLEY in his work on Torts (3d ed) pp. 1324-25, viz.: "... the failure to observe, for the protection of the interests of another person, that degree of care, precaution and vigilance which the circumstances justly demand, whereby such other person suffers injury". This Court has cited this definition with approval: Caulton v. Eyre & Co., Inc., 330 Pa. 385, 389, 199 A. 136. It has also been defined in Wharton, Negligence, sec. 3 as follows: "Negligence, in its civil relations, is such an inadvertent imperfection, by a responsible human agent, in the discharge of a legal duty, as immediately procedures, in an ordinary and natural sequence, a damage to another".
It is not disputed that at common law a bank is liable to the drawer of a check for payment after receipt of a proper nonpayment notice: The German N. Bank v. The Farmers' D. N. Bank, 118 Pa. 294, 12 A. 303; George W. Wall v. Franklin Trust ...