Karsh v. American City Bank

Opinion

KINGSLEY, Acting P. J.

Plaintiff appeals from a judgment (order of dismissal) entered after an order sustaining, without leave to amend, a demurrer to his third amended complaint (hereinafter “complaint”). We reverse.

[421]

Resting his complaint on section 4402 of the California Uniform Commercial Code, plaintiff, in four causes of action, seeks damages for the conduct of defendant bank and its employees for dishonoring the checks of a corporation (Trio Consolidated Corporation) of which he was the president and sole owner. The demurrer was sustained on the theory that only the corporation, which was the nominal depositor, could maintain an action under that statute. We disagree.

Section 4402 of the California Uniform Commercial Code provides as follows: “A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. When the dishonor occurs through mistake liability is limited to actual damages proved.” The parties agree that, although two cases from other jurisdictions, interpreting the same section of the Uniform Commercial Code, have held in accordance with the ruling below,

1

California, in

Kendall Yacht Corporation

v.

United California Bank

(1975) 50 Cal.App.3d 949 [123 Cal.Rptr. 848], has recognized that, under some circumstances, an individual, not the nominal depositor, may recover damages under section 4402.

2

The issue before us is whether the facts alleged in the complaint before us bring plaintiff within the holding of

Kendall.

We conclude that they do.

In the case at bench, as in

Kendall,

it is alleged that the nominal depositor corporation “had not issued any stock of said corporation, was undercapitalized and was a transprent