Procedural Posture

Procedural Posture

Appellant depositor sought review of a judgment of the Superior Court of Napa County (California), which found in favor of respondent bank in the depositor’s action against the bank to recover damages for injuries the depositor suffered as a result of the bank’s refusal to honor several checks drawn by the depositor on his account with the bank.

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The depositor brought an action for damages against the bank after it refused to honor several checks drawn by the depositor on his account, for which the bank had sufficient funds owing to the depositor to pay the checks. The trial court dismissed the depositor’s complaint for failure to state a cause of action and then denied the depositor’s motion for new trial. The depositor appealed, and the court reversed, holding that as Cal. Civ. Code § 3302 did not apply to the depositor’s case, his complaint did state a cause of action and the trial court erred in holding otherwise. The court found that the cause of action grew out of or arose from a contract between the bank and the depositor but there was also an element of tort as the depositor was a trader who suffered greater injury than a regular depositor when his checks were dishonored. The court determined that damages were allowed in either view of the case and thus the form of the action was immaterial and because § 3302 did not provide damages for the breach of an obligation arising from a contract or for torts or breaches of obligations arising under the law, the section was inapplicable to the depositor’s cause of action.


The court reversed the trial court’s order and judgment, which had found in favor of the bank.