Hill v. St. Paul Federal Bank for Savings
Case Date: 03/29/2002
Court: 1st District Appellate
Docket No: 1-00-2226,
3622,
3769 co
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THIRD DIVISION 1-00-2226; 00-3622; 00-3769 (Cons.)
JUSTICE CERDA delivered the opinion of the court: In this consolidated appeal, plaintiffs, Daron A. Hill,Scott Shepard, and Maris V. Lidaka, appeal from the dismissal oftheir respective class action complaints alleging the illegalityof the practice of defendants, St. Paul Federal Bank for Savings,Harris Bank Elk Grove N.A., and Corus Bank, N.A., respectively,in posting overdrawn checks in the order of highest to lowestamount, resulting in some cases in more overdraft fees than ifthe lowest checks were posted first. We affirm. Plaintiff Shepard alleged that on January 20, 2000, he had$126.02 in his checking account when the bank received four ofhis checks, which were written in the amounts of $25.00, $13.00,$50.00, and $195.58. There were sufficient funds for Harris Bankto have paid three checks for the lower amounts; in that case,the bank would have assessed only one overdraft fee. Instead,the bank debited the check for $195.58 first, creating a largeroverdraft. As a result, all four checks bounced, and fouroverdraft fees were assessed. Plaintiff Shepard further alleged that it was Harris Bank'sunstated policy to (a) treat all of the checks as creating anoverdraft even though there were sufficient funds to pay one ormore of them; and (b) debit them in such order as maximizedrather than minimized the number of checks that did not clear andthe number of overdraft fees the bank may impose. The bankprogrammed its computers to treat all checks received at one timeas one amount and to sequence them from the highest dollar amountto the lowest dollar amount. Harris Bank allegedly neverinformed Shepard of this practice. Count I alleged breach of contract/covenant of good faithand fair dealing. It alleged that the account agreement betweenplaintiff and the bank gave the bank complete control anddiscretion over the order in which the checks were debited. Thehigh-to-low posting practice was allegedly inconsistent with thecustomer's reasonable expectations. The bank allegedly actedwith improper motive because it posted the checks in this ordermerely to increase the number of fees it could charge. Count II alleged violation of the Illinois Consumer FraudAct (815 ILCS 505/1 et seq. (West 2000)). Shepard alleged thatthe practice of the bank was deceptive because the practice wasundisclosed. Shepard also alleged that the practice was unfairbecause the bank took advantage of its complete control over theorder of debiting items to increase its profits. The allegations of the complaints of plaintiff Hill againstSt. Paul and plaintiff Lidaka against Corus Bank were similar. The following are the relevant portions of the accountagreements of the three banks. "If a check is written for an amount greater than what is in the account, the account will beoverdrawn and we have the right to return the checkunpaid. We may, at our discretion, pay the check. Ineither case, a fee will apply and be charged to theaccount. If a check is written against uncollectedfunds *** we have the right to return the check unpaidor, at our discretion, pay the check. We may return acheck for any reason checks are normally returned ***. In any case, a fee will apply and be charged to theaccount." (Corus Bank) "If a check is presented to the Bank for paymentat time when there is not a sufficient balance ofavailable funds in your account, the Bank may eitherpay the check or refuse payment and return it unpaid. You agree to deposit sufficient funds to cover anyoverdraft and any fee charged in connection with anoverdraft. Service charges may be imposed by the Bank inconnection with these accounts *** and are shown in theSchedule of Fees." (St. Paul Federal Bank forSavings) "If you write a check (or otherwise try to make awithdrawal) for more money than you have available inyour account, you will be overdrawn. We reserve theright to return the check (or other item) or, at ourdiscretion, we may pay the check (or other item). Ineither case, we may charge a fee to your account asdisclosed [on the fee schedule]." (Harris Bank ElkGrove)All the complaints were dismissed pursuant to section 2-615of the Illinois Code of Civil Procedure (735 ILCS 5/2-615 (West2000)). Plaintiffs appealed, and their appeals wereconsolidated. ANALYSIS In reviewing a motion to dismiss, the pertinent inquiry iswhether plaintiff has alleged sufficient facts in the complaintthat, if proved, would entitle plaintiff to relief. Boyd v.Travelers Insurance Co., 166 Ill. 2d 188, 194, 652 N.E.2d 267(1995). As we review the sufficiency of the complaint, all well-pleaded facts and all reasonable inferences from them are takenas true. Mt. Zion State Bank & Trust v. ConsolidatedCommunications, Inc., 169 Ill. 2d 110, 115, 660 N.E.2d 863(1995). Our review of such matters is de novo. DaceInternational, Inc. v. Apple Computer, Inc., 275 Ill. App. 3d234, 237, 655 N.E.2d 974 (1995). Plaintiffs first argue that defendants violated their dutyof good faith and fair dealing in choosing a posting method thatpotentially results in more overdraft fees than other methods. Section 4-303(b) of the Uniform Commercial Code (UCC)permits banks to pay checks in any order: "*** items may be accepted, paid, certified, or chargedto the indicated account of its customer in any order." 810 ILCS 5/4-303(b) (West 2000). Prior to a 1992 amendment, the statute stated "in any orderconvenient to the bank." 810 ILCS 5/4-303(b) Historical andStatutory Notes, at 52 (Smith-Hurd Supp. 2001). The phrase wasdeleted as being superfluous. 810 ILCS 5/4-303(b) HistoricalNotes, at 52 (Smith-Hurd Supp. 2001). According to a commentator, the statute reflects theabandonment of "dribble posting," in which items are posted inbatches throughout a day; rather, items received on one day arenow posted all at one time on the next day. 6 Hawkland UCCSeries |
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