Union Bank and Trust Co. v. Polkinghorne

HANSEN, Presiding Judge,

dissenting:

I respectfully dissent. PTR’s questionable banking practices resulting in numerous overdrafts and Bank’s failure to adhere to its own policy regarding the issuance of immediate credit against deposits raise questions of fact as to whether Bank actually met the holder in due course requirements of good faith and without notice of the defenses claimed by Polkinghorne.

The possibility of a defense is all that is required by law to place upon Bank the burden of proving it is in good faith and has no knowledge of a defense. Peoples Bank of Aurora v. Haar, 421 P.2d 817 (Okla.1966). Polkinghorne’s allegations that misrepresentation by PTR caused him to receive inadequate consideration for the instrument he issued places the burden of proof of the last two requirements of a holder in due course upon Bank.

In the instant ease, Bank’s only evidence of good faith is that the officer responsible for the transaction, after considering all relevant circumstances and knowing that Bank had never sustained a loss with this customer, made the decision to issue immediate credit against the deposit. However, the record reveals Bank’s officer violated its policy regarding the issuance of immediate credit against deposits in light of the fact that PTR had numerous overdrafts.

Moreover, when the circumstances are such as to justify the conclusion that the failure to make inquiry arose from a suspicion that the inquiry would disclose a vice or defect in the transaction, such indorsee is charged with notice. See Christian v. California Bank, 30 Cal.2d 421, 182 P.2d 554 (1947). Bank knew its customer had overdrawn his account, and it would be advantageous to have him make a deposit sufficient to cover his overdrawn checks. Similarly, Bank extended immediate credit on a $12,500 deposit to an account that had a negative balance at the time of the deposit. The account had previously experienced sixteen overdrafts that month.

Summary judgment should be granted only where it is “perfectly clear” there is no substantial controversy as to any fact in a case. Moreover, it must appear that reasonable people exercising fair and impartial judgment could not reach different conclusions upon the undisputed facts. Flanders v. Crane, 693 P.2d 602 (Okla.1984). It is apparent in the case at bar that reasonable persons, exercising fair and impartial judgment, could reach different conclusions upon consideration of the facts.

Whether Bank met the requirements of a holder in due course was a question of fact for the jury to determine, and Bank was not entitled to prevail as a matter of law.