[182]*182ORDER
TOLEDO, District Judge.
This cause is before us on a motion to dismiss1 which alleges that plaintiff’s complaint fails to state a claim against the defendant upon which relief can be granted.2 Extensive memoranda of law and exhibits were filed by both parties to the action.
Plaintiff’s complaint alleges in substance that during the month of November 1970, and in the regular course of business, it received twenty-four (24) checks totalling the sum of $138,472.90, issued against several accounts of defendant bank.3 Plaintiff further alleges that, without delay and following accepted banking procedures, it forwarded the mentioned checks through its correspondent banks to defendant, who received them at the Puerto Rico Clearing House. It is further contended that the defendant retained the checks for over one week and after said period refused payment of the checks to plaintiff. The plaintiff also contends that acceptable banking practices as well as the negotiable instruments law and the prevailing banking regulations require that a bank which receives a check at the clearing house must accept or reject4 the same within twenty-four (24) hours and that a retention beyond that period is an acceptance of the check. By having the defendant retain the checks for over one week, refusing payment of the checks afterwards, plaintiff alleges the defendant has caused it damages, for the plaintiff, relying on the law, regulations and [183]*183business practices and after a reasonable time, allowed the withdrawal of the funds represented by the checks drawn upon accounts in the defendant bank.
Defendant’s motion to dismiss the complaint basically contends that at the time the twenty-four (24) checks were presented5 to the defendant, there was an agreement6
7between all banking institutions doing business in Puerto Rico, whereby each and every such bank gave defendant a period of five days in which to return to presenting banks the unpaid items. It further contends that the twenty-four (24) hour period which serves as a basis for plaintiff’s complaint is not applicable in Puerto Rico, and therefore, to this case.1 Furthermore, defendant contends that even if the court were to consider the twenty-four (24) hour period, is applicable to demand items presented for payment,8 the court would, nevertheless, have to find that there was never an acceptance of such items under the provisions of Section 246 of Title 19, Laws of Puerto Rico Annotated, since the holders of said items, Banco Crédito y Ahorro Ponceño and Chase Manhattan Bank, allowed the defendant a period of five (5) days during which to return the unpaid items.9 Defendant further contends it has no relation, privity or connection with plaintiff in regard to the aforesaid checks; and that any communication between the defendant and another bank related to the twenty-four (24) checks involved herein were communications with Banco Crédito y Ahorro Ponceño and Chase Manhattan Bank, among which the agreement10 was binding, valid and effective at the time the defendant returned said checks.
The plaintiff filed a motion in opposition to defendant’s motion to dismiss the complaint contending that there is no “agreement” and that even if the exhibit attached to defendant’s motion and labeled “agreement”, were to be considered valid and effective, the defendant did not comply with its provisions. In the brief in support of plaintiff’s motion in opposition, it is contended that variations to the twenty-four (24) hour period expressed in Section 246 of the Uniform Negotiable Instruments Act, Title [184]*18419, Laws of Puerto Rico Annotated, can be altered. Any variations are said to be usually manifested in the rules of the Clearing House used by banks to facilitate their business. It is further stated that there is in existence a Clearing House Association Agreement,11 supervised by the Government Development Bank. It is expressed in plaintiff’s memorandum that Regulation No. 3 of the Clearing House Association provides that when an item is presented to a bank for payment through the Clearing House, the retention period shall be two (2) days for those banks handling their demand deposits accounting at a metropolitan office and for those handling their demand deposit accounting at a non-metropolitan office, the retention period is three (3) days. Thus, plaintiff contends that the defendant has failed to comply with the Rules and Regulations of the Clearing House of which it is a member. In relation to the twenty-four (24) hour period established by the Uniform Negotiable Instruments Act of Puerto Rico, Title 19, Laws of Puerto Rico Annotated, Sections 245 and 246,12 plaintiff contends that if it does not apply to the facts of this case as defendant contends, then the checks involved herein were payable on demand and no period of time need be given to the bank upon which it is drawn, relying on Guardian National Bank v. Huntington County State Bank (Appellate Court of Indiana 1931), 178 N.E. 574. As to the alleged agreement,13 which defendant contends is applicable and determinative of the case, the plaintiff contends that the defendant failed to comply with it, for each and every check involved in this case were retained by the defendant for a period exceeding the five working days mentioned in the purported “agreement”.14 In regard to the alleged absence of privity, or relation between the parties to this action in reference to the twenty-four (24) checks, it is plaintiff’s contention that it deserves no mention for, although the defendant asserts this position in his motion to dismiss, in its memorandum of law it, nevertheless, takes the position that there is a relationship between plaintiff and defendant in view of the fact that plaintiff dealt with the defendant through its agents, Banco Crédito y Ahorro Ponceño and Chase Manhattan Bank.
A motion to dismiss for failure to state a claim can serve a useful purpose by disposing of legal issues with a minimum of time and expense to the interested parties. Hiland Dairy, Inc. v. Kroger Co. (8 Cir. 1968), 402 F.2d 968, cert. den. 395 U.S. 961, 89 S.Ct. 2096, 23 L.Ed.2d 748. But see Rennie & Laughlin, Inc. v. Chrysler Corporation, 242 F.2d 208 (1957), where the Ninth Circuit Court of Appeals, at pages 212-213, Judge Barnes speaking for the Court, said what the Court believes reflects a proper perspective:
“ * * * As stated in Gruen Watch Co. v. Artists Alliance, 9 Cir., 191 F.2d 700, 705,
“On occasion motions to dismiss supply a useful technique for the prompt disposition of suits, and the Federal Rules of Civil Procedure which permit judgment on the pleadings are useful indeed. But it must be borne in mind that in many
Free access — add to your briefcase to read the full text and ask questions with AI
[182]*182ORDER
TOLEDO, District Judge.
This cause is before us on a motion to dismiss1 which alleges that plaintiff’s complaint fails to state a claim against the defendant upon which relief can be granted.2 Extensive memoranda of law and exhibits were filed by both parties to the action.
Plaintiff’s complaint alleges in substance that during the month of November 1970, and in the regular course of business, it received twenty-four (24) checks totalling the sum of $138,472.90, issued against several accounts of defendant bank.3 Plaintiff further alleges that, without delay and following accepted banking procedures, it forwarded the mentioned checks through its correspondent banks to defendant, who received them at the Puerto Rico Clearing House. It is further contended that the defendant retained the checks for over one week and after said period refused payment of the checks to plaintiff. The plaintiff also contends that acceptable banking practices as well as the negotiable instruments law and the prevailing banking regulations require that a bank which receives a check at the clearing house must accept or reject4 the same within twenty-four (24) hours and that a retention beyond that period is an acceptance of the check. By having the defendant retain the checks for over one week, refusing payment of the checks afterwards, plaintiff alleges the defendant has caused it damages, for the plaintiff, relying on the law, regulations and [183]*183business practices and after a reasonable time, allowed the withdrawal of the funds represented by the checks drawn upon accounts in the defendant bank.
Defendant’s motion to dismiss the complaint basically contends that at the time the twenty-four (24) checks were presented5 to the defendant, there was an agreement6
7between all banking institutions doing business in Puerto Rico, whereby each and every such bank gave defendant a period of five days in which to return to presenting banks the unpaid items. It further contends that the twenty-four (24) hour period which serves as a basis for plaintiff’s complaint is not applicable in Puerto Rico, and therefore, to this case.1 Furthermore, defendant contends that even if the court were to consider the twenty-four (24) hour period, is applicable to demand items presented for payment,8 the court would, nevertheless, have to find that there was never an acceptance of such items under the provisions of Section 246 of Title 19, Laws of Puerto Rico Annotated, since the holders of said items, Banco Crédito y Ahorro Ponceño and Chase Manhattan Bank, allowed the defendant a period of five (5) days during which to return the unpaid items.9 Defendant further contends it has no relation, privity or connection with plaintiff in regard to the aforesaid checks; and that any communication between the defendant and another bank related to the twenty-four (24) checks involved herein were communications with Banco Crédito y Ahorro Ponceño and Chase Manhattan Bank, among which the agreement10 was binding, valid and effective at the time the defendant returned said checks.
The plaintiff filed a motion in opposition to defendant’s motion to dismiss the complaint contending that there is no “agreement” and that even if the exhibit attached to defendant’s motion and labeled “agreement”, were to be considered valid and effective, the defendant did not comply with its provisions. In the brief in support of plaintiff’s motion in opposition, it is contended that variations to the twenty-four (24) hour period expressed in Section 246 of the Uniform Negotiable Instruments Act, Title [184]*18419, Laws of Puerto Rico Annotated, can be altered. Any variations are said to be usually manifested in the rules of the Clearing House used by banks to facilitate their business. It is further stated that there is in existence a Clearing House Association Agreement,11 supervised by the Government Development Bank. It is expressed in plaintiff’s memorandum that Regulation No. 3 of the Clearing House Association provides that when an item is presented to a bank for payment through the Clearing House, the retention period shall be two (2) days for those banks handling their demand deposits accounting at a metropolitan office and for those handling their demand deposit accounting at a non-metropolitan office, the retention period is three (3) days. Thus, plaintiff contends that the defendant has failed to comply with the Rules and Regulations of the Clearing House of which it is a member. In relation to the twenty-four (24) hour period established by the Uniform Negotiable Instruments Act of Puerto Rico, Title 19, Laws of Puerto Rico Annotated, Sections 245 and 246,12 plaintiff contends that if it does not apply to the facts of this case as defendant contends, then the checks involved herein were payable on demand and no period of time need be given to the bank upon which it is drawn, relying on Guardian National Bank v. Huntington County State Bank (Appellate Court of Indiana 1931), 178 N.E. 574. As to the alleged agreement,13 which defendant contends is applicable and determinative of the case, the plaintiff contends that the defendant failed to comply with it, for each and every check involved in this case were retained by the defendant for a period exceeding the five working days mentioned in the purported “agreement”.14 In regard to the alleged absence of privity, or relation between the parties to this action in reference to the twenty-four (24) checks, it is plaintiff’s contention that it deserves no mention for, although the defendant asserts this position in his motion to dismiss, in its memorandum of law it, nevertheless, takes the position that there is a relationship between plaintiff and defendant in view of the fact that plaintiff dealt with the defendant through its agents, Banco Crédito y Ahorro Ponceño and Chase Manhattan Bank.
A motion to dismiss for failure to state a claim can serve a useful purpose by disposing of legal issues with a minimum of time and expense to the interested parties. Hiland Dairy, Inc. v. Kroger Co. (8 Cir. 1968), 402 F.2d 968, cert. den. 395 U.S. 961, 89 S.Ct. 2096, 23 L.Ed.2d 748. But see Rennie & Laughlin, Inc. v. Chrysler Corporation, 242 F.2d 208 (1957), where the Ninth Circuit Court of Appeals, at pages 212-213, Judge Barnes speaking for the Court, said what the Court believes reflects a proper perspective:
“ * * * As stated in Gruen Watch Co. v. Artists Alliance, 9 Cir., 191 F.2d 700, 705,
“On occasion motions to dismiss supply a useful technique for the prompt disposition of suits, and the Federal Rules of Civil Procedure which permit judgment on the pleadings are useful indeed. But it must be borne in mind that in many [185]*185a suit such a motion cannot take the place of submission of evidence and of findings of fact and conclusions of law.”
Nor is a motion to dismiss the only effective procedural implement for the expeditious handling of legal controversies. Pretrial conference; the discovery procedures; and motions for a more definite statement, judgment on the pleadings and summary judgment, all provide useful tools for the sifting of allegations and the determination of the legal sufficiency of an asserted claim. The salvaged minutes that may accrue from circumventing these procedures can turn to wasted hours if the appellate court feels constrained to reverse the dismissal of an action. That is one of the reasons why a motion to dismiss is viewed with disfavor in the federal courts. Another is the basic precept that the primary objective of the law is to obtain a determination of the merits of any claim; and that a case should be tried on the proofs rather than the pleadings. DeLoach v. Crowley’s, Inc., 5 Cir., 128 F.2d 378, 380. This is not to say or imply that a motion to dismiss should never be granted. It is obvious that there are cases which justify and indeed compel the granting of such motion. The line between the totally unmeritorious claims and the others cannot be drawn by scientific instruments but must be carved out case by case by the sound judgment of trial judges. That judgment should be exercised cautiously on such a motion.”
The purpose of a motion to dismiss under Rule 12(b) (6) of the Federal Rules of Civil Procedure,15 Title 28, United States Code, is to test the formality of the statement of the claim for relief, that is, the legal sufficiency of the complaint. See Pointer v. American Oil Co. (D.C.Ind.1969), 295 F.Supp. 573; Bing v. General Motors Acceptance Corp. (D.C.S.C.1965), 237 F.Supp. 911; Travel Magazine, Inc. v. Travel Digest, Inc. (D.C.N.Y.1961), 191 F.Supp. 830. That is why it is necessary that a motion under Rule 12(b) (6) of the Federal Rules of Civil Procedure be read in conjunction with Rule 8(a) of the same rules;16 for the court’s inquiry is directed to whether the allegation in the complaint constitutes a statement of a claim in accordance with the last mentioned rule. Only when the pleadings fail to meet this liberal standard enunciated in Rule 8(a) is the complaint subject to dismissal under Rule 12(b) (6). Tenopir v. State Farm Mutual Company (9 Cir. 1968), 403 F.2d 533.
The test most often applied to determine the sufficiency of a complaint was set out in the leading case of Conley, et al. v. Gibson, et al., 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), in which the Supreme Court, Justice Black speaking for the court stated at pages 45-46, 78 S.Ct. at page 102, the following:
“* * * in appraising the sufficiency of the complaint we follow, of course, the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of [186]*186his claim which would entitle him to relief.” 17
A defendant who presents a motion to dismiss admits, for the purposes of the motion, all the well pleaded material allegations of the complaint, but does not admit any conclusion of law or Unwarranted deductions of fact made from them. Hiland Dairy, Inc. v. Kroger Company, supra; Ward v. Hudnell (5 Cir. 1966), 366 F.2d 247; Pauling v. McElroy (C.A.D.C.1960), 278 F.2d 252; Smith v. U. S. (D.C.Del.1953), 113 F. Supp. 131. Thus, in deciding such a motion, the Court views the material allegations of the complaint in the light most favorable to the plaintiff and its allegations are taken as true, except for the legal conclusions or unwarranted deductions made by the pleader. Olpin v. Ideal National Insurance Co. (10 Cir. 1969) , 419 F.2d 1250, cert. den. 397 U.S. 1074, 90 S.Ct. 1522, 25 L.Ed. 2d 809; Ward v. Hudnell, supra; Dunn v. Gazzola (1 Cir. 1954), 216 F.2d 709; U. S. ex rel. Smith v. Heil (D.C.Pa. 1970) , 308 F.Supp. 1063; Sinchak v. Parente (D.C.Pa.1966), 262 F.Supp. 79; García v. Hilton Hotels International, supra.
In determining whether to grant a motion to dismiss, the court has a wide range of discretion. Sun Cosmetic Shoppe, Inc. v. Elizabeth Arden Sales Corp. (D.C.N.Y.1948), 81 F.Supp. 547; United States v. Carolina Warehouse Co. (D.C.S.C.1945), 4 F.R.D. 291; Perry v. Creech Coal Co. (D.C.Ky.1944), 55 F.Supp. 998. Nevertheless, this motion is ordinarily granted sparingly and cautiously in order to make certain that a plaintiff is not improperly denied a right to have his claim adjudicated on the merits. Dann v. Studebaker-Packard Corp. (6 Cir. 1961), 288 F.2d 201; Pessin v. Keeneland Association (D.C.Ky. 1968), 45 F.R.D. 10; Reeser v. Philadelphia National League Club (D.C.Pa. 1949), 84 F.Supp. 947. That is why the motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted. Madison v. Purdy (5 Cir. 1969), 410 F.2d 99; Dann v. Studebaker-Packard Corp., supra; Pessin v. Keeneland Association, supra; García v. Hilton Hotels International, supra.
From the above enunciated general principles of law it can be seen that whenever a court entertains a motion to dismiss filed pursuant to Rule 12(b) (6) of the Federal Rules of Civil Procedure, the court has to determine whether in the light most favorable to the plaintiff, and with every doubt resolved in his behalf, the complaint states any valid claim for relief.
Assuming all the well pleaded facts in the complaint to be true and viewing the allegations in the complaint in the light most favorable to the plaintiff, this court cannot say that it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Couley v. Gibson, supra. In this case, enough has been alleged to give the defendant a fair notice of the basis of plaintiff’s claim. Ballou v. General Electric Company, supra.
After having read the memoranda of law and the exhibits attached, which both parties have submitted, this Court is of the opinion that what the defendant desires, and have forced the plain[187]*187tiff to do, is to raise at the pleading stage issues which should not be raised until after the responsive pleadings and the discovery proceedings are terminated. Defendant will have ample opportunity to resort to interrogatories, depositions, discovery and summary judgments or pretrial conference procedures during the progress of this litigation, which will be sufficient to enable it to ascertain the facts and also will result in a more expeditious disposition of the case. Bank of Nova Scotia v. San Miguel (D.C.Puerto Rico 1949), 9 F.R.D. 171. A motion under Rule 12(b) (6) of the Federal Rules of Civil Procedures is not to be used as a discovery procedure nor in order to raise issues for trial.18
It is not our purpose in stating what basically are the facts asserted and legal issues raised by the parties, to chart the future of this litigation; but to reflect the condition of the case before the court and to make use of the general rules of law governing the immediate consideration herein in relation to the reflected condition.
In view of the foregoing, it is the opinion of this Court that the complaint herein states a cause of action in conformity with Rule 8(a) of the Federal Rules of Civil Procedure.
Therefore, it is ordered, adjudged and decreed, that defendant’s motion to dismiss be and the same is hereby denied; and
It is further ordered, adjudged and decreed, that defendant enter a responsive pleading in this matter within twenty (20) days following the day of the entering of this order.