Livingston Industries, Inc. v. Walker Bank & Trust Co.

565 P.2d 1117, 22 U.C.C. Rep. Serv. (West) 432, 1977 Utah LEXIS 1229

• Court: Utah Supreme Court
• Decided: August 11, 1977
• Docket: 14751
• Status: Published

Opinions

HALL, Justice:

This is an appeal from a summary judgment in favor of defendant bank in an action filed by plaintiff to recover the sum of $4,277.00 given to defendant by one of its customers for payment to plaintiff but paid over to another contrary to agreement.

On or about May 10,1972, Wash-A-Matic, Inc., a distributor of plaintiff, sold certain car washing equipment to one Clarence Hollingshead who in turn entered into an agreement with Equitable Leasing Company under the terms of which it purchased the said equipment and leased it to Holl-ingshead. In January, 1974, Equitable owed plaintiff a balance of $4,277.80 on the purchase price and gave plaintiff a check therefor. The same was dishonored on presentation and plaintiff demanded a cashier’s check, telling Equitable not to release any funds to Wash-A-Matic. Equitable’s representative, David N. Phelps, went to defendant’s Centerville Branch where Darol Win-tie, assistant manager, agreed on behalf of the bank to forward a $4,277.80 cashier’s check to plaintiff and not to Wash-A-Matic. Contrary to the agreement, defendant delivered a cashier’s check in the amount of $4,277.00 to Wash-A-Matic. Based on these facts the trial court determined no right of action existed in favor of plaintiff against the bank.

Plaintiff assigns as error the denial of its right to proceed to trial on third-party beneficiary theories based on conversion or negligence.

Summary judgment is proper only if the pleadings, depositions, affidavits and admissions show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law,¹ and the evidence, when viewed in the light most favorable to the loser, must show that there is no genuine issue as to any material fact.²

The facts here reveal that defendant bank may very well have a duty to pay plaintiff in accord with the instructions of its depositor and a breach thereof may subject them to the loss. See Pacific Metals Co. v. Tracy-Collins Bank and Trust Company³ and Robertson v. Commercial Security Bank.⁴

An additional question of fact appears to be inherent in plaintiff’s claim of standing before the court on a third party beneficiary contract theory and the case of Walker Bank and Trust Company v. First Security Corporation⁵ appears to recognize such a rule. Also, such a cause of action for failure to follow direction of a depositor is recognized in Corbin on Contracts, Section 775 (1952) where the following example is set forth:

. B promises to A to deposit $100 in the City Bank to C’s credit; the deposit will create a right in C against the bank.

A further example is set forth by Corbin in Section 783:

. A can have the bank transfer the account on its books to C. This is a transaction between A and the Bank, C’s knowledge and assent being unnecessary. Here, as in the first case supposed, C is the beneficiary of a contract between A and the bank. As such, C can enforce the bank’s promise to A.

Plaintiff has raised a substantial issue of fact as to the relationship of Equitable and defendant and the consequences of the failure to follow the instructions of its depositor which renders summary judgment inappropriate.

The summary judgment is reversed and the case is remanded for trial.

ELLETT, C. J., and CROCKETT and MAUGHAN, JJ., concur.

1 . In re Williams’ Estates, 10 Utah 2d 83, 348 P.2d 683.

2 . Bullock v. Deseret Dodge and Truck Center, Inc., 11 Utah 2d 1, 354 P.2d 559, Tanner v. Utah Poultry and Farmers Co-op, 11 Utah 2d 353, 359 P.2d 18.

3 . 21 Utah 2d 400, 466 P.2d 303.

4 . Utah, 557 P.2d 150 (1976).

5 . 9 Utah 2d 215, 341 P.2d 944.