Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

Exercise 14

FACTS Messing had a check in the amount of $976 from Toyson J. Burruss, the drawer. Instead of depositing the check into his bank account, Messing presented the check for payment at Mr. Burruss' bank, Bank of America, the drawee. The teller, by use of a computer, confirmed the availability of funds on deposit, and placed the check into the computer's printer slot. The computer stamped certain data on the back of the check, including the time, date, amount of the check, account number, and teller number. The computer also placed a hold on the amount of $976 in the customer's account. The teller gave the check back to the Messing, who indorsed it. The teller then asked for Messing's identification. He presented his driver's license and a major credit card. The teller took the indorsed check from Messing and manually inscribed the driver's license information and certain credit card information on the back of the check.
At some point during the transaction, the teller counted out $976 in cash. She asked whether Messing was a customer of Bank of America. He stated that he was not. The teller returned the check to Messing and requested, consistent with bank policy when cashing checks for noncustomers, that he place his thumbprint on the check. Messing refused and the teller informed him that she would be unable to complete the transaction without his thumbprint. In response, the teller gave Messing back the check, released the hold on the customer's funds, voided the transaction in the computer, and replaced the cash.
Rather than take the check to his own bank and deposit it there, or return it to Burruss, Messing filed an action against Bank of America in the Circuit Court for Baltimore City. Messing claimed that the Bank had violated the Maryland Uniform Commercial Code (UCC) and had violated his personal privacy when the teller asked him to place an ''inkless'' thumbprint on the face of the check at issue.
The Circuit Court entered summary judgment in favor of the bank. The Court of Special Appeals upheld the Circuit Court's decision in favor of the bank. Messing petitioned this Court for a writ of certiorari, which was granted.
DECISION Judgment of the Court of Special Appeals is affirmed.
OPINION Harrell, J. Under the UCC, a check is simply an order to the drawee bank to pay the sum stated, signed by the makers and payable on demand. Receipt of a check does not, however, give the recipient a right against the bank. The recipient may present the check, but if the drawee bank refuses to honor it, the recipient has no recourse against the drawee.
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Absent a special relationship, a non-customer has no claim against a bank for refusing to honor a presented check. [Citation.] ***
A check or other draft does not of itself operate as an assignment of funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until the drawee accepts it.
Once a bank accepts a check, under § 3-409, it is obliged to pay on the check under § 3-413. Thus, the relevant question in terms of any rights Petitioner had against the Bank turns not on the reasonableness of the thumbprint identification, but rather upon whether the Bank accepted the check when presented as defined by § 3-409. *** Respondent Bank of America argues that the intermediate appellate court correctly found that it did not ''accept'' the check as that term is defined in § 3-409(a). We agree. The mere fact that the teller's computer printed information on the back of the check does not, as Petitioner contends, amount by itself to an acceptance.
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The question is whether requiring a thumbprint constitutes a request for ''reasonable identification'' under § 3-501(b)(2)(ii). If it is ''reasonable,'' then under § 3- 501(b)(3)(ii) the refusal of the Bank to accept the check from Petitioner did not constitute dishonor. If, however, requiring a thumbprint is not ''reasonable'' ***, then the refusal to accept the check may constitute dishonor. ***
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Nowhere does the language of UCC. § 3-501(b)(2) suggest that ''reasonable identification'' is limited to information [Respondent] can authenticate at the time presentment is made. Rather, all that is required is that the ''person making presentment must … give reasonable identification.'' UCC. § 3-501(b)(2). While providing a thumbprint signature does not necessarily confirm identification of the checkholder at presentment-unless of course the drawee bank has a duplicate thumbprint signature on file-it does assist in the identification of the checkholder should the check later prove to be bad. It therefore serves as a powerful deterrent to those who might otherwise attempt to pass a bad check. That one method provides identification at the time of presentment and the other identification after the check may have been honored, does not prevent the latter from being ''reasonable identification'' for purposes of C.L. § 3-501(b)(2).
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In short, when a bank cashes a check over the counter, it assumes the risk that it may suffer losses for counterfeit documents, forged endorsements, or forged or altered checks. Nothing in the Uniform Commercial Code forces a bank to assume such risks. See Barnhill, 503 U.S. 393, 398-99, 118 L. Ed. 2d 39, 112 S. Ct. 1386 (1992); § 3- 408. To the extent that banks are willing to cash checks over the counter, with reasonable identification, such willingness expands and facilitates the commercial activities within the State. ***
Because the reduction of risk promotes the expansion of commercial practices, we believe that the direction of § 1- 102(2)(b) requires that we conclude that a bank's requirement of a thumbprint placed upon a check presented over the counter by a non-customer is reasonable. [Citation.] As the intermediate appellate court well documented, the Thumbprint Program is part of an industry wide response to the growing threat of check fraud. Prohibiting banks from taking reasonable steps to protect themselves from losses could result in banks refusing to cash checks of noncustomers presented over the counter at all, a result which would be counter to the direction of § 1-102(2)(b).
As a result of this conclusion, Bank of America in the present case did not dishonor the check when it refused to accept it over the counter.
INTERPRETATION A bank is not required to accept a check from a noncustomer and, if it chooses to do so, is entitled to demand reasonable identification.
ETHICAL QUESTION Did the court fairly decide this case? Explain.
CRITICAL THINKING QUESTION What options may Messing now pursue? Explain.