Decatur Auto Ctr. v. Wachovia Bank NA

The plaintiff could seek recovery in a conversion suit for the full value of a check which the defendant bank deliberately honored after processing and charging the plaintiff for a stop-payment order.

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This case addresses the question whether the maker of a check can bring an action in conversion against its bank when the bank pays out on the check despite a stop-payment order. Decatur Auto Center, Inc. issued Northside Sales & Leasing a check for $30,500 to be cashed once Northside obtained title to a Mercedes automobile that a Decatur Auto customer wanted to buy. The check, number 1041, was drawn on Decatur Auto’s commercial account at Wachovia Bank, N.A. Although Decatur Auto instructed Northside not to cash the check until otherwise ordered,1 Northside disregarded Decatur Auto’s instruction and immediately deposited the check into its account at Colonial Bank. For reasons not explained in the record, Colonial Bank immediately paid the $30,500 into Northside’s account without first ascertaining that the check would clear. Check no. 1041 was dishonored for insufficient funds. Decatur Auto subsequently used other means to pay for the vehicle from Northside and Northside promised it would return check no. 1041 to Decatur Auto.

Instead, Colonial Bank continued to hold the check and contacted Wachovia almost daily over several months to ascertain whether there were sufficient funds in Decatur Auto’s account to cover the check. Upon learning sufficient funds were present, Colonial Bank dispatched its representative, Gregory Cade, to a Wachovia branch where, by chance, Cade encountered Decatur Auto’s president, Raimi Sanuse. Sanuse informed Cade that Northside had already been paid for the vehicle and check no. 1041 belonged to Decatur Auto. Sanuse immediately placed a stop-payment order on the check. Although Wachovia processed the stop-payment order and charged Decatur Auto for doing so, Wachovia admitted that it deliberately chose to honor Decatur Auto’s check no. 1041, issued a check for $30,500 to Colonial,2 and debited Decatur Auto’s account for that amount. Wachovia then refused to reimburse Decatur Auto for the $30,500 debited from its account.

Decatur Auto Ctr. v. Wachovia Bank NA

The plaintiff could seek recovery in a conversion suit for the full value of a check which the defendant bank deliberately honored after processing and charging the plaintiff for a stop-payment order.

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