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COA: Bank could charge back account after check is lost

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A man who withdrew nearly all of the money in a bank account is personally liable to pay back that money to the bank, the Indiana Court of Appeals ruled Thursday. The bank had lost a check deposited into the account and the account holder was unable to help the bank identify the check writer to obtain a replacement check.

James R. Sapp had multiple bank accounts with Flagstar Bank and other banks in and out of state. He deposited $125,000 in late August 2005 into his account referred to as SF7 that was the account of an LLC he had formed. The check was a cashier’s check made up of various amounts from other banks paid to some of Sapps’ businesses as well as some unidentified amount of cash. Almost all of the money was gone from the account 16 days after the deposit; Sapp had deposited $100,000 from the SF7 account into an account to which only he had access.

In November 2005, Flagstar debited $125,000 from the SF7 account and was only able to recover nearly $2,000. This was after the bank pressed Sapp to help it identify who issued the previous check in order to obtain a replacement. In 2007, the bank sued Sapp for breach of contract, theft, conversion and unjust enrichment. The trial court ruled in favor of the bank on its claims and ordered Sapp to pay attorney fees.

The transaction was not final, as Sapp had argued, because the account agreement states that the account holder agrees to be liable for any account shortage resulting from a charge or an overdraft. He chose to withdraw funds from the SF7 account while the provision credit was in place, the COA ruled in James R. Sapp v. Flagstar Bank, FSB, 49A02-1311-PL-935.

“Had Sapp not written any of those checks, the account would still have held the $125,000 provision credit and would not have been overdrawn when that credit was revoked,” Judge John Baker wrote in finding Sapp liable for the shortage in the account.

Sapp argued the bank waited too long to notify him the check had been lost and that the transaction had been “finalized” based on language in the account agreement. The agreement allowed Sapp to withdraw the funds based on the provision credit, but it also put him on notice that he would be liable for any checks deposited in the account that are unpaid.

The judges upheld the order that Sapp pay the bank’s attorney fees, again citing the account agreement. They also remanded for the trial court to decide the amount of appellate attorney fees to which Flagstar may be entitled.
 

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  1. File under the Sociology of Hoosier Discipline ... “We will be answering the complaint in due course and defending against the commission’s allegations,” said Indianapolis attorney Don Lundberg, who’s representing Hudson in her disciplinary case. FOR THOSE WHO DO NOT KNOW ... Lundberg ran the statist attorney disciplinary machinery in Indy for decades, and is now the "go to guy" for those who can afford him .... the ultimate insider for the well-to-do and/or connected who find themselves in the crosshairs. It would appear that this former prosecutor knows how the game is played in Circle City ... and is sacrificing accordingly. See more on that here ... http://www.theindianalawyer.com/supreme-court-reprimands-attorney-for-falsifying-hours-worked/PARAMS/article/43757 Legal sociologists could have a field day here ... I wonder why such things are never studied? Is a sacrifice to the well connected former regulators a de facto bribe? Such questions, if probed, could bring about a more just world, a more equal playing field, less Stalinist governance. All of the things that our preambles tell us to value could be advanced if only sunshine reached into such dark worlds. As a great jurist once wrote: "Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman." Other People's Money—and How Bankers Use It (1914). Ah, but I am certifiable, according to the Indiana authorities, according to the ISC it can be read, for believing such trite things and for advancing such unwanted thoughts. As a great albeit fictional and broken resistance leaders once wrote: "I am the dead." Winston Smith Let us all be dead to the idea of maintaining a patently unjust legal order.

  2. The Department of Education still has over $100 million of ITT Education Services money in the form of $100+ million Letters of Credit. That money was supposed to be used by The DOE to help students. The DOE did nothing to help students. The DOE essentially stole the money from ITT Tech and still has the money. The trustee should be going after the DOE to get the money back for people who are owed that money, including shareholders.

  3. Do you know who the sponsor of the last-minute amendment was?

  4. Law firms of over 50 don't deliver good value, thats what this survey really tells you. Anybody that has seen what they bill for compared to what they deliver knows that already, however.

  5. As one of the many consumers affected by this breach, I found my bank data had been lifted and used to buy over $200 of various merchandise in New York. I did a pretty good job of tracing the purchases to stores around a college campus just from the info on my bank statement. Hm. Mr. Hill, I would like my $200 back! It doesn't belong to the state, in my opinion. Give it back to the consumers affected. I had to freeze my credit and take out data protection, order a new debit card and wait until it arrived. I deserve something for my trouble!

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