In 1995, Diana Flores intercepted four checks totaling $157,386.30 that two investor service companies had issued and mailed to Ms. Flores' 88-year-old aunt, Olga Ensenat. Ms. Flores then fraudulently endorsed and deposited the checks into various accounts at Hancock Bank. Ms. Ensenat filed suit against Hancock Bank and the investor companies on theories of breach of contract, bad faith breach of contract, negligence, and gross or reckless conduct disregarding her interests. At trial, Hancock Bank employees testified to departures from established banking procedures that had occurred in reference to the four transactions. The jury assessed Hancock Bank with no liability for actual damages or interest, $38,000 in compensatory damages, $20,000 in consequential damages, and $157,000 in "bad faith" damages, for a total of $215,000. On July 8, 1999, the circuit court granted Hancock Bank a remittitur of $35,000, representing the settlement reached between Ms. Ensenat and one of the investor companies. The circuit court then ordered Hancock Bank to pay $180,000.
Hancock Bank appealed, arguing that the trial court erred in allowing the case to be tried under theories other than the Uniform Commercial Code (UCC), which limits the banks'' liability for actual damages to the amount of funds improperly withdrawn. Ms. Ensenat (who died after the trial court's judgment), countered that because she chose to pursue her claims under theories outside the UCC, and did not bring an action labeled "conversion," the UCC was not applicable.
The Court of Appeals of Mississippi reverses and remands, finding that the UCC governs and that Hancock Bank''s liability is controlled by the UCC section on conversion. 'Whether negligent or not,' the court writes, 'Hancock Bank is liable for the plaintiff''s interest in the amount payable on the converted instruments, less amounts actually received by the plaintiff.'
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