Jacobs v. Citibank, N.A.

¶1dissents in a memorandum as follows: I dissent and would affirm. The plaintiffs allege that the defendant bank, without prior notice and without consent, overcharged its banking account depositors for checks returned for uncollected or insufficient funds. The defendant bank has a service charge of $7 when checks are drawn by the depositor against insufficient funds and $3 for checks payable to the depositor from third persons when those checks are drawn against insufficient funds by the third person and returned unsatisfied. It is contended by the plaintiffs that the charges are disproportionate to actual costs and, therefore, a penalty, and, further, that, as to third persons, it must clearly be a penalty because the depositor did not write the check and may have no knowledge of the “insolvency” of the check writer. During the period in question, section 32.1 of the General Regulations of the New York State Banking Board (3 NYCRR 32.1), in accordance with section 108 (subd 8, pars [a]-[c]) of theJMew York State Banking Law, provided for a maximum service charge of $4* when a depositor writes a check resulting in an overdraft and $1.25 when an item deposited in an account is dishonored. In Dietrich v Chemical Bank (92 AD2d 786), released simultaneously herewith, the bank adhered to that maximum and so we have been unanimous in affirming the dismissal of the complaint. The fact that the defendant bank in the present case is a Federally chartered bank while in the Dietrichcase the bank is a State bank, does not alter the fact that a charge to a customer may be unfair. We have no expertise in what a fair service charge should be. The banks themselves concede that they have no analysis of costs in this area and proceed by intuition. The State Banking Board sets the standard. If the standard is exceeded, it can only be based on contract. The statements signed on the opening of the account in this case provide for an amount “necessary to compensate you [bank] for service”. It needs no reliance on Clark v Marine Midland Bank (67 AD2d 846 [involving a State bank]) to come to the logical conclusion that summary judgment should not be granted in this case.