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Customer Sues L. B. Bank in $100 Dispute

February 05, 1989|DAVID HALDANE | Times Staff Writer

Jeffrey Johnson of Lakewood is mad at his bank. He has filed a small claims suit against it. He says he has persuaded several of his friends to close their accounts there. And at a recent business seminar, he urged others to avoid doing business with that bank.

All because he says the bank cheated him out of $100.

"What they did isn't right," said Johnson, 35. "I think that business institutions need to act in good faith with the people doing business with them. They need to learn that if they act against that good faith that they won't stay in business long."

The object of his wrath is Farmers & Merchants Bank of Long Beach.

Counted the Money Twice

The dispute began early last month when Johnson, a computing consultant from Lakewood, went to the bank's Seal Beach branch to cash a $100 check. To hear Johnson tell it, all went well. He said he took his money, counted it twice to make sure he had received the correct amount, and then went home.

But that night, Johnson says, he got a call from the teller asking if he had noticed an extra $100 in his wallet. A few days later, he says, he received a letter from the bank informing him that he had been given an extra $100, an assertion Johnson vehemently denies. To make things right, the letter went on to say, the bank had withdrawn the additional $100 from his account.

"We apologize for our error and appreciate your cooperation with the action necessary," said the letter, signed by Jeffrey C. Hagan, assistant vice president.

Hagan said the letter was based on a close reading of the teller's audit tape, a computer printout that automatically records every transaction at a teller's window. Included in the material he sent Johnson was a copy of the tape showing a dispersal on the date in question of $200--ten $20 bills--to Johnson. Also included was Johnson's canceled check for $100. "I am sorry he feels that we're in the wrong," Hagan said in an interview, "but I am required to go by what our paper documentation shows us."

Denise Hatfield, the teller involved, said she definitely remembers handing Johnson $200, but declined to elaborate.

Six Similar Cases

Senior Vice President and Cashier John Henrichs characterized the teller's tape as a "very complex and highly reliable" method of recording bank transactions. "The teller can't take a dollar out of the drawer without putting it on the tape," Henrichs said, adding that the bank has experienced about six such disputes over the last 15 years, all of which were decided in its favor.

He said a state law allows banks to seize the assets of customers to offset verified financial obligations.

After punching a series of numbers on a computer keyboard and thereby recording the transaction, bank officials say, tellers remove the money from a drawer and generally count it twice before giving it to a customer.

In Johnson's case, said Senior Vice President Charles Hagan, who is Jeffrey Hagan's father, there were "some unique characteristics . . . that caused the error." He said he could not reveal them because of the pending litigation. He also said the teller who handled the transaction has been with the bank for several years and is highly regarded.

"We feel that the customer in this case is making this claim in innocence," he said. "He really doesn't believe that he got the money."

After receiving the bank's letter, Johnson immediately fired off a letter demanding repayment of the $100. "What I don't understand," he wrote, "is why you insist on victimizing me when you can't possibly demonstrate that I received this money. It can't be demonstrated because it never happened."

When he did not receive a response, Johnson filed a suit in the Small Claims Division of Long Beach Municipal Court asking that the money be returned. A hearing is scheduled Feb. 27.

Customer Is 'Outraged'

In the meantime, Johnson is closing his account at the bank. "I am outraged," he said in an interview last week. "I think it's terrible what they've done. The bank shouldn't bill customers for its own clerical errors; having such a policy is destructive and not good business."

Charles Hagan, calling Johnson's response vindictive, said the bank has not experienced a flurry of account closures as a result of the incident. "There's nothing we can do about that kind of behavior," he said of Johnson's determination to be a walking bad advertisement for the bank. "It's part of the emotions that get involved in these transactions."

But he also said that the bank intends to vigorously defend its position to the legal limit, including an appeal if necessary. "We will defend on principle," he said. "Our processes are reliable and trustworthy. There has to be some authority in these transactions."

Johnson recently returned to Farmers & Merchants to cash some new checks before closing his account. However, he said that this time he brought a friend along to act as a witness, and asked for a copy of the teller's audit tape verifying the amount of the transaction.

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