McGuire v. Bank One, Louisiana, N.A.
Louisiana Court of Appeal
744 So.2d 714 (1999)
Lottie McGuire (plaintiff) arranged to transfer $200,000 from her investment account into her checking account so she could give Timothy Looney a check for that amount to purchase bonds on her behalf, instructing Looney not to cash the check until the transfer was complete. Looney ignored her instructions and deposited the check early, and Bank One (defendant) honored it the next day despite the transfer being incomplete and the checking account lacking sufficient funds, resulting in a $188,198.79 overdraft; Looney then absconded with the money and later pleaded guilty to fraud. McGuire sued Bank One for failing to exercise ordinary care in honoring the check despite the massive overdraft, but the trial court dismissed her suit based on UCC § 4-401, and McGuire appealed.
Whether, under the Uniform Commercial Code, a bank has the discretion to charge a properly payable check against a customer's account, even if the charge creates an overdraft.