Appeal from the United States District Court for the Northern District of Indiana, Hammond Division. No. H85-0415-Rudy Lozano, Judge.
Cudahy, Coffey, and Easterbrook, Circuit Judges.
Plaintiff United Bank of Crete-Steger ("Crete-Steger") appeals the order of the United States District Court for the Northern District of Indiana granting summary judgment for the defendant, Gainer Bank, N.A. ("Gainer"), finding that because Saturday, June 23, 1984, could not be considered as a "banking day" under Ind. Code § 26-1-4-104(1)(c), Gainer provided Crete-Steger with timely notice of its decision to dishonor a check. We affirm.
The facts are not in dispute. On Thursday, June 21, 1984, Gentry Metals, Inc. ("Gentry"), issued a check for $142,300, drawn on its account at Gainer and made payable to John Zwick. Later that day Zwick deposited the check in his account at the United Bank of Crete-Steger. Crete-Steger forwarded the check through the routine banking channels for collection to the Federal Reserve Bank of Chicago, which in turn forwarded the check to Gainer. Gainer received the check on Friday, June 22.*fn1 Although Gainer's main facility and all of its branches were open during the morning hours of Saturday, June 23, Gainer did not process the check until Monday, June 25. Upon checking their records, Gainer determined that Gentry had insufficient funds in its account to cover the $142,300 draft, dishonored the check and immediately notified Crete-Steger. for to receiving Gainer's notice of dishonor, Crete-Steger credited Zwick's account with $142,300 and Zwick withdrew the funds.
Crete-Steger commenced this action in the district court on May 2, 1985, alleging that Gainer failed to give timely notice of its decision to dishonor Gentry's check as required under Ind. Code § 26-1-4-301(1)*fn2 -- Indiana's codification of the Uniform Commercial Code-and was thus strictly liable to Crete-Steger under Ind. Code § 26-1-4-302*fn3 for the face amount of the check.*fn4 Crete-Steger alleged that Gainer should have given notice on Saturday, June 23, rather than on Monday, June 25, because Gainer was open to the public, albeit for restricted hours and limited banking services on that Saturday.
On October 16, 1986, Crete-Steger filed a motion for summary judgment arguing that it was entitled to judgment as a matter of law because Gainer failed to give notice of its decision to dishonor Gentry's check prior to midnight on Saturday, June 23. Gainer filed a cross-motion for summary judgment on November 5, 1986, arguing that Saturday, June 23, was not a "banking day" and thus, Gainer was not required to give notice of dishonor until Monday, June 25. On June 1, 1988, the district court granted Gainer's motion for summary judgment and denied Crete-Steger's motion. The district court found that because Saturday, June 23, was not a "banking day" for Gainer, Gainer's notice of dishonor on Monday, June 25, was timely. On appeal Crete-Steger alleges that the district court misapplied the substantive law applicable on the question of whether Saturday, June 23, 1984, was a "banking day" under Ind. Code § 26-1-4-104(1)(c), and thus committed error in granting Gainer's summary judgment motion.
Rule 56(c) of the Federal Rules of Civil Procedure allows the granting of a motion for summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving part is entitled to judgment as a matter of law." The facts of this case are not in dispute. Thus, "our inquiry is limited to determining whether the district court erred in concluding that [Gainer] is entitled to judgment as a matter of law. Our review is de novo." Commercial Union Insurance Co. v. Ramada Hotel Operating Co., 852 F.2d 298, 300 (7th Cir. 1988).
Section 26-1-4-301(1) of the Indiana Code requires that a payor bank either pay or notify a collecting bank of its decision to dishonor a check before the midnight deadline following the payor bank's receipt of the item. "Midnight deadline" is defined as "midnight on [the payor bank's] next banking day following the banking day on which it receives the relevant item . . . ." Ind. Code § 26-1-4-104(1)(h). Gainer received Gentry's check on Friday, June 22. Thus, under sections 4-301(1) and 4-104(1)(h) Gainer had until midnight of the next banking day following Friday, June 22, to notify Crete-Steger of its decision to dishonor Gentry's check. "Banking day" is defined as "that part of any day on which a bank is open to the public for carrying on substantially all of its banking functions." Ind. Code § 26-1-4-104(1)(c) (emphasis added).
The sole dispute between the parties to this lawsuit is whether Saturday, June 23, was a "banking day" for Gainer. If it was, as Crete-Steger contends, then Gainer's notice of dishonor on Monday, June 25, was untimely and Gainer would be strictly liable for Crete-Steger's loss on the check. On the other hand, if Gainer's assertion that Saturday, June 23, was not a full "banking day" under the Code is proper, then Gainer's notice of dishonor was given within the midnight deadline of its next banking day-Monday, June 25-and Crete-Steger must look to the other parties involved in the transaction in its attempt to recover the loss on Gentry's check.
Whether Saturday, June 23, was a "banking day" depends on whether Gainer was "open to the public for carrying on substantially all of its banking functions." It is undisputed that Gainer's main office and all of its branches were open only for limited banking services during the morning hours on Saturday, June 23. During these hours Gainer's customers could cash checks, make deposits and withdrawals, purchase cashier's checks and money orders, open new accounts, and fill out loan applications. Many of Gainer's departments, including but not limited to the installment loan department, the commercial loan department and the bookkeeping department, were closed on Saturday, June 23. Thus, the relevant inquiry is whether the limited services Gainer Bank offered on Saturday, June 23, comprised "substantially all of its banking functions."
This court was recently confronted with interpreting the phrase "substantially all of its banking functions" in Merrill Lynch, Pierce, Fenner and Smith, Inc. v. Devon Bank, 832 F.2d 1005 (7th Cir. 1987).*fn5 The plaintiff in Merrill Lynch argued that because the defendant bank maintained walk-up windows for customers to make deposits and withdrawals, processed checks, and made inter-bank loans on the day in dispute, that day was a "banking day" under § 4-104(1)(c). In considering the plaintiff's argument, we referred to the definition of "bank" in the Bank Holding Company Act and concluded that in order to "carry on substantially all of its banking functions," a bank must be open to the public for both accepting deposits and withdrawals and making loans, because "making loans is a necessary part of 'banking.'" Id. at 1006-07.*fn6 The Devon bank was not open on the disputed day for opening accounts, arranging loans, or drawing down lines of credit. Id. at 1006. Thus, in the Merrill Lynch case, we held that the day in ...