Procedural Posture

Appellant bank sought review of the decision from the Superior Court of Los Angeles County, which held in favor of respondent depositor, in the depositor’s action against the bank for negligent breach of contract of deposit.

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The depositor brought suit against the bank for negligent breach of contract of deposit and recovered judgment against the bank for losses resulting from the defalcations of an employee. On appeal, the court held that the bank was not justified in assuming that, because of her position with the depositor, the employee had authority to make the deposits in the manner indicated. The court held that the acts of the bank in accepting deposits of a single check as several separate deposits was a breach of duty owed to the depositor and a legal cause of the depositor’s loss. The court held that the bank acted negligently in performing its duty to render faithful and accurate accounts under the contract of deposit with the depositor. The court held that because there was substantial evidence in the record to show the thefts would have been discovered but for the bank’s negligence, that negligence was a substantial factor in causing the loss and therefore must be regarded as a cause in fact of the loss. The court held that the bank was not responsible for the prior losses.


The court affirmed in part and reversed in part the decision of the trial court. The court affirmed the judgment as to the bank’s liability and reversed the judgment on the issue of damages and directed the lower court to determine the amount of damages actually caused by the bank’s negligence in accordance with the decision. The court held that costs on appeal were to be borne by the bank.