COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 61244 CUYAHOGA CLEANING SERVICES, INC. : : : PLAINTIFF-APPELLANT : JOURNAL ENTRY : v. : AND : : OPINION WOMEN'S FEDERAL SAVINGS BANK : : : DEFENDANT-APPELLEE : DATE OF ANNOUNCEMENT OF DECISION: AUGUST 27, 1992 CHARACTER OF PROCEEDING: Civil appeal from Common Pleas Court, Case No. 177926. JUDGMENT: REVERSED AND REMANDED. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-appellant: Paul Mancino, Jr., Esq. 75 Public Square Building Suite 1016 Cleveland, Ohio 44113 For Defendant-appellee: Nancy M. Czupik, Esq. Richard A. Prayson, Esq. Thomas G. McNally, Esq. 120 Public Square Cleveland, Ohio 44113 - 2 - SWEENEY, JAMES D., J.: Plaintiff-appellant Cuyahoga Cleaning Services, Inc. appeals the trial court's ruling which denied their motion for summary judgment. The court also granted the motion for summary judgment filed by defendant-appellee Women's Federal Savings Bank on both the complaint and the counterclaim. The appellee was awarded judgment on the counterclaim for the sum of $15,501.44. On August 9, 1989, William L. Spigutz opened a checking account at Women's Federal under the title Cuyahoga Cleaning Service. On Friday, August 25, 1989, the appellant made a deposit to the account at Women's Federal in the amount of $40,575.60. The drawer of the check was Thomas E. Ferguson, Auditor of State; the drawee or payor bank was Bank Ohio; the Payee was Nunes, Inc., dba NNC Construction Company; the check was endorsed by Nunes, Inc., NNC Construction Company, Anthony Nunes, President. At the time of the deposit, the appellant's account number was written on the check. On Friday, September 1, 1989, Women's Federal was informed by its computer notification company that a check in the amount of $40,575.60 made payable to and endorsed by Nunes, Inc., dba NNC Construction was being returned as payment had been stopped. Although appellee searched its records, no customer named Nunes, Inc. could be located. Monday, September 4, 1989, was a holiday, and appellee did not receive the returned check until the following day, Tuesday, - 3 - September 5, 1989. Once the check itself was received, appellee was able, by virtue of the account number placed on the check, to identify its customer, Cuyahoga Cleaning Services, Inc. Appellee telephoned Mr. Spigutz, but was unable to reach him. A message was left requesting a return call. Mr. Spigutz returned appellee's call the next day, September 6, 1989, and at that time was informed of the stop payment order on the check which he had deposited on Friday, August 25, 1989. After the initial deposit, but before appellant learned of the stop payment order, appellee alleges that appellant made withdrawals against the account in the amount of $15,501.44. Appellant sets forth five assignments of error. Appellant's first and fifth assignments of error. I THE COURT COMMITTED PREJUDICIAL ERROR IN GRANTING SUMMARY JUDGMENT TO THE DEFENDANT AS THERE WERE GENUINE ISSUES AS TO MATERIAL FACTS WHICH PRECLUDED THE GRANT TO SUMMARY JUDGMENT. V THE COURT COMMITTED PREJUDICIAL ERROR IN OVERRULING THE MOTION OF THE PLAINTIFF FOR SUMMARY JUDGMENT. In determining whether or not a motion for summary judgment should be granted, the court must look to Civil Rule 56(C), which reads in pertinent part: (C) Motion and proceedings thereon. *** Summary judgment shall be rendered forthwith if the pleading, depositions, answers to interrogatories, written admissions, - 4 - affidavits, transcripts of evidence in the pending case, and written stipulations of fact, if any, timely filed in the action, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. No evidence or stipulation may be considered except as stated in this rule. A summary judgment shall not be rendered unless it appears from such evidence or stipulation and only therefrom, that reasonable minds can come to but one conclusion and that conclusion is adverse to the party against whom the motion for summary judgment is made, such party being entitled to have the evidence or stipulation construed most strongly in his favor. *** A motion for summary judgment may be granted only where the motion demonstrates there are no genuine issues of material fact and that, as a matter of law, the moving party is entitled to a judgment. As the Supreme Court stated in AAAA Enterprises, Inc. v. River Place Community Urban Redevelopment Corp. (1990), 50 Ohio St.3d 157: Summary judgment is a potentially useful, but extraordinary, procedure wherein the trial of issues of fact made up by the pleadings is avoided. Because summary judgment represents a shortcut through the normal litigation process by avoiding a trial, the burden is strictly upon the moving party to establish, through the evidentiary material permitted by the rule, that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. Civ. R. 56(C). Appellant filed this suit seeking damages from appellee for the wrongful cancellation of credit and for wrongfully dishonoring the check deposited by appellant on August 25, 1989. - 5 - This case is governed by the Uniform Commercial Code, which has been adopted in Ohio by way of Chapter 13 of the Revised Code. R.C. 1304.01 defines the following terms: item, midnight deadline, settle, depositary bank, payor bank, and collecting bank. These terms are pertinent to the resolution of this case and are as follows: * * * * (7) "Item" means any instrument for the payment of money even though it is not negotiable but does not include money; (8) "Midnight deadline" with respect to a bank is midnight on its next banking day following the banking day on which it receives the relevant item or notice or from which the time for taking action commences to run, whichever is later; * * * * (10) "Settle" means to pay in cash, by clearing house settlement, in a charge or credit or by remittance, or otherwise as instructed. A settlement may be either provisional or final; * * * * (12) "Depositary bank" means the first bank to which an item is transferred for collection even though it is also the payor bank; (13) "Payor bank" means a bank by which an item is payable as drawn or accepted; * * * * (15) "Collecting bank" means any bank handling the item for collection except the payor bank; * * * * - 6 - The "item" in the case sub judice was the check deposited by appellant. The depositary bank and the collecting bank was the appellee. Bank Ohio was the payor bank. The issue before this court is whether or not appellee can recover funds from appellant which it paid on appellant's behalf subsequent to the deposit of the check. This issue can only be resolved by determining whether or not the payor bank had effected a final settlement of the item, thereby prohibiting the stop payment order. If the stop payment order was not received before final settlement occurred, appellee had no ability to charge back to appellant the funds already paid on appellant's behalf. R.C. 1304.19 sets forth when a payor bank, here Bank Ohio, has finally paid an item. 1304.19 (UCC 4-213) Final payment of item by payor bank; when provisional debits and credits become final; when certain credits become available for withdrawal. (A) An item is finally paid by a payor bank when the bank has done any of the following, whichever happens first: * * * * (4) made a provisional settlement for the item and failed to revoke the settlement in the time and manner permitted by statute, clearing house rule, or agreement. Upon a final payment under divisions (A) (2), (3), or (4) of this section, the payor bank shall be accountable for the amount of the item. The concept of final payment is important in the determination of priorities. Official Comment 1 states: - 7 - 1. By the definition and use of the term "settle" (RC 1304.01(A)(10) [UCC 4- 104(j)]) this Chapter recognizes that various debits or credits, remittances, settlements or payments given for an item may be either provisional or final, that settlements sometimes are provisional and sometimes are final and sometimes are provisional for awhile but later become final. Division (A) of RC 1304.19 [UCC 4-213] defines when settlement for an item or other action with respect to it constitutes final payment. Final payment of an item is important for a number of reasons. It is one of several factors determining the relative priorities between items and notices, stop- orders, legal process and set-offs (RC 1304.23 [UCC 4-303]). It is the "end of the line" in the collection process and the "turn around" point commencing the return flow of proceeds. It is the point at which many provisional settlements become final. See RC 1304.19(B) [UCC 4-213(2)]. Final payment of an item by the payor bank fixes preferential rights under RC 1304.20(A) and (B) [UCC 4-214(1) and (2)]. Official Comment 6 specifically discusses R.C. 1304.19(A)(4): 6 . Division (A) (4) covers the situation where the payor bank m a k e s a provisional settlement for an item, which settlement becomes final at a later time by reason of the failure of the payor bank to revoke it in the time and m a n n e r permitted by s t a t u t e , - 8 - clearing house r u l e o r agreement. An example of this t y p e o f situation is the clearing h o u s e settlement referred to in Comment 4. In t h e illustration there given if the time limit for the return o f i t e m s received in the Monday morning clearing is 2:00 p.m. on Tuesday and the provisional settlement has n o t b e e n revoked at that time in a m a n n e r permitted by the clearing house rules, the provisional settlement made on Monday morning becomes final at 2:00 p . m . o n T u e s d a y . Division (A) (4) provides specifically that in this situation the item is finally paid at 2:00 p.m. Tuesday. If on the other hand a payor bank receives an item in the - 9 - mail on Monday and makes some provisional settlement for the item on Monday, it has until midnight on Tuesday to return the item or give notice and revoke any settlement under RC 1304.21 [UCC 4- 301]. In this situation division (A) (4) of RC 1304.19 [UCC 4- 213(1)(d)] provides that i f t h e provisional settlement made on Monday is not revoked before midnight on Tuesday as permitted by RC 1304.21 [UCC 4-301], the item is finally p a i d a t midnight on Tuesday even if the process of posting the item to the account of the drawer has not been completed at that time. The payor bank, Bank Ohio, had until its midnight deadline after receipt of the check deposited by appellant to dishonor the check. If it did not do so, the provisional settlement - 10 - automatically became a final settlement. See also RC 1304.21 and 1304.22. Under the facts before this court, the payor bank did not timely dishonor the check, and a final settlement occurred. The responsibilities of a collecting bank, the appellee, are delineated in RC 1304.08: 1304.08 (UCC 4-202) Responsibility for collection; when action seasonable. (A) A collecting bank must use ordinary care in: * * * * (3) settling for an item when the bank receives final settlement; and . . . Once the check was finally settled by Bank Ohio, the provisional settlement afforded to appellant by appellee became final. The appellee was obligated to use ordinary care in settling the check as to its customer, the appellant. Once the settlement was final, appellee no longer had a right to "charge back" the funds under RC 1304.18. Official Comment 3 to RC 1304.18 states: 3. The r i g h t o f charge-back or refund exists if a collecting bank has made a provisional settlement for an item with its customer but terminates if and when a settlement received by the bank for the item is or - 11 - becomes final. * * * * Appellee, Women's Federal Savings Bank, did not have grounds to "charge back" to appellant the amounts it had paid out on appellant's behalf. Once a final settlement occurred, appellee had no recourse against the appellant. As appellee correctly notes, these provisions can be varied by agreement. R.C. 1304.03(A) states as follows: 1304.03 (UCC 4-103) Variation by agreement; measure of damages; action constituting ordinary care. (A) The effect of the provisions of sections 1304.01 to 1304.34, inclusive, of the Revised Code, may be varied by agreement except that no agreement can disclaim a bank's responsibility for its own lack of good faith or failure to exercise ordinary care or can limit the measure of damages for such lack or failure; but the parties may by agreement determine the standards by which such responsibility is to be measured if such standards are not manifestly unreasonable. (Emphasis added.) It is clear that the duty of ordinary care cannot be limited by a contract between the appellee bank and its customer. As previously stated, appellee was obligated to use ordinary care in settling the check. The appellee breached this duty when it failed to settle the check pursuant to R.C. 1304.08. The motion for summary judgment filed by the appellee should have been denied as a matter of law, and on that basis, the - 12 - appellant's arguments in the first assignment of error are well taken. Appellant's fifth assignment of error is well taken. Appellant's second assignment of error. II THE COURT COMMITTED PREJUDICIAL ERROR IN RULING UPON THE MOTION FOR SUMMARY JUDGMENT WITHOUT RULING UPON THE OUTSTANDING MOTIONS THAT WERE FILED IN THIS CASE BY BOTH OF THE PARTIES. As this court stated in Solon v. Solon Baptist Temple (1982), 8 Ohio App.3d 347, where a court fails to rule upon an objection or motion, it will be presumed that the court overruled the objection or motion. Appellant's second assignment of error is without merit. Appellant's third assignment of error. III THE COURT COMMITTED PREJUDICIAL ERROR IN GRANTING SUMMARY JUDGMENT OF THE DEFENDANT ON ITS COUNTERCLAIM WHEN THE MOTION FOR SUMMARY JUDGMENT ONLY SOUGHT SUMMARY JUDGMENT ON THE COMPLAINT OF THE PLAINTIFF. Appellee's motion for summary judgment, filed on April 30, 1990, states as follows: The Defendant, Women's Federal Savings Bank ("Women's Federal"), hereby moves this Court pursuant to Rule 56 of the Ohio Rules of Civil Procedure for its Order granting Summary Judgment in favor of Women's Federal on all claims asserted by the Plaintiff in this case for the reason that there is no genuine issue as to any material fact and Women's Federal is entitled to judgment as a matter of law. The reasons supporting this - 13 - Motion are fully set forth in the attached Memorandum in Support and Affidavit. (Emphasis added.) Although appellee did not specifically delineate a request for judgment on the counterclaim, it did request a judgment as a matter of law. This statement was sufficient to put appellant on notice that appellee was requesting a judgment on the counterclaim as well as on the complaint. In addition, the motion references the memorandum in support, in which appellee does specifically discuss the counterclaim. The trial court properly entertained appellee's motion for summary judgment on the appellee's counterclaim. Appellant's third assignment of error is overruled. Appellant's fourth assignment of error. IV THE COURT COMMITTED PREJUDICIAL ERROR IN GRANTING SUMMARY JUDGMENT TO THE DEFENDANT ON ITS COUNTERCLAIM AGAINST THE PLAINTIFF AS THE COUNTERCLAIM WAS NOT SUPPORTED WITH PROPER EVIDENTIARY MATERIALS. In AAAA Enterprises, Inc., supra, at syllabus 2, the Supreme Court established the movant's burden upon filing a motion for summary judgment. 2. Regardless of who may have the burden of proof at trial, the burden is upon the party moving for summary judgment to establish that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. The evidentiary material submitted by the movant may be relied upon by the respondent in support of the latter's - 14 - argument that there is a genuine issue of material fact. Applying the law to the case sub judice, appellee had the burden to submit evidentiary materials supporting its claim sufficient to establish that judgment should be rendered in its favor by the court. Although appellee alleged appellant withdrew $15,501.44, there is no evidence attached to appellee's motion which supports its allegation. Where a party fails to offer evidence as to an essential element of its claim, summary judgment cannot be rendered. Appellant's fourth assignment is well taken. Judgment entered in favor of appellee and against appellant is reversed. Judgment is hereby rendered in favor of appellant. Cause remanded for a determination of damages. - 15 - This cause is reversed and remanded. It is, therefore, considered that said appellant(s) recover of said appellee(s) its costs herein. It is ordered that a special mandate be sent to said court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. Exceptions. DAVID T. MATIA, C.J., and SARA J. HARPER, J., CONCUR. JAMES D. SWEENEY JUDGE N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announcement of decision (see Rule 26). Ten (10) days from the date hereof this document will be stamped to indicate journalization, at which time it will become the judgment and order of the court and time period for review will begin to run. .