Legalities of bank error in my favor?

[atomicbadgerrace]

I’m pretty sure this has been discussed at least a few times before, but if memory serves, the discussion always turns into the ethics of the following scenario. I’d do a search, but…

Anyway, the following didn’t happen to me, so I’m not seeking legal advice. YANML, IANYC, and such.

It’s my understanding that if a person gives me something, let’s say a DVD, that it’s mine. If it were to go to court and I could adequately prove that this person gave me the DVD, I’d likely win the case and the DVD would be deemed mine.

Now, what if my employer were to screw up payroll one week. A $10,000 direct deposit shows up in my account overnight, instead of the usual shirt buttons and dust. Naturally, corporate realizes this, and calls me up to ask for the money back. If I say “sorry, you gave it to me fair and square,” I presume that their lawyers will be serving me in short order. At trial, would the argument that they gave it to me, so it’s mine be a good one? Proving that they gave it to me (and I didn’t steal it) would be easy enough.

Does it then become an intent issue? If the employer can prove (by showing my timecard, pay rate, technical issue resulting in overpayment) that they didn’t mean to deposit money into my account, what are the legal grounds for them to then reclaim what they gave to me? Going back to the first scenario, would it be the same if my friend could somehow prove that he didn’t intend to give me the DVD, but did anyway?

Would I be correct in assuming that I probably couldn’t be charged with theft, because I didn’t take any action to steal the money?

Anyway, let’s not delve into the question of -should- I give it back immediately; feel free to start a GD on that if you wish. This thread could wind up in GD, I suppose, but I’m more curious about the legal process involved – has there been anything like this happen before, and what happened?

[UltraVires]

IANAL, but I did take a couple of law classes, and IIRC, it’s not your money and you have to give it back. If you started spending it knowing that it wasn’t yours, then you could very well be charged with theft.

Something similar? happened to me some years back when I was at a bank drive-thru cashing a hundred dollar check. The teller sent the wrong tubes to the wrong car, and some other guy got my hundred bucks and I got about six grand. I sent the tube back and the teller thanked me profusely.

Under your scenario, I could have floored it because the bank “gave” me the money. But in similar situations that same bank has prosecuted people for theft…

[atomicbadgerrace]

@jtgain

IANAL, but I did take a couple of law classes, and IIRC, it’s not your money and you have to give it back. If you started spending it knowing that it wasn’t yours, then you could very well be charged with theft.

Hmm, but could you make a case that because the employer actively initiated the transfer of funds into your account, it then became yours? If the answer is “not a chance in hell,” then could you ever make the case that it has become yours? As in, if the employer doesn’t notice the error for a month? A year? Ten years? Is there a statute of limitations on “oops, we sent you money by mistake, give it back”?

[Harmonious_Discord]

You know it’s not money you have coming to you, and you cash the check. You have now committed fraud, when the opportunity was there. The ex employer will win the judgment against you when they take you to court.

[Gary_T]

I haven’t studied law, so I can’t answer the question, but I’ll offer this: I have observed that in many situations, a standard of reasonableness prevails. The question would be, is it reasonable for the company to suffer a $10K loss, and for you to reap it as a windfall, over a clerical error? How would an ordinary reasonable person answer that? I think the answer would be “no,” and I believe that between the statutes and the courts the law supports this approach.

[Gfactor]

The employer can probably recover the money in a cause of action called either “money had and received” or “money paid by mistake.” E.g., http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=al&vol=1012070&invol=2

Oklahoma Legal Research & Court Cases: Find OK Opinions at FindLaw

COOKSON GROUP PLC v. FLYNN (2001) | FindLaw

There are time limits for filing this type of case: http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=or&vol=a92691&invol=1

Sometimes spending the money will get you prosecuted: http://news.yahoo.com/s/nm/20080221/od_nm/crime_error_dc

[brazil84]

@atomicbadgerrace

It’s my understanding that if a person gives me something, let’s say a DVD, that it’s mine. If it were to go to court and I could adequately prove that this person gave me the DVD, I’d likely win the case and the DVD would be deemed mine.

There are two possibilities here:

First, the DVD was intended as a gift. You can show this because your friend brought it to your birthday party wrapped in wrapping paper, with a nice card.

Second, the DVD was unsolicited merchandise. In most jurisdictions, there are statutes that address the specific situation of a merchant that sends you merchandise unsolicited. The statutes say that you can treat such merchandise as a gift.

In the case of a bank that gives you money by accident, it’s not a gift and it’s not unsolicited merchandise. So I would say that you are on the hook to return the money.

If the employer can prove (by showing my timecard, pay rate, technical issue resulting in overpayment) that they didn’t mean to deposit money into my account, what are the legal grounds for them to then reclaim what they gave to me?

Unjust enrichment, constructive trust, and possibly conversion.

Going back to the first scenario, would it be the same if my friend could somehow prove that he didn’t intend to give me the DVD, but did anyway?

I would say “yes,” for example if by mistake he gave you the smooth jazz DVD that was supposed to be for his lover.

Would I be correct in assuming that I probably couldn’t be charged with theft, because I didn’t take any action to steal the money?

I wouldn’t make that assumption. If you knew the money wasn’t yours but you went ahead and started spending it anyway, I think you could get into some serious problems.

has there been anything like this happen before, and what happened?

It happens all the time. If you do some news archive searches you will see.

[muldoonthief]

FWIW, the small print on every Direct Deposit agreement I’ve signed with an employer included language allowing them to withdraw funds that were deposited in error, without prior notice.

[Really_Not_All_That_Bright]

Take the $10 and put the Community Chest card back at the bottom of the pile.

More seriously, think about it this way: if they failed to pay you money you were actually due, for some reason, would they get to keep it?

[One_And_Only_Wanderers]

Here’s a case from the UK. Jail time ensued.

BBC Link

[Dewey_Finn]

@muldoonthief

FWIW, the small print on every Direct Deposit agreement I’ve signed with an employer included language allowing them to withdraw funds that were deposited in error, without prior notice.

Second this. I remember seeing language to such effect when I set up direct deposit.

[Gfactor]

http://select.nytimes.com/gst/abstract.html?res=F5081FFF39581B728DDDA80A94D9415B848AF1D3 (man gets five years for refusing to return $43,000 bank error).

http://nl.newsbank.com/nl-search/we/Archives?p_product=PI&s_site=philly&p_multi=PI&p_theme=realcities&p_action=search&p_maxdocs=200&p_topdoc=1&p_text_direct-0=0EB293E8DF9D68A5&p_field_direct-0=document_id&p_perpage=10&p_sort=YMD_date:D&s_trackval=GooglePM (indictment for similar transgression)

[Mike_Fun]

I’ve seen this exact situation many times before when I used to work in payroll (although not such a large amount). Your employer would likely first attempt to debit your account for the overpayment. If the funds were no longer available, your future pay might be garnished until it’s paid back. If you no longer work there, you may get a nice letter asking you to give it back, but they don’t hear back from you within a reasonable time frame, then it’ll probably be turned over to the legal department for litigation. IANAL, but I believe this would be a civil suit, and not criminal charges.

[Gfactor]

@muldoonthief

FWIW, the small print on every Direct Deposit agreement I’ve signed with an employer included language allowing them to withdraw funds that were deposited in error, without prior notice.

We did a thread on this issue a while back. If only I could search for it. :o

Here is an example of language like that:

If at any time the amount of salary or wages so deposited exceeds the amount of salary or wages actually due and payable to me, I
hereby authorize the State Controller’s Office to either:
(a) Withhold a sum equal to the overpayment from future salary or wages; or
(b) Recover such overpayment from the above-designated account.

std699.pdf

[Dewey_Finn]

On Citibank’s website, I found a PDF form to set up direct deposit and it includes the following statement: “I authorize __________ (Employer/Fund Originator) to initiate credit entries and, if necessary, to initiate any debit entries and adjustments to correct any erroneous credit entries to my account at Citibank.”

[muldoonthief]

@Gfactor

We did a thread on this issue a while back. If only I could search for it. :o

I was about to get all defensive for getting slapped down by a moderator for providing what I thought was relevant info, if not exactly answering the OP’s question. Luckily I spotted the Announcement first.

[Gfactor]

@muldoonthief

I was about to get all defensive for getting slapped down by a moderator for providing what I thought was relevant info, if not exactly answering the OP’s question. Luckily I spotted the Announcement first.

I’m glad you figured it out. I definitely didn’t intend any slapping. Although, if you’d been insulted enough, it might have generated my first-ever pitting.

[Martin_Hyde]

@Gfactor

http://select.nytimes.com/gst/abstract.html?res=F5081FFF39581B728DDDA80A94D9415B848AF1D3 (man gets five years for refusing to return $43,000 bank error).

That seems ridiculously obstinate. Even if he had some genuine moral feeling that the money was his, I can’t imagine why someone would let it get to the point of him facing 5 years in prison when I’m pretty sure the the prosecutor would probably have dropped the charges if he’d given the money back.

[Gfactor]

@Martin Hyde

That seems ridiculously obstinate. Even if he had some genuine moral feeling that the money was his, I can’t imagine why someone would let it get to the point of him facing 5 years in prison when I’m pretty sure the the prosecutor would probably have dropped the charges if he’d given the money back.

Here is the case: http://bulk.resource.org/courts.gov/c/F2/354/354.F2d.735.22120.html

On the morning of March 6, 1963, appellant received his February, 1963 bank statement from the Union Bank & Trust Company, showing a balance in excess of $43,000. He showed this statement to a friend, remarking, ‘You don’t make this kind of money in used car business.’ It appears that the bank had received two deposits aggregating approximately $43,000 for the account of the Alabama Power Company and that, as the result of a bookkeeping mistake, this sum was erroneously credited to the account of Alabama Motors Company (owned by Thaggard). On the same morning, March 6th, Thaggard went to the statement teller of the bank and requested the amount of his balance in the Alabama Motors account. The teller obtained this balance from the bookkeeping department, wrote it down for Thaggard in the amount of $43,498.38, and handed him the piece of paper containing this information after again verifying the amount at his request. Shortly thereafter Thaggard asked a paying teller at the bank for the amount of the balance in the Alabama Motors account. This teller also called the bookkeeper, obtained the same balance, and handed appellant a piece of paper containing this information. Appellant then handed this same paying teller a check in the amount of $43,000 and said he wished to withdraw that amount. At the paying teller’s request, appellant endorsed this check, whereupon the teller again called the bookkeeping department to determine whether there were any uncollected items against the account, thereafter paying the amount of the check to appellant. The paying teller assumed at the time of payment that the check was good and did not in any way misread the check, i.e., she intended to pay Thaggard the $43,000.
Around ten minutes after the payment to appellant, the true facts were discovered and appellant was finally located and taken to police headquarters on the night of March 6th, although he was not then under arrest. At this time appellant admitted that he had not made the $43,000 deposit, that he knew of no one who would have had any occasion to make such a deposit to his account and that the money did not belong to him. Subsequently, appellant was indicted under the Federal bank robbery statute and, after trial by jury in the district court, was found guilty. From this judgment Thaggard has taken this appeal.

It may be that he could have returned the money and walked away, but the authorities might have wanted to make an example of him.

[peekercpa]

@Mike Fun

I’ve seen this exact situation many times before when I used to work in payroll (although not such a large amount).

I had a new payroll clerk code in someone’s annual salary and attach it to an hourly pay code. This associate ended up getting a direct deposit for 52000 x 80 hours (4,160,000) instead of 52000/26 (2,000). Caught it rather quickly and let the associate know that although it would hit her account that we would be sucking it back out later that day.

However, it did sit in her account for a couple of hours. She had her spouse call in and verify the balance of their checking account. From what she told me he damn near passed out.