Bank One Chicago, N. A. v. Midwest Bank & Trust Co.

Background

This case involved two banks: Bank One Chicago (which paid out funds to its customer) and Midwest Bank & Trust (the payor bank that returned a check unpaid). A customer deposited a large check drawn on Midwest. After an endorsement problem and a later notice of insufficient funds, Bank One made the funds available to its customer and sought to recover from Midwest the uncollected amount under federal check-collection rules derived from the Expedited Funds Availability Act and Regulation CC. The District Court ruled for Bank One, but the Seventh Circuit dismissed the suit, saying the Act gave federal courts jurisdiction only for depositor-versus-bank suits.

Reasoning

The Supreme Court asked whether the Act’s civil-liability provisions allow federal suits between banks as well as suits by depositors. The Court read together §4010(a), §4010(f), and §4010(d), noting the section’s title “Civil liability,” the drafting history, and common patterns where agencies set rules and courts decide disputes. The Court found that subsection (f) creates interbank liability and that subsection (d) permits bringing any action under §4010 in federal court. The Court rejected the idea that Congress intended the Federal Reserve Board to be the exclusive adjudicator of private interbank claims.

Real world impact

The ruling lets banks sue one another in federal district courts under the Expedited Funds Availability Act, so related claims can be heard together in a single forum. State courts remain an alternative forum because jurisdiction is concurrent. The decision resolved only who may sue where; it sent the case back for further proceedings on the underlying claim.

Dissents or concurrances

Two Justices wrote separately: Justice Stevens agreed and defended use of legislative history; Justice Scalia joined the judgment but warned against relying on drafting history and favored a strictly textual approach.