France v. Ford Motor Credit Company

Harold L. France (plaintiff) entered into an installment contract with Ford Motor Credit Company (Ford Credit) (defendant) to purchase a tractor for $10,035, plus finance charges. France made a $2,000 downpayment. The remaining amount was to be paid in 47 monthly payments or sooner. France decided that he wanted to pay the remaining balance of $8,506.19 in full. Accordingly, France’s wife drew a check on their joint account at the Bank of Eureka Springs payable to Ford Credit for the remaining balance. Pursuant to the contract, France’s wife sent the check to Mellon Financial Services (Mellon). Mellon encoded the amount of the check using magnetic ink so Ford Credit’s bank, Texas Commerce Bank, could mechanically process the check. However, Mellon made an encoding error by incorrectly encoding the amount of the check as $506.19, not $8,506.19. Consequently, Texas Commerce Bank processed the check using the incorrect amount. Once the error was discovered, France’s wife drew a second check for $8,000 and sent the check to Mellon. France’s wife indicated the amount correctly numerically on the second check but wrote the amount out as “Eight dollars and 00/100,” which resulted in only an additional $8 payment to Ford Credit. Though the record did not indicate who stamped the check, the words “Amount Guaranteed to Be” were stamped on the check directly above a handwritten $8,000 figure. France refused to pay the remaining balance thereafter. Thus, Ford Credit sought replevin for the tractor. France argued that Ford Credit must seek recourse from Mellon because Mellon’s coding error suspended his payment obligation and Mellon guaranteed the amount of the second check. The trial court ruled for Ford Credit. France appealed.