IBP, Inc. v. Mercantile Bank of Topeka

In July 1986, IBP, Inc. (plaintiff) wrote a check for approximately $135,000 to Meyer Land & Cattle Company (Meyer) and Sylvan State Bank (Sylvan) (defendants). The check was drawn on IBP’s account with the Mercantile Bank of Topeka (Mercantile) (defendant). Meyer lost the check until 1995, at which time Meyer presented the check for deposit in its account with Sylvan, which accepted the check. After confirming that IBP had not stopped payment, Mercantile paid the check. IBP sued Meyer, Sylvan, and IBP. With respect to Meyer, IBP alleged (without evidentiary support) that Meyer was not entitled to the money and that Meyer’s actions thus constituted conversion and resulted in unjust enrichment. With respect to Sylvan, IBP alleged conversion and unjust-enrichment claims similar to those against Meyer, as well as a negligence claim. Per IBP, Sylvan was negligent because, among other things, Sylvan should have contacted IBP before cashing the check. With respect to Mercantile, IBP claimed that Mercantile was negligent in cashing a stale check without reviewing the date or notifying IBP first. Mercantile countered that it followed reasonable banking-industry standards in not reviewing the check’s date and that it could identify stale checks only via expensive and inefficient manual reviews. IBP also alleged that Mercantile breached its contract with IBP. However, the IBP-Mercantile agreement did not address stale checks. Meyer, Sylvan, and Mercantile moved for summary judgment.