## Facts

- Kenneth and Vicki Isaacs maintained a checking account at Twin City Bank.
- In May 1979, the Isaacs discovered their checkbook was missing and promptly notified the bank.
- Two forged checks totaling $2,050 were paid from the account; after additional items cleared, roughly $2,000 remained.
- The bank placed a hold on the account, effectively freezing the Isaacs’ access to their funds, based in part on suspicion that they were involved.
- Police identified, charged, and convicted the forger, and informed the bank twice that there was nothing connecting the Isaacs to the forgeries.
- The bank nevertheless kept the account frozen for approximately four years, asserting it acted on advice of counsel.
- During the freeze, the bank dishonored checks, continued assessing service charges and overdraft fees, and the Isaacs suffered repossessions, loss of credit, a lost home-purchase bargain after an earnest-money check was dishonored, and mental suffering and marital strain.
- The Isaacs sued for wrongful dishonor and wrongful withholding of funds; a jury awarded $18,500 compensatory damages and $45,000 punitive damages.

## Issues

1. Whether the trial court abused its discretion by denying a mistrial or new trial based on alleged juror misconduct.
2. Whether the trial court erred in refusing the bank’s requested jury instructions on liability and damages.
3. Whether the compensatory and punitive damages were excessive or unsupported, including recovery for mental anguish under U.C.C. § 4-402 (Ark. Stat. Ann. § 85-4-402).

## Decision

- The Arkansas Supreme Court affirmed the denial of the bank’s motion for a new trial.
- The court found no reversible error regarding the juror-misconduct claim, given the trial court’s investigation and lack of demonstrated prejudice.
- The court upheld the refusal of the bank’s requested instructions because the charge given adequately covered the law and the requested instructions were duplicative, inaccurate, or inappropriate.
- The court held that compensatory damages, including intangible harms such as mental anguish, were supported as proximately caused by the wrongful dishonor and prolonged withholding of funds.
- The court upheld the punitive damages award based on evidence that the bank’s continued freeze after exculpatory police information could be found willful or wanton, and the amount did not indicate passion or prejudice.

## Legal Principles

- Under U.C.C. § 4-402, a payor bank is liable to its customer for damages proximately caused by wrongful dishonor, including actual and consequential damages.
- Damages under § 4-402 may include intangible injuries such as mental anguish; the plaintiff need not satisfy the heightened elements associated with an independent emotional-distress tort.
- Exact quantification of consequential or intangible damages is not required when the evidence supports that such damages were proximately caused by the wrongful dishonor.
- Trial courts have broad discretion to evaluate allegations of juror misconduct; appellate reversal requires a clear abuse of discretion and a showing of prejudice.
- Punitive damages may be awarded where the bank’s conduct regarding wrongful dishonor or withholding of funds is sufficiently willful or wanton to warrant punishment and deterrence.

## Conclusion

The Arkansas Supreme Court affirmed liability and substantial compensatory and punitive awards where a bank froze a customer’s account for years and dishonored checks despite police exoneration, holding that U.C.C. § 4-402 permits recovery for foreseeable consequential and intangible harms, including mental anguish, and that punitive damages may be sustained on proof of willful or wanton conduct.


Twin City Bank v. Isaacs, 672 S.W.2d 651 (Ark. 1984)