Port City State Bank v. American National Bank

Citation: Port City State Bank v. American National Bank, 486 F.2d 196 (10th Cir. 1973).

Factual Background
Port City sued for collection on two checks that American National did not return as insufficient before a midnight deadline. American National's defense was that its new computer developed a memory error, which a repairman assured the bank could be corrected that day. However, when the computer was started up the next day, there was a second breakdown, and another two days were lost before service could be restored.

American National began using another computer at a bank two hours and thirty minutes away as soon as they realized that repairs could not be made immediately.

Trial Court Decision
In ruling for American National, the Court of Appeals found that the bank had demonstrated the diligence required in an emergency:


 * [T]he statute does not require perfection on the part of [American National], and American National’s performance should not be judged on the basis of 20-20 hindsight . . . . Further, there was evidence to indicate that such computer breakdowns are generally repaired very quickly. Thus it would appear that appellee was justified in its initial delay in adopting emergency procedures based on its belief [that] such measures would prove unnecessary.