FACTS AND POINT DECIDED

French banks customarily apply what they call “value dates” to transactions recorded in the accounts of their customers. The banks back-date debits and post-date credits to these accounts. The result is principally that a bank has the free use of the customer’s funds during the extra periods thus created; and, where interest is concerned, it pays less on credits and receives more on debits. This case, between the Banco Exterior France and certain customers, concerns the validity of this practice. It also, incidentally, concerns the period over which interest can be capitalised in relation to a current account.

Held:

(1) Article 1154 of the Civil Code, which provides for capitalisation of interest over a period of at least a year, does not apply to current accounts.

(2) There is no valid ground which justifies the practice of applying dates to current accounts other than those upon which the relevant transaction occurred. Pursuant to Article 1131 of the Civil Code, such a practice is not supported by consideration (“cause”).

At the public hearing of 30 March 1993, the COURT:

Whereas, according to the judgement currently under Appeal, certaincompanies Major, Jean Major, Suren and Ambre (“the Companies”), holders of current accounts in the books of Banco Exterior France (“the Bank”), brought action against the latter in order to obtain the return of bank charges; and the Bank counter-claimed that they be ordered to pay the debit balance on their accounts:

As regards the second argument:

Whereas the judgement is challenged for holding that, in the course of administering the current accounts it had opened in the names of the Companies, the Bank committed no wrong in capitalising accrued interest quarterly, while, according to the appeal, even if the current account agreement constitutes the special agreement referred to by article 1154 of the Civil Code, the provisions of that same article 1154 of the Civil Code lay down that the capitalisation of interest can only apply to interest due over a whole year; by deciding the opposite, the Court of Appeal has violated article 1154 of the Civil Code;

But whereas (1) the judgement points out that article 1154 of the Civil Code does not apply to the capitalisation of interest of a current account, and that indeed, the regular debiting of accrued interest constitutes payment of such interest, which itself loses its autonomy by merging with the balance; (2) the Court of Appeal has thus legally justified its decision; (3) the argument is not founded;

But as regards the first argument, taken in its first branch:

Having considered article 1131 of the Civil Code;

Whereas the Companies argued that their obligation to pay interest partially lacked consideration (“cause”), in so far as the sums on which interest was calculated were without reason increased by the use of “value dates” for the deposit of cheques and cash as well as for withdrawals;

Whereas, in order to reject that claim, the judgement holds that the Bank’s actions, here challenged, are justified by the fact that “when a sum is credited to, or debited from, an account, a certain period of time is required for cashing or disbursing that sum”, and that the “value of a cheque can only be credited to an account after it has been cashed, which cannot be an instantaneous process”;

Whereas by coming to this conclusion, whilst the operations being litigated (other than the deposit of cheques for cashing) did not necessitate the postponement or bringing forward of the credit or debit dates (even for the calculation of interest), the Court of Appeal violated the aforementioned text;

ON THESE GROUNDS, and without it being necessary to examine the other grounds of appeal:

QUASHES AND ANNULS, but only as regards the statement that “the company Banco Exterior France has not committed a civil wrong by its use of value dates”, the judgement rendered between the parties on 3rd October 1990 by the Aix-en-Provence Court of Appeal; thus reverts both the matter and the parties involved to their (respective) positions prior to the aforementioned judgement, and, that justice may be done, refers them to the Court of Lyons.

Based on the report of Coucillor Dumas, the comments of Me.Capron, advocate for the companies Suren, Jean Magar, Magar and Ambre and of the the spouses Makarian, and of SCP Peignot and Garreau, advocates for Banco Exterior France, the conclusions of Mrs. Piniot, Advocate-General. Mr. BEZARD, President.

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