Liability of a Bank for an Unjustified Credit Entry that Led to the Deception of Stock Buyers

Facts

Inro Corsetry Ltd. had a Swiss franc account with Michelis Bank AG. On June 27, 1960, an amount of CHF 51,675 was credited to its account, allegedly representing the equivalent of DM 50,000. In August 1960, attorney Dr. D. acquired all shares of Inro Corsetry Ltd. on behalf of a new group of shareholders. After Niederberger, the vice-director of Michelis Bank AG, was arrested in the fall of 1960 for offenses against property, the bank canceled the credit entry of CHF 51,675 on October 31, 1960.

Inro Corsetry Ltd. filed a lawsuit against Michelis Bank AG for payment of CHF 10,547.75 and a declaration that the parties had settled all claims with this payment. The bank filed a counterclaim for payment of CHF 44,092 plus interest. The Commercial Court of the Canton of Zurich partially upheld the main claim and dismissed the counterclaim.

Both parties appealed the judgment to the Federal Supreme Court. The Federal Supreme Court remanded the case to the lower court for a new assessment in accordance with the considerations.

Considerations

The Federal Supreme Court stated that Michelis Bank AG, as a corporation, is liable for the damage caused by the unlawful acts of its organs under Art. 718 para. 3 of the Swiss Code of Obligations (OR). Niederberger, the vice-director of the bank, had initiated the unjustified credit entry to simulate a reduction of the bank's debts owed by Inro Corsetry Ltd.

The Federal Supreme Court examined whether Niederberger also intended to deceive third parties, particularly the stock buyers, about the value of Inro Corsetry Ltd.'s shares through the unjustified credit entry. If this were the case, Michelis Bank AG would be liable, as Niederberger had acted in the course of his business…