Statement by Hart, J.:

This is an action by Charlotte Marshall against State Bank of Siloam Springs to recover damages for the refusal by the defendant to honor certain checks drawn on it by the plaintiff against a deposit subject to checking which she had with the defendant, and which was more than sufficient to meet the checks so drawn when presented.

It appears from the record that during the period of time involved in this lawsuit and for several years prior thereto Charlotte Marshall was engaged in operating a rooming and boarding house in Siloam Springs, Arkansas. On the 19th day of November, 1921, she had on deposit, subject to check, in the State Bank of Siloam Springs the sum of $245.27. On November 23, 1921, she gave a check on the bank for $10 for goods purchased at a drug store. On November 26, 1921,

the plaintiff gave a check upon the bank to a mercantile company for $30.25 in payment of merchandise which she had bought. On the same day she gave another merchant a check on the bank for $20 for merchandise bought from him. On November 25, 1921, she gave a lumber company a check on the bank for $10 for lumber bought from it. Each of these checks was returned marked "No funds," and the bank refused payment on the checks because it had applied the amount on deposit to the credit of the plaintiff in payment of a debt due in the future from the plaintiff to the defendant. It also appears from the evidence of the plaintiff that she was not insolvent at this time. Other facts will be stated or referred to in the opinion.

The jury returned a verdict in favor of the plaintiff against the defendant in the sum of $250; and

from the judgment rendered the defendant has duly prosecuted an appeal to this court.

Mr. A. L. Smith, for appellant: While the mere allegation of wrongful dishonor of plaintiff's checks, and damage to her credit might have been sufficient under the common-law rule before the Act of March 26, 1921, if the plaintiff had been a merchant or trader, the amended complaint now under consideration would not have been sufficient on demurrer, plaintiff not being a merchant or trader.

First Nat. Bank v. McFall, 144 Ark. 149, 222 S. W. 40; McFall v. First Nat. Bank, 138 Ark. 370, 4 A.L.R. 940, 211 S. W. 919.

The fact that defendant was accommodating to plaintiff, and that other people required her to give security, if in fact they did, should not militate against defendant, and is not evidence of any actual or special damages to plaintiff. Special damages are those that are the natural, but not the necessary, result of the act complained of, and consequently are not implied by the law, and must be particularly stated and proven.

Lynch v. Third Ave. R. Co. 27 Jones & S. 71, 13 N. Y. Supp. 236; Haszlacher v. Third Ave. R. Co. 26 Misc. 865, 56 N. Y. Supp. 380; Rembt v. Roehr Pub. Co. 71 App. Div. 459, 75 N. Y. Supp. 861; Woodruff v. Bradstreet Co. 35 Hun, 16; Roberts v. Breckon, 31 App. Div. 431, 52 N. Y. Supp. 638; Bristol Mfg. Co. v. Gridley, 28 Conn. 201; Tomlinson v. Derby, 43 Conn. 562; Bateman v. Blake, 81 Mich. 227, 45 N. W. 831; Lashus v. Chamberlain, 6 Utah, 385, 24 Pac. 188; North Point Consol. Irrig. Co. v. Utah & S. L. Canal Co. 23 Utah, 199, 63 Pac. 812; Nicholson v. Rogers, 129 Mo. 136, 31 S. W. 260; State use of McCracken v. Blackman, 51 Mo. 319; Barrett v. Western U. Teleg. Co. 42 Mo. App. 542; Brown v. Hannibal & St. J. R. Co. 99 Mo. 310, 12 S W. 655; Lawrence v. Porter, 26 L.R.A. 167, 11 C. C. A. 27, 22 U. S. App. 483, 63 Fed. 62; Roberts v. Graham, 6 Wall. 578, 18 L. ed. 791; Fitchburg R. Co. v. Donnelly, 30 C. C. A. 580, 59 U. S. App. 708, 87 Fed. 135; Louisville & N. R. Co. v. Ray, 101 Tenn. 1, 46 S. W. 554; Tyler v. Salley, 82 Me. 128, 19 Atl. 107; Hunter V. Stewart, 47 Me. 419; Salt River Canal Co. v. Hickey, 4 Ariz. 240, 36 Pac. 171; Thompson v. Webber, 4 Dak. 240, 29 N. W. 671; Kircher v. Larchwood, 120 Iowa, 578, 95 N. W. 184;

Louisville & N. R. Co. v. Reynolds, 24 Ky. L. Rep. 1402, 71 S. W. 516; Donnell v. Jones, 13 Ala. 490, 48 Am. Dec. 59; Oldfather v. Zent, 14 Ind. App. 89, 41 N. E. 555; Herfort v. Cramer, 7 Colo. 483, 4 Pac. 896.

Messrs. Williams & Williams for appellee.

Hart, J., delivered the opinion of the court:

At the time the plaintiff drew the checks in question on the defendant bank she had on deposit there a sum subject to her check which was greater than the amount of the four checks drawn by her upon which the bank refused payment. The ground upon which the bank dishonored the checks was that it had applied the deposit of the plaintiff towards the payment of a debt which she owed the bank, but which was not then due. It was also shown by the plaintiff that she was not at the time insolvent, and that the bank had no lien on her deposit.

honor check.

The general rule is that a bank is bound to honor checks drawn on it by a depositor, if it has sufficient funds belonging to the depositor when Banks-duty to the check is presented, and the funds are not subject to any lien or claim; and for its refusal or neglect to do so it is liable in an action by the depositor. This rule is so well settled in this state as well as elsewhere that a citation of authorities in support of it is not necessary.

In McFall v. First Nat. Bank, 138 Ark. 370, 4 A.L.R. 940, 211 S. W. 919, and First Nat. Bank v. McFall, 144 Ark. 149, 222 S. W. 40, this court held that, in case a bank wrongfully dishonors, through mistake or otherwise, a merchant's or trader's check, injury to his credit may be inferred from the fact that he is a merchant or trader, and substantial damages may be awarded upon proof of that fact without anything more.

The reason is that the act of the banker in refusing to honor the check imputes insolvency or bad faith to the drawer of the check, and has the effect of slandering the mer

chant or trader in his business. The refusal to pay the check injures the credit of the merchant or trader, and, because this element of damages is difficult to prove and estimate, temperate damages are allowed. They are more than nominal damages, and are such as would be a reasonable compensation for the injury to the credit of the merchant or trader.

Subsequent to the rendition of these decisions, the legislature of 1921 passed Act 496, whereby the act of the general assembly of 1913 creating the state bank department was amended. Section 10 of the act reads as follows: "A depositor, whether a merchant or trader or otherwise, may recover from any bank doing business in this state for or on account of its wrongful dishonor of his check only upon allegation and proof of such special damages as have proximately resulted to him therefrom." Gen. Acts 1921, pp. 514, 524.

The evident purpose of the section quoted was to change the rule announced in the decisions referred to above, and to require depositors in all cases to prove the amount of damages they have suffered by reason of the bank refusing to pay their checks, before they can recover more than nominal damages. In short, merchants and traders must prove actual loss to their credit before they can recover damages from a bank for refusing to pay their checks.

In the instant case the court limited the right of the plaintiff to recover against the defendant to compensation for damage to her credit. In this connection it may be stated that the plaintiff was not a merchant or trader and did not suffer any damage to her credit.

In construing the Federal Bankruptcy Act (U. S. Comp. Stat. §§ 9585-9656, 1 Fed. Stat. Anno. 2d ed. p. 509) it has been generally held that a merchant or trader is one whose business it is to buy merchandise, goods, or chattels to sell the same at a profit. One engaged in

running a rooming and boarding house is not a mer

ages-refusal to boarding-house

chant or trader. Evidence—damOne engaged in the honor checkbusiness of running keepers. a boarding and

rooming house is not engaged in the purchase and sale of merchandise or chattels, but is engaged in furnishing the traveling public with a temporary home and with food. It is true that groceries and other merchandise are purchased for use in running rooming houses and feeding the boarders; but the articles are used by the roomers and served to the boarders in a changed form.

It has been well said that to say such a business is that of a "merchant" or "trader" is giving those words an elasticity of meaning not according to common usage. Toxaway Hotel Co. v. Smathers, 216 U. S. 439, 54 L. ed. 558, 30 Sup. Ct. Rep. 263; Re Excelsior Café Co. (D. C.) 175 Fed. 294; Re Wentworth Lunch Co. 86 C. C. A. 393, 159 Fed. 413; and Re United States Hotel Co. 68 L.R.A. 588, 67 C. C. A. 153, 134 Fed. 225.

The plaintiff, not being a merchant or trader, was not entitled to recover more than nominal damages under the proof made. Her testimony that she suffered damages to her credit in business was not sufficient to allow her to recover more than nominal damages. She must show the facts or circumstances which occasioned the damage, and the amount thereof. At most she only showed in the present case that her checks were dishonored by the bank, and that she suffered some inconvenience thereby. inconvenience thereby. It is not shown that she suffered any loss of patronage to her rooming and boarding house, or that she was prevented from supplying her guests with food or other articles necessary for their use and comfort. It is shown that one of the merchants in question continuance of refused to extend credit-special damages. her credit any further, but she continued to buy from him for cash. She was not entitled

Evidence-dis

to recover, under the proof made, more than nominal damages.

The jury returned a verdict in her favor for $250. There is nothing in the proof tending to show any elements of damages to the plaintiff upon which the jury might base this verdict.

Therefore a verdict for more than nominal damages under the proof made is without evidence to support it, and constitutes reversible error.

It follows that the judgment must be reversed, and the cause remanded for a new trial.

The general rule applied in the recent, as well as the earlier, decisions, is that a bank is liable in substantial damages for dishonoring the check of a trader or merchant depositor who has sufficient funds on deposit in the bank to pay the check. In the absence of proof to the contrary, substantial damages to his business credit is presumed. Berea Bank & T. Co. v. Mokwa (1922) 194 Ky. 556, 239 S. W. 1044; Castaline v. National City Bank (1923) 244 Mass. 416, 26 A.L.R. 1484, 138 N. E. 398, affirmed in (1924) Mass. 143 N. E. 832; Browning v. Bank of Vernal (1922) 60 Utah, 197, 207 Pac. 462. See also the reported case (STATE BANK V. MARSHALL, ante, 202). Compare Ott v. Kentwood Bank (1922) 152 La. 962, 94 So. 899.

Thus, in Browning v. Bank of Vernal (1922) 60 Utah, 197, 207 Pac. 462, wherein it appeared that a bank wrongfully dishonored checks drawn by a depositor engaged in the millinery business, it was held that the depositor was entitled to recover substantial damages, without proof of actual damages, on the ground that

the law presumed damages to the credit of a merchant or trader.

In Berea Bank & T. Co. v. Mokwa (Ky.) supra, wherein it appeared that the defendant, due to bookkeeping mistakes, failed to enter deposits in a trader's account, and on the presentation of checks dishonored them on the ground that the depositor's funds were insufficient, it was held that the bank was liable for the damages suffered by the depositor to his business and credit.

The rule was applied in Castaline v. National City Bank (1923) 244 Mass. 416, 26 A.L.R. 1484, 138 N. E. 398, on subsequent appeal in (1924)

Mass., 143 N. E. 832, wherein it appeared that the defendant bank dishonored two checks presented at the same time. The plaintiff's checking account at the time was sufficient to pay one of the checks, but not both of them. The court held that the defendant was liable for failure to pay one of the checks.

The reported case (STATE BANK V. MARSHALL, ante, 202), by way of dictum, approves the rule that a merchant or trader is entitled to substantial damages in case a bank, through mistake or otherwise, wrongfully dishonors his check, as injury to his business credit is inferred.

But nominal damages only are recoverable where the evidence overcomes the presumption of damages to the merchant's business credit. Ott v. Kentwood Bank (La.) supra. In that case, an action by a depositor for an accounting of collections and for damages resulting from dishonoring one of his checks, it appeared that the plaintiff, at the time his check was

dishonored, had on deposit in the defendant bank a special account more than the amount of the check, although originally the account had been pledged as security to a debt which had been paid before the check was drawn. The court said that, after the removal of the indebtedness, there was no longer any claim or lien against the fund, and the bank was liable for such damages as actually resulted from wrongfully dishonoring the check. It was held that the plaintiff was entitled to nominal damages only for the violation of his legal rights, for the reason that the record showed that he suffered no actual damages to his business credit, which already had been seriously impaired by his seeking a respite, failing to meet deferred payments thereunder, mortgaging his property, and having his financial affairs in a very involved condition.

III. Check of nontrader. (Supplementing annotation in 4 A.L.R. 954, and 13 A.L.R. 307.)

In the case of a depositor who is a

nontrader, a bank dishonoring a check is generally, in the absence of proof of special damages, liable for nominal damages only. Bearden v. Bank of Italy (1922) 57 Cal. App. 377, 207 Pac. 270; Geibe v. Chicago-Lake State Bank (1924) Minn. - 199 N. W. 514; Browning v. Bank of Vernal (1922) 60 Utah, 197, 207 Pac. 462. See the reported case (STATE BANK V. MARSHALL, ante, 202).

Thus the reported case (STATE BANK v. MARSHALL) holds that in the case of a nontrader, the keeper of a boarding house, recovery should be limited to nominal damages, in the absence of proof of special damages resulting from the dishonor of a check.

In Bearden v. Bank of Italy (Cal.) supra, it was held that a bank was not liable to a depositor for dishonoring her check, with the result that she was arrested and imprisoned at the instance of the payee, on the ground that the proximate cause of the arrest and imprisonment was not the refusal of the bank to honor the depositor's check. R. E. La G.

2. A pardon is an act of grace and mercy bestowed by the state, through its chief executive, upon offenders against its laws after conviction, and a full, unconditional pardon reaches both the punishment prescribed for Headnotes by DOYLE, J.

the offense and the guilt of the otfender; it obliterates, in legal contemplation, the offense itself, and hence its effect is to make the offender a new man.

[See 20 R. C. L. 556, 557.] Criminal law, § 203 how evidenced. 3. Granting a pardon is an official