Overdraft Louise Kalbe maintained a checking account at the Pulaski State Bank ( Bank) in Wisconsin. Kalbe made out a check for $ 7,260, payable in cash. Thereafter, she misplaced it but did not report the missing check to the bank or stop payment on it. One month later, some unknown person presented the check to a Florida bank for payment. The Florida bank paid the check and sent it to Bank for collection. Bank paid the check even though it created a $ 6,542.12 over-draft in Kalbe’s account. Bank requested Kalbe pay this amount. When she refused, Bank sued Kalbe to collect the overdraft. Who wins?

The banks may provide overdraft services to it's customers and pay check even in the case of unavailability of funds in their accounts. An overdraft creates obligation on the customer to pay later in future.

In this case the defendant did not report the loss or theft of the check until the bank finally contacted for paying overdraft. The plaintiff bank could pay the properly presented check even if it created an overdraft. Although it is up to the bank that it may consider the check not to be properly payable and deny paying without risk of liability for wrongful dishonour, it does not prevent the bank from paying the overdraft check alternatively.