Holmes v. Fleet Bank, N.A.

A-1119-00T3 (N.J. Super. App. Div. 2001) (Unpublished)

Opinion Date: December 17, 2001
Business Law
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BANKS; CERTIFICATES OF DEPOSIT—Where a bank certificate of deposit states that it will not be automatically renewed and that interest cannot be paid beyond the term of the certificate, a holder is not entitled to interest beyond the certificate’s maturity.

A customer purchased three certificates of deposit from a bank. Seventeen years later, after several bank mergers, the customer made his first demand for the principal and interest. The bank refused to pay. The certificates each provided that “[t]he payment of interest beyond the date of maturity is prohibited by law.” The customer sued, alleging breach of contract, breach of fiduciary duty, conversion, and unjust enrichment. The bank denied liability but made an offer of judgment which the customer rejected. The lower court dismissed all claims against the bank except for the claim for principal and for interest for the six month term of the certificates of deposit. The Appellate Division agreed, pointing to federal law that states that “No member bank shall, directly or indirectly, by any device whatsoever, pay any interest on any deposit which is payable on demand… .” Although that statute provided certain limited exceptions, none of them applied to this case.

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