Small mistakes can have big consequences, and can make for some amusing legal decisions. Like the time a major bank accidentally wired $900 million to a customer’s creditors, and was unable to recover most of it. Apparently, the mistaken transfer was caused by a subcontractor’s simple failure to check two boxes on a computer program.

A recent case from the California Court of Appeal dealt with another type of mistake, with similarly harsh consequences. In the case, an individual (“Creditor”) obtained a judgment against another individual (“Debtor”) and a corporation. Under California’s Enforcement of Judgments Law, a creditor is entitled to enforce a judgment against “all property of the judgment debtor.” The creditor first obtains a “writ of execution” from the trial court, which is directed to the sheriff or other levying officer and authorizes them to enforce the judgment; and then serves a “notice of levy,” which is directed to the judgment debtor—or a third person holding the debtor’s property—notifying them of their duties and rights.

Significantly, when a third party holding the debtor’s property is served with the notice of levy, it is required to deliver the property to the levying officer unless it itself has a claim to possess the property, or has “good cause” to not comply with the levy. Absent these excuses, it is itself liable to the creditor for the amount of the levy.

In the case, the Creditor sought to levy on bank accounts of the Debtor’s spouse. She served a notice of levy on the agent for service of process (a person designated to receive notices of legal proceedings) of the bank holding the accounts. For whatever reason, on that notice of levy, someone had underlined the name of the debtor corporation. Apparently, in the world of service of legal papers, there is a common practice of underlining the name of the party to be served. Thus, when the agent received the notice of levy, it rejected it because the name underlined was that of the debtor corporation (an entity it had no relationship with), and not of its principal, i.e., the bank holding the funds of Debtor’s spouse. And so the bank never found out about the levy, allowing the spouse to drain the accounts of most of the cash, leaving the Creditor unable to seize the funds.

The Creditor moved the trial court for an order imposing liability on the bank for its failure to make the account funds available for the levy. The bank prevailed in the lower court, arguing that its agent acted excusably in ignoring the notice of levy due to the underlining. Again, in the industry there is a “custom and practice” of looking at whatever was underlined and assuming that the underlined person or entity was the third person to whom the notice of levy was directed.

The Court of Appeal, however, reversed and held for the Creditor. Again, one who fails to surrender property to the levying officer faces liability if she acts without “good cause.” This is absent when the party knew—or should have known—of the levy. Thus, when that party negligently fails to understand that a levy is directed toward it, good cause is absent. And here: (1) The agent was negligent in not examining the notice of levy to determine, underlining notwithstanding, that the bank was the target; and (2) Under longstanding principles of agency, said agent’s negligence is imputed to the bank. In so holding, the court specifically rejected the defense that relying on the underlining to determine the party to be served excused the mistake: “General negligence cannot be excused on the ground that others in the same locality practice the same kind of negligence.”