Case Title: FIRST NATIONAL BANK IN MILES CITY v

Citation: 

Docket Number: 80-467

State: montana

Court: Montana Supreme Court

Date: 1981-06-02T00:00:00Z

Document:
No. 80-467 I N THE SUPREME COURT O F T H E STATE O F MONTANA 1981 FIRST NATIONAL BANK I N MILES CITY, P l a i n t i f f and Respondent, VS. G L A D Y S NUNN Defendant and Appellant. Appeal from: D i s t r i c t Court of t h e Sixteenth J u d i c i a l D i s t r i c t , I n and f o r t h e County of Custer. Honorable A. B. Martin, Judge presiding. Counsel of Record: For Appellant: Nye Law Firm, B i l l i n g s , Montana J e r r o l d L. Nye argued, B i l l i n g s , Montana For Respondent: Lucas and Monaghan, M i l e s C i t y , Montana Thomas Monaghan argued, M i l e s C i t y , Montana Submitted: A p r i l 23, 1981 \JUI$ ' 3 IC6. Filed: a d bl* - Clerk M r . Chief J u s t i c e Frank I. Haswell d e l i v e r e d t h e Opinion of t h e C o u r t . The F i r s t N a t i o n a l Bank i n Miles C i t y i n i t i a t e d t h i s a c t i o n i n t h e S i x t e e n t h J u d i c i a l D i s t r i c t Court, C u s t e r County, t o r e c o v e r t h e amount of a check d e p o s i t e d by its customer, Gladys Nunn. The check had been r e t u r n e d to F i r s t N a t i o n a l t h r o u g h t h e c o l l e c t i o n c h a i n because of an improper endorsement. F i r s t N a t i o n a l a l l e g e d i n its complaint t h a t Gladys Nunn had breached h e r w a r r a n t y under t h e Uniform Commercial Code, s e c t i o n 30-4-207, MCA, and was t h e r e f o r e r e q u i r e d to reimburse t h e bank f o r t h e amount of t h e check. Gladys Nunn f i l e d a c o u n t e r c l a i m f o r damages f o r l i b e l and s l a n d e r , mental anguish, costs and a t t o r n e y f e e s . A f t e r d i s c o v e r y , b o t h p a r t i e s moved f o r summary judgment. Gladys Nunn a p p e a l s from t h e o r d e r g r a n t i n g summary judgment i n f a v o r of F i r s t N a t i o n a l on both t h e c o m p l a i n t and t h e c o u n t e r c l a i m . W e a f f i r m t h e judgment on t h e c o u n t e r c l a i m , r e v e r s e t h e judgment on t h e complaint and remand f o r e n t r y of judgment i n f a v o r of Gladys Nunn on t h e complaint. I n October of 1979, Gladys Nunn moved to Miles C i t y to l i v e w i t h h e r former husband, P a u l Nunn, who w a s employed by C o n t i n e n t a l - K e i l , Inc. On October 18, 1979, Gladys Nunn opened a checking account a t t h e F i r s t N a t i o n a l Bank i n Miles C i t y . Two o f P a u l Nunn's paychecks, p r o p e r l y endorsed by him, were used to open Gladys Nunn's account. Only Gladys Nunn was a u t h o r i z e d to draw on t h i s account. On a monthly b a s i s t h e r e a f t e r , Gladys Nunn d e p o s i t e d P a u l Nunn's paychecks from C o n t i n e n t a l - K e i l i n t o h e r checking a c c o u n t . She would t h e n use t h e funds to pay t h e l i v i n g expenses and b i l l s o f t h e household which c o n s i s t e d of h e r s e l f , Paul Nunn, and a minor c h i l d of P a u l Nunn from a p r e v i o u s marriage. On A p r i l 2, 1980, Gladys Nunn d e p o s i t e d i n t o h e r checking a c c o u n t Continental-Keil I s check No. 33326 d a t e d March 29, 1980, i n t h e amount of $1,364.33. The check was made payable to P a u l Nunn. On t h e back of t h e check, Gladys Nunn wrote " f o r d e p o s i t o n l y . " P a u l Nunn had not endorsed t h e check, nor had Gladys Nunn s i g n e d h i s name o r h e r name. The b a n k ' s employee accepted t h e check and t h e d e p o s i t t i c k e t . A f t e r Gladys Nunn l e f t t h e bank, t h e employee stamped t h e f o l l o w i n g words on t h e back of t h e check: DEPOSITED T O THE CREDIT O F FIRST NATIONAL BANK MILES CITY, M O N T A N A The employee wrote t h e name of P a u l Nunn on t h e l i n e . Addition- a l l y t h e bank stamped its g u a r a n t e e of p r i o r endorsements. The check was c r e d i t e d to Gladys Nunn's account and forwarded through t h e u s u a l banking c h a n n e l s f o r c o l l e c t i o n . Gladys Nunn t e s t i f i e d i n h e r d e p o s i t i o n t h a t she had picked up t h e check a t t h e p o s t o f f i c e box which she and P a u l Nunn owned. She s t a t e d t h a t she t a l k e d to P a u l Nunn on t h e t e l e p h o n e on Monday evening, March 31, 1980, and t h a t he t o l d h e r to s i g n t h e check, d e p o s i t it and pay t h e b i l l s . When P a u l Nunn r e t u r n e d home on Wednesday, A p r i l 2, he asked Gladys f o r $250, which she gave to him i n t h e form of a check drawn on h e r a c c o u n t o u t of t h e paycheck funds. A s a r e s u l t of domestic d i f f i c u l t i e s Gladys Nunn moved o u t of t h e home i n Miles C i t y and r e t u r n e d to L i v i n g s t o n . When she l e f t Miles C i t y on A p r i l 8 , she had withdrawn a l l of t h e proceeds from t h e C o n t i n e n t a l - K e i l check by w r i t i n g checks f o r household expenses and purchasing a money o r d e r payable to h e r s e l f i n t h e amount of $600. C o n t i n e n t a l - K e i l check No. 33326 was drawn on t h e c o r p o r a t i o n ' s account a t S e c u r i t y Bank i n B i l l i n g s . S e c u r i t y Bank r e c e i v e d t h e check from F i r s t Bank of B i l l i n g s , t h e i n t e r - m e d i a t e o r c l e a r i n g house bank i n t h e c o l l e c t i o n c h a i n , on o r a b o u t A p r i l 3 and d e b i t e d t h e account of C o n t i n e n t a l - K e i l . On A p r i l 11, S e c u r i t y Bank s e n t a s t a t e m e n t t o C o n t i n e n t a l - K e i l , which included check N o . 33326. J e r r y Wagner, t h e c o m p t r o l l e r of C o n t i n e n t a l - K e i l was con- t a c t e d by P a u l Nunn on o r about A p r i l 12, 1980. P a u l t o l d Wagner t h a t h i s ex-wife had r e c e i v e d h i s paycheck and d e p o s i t e d it i n t o h e r account and t h a t h i s name had been forged to t h e check. Wagner went t o S e c u r i t y Bank on A p r i l 17 and completed a "forged endorsement document" and o t h e r n e c e s s a r y p a p e r s t o have t h e check r e t u r n e d t o t h e F i r s t N a t i o n a l Bank. Subsequently J e r r y Wagner i s s u e d a new check to P a u l Nunn i n replacement of check N o . 33326. Paul Nunn h a s n e v e r been a v a i l a b l e f o r t e s t i m o n y because i n e a r l y May, 1980, he a1 l e g e d l y embezzled c o n s i d e r a b l e f u n d s from h i s employer and d i s a p p e a r e d . S e c u r i t y Bank r e t u r n e d check No. 33326 t o F i r s t Bank of B i l l i n g s , which i n t u r n r e t u r n e d t h e check t o F i r s t N a t i o n a l Bank. S e c u r i t y Bank c r e d i t e d t h e account of C o n t i n e n t a l - K e i l and r e c e i v e d c r e d i t from F i r s t Bank. F i r s t Bank w a s reimbursed by F i r s t N a t i o n a l Bank f o r t h e $1,364.33. F i r s t N a t i o n a l Bank r e s e a r c h e d Gladys Nunn's checking account and found it to have i n s u f f i c i e n t funds t o cover t h e r e t u r n e d check. On A p r i l 24, 1980, P a u l Mottram of F i r s t N a t i o n a l Bank c o n t a c t e d Gladys Nunn and n o t i f i e d h e r of t h e f a c t t h a t t h e check had been r e t u r n e d due t o an improper endorsement. The F i r s t N a t i o n a l Bank demanded t h a t Gladys Nunn refund t h e amount of t h e check, which she r e f u s e d to do. The F i r s t N a t i o n a l Bank f i l e d its c o m p l a i n t a g a i n s t Gladys Nunn on June 10, 1980, a l l e g i n g t h a t Gladys Nunn breached h e r w a r r a n t y under s e c t i o n 30-4-207, MCA, and t h a t she was t h e r e f o r e l i a b l e f o r t h e $1,364.33. Gladys Nunn f i l e d a c o u n t e r c l a i m f o r damages f o r l i b e l and s l a n d e r i n t h e amount of $15,000; f o r men- t a l a n g u i s h , s u f f e r i n g and damage i n t h e amount of $5,000; and f o r h e r s p e c i f i c expenses, costs and a t t o r n e y f e e s f o r defending F i r s t N a t i o n a l Bank's a c t i o n . The i s s u e p r e s e n t e d f o r d e t e r m i n a t i o n is whether t h e District Court e r r e d i n g r a n t i n g summary judgment t o F i r s t N a t i o n a l Bank on t h e complaint and c o u n t e r c l a i m . In its conclu- s i o n s of law, t h e District Court found t h a t Gladys Nunn breached h e r w a r r a n t y as a customer under s e c t i o n 30-4-207, MCA, and t h a t under s e c t i o n 30-4-212, MCA, F i r s t N a t i o n a l Bank was e n t i t l e d t o a refund from h e r i n t h e amount of $1,364.33, p l u s i n t e r e s t . The c o u r t f u r t h e r found t h a t C o n t i n e n t a l - K e i l r e t u r n e d t h e check w i t h i n t h e t i m e s p e c i f i e d i n s e c t i o n 30-4-406, MCA, a f t e r l e a r n i n g of t h e improper endorsement, t h a t F i r s t N a t i o n a l Bank gave t i m e l y n o t i c e to Gladys Nunn of t h e r e t u r n of t h e check and made t i m e l y demand upon h e r f o r a r e f u n d , t h a t F i r s t N a t i o n a l Bank made a p r o v i s i o n a l s e t t l e m e n t w i t h Gladys Nunn on t h e d a t e o f t h e d e p o s i t , and t h a t t h e s e t t l e m e n t never became f i n a l . For t h e f o l l o w i n g r e a s o n s we f i n d t h a t t h e District Court e r r e d i n its i n t e r p r e t a t i o n of t h e Uniform Commercial Code as it a p p l i e s t o t h i s case. The F i r s t N a t i o n a l Bank is both a d e p o s i t a r y and a c o l l e c t i n g bank under t h e d e f i n i t i o n s of s e c t i o n 30-4-105(a) and ( d ) . Gladys Nunn w a s a customer of F i r s t N a t i o n a l Bank as d e f i n e d i n s e c t i o n 30-4-104 ( e ) . S e c t i o n 30-4-212, MCA, p r o v i d e s f o r t h e r i g h t of charge-back o r refund from t h e customer a s f o l l o w s : "(1) - - I f a c o l l e c t i n g bank h a s made p r o v i s i o n a l ---- s e t t l e m e n t -- w i t h its customer f o r an i t e m - and i t s e l f f a i l s by r e a s o n of d i s h o n o r , s u s p e n s i o n of payments by a bank or o t h e r w i s e to r e c e i v e a s e t t l e m e n t f o r t h e item which is o r becomes f i n a l , t h e bank may ----- --- revoke t h e s e t t l e m e n t g i v e n -- by it, c h a r g e -- back t h e amount -- o f any c r e d i t g i v e n f o r t h e ----- i t e m t o its c u s t o m e r ' s a c c o u n t or o b t a i n r e f u n d from its customer whether or n o t it i s a b l e to r e t u r n t h e items -- i f by its m i d n i g h t d e a d l i n e or w i t h i n a l o n g e r r e a s o n a b l e t i m e a f t e r it l e a r n s the f a c t s it r e t u r n s t h e i t e m or --- s e n d s n o t i f i c a t i o n o f t h e facts. These r i g h t s t o r e v o k e , c h a r g e b a c k a n o b t a i n refund t e r m i n a t e i f and when a s e t t l e m e n t f o r t h e i t e m r e c e i v e d by tG --- bank is o r becomes f i n a l ( s u b s e c t i o n ( 3 ) of 30-4-211 and s u b s e c t i o n s ( 2 ) and ( 3 ) of 30-4-213)." (Emphasis added. ) By c r e d i t i n g Gladys Nunn's account w i t h t h e amount of t h e C o n t i n e n t a l - K e i l check, F i r s t N a t i o n a l Bank made a " p r o v i s i o n a l s e t t l e m e n t " w i t h h e r . The bank had t h e r i g h t to a u t o m a t i c a l l y revoke t h a t s e t t l e m e n t up to such t i m e as t h e s e t t l e m e n t became f i n a l . The q u e s t i o n becomes whether t h e s e t t l e m e n t e v e r became f i n a l . The District Court found t h a t t h e s e t t l e m e n t d i d n o t become f i n a l . W e conclude t h a t t h e s e t t l e m e n t became f i n a l . S e c t i o n 30-4-213(2), MCA, p r o v i d e s t h a t a p r o v i s i o n a l s e t t l e m e n t becomes f i n a l upon t h e o c c u r r e n c e of Iff i n a l payment" o f t h e i t e m by t h e payor bank. F i n a l payment is d e f i n e d by sec- t i o n 30-4-213 ( I ) , MCA, as f o l l o w s : " (1) An i t e m is f i n a l l y paid by a payor bank when t h e bank h a s done any of t h e f o l l o w i n g , whichever happens f i r s t : " ( a ) paid t h e i t e m i n cash; or " ( b ) s e t t l e d f o r t h e item w i t h o u t r e s e r v i n g a r i g h t to revoke t h e s e t t l e m e n t and w i t h o u t having such r i g h t under s t a t u t e , c l e a r i n g h o u s e r u l e o r agreement; or " ( c ) completed t h e p r o c e s s o f p o s t i n g -- t h e i t e m t o t h e i n d i c a t e d a c c o u n t o f the drawer, maker or -- -- -- o t h e r p e r s o n -- t o be charged t h e r e w i t h ; or - ( d ) made a p r o v i s i o n a l s e t t l e m e n t f o r t h e item and f a i l e d to revoke t h e s e t t l e m e n t i n t h e t i m e and manner p e r m i t t e d by s t a t u t e , c l e a r i n g h o u s e r u l e or agreement. Upon a f i n a l payment under s u b p a r a g r a p h s ( b ) , ( c ) , o r ( d ) t h e payor bank s h a l l be a c c o u n t a b l e f o r t h e amount of t h e i t e m . " (Emphasis added. ) I f S e c u r i t y Bank ( t h e payor bank) completed t h e p r o c e s s of p o s t i n g t h e check t o C o n t i n e n t a l - K e i l ' s ( t h e d r a w e r ' s ) a c c o u n t , t h e n t h e p r o v i s i o n a l s e t t l e m e n t s i n t h e c o l l e c t i o n c h a i n became f i n a l , i n c l u d i n g t h e s e t t l e m e n t made by F i r s t N a t i o n a l Bank w i t h Gladys Nunn. The p r o c e s s of p o s t i n g i n c l u d e s t h e f o l l o w i n g s t e p s t a k e n by t h e bank, a c c o r d i n g to s e c t i o n 30-4-109, MCA: " ( a ) v e r i f i c a t i o n of any s i g n a t u r e ; " ( b ) a s c e r t a i n i n g t h a t s u f f i c i e n t funds a r e a v a i l a b l e ; " ( c ) a f f i x i n g a ' p a i d ' o r o t h e r stamp; " ( d ) e n t e r i n g a charge o r e n t r y to a c u s t o m e r ' s a c c o u n t ; " ( e ) c o r r e c t i n g or r e v e r s i n g an e n t r y o r e r r o n e o u s a c t i o n w i t h r e s p e c t to t h e i t e m . " Gary M. Johnson of S e c u r i t y Bank t e s t i f i e d i n h i s deposi- t i o n t h a t check N o . 33326 was r e c e i v e d by h i s bank from t h e F i r s t Bank of B i l l i n g s ( a n i n t e r m e d i a r y bank i n t h e c o l l e c t i o n c h a i n ) on o r about A p r i l 3, 1980, and posted t o C o n t i n e n t a l - K e i l ' s a c c o u n t on t h a t same d a t e . C o n t i n e n t a l - K e i l 's account was d e b i t e d i n t h e amount of $1,364.33. C o n t i n e n t a l - K e i l r e t u r n e d t h e check to S e c u r i t y Bank on A p r i l 17, 1980, c l a i m i n g a forged or improper endorsement of t h e p a y e e ' s s i g n a t u r e . T h i s r e t u r n of t h e check to S e c u r i t y and t h e s u b s e q u e n t r e c r e d i t i n g of C o n t i n e n t a l - K e i l 's account o c c u r r e d a f t e r t h e p r o c e s s of p o s t i n g had been completed and t h e r e f o r e a f t e r t h e s e t t l e m e n t s extended on t h e i t e m became f i n a l . Respondent a r g u e s t h a t t h e p r o v i s i o n a l s e t t l e m e n t s do n o t become f i n a l u n t i l t h e drawer h a s had time to examine h i s bank s t a t e m e n t , r e l y i n g on s e c t i o n 30-4-406, MCA. That s t a t u t e con- c e r n s t h e c u s t o m e r l s d u t y to d i s c o v e r and r e p o r t unauthorized s i g n a t u r e s w i t h i n a r e a s o n a b l e t i m e a f t e r r e c e i v i n g h i s s t a t e m e n t . I f t h e customer f a i l s to t i m e l y r e p o r t a f o r g e r y he is precluded from r e c o v e r i n g from h i s bank. Although s e c t i o n 30-4-109(e), MCA, states t h a t p o s t i n g is n o t completed u n t i l t h e bank h a s " c o r r e c t [ed] or r e v e r s [edl a n e n t r y o r e r r o n e o u s a c t i o n w i t h r e s p e c t t o t h e i t e m , " t h a t s u b s e c t i o n cannot be c o n s t r u e d to allow u n l i m i t e d t i m e f o r t h e customer to examine h i s s t a t e m e n t and r e p o r t a f o r g e r y . The purpose of s u b s e c t i o n ( e ) was to allow t i m e f o r a bank employee t o examine items a f t e r t h e computer a u t o m a t i c a l l y d e b i t e d t h e c u s t o m e r ' s a c c o u n t and to make a f i n a l d e c i s i o n w i t h r e s p e c t to t h e item. See F i n a l Payment and t h e P r o c e s s of P o s t i n g under t h e Uniform Commercial Code, 68 Colum. L. Rev. 349 ( 1 9 6 8 ) . S i n c e C o n t i n e n t a l - K e i l d i d n o t r e t u r n t h e check u n t i l a f t e r f i n a l s e t t l e m e n t , S e c u r i t y Bank no l o n g e r had t h e r i g h t t o revoke t h e s e t t l e m e n t g i v e n to F i r s t N a t i o n a l Bank, through t h e c o l l e c t i o n c h a i n , under t h e p r o v i s i o n a l s e t t l e m e n t d o c t r i n e . A l s o , F i r s t N a t i o n a l Bank no l o n g e r had t h e r i g h t of charge- back t o its c u s t o m e r ' s account o r t h e r i g h t to o b t a i n refund from its customer, Gladys Nunn, under s e c t i o n 30-4-212, MCA. The District C o u r t ' s c o n c l u s i o n t h a t F i r s t N a t i o n a l was e n t i t l e d to a r e f u n d under s e c t i o n 30-4-212, MCA, was e r r o n e o u s . The c o n c l u s i o n t h a t t h e s e t t l e m e n t s i n t h e c o l l e c t i o n c h a i n became f i n a l does n o t r e s o l v e t h i s case, however. The loss o f t h e r i g h t t o charge-back or refund under s e c t i o n 30-4-212, MCA, d o e s n o t p r e c l u d e F i r s t N a t i o n a l Bank from seeking to h o l d its customer l i a b l e f o r breach of h e r warranty p u r s u a n t to sec- t i o n 30-4-207. S e c t i o n 30-4-212(5), MCA; Sunshine v. Bankers T r u s t Co. ( 1 9 7 4 ) , 34 N.Y.2d 404, 358 N.Y.S.2d 113, 314 N.E.2d 860. According to s e c t i o n 30-4-207 ( 2 ) , MCA, each customer who t r a n s f e r s an item to a c o l l e c t i n g bank w a r r a n t s to t h e c o l l e c t i n g bank t h a t : " ( a ) he h a s a good t i t l e to t h e i t e m or is a u t h o r i z e d to o b t a i n payment or a c c e p t a n c e on b e h a l f o f one who h a s a good t i t l e and t h e t r a n s f e r is o t h e r w i s e r i g h t f u l ; and " ( b ) a l l s i g n a t u r e s are genuine or a u t h o r i z e d ; and " ( c ) t h e item h a s n o t been m a t e r i a l l y a l t e r e d ; and " ( d ) no d e f e n s e of any p a r t y is good a g a i n s t him; and " ( e ) he h a s no knowledge of any i n s o l v e n c y pro- c e e d i n g i n s t i t u t e d w i t h r e s p e c t to t h e maker or a c c e p t o r or t h e drawer of a n unaccepted item. In a d d i t i o n each customer and c o l l e c t i n g bank so t r a n s - f e r r i n g an item and r e c e i v i n g a s e t t l e m e n t or o t h e r c o n s i d e r a t i o n engages t h a t upon d i s h o n o r and any n e c e s s a r y n o t i c e of d i s h o n o r and p r o t e s t he w i l l t a k e up t h e i t e m . " The District Court found t h a t as a customer of F i r s t N a t i o n a l Bank, Gladys Nunn gave t h e w a r r a n t i e s of s u b s e c t i o n ( a ) above, and t h a t s h e breached t h e s e w a r r a n t i e s . A p p e l l a n t a r g u e s t h a t s h e d i d n o t breach t h e warranty of good t i t l e or a u t h o r i t y because she was g i v e n t h e a u t h o r i t y to o b t a i n payment of t h e c h e c k by P a u l Nunn. None of t h e o t h e r w a r r a n t i e s or p r o v i s i o n s i n s u b s e c t i o n s ( b ) t h r o u g h ( e ) a p p l y to t h i s case. The f i r s t w a r r a n t y is t h a t t h e customer h a s good t i t l e to t h e i t e m . It is c e r t a i n t h a t i f t h e p a y e e ' s endorsement were f o r g e d , t h e f o r g e r would n o t have good t i t l e . That is n o t t h e s i t u a t i o n h e r e . According to Anderson, Uniform Commercial Code, Vol. 3 S 3-417: 8 (2nd E d i t i o n ) , good t i t l e r e q u i r e s t h a t a l l n e c e s s a r y endorsements be genuine and a u t h o r i z e d . It can be i n £ e r r e d from t h i s comment t h a t t h e n e c e s s a r y endorsements must e x i s t , and i n t h i s case where t h e p a y e e ' s endorsement is m i s s i n g , Gladys Nunn d i d n o t have good t i t l e . Gladys Nunn d i d n o t b r e a c h h e r warranty, however, i f she had a u t h o r i t y to o b t a i n payment on b e h a l f of one who d i d have good t i t l e , i.e. on b e h a l f o f P a u l Nunn. According to Anderson, s u p r a , S 3-417: 1.8, t h e second w a r r a n t y of s u b s e c t i o n ( a ) is meant t o cover t h e case of a n a g e n t who t r a n s f e r s f o r a n o t h e r . The f a c t s of t h i s case show t h e e x i s t e n c e of an agency r e l a t i o n s h i p between P a u l and Gladys Nunn. Gladys opened h e r account w i t h P a u l ' s paychecks, p r o p e r l y endorsed by him. S u b s e q u e n t l y t h e r e were a t least f o u r d e p o s i t s by Gladys of P a u l ' s paychecks, p r o p e r l y endorsed by him. A l l of t h e s e funds were used to pay t h e household expenses of P a u l and Gladys. T h i s p r i o r conduct is s t r o n g e v i d e n c e t h a t Gladys w a s an a g e n t of P a u l ' s f o r t h e purpose of d e p o s i t i n g h i s checks. I n a d d i t i o n , Gladys t e s t i f i e d i n h e r d e p o s i t i o n t h a t she t a l k e d t o P a u l on t h e t e l e p h o n e w i t h regard t o check No. 33326, t h a t he t o l d h e r to s i g n t h e check, d e p o s i t it and pay t h e b i l l s . She thought s h e had signed t h e check. I f she had signed P a u l ' s name, t h i s would have been p e r m i s s i b l e under s e c t i o n 30-3-403, MCA. F u r t h e r , when P a u l came home on t h e evening of A p r i l 2, 1980, he asked Gladys i f she had d e p o s i t e d t h e check and paid t h e b i l l s . H e asked how much money was l e f t , and t h e n asked h e r f o r $250. Paul r e c e i v e d a check from Gladys f o r $250 o u t of t h e p r o c e e d s of h i s paycheck. H e a l s o r e c e i v e d b e n e f i t i n t h e form o f payment of t h e household b i l l s . Gladys also t e s t i f i e d t h a t he r e c e i v e d a n o t h e r $200 i n c a s h from t h e proceeds of h i s paycheck. About a week l a t e r , P a u l went to h i s employer and a l l e g e d t h a t h i s paycheck had been s t o l e n and h i s s i g n a t u r e forged. The UCC p r o v i d e s t h a t agency l a w a p p l i e s u n l e s s d i s p l a c e d by Code p r o v i s i o n s . S e c t i o n 30-1-103, MCA. Agency p r i n c i p l e s a r e used i n s e c t i o n 30-3-403, MCA, r e g a r d i n g s i g n a t u r e s made by a g e n t s . Where t h e r e is no s i g n a t u r e of t h e p r i n c i p a l o r of t h e a g e n t , agency law may n o n e t h e l e s s be a p p l i d to e s t a b l i s h t h e (23 a u t h o r i t y r e f e r r e d to i n s e c t i o n 30-4-207qa), MCA. It is w e l l - s e t t l e d t h a t a p r i n c i p a l who a c c e p t s t h e b e n e f i t s of an agency t r a n s a c t i o n cannot l a t e r deny t h e r e w a s an agency. P u r c e l l v. Gibbs ( 1 9 5 8 ) , 133 Mont. 481, 326 P.2d 679; Arnold v. Genzberger ( 1 9 3 4 ) , 96 Mont. 358, 3 1 P.2d 296; New Home Sewing Machine Co. v. Songer ( 1 9 3 1 ) , 91 Mont. 127, 7 P.2d 238. Even i f t h e a g e n t ' s a c t i o n s were u n a u t h o r i z e d , t h e p r i n c i p a l r a t i f i e s them by re- c e i v i n g t h e b e n e f i t s and is estopped t o deny t h e agency. Arnold v . Genzberger, s u p r a . W e f i n d t h a t Gladys Nunn had t h e r e q u i s i t e a u t h o r i t y t o o b t a i n payment of t h e check on b e h a l f of P a u l Nunn and t h a t she was n o t i n breach of h e r warranty under s e c t i o n 30-4-207(2) ( a ) , MCA. Consequently F i r s t N a t i o n a l Bank cannot r e c o v e r from Gladys Nunn. The b a n k ' s remedy, i f any, is a g a i n s t C o n t i n e n t a l - K e i l o r P a u l Nunn. With r e s p e c t t o t h e c o u n t e r c l a i m made by Gladys Nunn, w e f i n d t h a t t h e District Court was c o r r e c t i n g r a n t i n g summary judgment f o r F i r s t N a t i o n a l Bank. Where t h e record shows no g e n u i n e i s s u e of m a t e r i a l f a c t , t h e p a r t y opposing t h e motion f o r summary judgment h a s t h e burden of coming forward w i t h substan- t i a l e v i d e n c e r a i s i n g t h e i s s u e . Rule 5 6 ( c ) and ( e ) , M.R.Civ.P.; Van Uden v. Hendricksen ( 1 9 8 0 ) , Mont. , 615 P.2d 220, 37 St.Rep. 1431; R i i s v. Day ( 1 9 8 0 ) , Mont . , 613 P.2d 696, 37 St.Rep. 1093; Downs v. Smyk ( 1 9 7 9 ) , Mont . , 604 P.2d 307, 36 St.Rep. 2300. Here, t h e record shows no genuine i s s u e of m a t e r i a l f a c t , Gladys Nunn d i d n o t produce e v i d e n c e r a i s i n g such i s s u e , and t h e r e c o r d does n o t s u p p o r t h e r claim f o r damages. F i r s t N a t i o n a l Bank was e n t i t l e d to judgment on t h e c o u n t e r c l a i m as a matter of l a w . A t t o r n e y f e e s are r e c o v e r a b l e by t h e p r e v a i l i n g p a r t y o n l y where e x p r e s s l y a u t h o r i z e d by s t a t u t e or by agreement by t h e p a r t i e s . S t a l c u p v. Montana T r a i l e r S a l e s ( 1 9 6 5 ) , 146 Mont. 494, 409 P.2d 542, and cases c i t e d t h e r e i n . S i n c e t h e r e is no s t a t u t e o r agreement p r o v i d i n g f o r an award of a t t o r n e y f e e s i n t h i s case, t h e r e is no b a s i s f o r such an award. The judgment of t h e District Court on t h e c o u n t e r c l a i m is a f f irmed, t h e judgment on t h e complaint is r e v e r s e d , and t h e case is remanded f o r e n t r y of summary judgment i n f a v o r of Gladys Nunn on t h e c o m p l a i n t . Chief J u s t i c e