Case Title: IVERSON v FIRST BANK OF BILLINGS

Citation: 

Docket Number: 85-158

State: montana

Court: Montana Supreme Court

Date: 1985-12-31T00:00:00Z

Document:
No. 85-158 I N THE SUPREME COURT O F THE STATE O F M O N T A N A 1985 GENE G. IVERSON, P l a i n t i f f and Respondent, FIRST BANK O F BILLINGS ( f o r m e r l y t h e Midland National. Bank o f B i l l i n g s , Montana), Defendant, T h i r d P a r t y P l a i n t i f f and A p p e l l a n t , M O N T A N A LIVESTOCK PRODUCTION CREDIT ASSOCIATION OF HELENA, MONTANA, T h i r d P a r t y Defendant, Counter-Claimant and Respondent, APPEAL FROM: D i s t r i c t C o u r t o f t h e E i g h t h J u d i c i a l District, I n and f o r t h e County o f Cascade, The Honorable Thomas M c K i t t r i c k , Judge p r e s i d i n g . COUNSEL O F RECORD: F o r A p p e l l a n t : Moulton, Bellingham, Longo & Mather; Gerald B. Murphy a r g u e d , B i l l i n g s , Montana For Respondent : Alexander & Baucus; John D. Alexander argued f o r I v e r s o n , G r e a t F a l l s , Montana Luxan & M u r f i t t ; W a l t e r S. M u r f i t t argued f o r Montana L i v e s t o c k , Helena, Montana Submitted: October 2 2 , 1985 Decided: December 31, 1985 M r . J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion o f t h e Court. I n t h e a c t i o n below, p l a i n t i f f Gene I v e r s o n [ h e r e i n a f t e r I v e r s o n ) f i l e d a c o m p l a i n t a g a i n s t two d e f e n d a n t s , Howard Nuernberger ( h e r e i n a f t e r N u e r n b e r g ~ r ) and F i r s t Bank B i l l i n g s ( h e r e i n a f t e r F i r s t Bank). I n c o u n t I o f h i s c o m p l a i n t , I v e r s o n a l l e g e d t h a t Nuernberger was l i a b l e t o him f o r t h e f a c e amount o f a dishonored check i s s u e d by Nuernberger t o I v e r s o n . I n c o u n t I1 o f h i s c o m p l a i n t , I v e r s o n a l l e g e d t h a t F i r s t Bank was a l s o l i a b l e t o him f o r t h e f a c e amount o f t h e dishonored Nuernberger check because F i r s t Bank had v i o l a t e d S 30-4-302, MCA, ( t h e midnight d e a d l i n e r u l e ) by f a i l i n g t o r e t u r n t h e dishonored check i n a t i m e l y manner a f t e r t h e s u b j e c t check was p r e s e n t e d t o F i r s t Bank f o r c o l l e c t i o n . F i r s t Bank responded by denying l i a b i l i t y and a l l e g i n g t h a t § 30-4-302 was n o t v i o l a t e d because t h e s u b j e c t check was n o t " p r e s e n t e d " t o F i - r s t Bank f o r c o l l e c t i o n a s a "demand i t e m , " and a l s o because t h e check was h e l d l o n g e r t h a n normal by F i r s t Bank p u r s u a n t t o t h e s p e c i f i c r e q u e s t and a u t h o r i t y o f Montana L i v e s t o c k P r o d u c t i o n C r e d i t A s s o c i a t i o n ( h e r e i n a f t e r MLPCA), a j o i n t payee on t h e s u b j e c t check. T h e r e a f t e r , F i r s t Bank f i l e d a t h i r d - p a r t y c o m p l a i n t a g a i n s t MLPCA s e e k i n g i n d e m n i f i c a t i o n from MLPCA i f it should b e found t h a t F i r s t Bank was l i a b l e t o I v e r s o n . MLPCA t h e n f i l e d a c o u n t e r c l a i m a g a i n s t F i r s t Bank a l l e g i n g , a s I v e r s o n had done e a r l i e r , t h a t F i r s t Bank had v i o l a t e d t h e r e q u i r e m e n t s o f § 30-4-302, MCA, and sought t h e f a c e amount o f t h e s u b j e c t check a s damages. Nuernberger, a t t h i s p o i n t , s t i p u l a t e d t o e n t r y o f judgment i n f a v o r o f I v e r s o n and t h e remaining p a r t i e s a l l moved f o r summary judgment. The D i s t r i c t Court of t h e E i g h t h J u d i c i a l D i s t r i c t , Cascade County, t h e Honorable Thomas M. McKittrick p r e s i d i n g , g r a n t e d summary judgment i n f a v o r o f I v e r s o n and MLPCA. The D i s t r i c t Court found F i r s t Bank s t r i c t l y l i a b l e f o r t h e f a c e amount o f t h e s u b j e c t check because o f F i r s t Bank's f a i l u r e t o comply w i t h t h e r e q u i r e m e n t s o f S 30-4-302. From t h i s judgment F i r s t Bank a p p e a l s . W e r e v e r s e t h e summary judgment o f t h e D i s t r i c t Court e n t e r e d i n f a v o r o f I v e r s o n and MLPCA a g a i n s t F i r s t Bank, and hereby o r d e r t h e District Court t o e n t e r summary judgment i n f a v o r o f F i r s t Bank a g a i n s t I v e r s o n and MLPCA i n accordance w i t h t h i s o p i n i o n . P l a i n t i f f , Gene I v e r s o n , is a r a n c h e r o u t s i d e o f G r e a t F a l l s , Montana, who o b t a i n e d f i n a n c i n g f o r h i s cattle o p e r a t i o n from MPLCA. I v e r s o n , i n o b t a i n i n g f i n a n c i n g from MLPCA, executed and d e l i v e r e d t o MLPCA a l o a n agreement whereby MLPCA was given a f i r s t s e c u r i t y i n t e r e s t i n a l l o f I v e r s o n ' s c a t t l e . On September 2, 1979, I v e r s o n e n t e r e d i n t o a c o n t r a c t w i t h PJuernberger, doing b u s i n e s s a s t h e Montana C a t t l e Company, f o r t h e s a l e o f a number o f I v e r s o n ' s c a t t l e . The c o n t r a c t provided t h a t Nuernberger pay t o I v e r s o n t h e sum of $4,000 a s a down payment w i t h a b a l a n c e owing o f $41,209. S h o r t l y t h e r e a f t e r , Nuernberger executed and d e l i v e r e d t o I v e r s o n h i s check, p a y a b l e t o I v e r s o n and MLPCA a s j o i n t payees, i n t h e amount o f $41,209 and took p o s s e s s i o n o f t h e c a t t l e . I v e r s o n t h e n d e l i v e r e d t h e check, w i t h o u t endorsement, t o MLPCA f o r a p p l i c a t i o n upon h i s d e b t owed t o MLPCA. A t t h i s p o i n t , MLPCA r e l e a s e d i t s s e c u r e d p o s i t i o n i n I v e r s o n ' s c a t t l e p r i o r t o t h e check b e i n g p a i d . Subsequently, MLPCA d e p o s i t e d t h e check i n i t s a c c o u n t a t F i r s t S e c u r i t y Bank i n Helena, Montana, f o r payment t h r o u g h t h e normal banking c o l l e c t i o n p r o c e s s . On November 26, 1 9 7 9 , t h e c h e c k a r r i v e d a t F i r s t Rank B i l l i n g s and was s u b s e q u e n t l y r e t u r n e d t o MLPCA on November 2 8 , 1 9 7 9 , marked " i n s u f f i c i e n t f u n d s " (NSF). The c h e c k was d e p o s i t e d f o r a s e c o n d t i m e t o MLPCA's a c c o u n t on November 2 9 , 1979, and was a g a i n r e t u r n e d by F i r s t Bank B i l l i n g s t o MLPCA on December 4 , 1 9 7 9 , b e c a u s e o f i n s u f f i c i e n t f u n d s . The c h e c k , h a v i n g been d e p o s i t e d t w i c e and t w i c e r e f u s e d b e c a u s e o f i n s u f f i c i e n t f u n d s , was stamped "payment r e f u s e d t w i c e - - p r e s e n t f o r c o l l e c t i o n o n l y . " On o r a b o u t December 6 , 1 9 7 9 , MLPCA, t h r o u g h i t s a s s i s t a n t t r e a s u r e r , A l i c e T y a n i c h , t e l e p h o n e d F i r s t Bank and was p u t i n t o u c h w i t h James Wempner ( h e r e i n a f t e r Wempner) , v i c e - p r e s i d e n t i n c h a r g e o f t h e A g r i c u l t u r e D e p a r t m e n t f o r d i r e c t i o n s r e g a r d i n g c o l l e c t i o n o f t h e N u e r n b e r g e r c h e c k . Wempner i n s t r u c t e d A l i c e Tyanich t o f o r w a r d t h e c h e c k t o F i r s t Bank t o h i s (Wempner I s ) a t t e n t i o n g r a n t i n g p e r m i s s i o n t o F i r s t Bank t o h o l d t h e c h e c k beyond t h e normal 24-hour p e r i o d . P u r s u a n t t o t h e s e i n s t r u c t i o n s , t h e N u e r n b e r g e r c h e c k was m a i l e d t o F i r s t Bank w i t h a n accompanying memorandum which r e a d i n p e r t i n e n t p a r t a s f o l l o w s : SUBJECT: Check no. 214-Montana C a t t l e Company DATE December 6 , 1979 I am r e t u r n i n g h e r e w i t h t h e a b o v e named c h e c k and you h e r e b y h a v e o u r a u t h o r i t y t o h o l d it f o r l o n g e r t h a n t h e u s u a l 24-hour p e r i o d . When f u n d s a r e a v a i l a b l e on t h e a b o v e a c c o u n t p l e a s e s e n d a c a s h i e r ' s c h e c k made p a y a b l e t o Montana L i v e s t o c k PCA. D a t e B Y ALICE H. TYANICH, A s s i s t a n t T r e a s u r e r . The above memo and s u b j e c t c h e c k w e r e r e c e i v e d b y Wempner t h r o u g h t h e m a i l , b u t i n s t e a d o f t a k i n g t h e c h e c k t o t h e c o l l e c t i o n d e p a r t m e n t o f F i r s t Bank p u r s u a n t t o t h e e s t a b l i s h e d p o l i c y o f F i r s t Bank, h e k e p t t h e c h e c k i n h i s d e s k i n a s e p a r a t e f i l e t i t l e d " N u e r n b e r g e r , Montana C a t t l e Company. " The record i n d i c a t e s t h a t Nuernberger , doing b u s i n e s s a s t h e Montana C a t t l e Company, had been a customer of F i r s t Bank f o r approximately f i v e y e a r s and h i s account had been p e r s o n a l l y handled by Wempner d u r i n g t h i s p e r i o d . The record a l s o i n d i c a t e s t h a t d u r i n g t h i s same t i m e p e r i o d , Wempner received f o r c o l l e c t i o n s e v e r a l o t h e r NSF checks i s s u e d by Nuernberger which he would p l a c e i n h i s Nuernberger desk f i l e . Wempner would check t h e Nuernberger account balance d a i l y and would pay t h e PJSF checks held i n h i s desk f i l e i n i n s t a l l m e n t s a s Nuernberger d e p o s i t e d funds. The record shows Wempner's a c t i o n s allowed Nuernberger t o s t a y i n b u s i n e s s a s a c a t t l e buyer and a l s o saved Nuernberger's c r e d i t o r s t h e inconvenience of having t o send t h e i r NSF checks t o F i r s t Bank numerous t i m e s f o r c o l l e c t i o n . The e s t a b l i s h e d p o l i c y of F i r s t Bank with r e s p e c t t o c o l l e c t i o n i t e m s , such a s t h e s u b j e c t check, r e q u i r e d Wempner t o d e l i v e r t h e check t o t h e c o l l e c t i o n department o f F i r s t Bank where it was t o be recorded. I f funds w e r e n o t a v a i l a b l e t o pay t h e check, according t o F i r s t Bank p o l i c y , t h e check was r e t u r n e d p r i o r t o midnight o f t h e day a f t e r r e c e i p t o f t h e check t o avoid l i a b i l i t y under 5 30-4-302, MCA, ( t h e midnight d e a d l i n e r u l e ) . F i r s t Bank p o l i c y d i d n o t allow a waiver o f t h e midnight d e a d l i n e r u l e f o r checks g r e a t e r t h a n $500. Wempner acknowledged t h a t he was aware o f F i r s t Rank's p o l i c y , b u t i n d i c a t e d t h a t he d i d n o t l i k e t h e l i m i t a t i o n s mandated by t h e midnight d e a d l i n e r u l e o r t h e p o l i c y o f F i r s t Bank. MLPCA, through A l i c e Tyanich, was n o t aware o f t h e p o l i c y o f F i r s t Bank. Wempner k e p t t h e s u b j e c t check i n h i s desk f i l e from December 10, 1979, t h e d a t e on which it was r e c e i v e d , u n t i l January 30, 1980, when it was r e t u r n e d pursuant t o t h e r e q u e s t o f Tom Brown, t h e n p r e s i d e n t o f MLPCA. D u r i n g t h i s t i m e p e r i o d F i r s t Bank d i d n o t send o u t n o t i c e o f d i s h o n o r t o e i t h e r MLPCA or I v e r s o n , o r pay t h e s u b j e c t check. I v e r s o n ' s f i r s t c o n t a c t w i t h F i r s t Bank o c c u r r e d on December 27, 1979, s e v e n t e e n d a y s a f t e r Wempner r e c e i v e d t h e s u b j e c t check f o r c o l l e c t i o n . The s u b j e c t c h e c k i n t h e amount o f $41,209 h a s n e v e r been pa i d . The a p p e l l a n t , F i r s t Bank, p r e s e n t s t h e f o l l o w i n g i s s u e s f o r review: (1) Whether § 30-4-302, MCA ( t h e m i d n i g h t d e a d l i n e r u l e ) , a p p l i e s t o t h e i n s t a n t c a s e , when t h e c h e c k i n q u e s t i o n was d e l i v e r e d t o F i r s t Rank b y MLPCA o u t s i d e t h e o r d i n a r y bank c o l l e c t i o n p r o c e d u r e ? ( 2 ) Whether MLPCA made a n agreement w i t h F i r s t Bank v a r y i n g t h e e f f e c t o f S 30-4-302, MCA? ( 3 ) Whether t h e D i s t r i c t C o u r t e r r e d i n a w a r d i n g damages u n d e r 5 30-4-302, MCA? ( 4 ) Whether F i r s t Bank i s e n t i t l e d t o i n d e m n i t y from MLPCA? W e f i n d t h e f i r s t i s s u e p r e s e n t e d by F i r s t Rank t o be d i s p o s i t i v e o f t h e i n s t a n t c a s e . Under its f i r s t i s s u e , F i r s t Bank i s a r g u i n g t h a t t h e s u b j e c t check was n o t " p r e s e n t e d " a s a "demand i t e m " f o r payment, a s d e f i n e d by t h e Montana Uniform Commercial Code (MUCC), b u t was i n s t e a d l e f t by MLPCA w i t h F i r s t Bank w i t h i n s t r u c t i o n s t o pay t h e c h e c k when and if f u n d s became a v a i l a b l e i n Nuernberger ' s a c c o u n t . F i r s t Rank a r g u e s b e c a u s e t h e s u b j e c t c h e c k was n o t p r o p e r l y " p r e s e n t e d " a s a "demand i t e m , " 5 30-4-302, M C A ( t h e m i d n i g h t d e a d l i n e r u l e ) , d o e s n o t a p p l y t o t h e i n s t a n t c a s e and t h u s F i r s t Bank i s n o t l i a b l e f o r t h e f a c e amount o f t h e s u b j e c t check. W e a g r e e w i t h F i r s t Bank's r e s u l t , b u t on a s l i g h t l y d i f f e r e n t t h e o r y . The major s t a t u t e under c o n s i d e r a t i o n i s 5 30-4-302, MCA. Subsection ( a ) o f t h e s t a t u t e i s commonly r e f e r r e d t o a s "The Midnight Deadline Rule." The s t a t u t e r e a d s a s follows: Payor b a n k ' s r e s p o n s i b i l i t y f o r l a t e r e t u r n o f i t e m . In t h e absence o f a v a l i d defense such a s breach o f a presentment warranty, ( s u b s e c t i o n (1) o f 30-4-207), s e t t l e m e n t e f f e c t e d o r t h e l i k e , i f an i t e m is p r e s e n t e d on and received by a payor bank t h e bank i s accountable f o r t h e amount o f : ( a ) a demand i t e m o t h e r than a documentary d r a f t whether p r o p e r l y payable o r n o t i f t h e bank, i n any c a s e where it i s n o t a l s o t h e d e p o s i t a r y bank, r e t a i n s t h e i t e m beyond midnight of t h e banking day o f r e c e i p t without s e t t l i n g for it o r , r e g a r d l e s s o f whether it i s a l s o t h e d e p o s i t a r y bank, d o ~ s n o t pay o r r e t u r n t h e i t e m o r send n o t i c e o f dishonor u n t i l a f t e r i t s midnight d e a d l i n e ; o r (b) any o t h e r p r o p e r l y payable i t e m u n l e s s w i t h i n t h e t i m e allowed f o r acceptance o r payment o f t h a t i t e m t h e bank e i t h e r a c c e p t s o r pays t h e i t e m o r r e t u r n s it and accompanying documents. (Emphasis added.) The p a r t i e s contend, i n l i g h t o f t h i s s t a t u t e , t h e r e a r e two major c o n d i t i o n s r e l e v a n t t o t h e i n s t a n t c a s e t h a t must be s a t i s f i e d b e f o r e F i r s t Bank becomes l i a b l e under t h e midnight d e a d l i n e r u l e : t h e r e must be a "demand i t e m " ( s u b j e c t check) "presented" ( t o F i r s t Bank) within t h e meaning o f S 30-4-302, MCA. I n arguing t h e s e c o n d i t i o n s t h e p a r t i e s devote a l l o f t h e i r a t t e n t i o n t o s u b s e c t i o n ( a ) o f S 30-4-302. Subsection ( a ) e s s e n t i a l l y provides t h a t i n t h e absence o f a v a l i d defense, a demand i t e m , r e t a i n e d beyond t h e "midnight deadline" by t h e payor bank without e i t h e r paying, r e t u r n i n g , o r g i v i n g n o t i c e o f dishonor r e n d e r s t h e payor bank l i a b l e t o t h e payee f o r t h e f a c e amount of t h e i t e m . Sun River C a t t l e Co., Inc. v. Miners National Bank o f Montana N.A. (1974), 164 Mont. 237, 521 P.2d 679. The "midnight deadline" r e f e r r e d t o i n d e s c r i b i n g t h e d u t y o f t h e payor bank i s d e f i n e d by S; 30-4-104 (h) , MCA, a s midnight o f t h e n e x t banking day f o l l o w i n g t h e banking day on which t h e i t e m was r e c e i v e d . T h i s Court r e c o g n i z e s t h a t s u b s e c t i o n ( a ) o f § 30-4-302, MCA, i s a v a l i d t h e o r y f o r h o l d i n g a bank l i a b l e when a "demand i t e m " i s " p r e s e n t e d " t o a payor bank and t h e bank h o l d s t h e i t e m beyond t h e midnight d e a d l i n e . But t h i s C o u r t h o l d s t h a t s u b s e c t i o n ( a ) o f S 30-4-302 i s n o t even a p p l i c a b l e t o t h e i n s t a n t c a s e because t h e s u b j e c t check i s n o t a "demand i t e m . " T h e r e f o r e , i f F i r s t Bank i s g o i n g t o b e - h e l d l i a b l e under § 30-4-302, t h i s Court must look i n s t e a d t o s u b s e c t i o n (b) o f t h e s t a t u t e . F i r s t , a s mentioned above, w e h o l d t h a t t h e s u b j e c t check i s n o t a "demand i t e m . " The s u b j e c t check though d a t e d and due, i s n o t a demand i t e m because it was t r a n s m i t t e d t o F i r s t Bank w i t h t h e u n d e r s t a n d i n g t h a t it should b e h e l d u n t i l t h e r e w e r e s u f f i c i e n t funds i n N u e r n b e r g e r ' s a c c o u n t t o pay t h e check. To b e t t e r understand t h i s c o n c l u s i o n it i s i m p o r t a n t t o review under what c o n d i t i o n s t h e s u b j e c t check was d e l i v e r e d t o F i r s t Bank by MLPCA. A s p r e v i o u s l y d i s c u s s e d i n t h e f a c t s o f t h i s o p i n i o n , MLPCA mailed t h e s u b j e c t check t o F i r s t Bank w i t h t h e f o l l o w i n g w r i t t e n i n s t r u c t i o n s : I am r e t u r n i n g h e r e w i t h t h e above named check and you h e r e b y have o u r a u t h o r i t y t o hold it f o r l o n g e r t h a n t h e u s u a l 24-hour p e r i o d . When funds a r e a v a i l a b l e on t h e above account p l e a s e send a c a s h i e r ' s check made p a y a b l e t o Montana L i v e s t o c k PCA. According t o t h i s memorandum, MLPCA a u t h o r i z e d F i r s t Rank t o hold t h e check beyond t h e u s u a l 24-hour p e r i o d and t o pay t h e check o n l y , "when funds a r e a v a i l a b l e . " T h i s C o u r t h o l d s t h e r e is no c o n c e i v a b l e way t o c o n s t r u e t h i s memorandum o t h e r t h a n t o s t a t e t h a t t h e i n t e n t o f MLPCA was t o t r a n s m i t t h e check, n o t a s an immediate demand f o r payment, b u t r a t h e r a s a r e q u e s t f o r payment whenever funds might be a v a i l a b l e t o pay t h e check. This simply i s n o t "demand i t e m " a s contemplated by § 30-4-302 ( a ) , MCA. Therefore, S30-4-302 ( a ) is n o t even a p p l i c a b l e t o t h e i n s t a n t c a s e . Next, b e f o r e we analyze t h e f a c t s o f t h i s c a s e under S 30-4-302 (b) , MCA, t h e concept o f "presentment" must be discussed. The p a r t i e s , e s p e c i a l l y F i r s t Bank, argue a t g r e a t l e n g t h how t h e term presentment should be i n t e r p r e t e d under S 30-4-302. Despite t h e e x t e n s i v e arguments of t h e p a r t i e s , t h i s Court h o l d s t h e t e r m " p r e s ~ n t m e n t " should b e l i b e r a l l y i n t e r p r e t e d a s t h e MUCC suggests. S e c t i o n 30-3-504(1), MCA, d e f i n e s presentment under t h e MUCC a s follows: How presentment made. (1) Presentment i s a demand f o r acceptance o r payment made upon t h e maker, a c c e p t o r , drawee o r o t h e r payor by o r on behalf o f t h e holder. I n a d d i t i o n , O f f i c i a l Comment 1 o f t h e UCC s t a t e s t h e following i n e x p l a i n i n g t h e purpose o f t h i s s t a t u t e : This s e c t i o n i s intended t o s i m p l i f y t h e r u l e s a s t o how presentment i s made and t o make it c l e a r t h a t any demand upon t h e p a r t y t o pay i s a presentment no m a t t e r where o r how. The above s t a t u t e and comment make it c l e a r t h a t t h e concept o f "presentment" i s t o be l i b e r a l l y i n t e r p r e t e d under t h e MUCC. This Court a g r e e s . Therefore, i n l i g h t o f t h e above d i s c u s s i o n , t h e only question remaining i n t h e i n s t a n t c a s e i s whether a presentment occurred a s r e q u i r e d by § 30-4-302, MCA. F i r s t , with regard t o MLPCA, t h e r e i s no q u e s t i o n it presented t h e s u b j e c t check t o F i r s t Bank w i t h i n t h e meaning o f 30-3-504 (1). The f a c t s a r e uncontroverted t h a t MLPCA, through A l i c e Tyanich, mailed t h e s u b j e c t check t o F i r s t Bank f o r c o l l e c t i o n pursuant t o t h e i n s t r u c t i o n s o f James Wempner. Wempner a l s o a d m i t s r e c e i v i n g t h e check from MLPCA though t h e m a i l f o r c o l l e c t i o n purposes. These f a c t s c o n s t i t u t e a presentment. However, w i t h r e g a r d t o I v e r s o n , t h e r e was no presentment o f t h e s u b j e c t check t o F i r s t Bank. I v e r s o n d e l i v e r e d t h e s u b j e c t check, a f t e r h e r e c e i v e d it from Nuernberger, t o MLPCA f o r a p p l i c a t i o n upon h i s d e b t owed t o MLPCA. The r e c o r d d o e s n o t i n d i c a t e I v e r s o n made any a t t e m p t , a f t e r h e d e l i v e r e d t h e s u b j e c t check t o MLPCA, t o demand t h a t F i r s t Bank a c c e p t o r pay t h e s u b j e c t check. A t t h i s p o i n t , t h e r e c o r d i n d i c a t e s I v e r s o n c o n s i d e r e d t h e s u b j e c t check t o b e t h e r e s p o n s i b i l i t y o f MLPCA. T h e r e f o r e , because I v e r s o n n e v e r p r e s e n t e d t h e s u b j e c t check t o F i r s t Bank w i t h i n t h e meaning o f 5 30-3-504 (1) , h i s c l a i m a g a i n s t F i r s t Rank under S 30-4-302 must f a i l . F i n a l l y , a f t e r d e t e r m i n i n g t h e s u b j e c t check was n o t a "demand item" and MLPCA p r o p e r l y " p r e s e n t e d " t h e s u b j e c t check t o F i r s t Bank f o r payment, we c a n a n a l y z e MLPCA's c l a i m a g a i n s t F i r s t Bank under S 30-4-302(b), MCA. A s n o t e d above, § 30-4-302(b) p r o v i d e s a s follows: [ i ] f an i t e m i s p r e s e n t e d on o r r e c e i v e d by a payor bank t h e bank i s a c c o u n t a b l e f o r t h e amount of: (b) any o t h e r p r o p e r l y p a y a b l e i t e m u n l e s s w i t h i n t h e t i m e allowed f o r a c c e p t a n c e o r payment o f t h a t i t e m t h e bank e i t h e r a c c e p t s o r p a y s t h e i t e m or r e t u r n s it and accompanying documents. I n l i g h t o f t h i s s t a t u t e , MLPCAfs c l a i m a g a i n s t F i r s t Bank under 5 30-4-302 must a l s o f a i l . I n t h e i n s t a n t c a s e , w i t h i n t h e t i m e allowed f o r a c c e p t a n c e o r payment, F i r s t Bank r e t u r n e d t h e s u b j e c t check t o MPLCA a t MLPCA's r e q u e s t because t h e r e was n e v e r enough money i n N u e r n b e r g e r ' s a c c o u n t t o c l e a r t h e check. The memorandum s e n t by MLPCA t o F i r s t Bank, along w i t h t h e s u b j e c t check, s p e c i f i c a l l y allowed F i r s t Bank t o hold t h e check u n t i l s u f f i c i e n t "funds [were] a v a i l a b l e [ i n ] t h e [Nuernberger] account" t o pay t h e check. F i r s t Bank never v i o l a t e d t h i s agreement and, within t h e t i m e allowed f o r acceptance o r payment, it r e t u r n e d t h e s u b j e c t check t o MLPCA. Therefore, F i r s t Bank i s n e i t h e r l i a b l e nor accountable under § 30-4-302(b) t o MLPCA. Although w e f i n d t h e f i r s t i s s u e presented by F i r s t Bank t o be d i s p o s i t i v e o f t h e i n s t a n t c a s e , w e a l s o f e e l it i s important t o c l a r i f y t h e second i s s u e presented by F i r s t Bank. Under i s s u e #2, t h e f a c t s which lead u s t o t h e conclusion t h a t t h e s u b j e c t check was n o t a "demand i t e m , " a l s o lead u s t o t h e conclusion t h a t t h e p a r t i e s agreed under § 30-4-103, MCA, t h a t t h e midnight d e a d l i n e o f S 30-4-302 should n o t apply t o t h e i n s t a n t c a s e . Section 30-4-103 provides t h a t : (1) The e f f e c t o f t h e p r o v i s i o n s o f t h i s c h a p t e r may be v a r i e d by aqreement except t h a t no aureement can d i s c l a i m a bank's r e s p o n s i b i l i t y f o r i t s own l a c k o f good f a i t h o r f a i l u r e t o e x e r c i s e o r d i n a r y c a r e o r can l i m i t t h e measure o f damages f o r such l a c k o r f a i l u r e ; b u t t h e p a r t i e s may by agreement determine t h e s t a n d a r d s by which such r e s p o n s i b i l i t y i s t o be measured i f such s t a n d a r d s a r e n o t m a n i f e s t l y unreasonable. (Emphasis added. ) Montana has recognized t h a t t h e p a r t i e s may agree t o v a r y t h e t i m e requirements o f $ 30-4-302. I n Sun River C a t t l e Co., Inc. v. Miners Bank o f Montana N.A. (1974), 164 Mont. 237, 521 P.2d 679, t h i s Court recognized t h a t t h e r e may be an agreement t o vary t h e e f f e c t o f § 30-4-302, b u t on t h e f a c t s b e f o r e it i n t h i s c a s e , t h e r e was i n s u f f i c i e n t evidence t o prove such an agreement. The c o u r t s o f o t h e r j u r i s d i c t i o n s have reached t h e same conclusion. See, W e s t e r n A i r and R e f r i g e r a t i o n v. Metro Bank o f D a l l a s ( 1 9 7 9 ) , 599 F.2d. 8 3 . We hold there is such an agreement, as provided by § 30-4-103, MCA, that varied the responsibility of First Bank and relieved it under the facts of this case from compliance with S 30-4-302 (the midnight deadline rule). The memorandum sent by MLPCA to First Bank, along with the subject check, specifically provided that "you hereby have our authority to hold it [the subject check] for longer than the usual 24-hour period. " Clearly MLPCA1s memorandum varied the responsibility of First Bank by waiving the midnight deadline rule in the instant case. After determining First Bank is not accountable to either Iverson or MLPCA under § 30-4-302, MCA, the additional issues raised by First Bank need not be discussed. The summary judgment of the District Court entered in favor of Iverson and MLPCA against First Bank is reversed, and the District Court is hereby ordered to enter summary judgment in favor of First Bank against Iverson and MLPCA in accordance with this opinion. n Justice i" Mr. Justice Frank B. Morrison, Jr. dissents as follows: The majority concludes that the "midnight deadline rule" is not available for recourse against the Bank for the following reasons: (1) The subject check was not a "demand item"; (2) the subject check was not presented by Iverson; (3) the midnight deadline rule was waived. I disagree with all three conclusions of the majority. The majority opinion concludes that the check was not a demand item because it was accompanied by aut-horization to hold for longer than the usual 24 hour period and to pay when funds were available. The accompanying memorandum may be viewed as an attempt by MLPCA to waive the "midnight deadline rule" but I do not see that as changing the character of what is clearly a demand item. The majority neglects to quote the Montana statute defining demand item. Section 30-3-108, MCA, states: Instruments payable on demand include those payable at sight or on presentation and those in which no time for payment is stated. The check here was clearly a demand item within the purview of the statute. Apparently the majority feels that since the check was to be held until funds became available that the check was not payable on demand. I would expect that most people anticipate that a bank will only pay a check if funds are available. The holding of this Court runs contrary to the holding in Sun River Cattle Co. v. Miners Bank of Montana N.A. (1974), 164 Mont. 237, 521 P.2d 679. In that case the Montana Supreme Court held that checks similar to the check here at issue were demand items. The Sun River Cattle Company case is not distinguished by the majority but is simply ignored. The majority opinion finds that Iverson made no presentment in this case. The subject check was made payable to both PCA and Iverson. There was no endorsement on the check but a stamped notation on the back stated: "Credit to the account of the within named payee. Absence of Endorsemnt Guaranteed." The check was delivered for collection to First Bank. On its face there is no way of determining whether the check came from PCA or from Iverson or from both of them. In view of the broad wording of S 30-3-504, MCA, which states that presentment is a demand for payment made by or on behalf of the holder, I fail to see how the majority distinguishes between presentment made by the PCA and presentment made by Iverson. Under the holding of the majority I suppose a.11 payees must make a joint presentment before they can have the protection of 30-4-302. Finally, I disagree with the majority's holding that there was a waiver of the midnight deadline rule. First of all, waiver is not sufficient. Section 30-4-103 states: (1) The effect of the provisions of this chapter may be varied by agreement except that no agreement can disclaim a bank's responsibility for its own lack of good faith or failure to exercise ordinary care . . . (Emphasis added.) There must be an agreement. The bank officer who attempted to enter into an agreement for extension of the midnight deadline rule lacked authority from the Bank to enter into such an agreement. In fact, the undisputed evidence shows the Bank's express policy forbid the bank officer to enter into such an agreement, The Bank cannot seek to rely upon the terms of an agreement made by its agent in violation of the express instructions of the principal bank. The following facts are taken from the trial court's findings : 10. Mr. Wempner received the subject check through the mail but instead of taking the check to the collection department of First Bank-Billings pursuant to the established policy of First Bank-Billings for collection as a non-cash item, he kept the check in his desk in a separate file titled 'Nuernbergor, Montana Cattle Company'. (Jacobson Depo., p. 6-9; Wempner Depo., p . 21, p. 67-68, setting forth normal bank policy; Jacobson Depo., p. 23; Wempner Depo., p. 30, p . 67, 1. 2-3, establishing that Mr. Wempner kept the subject check in his desk which violated bank procedure. 13. Mr. Wempner acknowledged that he was very much aware of the bank's policy, acknowledged he did not like the limitations mandated by the midnight deadline or the policy of the bank. (Wempner Depo., p . 67-69, p . 62-63, p. 66, p . 15-116. 14. Mr. Wempner had no authority to change said bank policy or to request or accept a waiver of said policy. The MLPCA, through Alice Tyanich, was not aware of the policy of First Bank-Billings. (Jacobson Depo., p. 8; Wempner Depo., p. 62; Affidavit of Alice Tyanich, Appendix "C".) It is clear that Wempner's attempt to effectuate an agreement for a waiver of the midnight deadline rule was clearly outside the scope of his authority; no agreement was created; the Bank cannot rely upon § 30-4-103. Furthermore, if such an agreement had been made, it would only extend the midnight deadline rule if the Bank acted in good faith. The trial court found that the Bank was acting to benefit its depositor at the expense of the payees on the check. This of course is evidence of lack of good faith but unfortunately is ignored by the majority opinion. For the reasons mentioned herein I would affirm the District Court.