Title: Harvey v. First Nat. Bank of Powell

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Harvey v. First Nat. Bank of Powell1996 WY 122924 P.2d 83Case Number: 96-19Decided: 09/19/1996Supreme Court of Wyoming
Douglas W. HARVEY d/b/a Homestead House Associates;

and The Homestead House, 
a Montana Corporation,

 Appellants 
(Plaintiffs),

v.

FIRST NATIONAL BANK OF 
POWELL, a National Banking Corporation, 

Appellee 
(Defendant).

Appeal from District 
Court, Park County, D. Terry Rogers, J.

James P. 
Castberg, Sheridan, for Appellants (Plaintiffs).

John G. Fenn of 
Yonkee & Toner, Sheridan; and Cecil Alice Johnstone of First National Bank 
of Powell, Powell, for Appellee (Defendant).

Before 
TAYLOR, C.J., and THOMAS, MACY, GOLDEN* and LEHMAN, 
JJ.

* Chief Justice at time of 
oral argument.

MACY, Justice.

[¶1]      Appellants 
Douglas Harvey, doing business as Homestead House Associates, and The Homestead 
House, a Montana corporation, appeal from a judgment as a matter of law which 
was entered in favor of Appellee First National Bank of Powell.

[¶2]      We 
affirm.

ISSUES

[¶3]      Appellants 
request our review of the following issues:

I.          
The Court erred in not allowing the jury to hear the Appellants' evidence 
concerning the attorney's fees expended by the Appellants as a result of the 
wrongful acts of the Appellee.

II.          
The Court erred in not allowing the Appellants to present the question of 
punitive damages for consideration by the jury.

III.         The 
Court erred in granting the Appellee's Motion For Judgment As A Matter Of Law 
following a verdict in favor of the Appellants by the jury.

FACTS

[¶4]      Julia Achilles, 
through JBA Furniture, Inc., operated furniture stores in several Wyoming 
cities. The store at issue in this case, the Furniture Center, was located in 
Powell. JBA Furniture used First National Bank for its banking and financial 
needs while it operated the Furniture Center. In 1986, JBA Furniture decided to 
close the Furniture Center and sought Harvey's assistance in conducting a "going 
out of business sale" since he had been involved in several similar 
sales.

[¶5]      On October 28, 
1986, Achilles, Harvey, and the loan officer for First National Bank met to 
discuss a loan for the going out of business sale and other transactions. First 
National Bank agreed to loan Achilles $20,000 so that she could initiate the 
sale. A checking account was opened in the name of "JBA Furniture Center Special 
Account" to be used during the course of the sale, and the $20,000 was placed in 
that account. First National Bank prepared a signature card for the account and 
gave it to Achilles, requesting that she obtain the appropriate 
signatures.

[¶6]      On November 13, 
1986, Harvey and Achilles returned the signature card to First National Bank. 
Achilles, Pam Mooney (Furniture Center's employee), Maxine Allred (Harvey's 
employee), and Allen Heinze (Achilles's accountant) had signed the card. 
Notations were written on the card in red ink which read: "2 if over $500" and 
"2 over $500."

[¶7]      JBA Furniture 
provided First National Bank with its corporate authorization resolution which 
was dated November 13, 1986, and which provided in part that two signatures were 
required on checks and orders for the payment of money and the withdrawal of 
funds which were on deposit at the bank. The corporate authorization resolution 
listed Julia Achilles - President, Charles Achilles - Vice President, and Allen 
Heinze - Secretary as the persons who were authorized to be one of the required 
two signatures. The second page of the resolution, however, 
provided:

RESOLVED, that The First 
National Bank of Powell, Wyoming is hereby designated a depository of this 
corporation and that all checks or orders drawn against our account be signed as 
follows:

CHECKS written in amounts 
up to $500.00 require one of the following signatures:

Pam Mooney or Maxine 
Allred

CHECKS [w]ritten in 
amounts in excess of $500.00 require TWO signatures:

Pam Mooney, Maxine Allred 
or one of the officers of the Corporation listed below.

CHECKS may be written in 
amounts in excess of $500.00 with one signature, Julia I. Achilles, 
President. In the absence of Julia 
I. Achilles, Allen Heinze or C.L. Achilles may sign checks over 
$500.00.

(Emphasis 
added.)

[¶8]      Allred assisted 
in the sale and kept track of the bookkeeping aspects of the sale for Harvey. 
Mooney performed bookkeeping duties and acted as assistant manager for the 
Furniture Center. She also continued to maintain the bookkeeping activities for 
JBA Furniture. At the beginning of the sale, Mooney and Allred shared an office 
in the Furniture Center facility which contained all the accounting data and 
records as well as the checkbook to the First National Bank account. Within a 
week or two, Harvey decided that Mooney should no longer perform her duties in 
that office and that he and Allred would use the desks in that office. He, 
therefore, moved Mooney to the front counter where she was to do her work, and 
he moved into the office with Allred, keeping the checkbook in that 
office.

[¶9]      First National 
Bank sent monthly bank statements to the Furniture Center address listed on the 
signature card. Mooney reconciled the bank statements and placed them in a 
filing cabinet which was located in the office that Harvey and Allred shared. 
Allred saw some of the statements which were mailed to the store. She was aware 
that Mooney reconciled them and that they were available to her if she wanted 
them.

[¶10]   On February 18, 1987, and February 
23, 1987, Achilles wrote two checks on the account to withdraw $50,821.80 and 
$37,653.84, respectively. She presented the checks simultaneously to First 
National Bank for payment. Upon review of the signature card and the resolution, 
and in reliance on the second page of the resolution, a loan administrator for 
First National Bank determined that the resolution took precedence over the 
signature card and that, therefore, only one signature was required on the 
checks, and he allowed Achilles to withdraw the funds.

[¶11]   Appellants filed a complaint 
against First National Bank on February 22, 1991, wherein they claimed that the 
bank had breached the account agreement by allowing Achilles to withdraw the 
money from the account with checks which contained only her signature and that, 
as a result of that breach, Appellants were denied the funds which they were 
entitled to have. A jury trial was held from June 19, 1995, through June 22, 
1995. At the close of Appellants' case in chief, First National Bank moved for a 
judgment as a matter of law pursuant to W.R.C.P. 50. The trial court granted the 
motion with respect to the punitive damages claim, finding that no evidence 
supported a finding of willful and wanton misconduct on First National Bank's 
part. With regard to the other claims, the trial court took the motion under 
advisement. At the close of the evidence, First National Bank renewed its motion 
for a judgment as a matter of law. The trial court indicated that the motion was 
still under advisement.

[¶12]   The jury found that First National 
Bank had breached the account agreement, had been negligent in performing its 
duties to Appellants, and had breached its fiduciary duties to Appellants. The 
jury assessed fault at fifty percent for Appellants and at fifty percent for 
First National Bank and found that the total damages sustained by Appellants was 
$10,000.

[¶13]   First National Bank again renewed 
its motion for a judgment as a matter of law. After a hearing on the motion, the 
trial court granted First National Bank's motion, set aside the jury's verdict, 
and dismissed Appellants' complaint. Appellants appeal from that 
decision.

STANDARD OF 
REVIEW

[¶14]   Our standard for reviewing a 
judgment as a matter of law is well established:

Generally, a motion for 
[a judgment as a matter of law] is reviewed by determining whether the jury 
reached the one conclusion reasonable jurors could have reached under the 
circumstances. However, W.R.C.P. 50(a)(1) allows a court to grant a motion for 
[a judgment as a matter of law] if the evidence presented at trial is legally 
insufficient. Thus, when the case is allowed to go to the jury and the jury 
renders a verdict which is not supported by legally sufficient evidence, the 
trial court has an obligation to direct the entry of judgment as a matter of 
law. This obligation must be fulfilled despite the fact that judgment as a 
matter of law should be granted cautiously and sparingly. The decision to grant 
or deny a motion for [a] judgment as a matter of law is reviewed de 
novo.

Del Rossi v. 
Doenz, 912 P.2d 1116, 1118-19 (Wyo. 1996) (citations omitted).

DISCUSSION

[¶15]   Appellants maintain that the trial 
court erred in granting First National Bank's motion for a judgment as a matter 
of law following the jury verdict which favored Appellants. First National Bank 
argues that Appellants' claims were barred under WYO. STAT. § 34-21-475 (1977), 
renumbered WYO. STAT. § 34.1-4-406(d) (1990) (amended 1991), since Harvey failed 
to notify the bank within one year that the checks contained unauthorized 
signatures.

[¶16]   Section 34-21-475(d) 
provided:

(d) Without regard to 
care or lack of care of either the customer or the bank a customer who does not 
within one (1) year from the time the statement and items are made available to 
the customer (subsection (1) [subsection (a)]) discover and report his 
unauthorized signature or any alteration on the face or back of the item or does 
not within three (3) years from that time discover and report any unauthorized 
indorsement is precluded from asserting against the bank such unauthorized 
signature or indorsement or such alteration.

This statute 
placed an absolute time limit of one year on a customer's right to make a claim 
for the payment of an instrument which contained an unauthorized signature. The 
one-year limitation period was not merely a limitation but was a rule of 
substantive law which barred absolutely a customer's untimely asserted right to 
make a claim against the bank. Provident Savings Bank v. United Jersey Bank, 207 
N.J. Super. 303, 504 A.2d 135, 137 (Law Div. 1985); Brighton, Inc. v. Colonial 
First National Bank, 176 N.J. Super. 101, 422 A.2d 433, 437 (App. Div. 198 0), 
cert. granted 85 N.J. 500, 427 A.2d 587 and judgment aff'd 86 N.J. 259, 430 A.2d 902 (1981). The statute imposed on customers the duty to promptly examine their 
bank statements and notify the bank of improper signatures. Id.

[¶17]   Several jurisdictions have 
addressed the issue of whether a missing signature falls within the meaning of 
an "unauthorized signature." The majority view is that a missing signature on a 
two-signature check does fall within the meaning of an "unauthorized signature." 
Knight Communications, Inc. v. Boatmen's National Bank of St. Louis, 805 S.W.2d 199, 201 (Mo. Ct. App. 1991); Provident Savings Bank, 504 A.2d  at 138; Southern 
Contract Carpet, Inc. v. County National Bank of South Florida, 528 So. 2d 42, 43 
(Fla. Dist. Ct. App. 1988); Rascar, Inc. v. Bank of Oregon, 87 Wis.2d 446, 275 N.W.2d 108, 111 (App. 1978); Pine Bluff National Bank v. Kesterson, 257 Ark. 
813, 520 S.W.2d 253, 258 (1975). Contra Wolfe v. University National Bank, 270 
Md. 70, 310 A.2d 558, 560-61 (1973). The minority view that a missing signature 
is not an unauthorized signature has been soundly criticized by commentators and 
other courts. Southern Contract Carpet, Inc., 528 So. 2d  at 44; Rascar, Inc., 275 N.W.2d  at 111; King of All Manufacturing, Inc. v. Genesee Merchants Bank & 
Trust Co., 69 Mich. App. 490, 245 N.W.2d 104, 105 (1976) (citing 6D Willier 
& Hart UCC Reporter-Digest, § 4-406, A16; Clark & Squillante, The Law of 
Bank Deposits, Collections and Credit Cards, 1975 Cum.Supp., pp. 
3-4).

[¶18]   The legislature's intention to have 
the majority rule apply to Wyoming is supported by its subsequent enactment in 
1991 of § 34.1-3-403 and the official comment to that section. Section 
34.1-3-403 provides in pertinent part:

(b) If the signature of 
more than one (1) person is required to constitute the authorized signature of 
an organization, the signature of the organization is unauthorized if one (1) of 
the required signatures is lacking.

WYO. STAT. § 
34.1-3-403 (1991). Official comment 4 to that section provides in pertinent 
part:

4.         
Subsection (b) clarifies the meaning of "unauthorized" in cases in which 
an instrument contains less than all of the signatures that are required as 
authority to pay a check. Judicial authority was split on the issue whether the 
one-year notice period . . . barred a customer's suit against a payor bank that 
paid a check containing less than all of the signatures required by the customer 
to authorize payment of the check. Some cases took the view that if a customer 
required that a check contain the signatures of both A and B to authorize 
payment and only A signed, there was no unauthorized signature within the 
meaning of that term . . . because A's signature was neither unauthorized nor 
forged. The other cases correctly pointed out that it was the customer's 
signature at issue and not that of A; hence, the customer's signature was 
unauthorized if all signatures required to authorize payment of the check were 
not on the check. Subsection (b) follows the latter line of cases.

[¶19]   In the case at bar, Appellants 
admit that Harvey was First National Bank's customer. As a customer, he had a 
duty to notify First National Bank within one year of any unauthorized 
signatures. First National Bank did not receive notification from anyone with 
regard to the single signature on the checks until four years after the checks 
had been paid. Harvey's failure to timely review the statements and notify First 
National Bank prevents Appellants' current claims against the bank.

[¶20]   Appellants attempt to avoid the 
statutory time limitation by couching their unauthorized signatures claim in 
different terms; i.e., claims under tort and contract and fiduciary duty 
theories. They cannot overcome the one-year bar by attempting to assert their 
claims in different terms:

Plaintiffs' argument is 
without merit. Whether defendants neglectfully failed to discover the forged 
signatures or by reason of paying forged items and debiting plaintiffs' account 
converted their money, the fact remains that the sine qua non for a drawee 
bank's liability to its customer is payment of an item over a forged or 
unauthorized signature of a drawer or of an item not otherwise properly payable. 
Without that essential element, the banks' neglect would not create liability; 
they would not have converted their customers' funds and would not be in 
possession of their customers' money subject to recovery for monies had and 
received.

Brighton, Inc., 
422 A.2d  at 438 (citation omitted). See also Provident Savings Bank, 504 A.2d  at 
136 (defendant admitted that negligence and breach-of-contract causes of action 
were barred by U.C.C. § 4-406(4)); American Home Assurance Company v. Scarsdale 
National Bank and Trust Company, 96 Misc.2d 715, 409 N.Y.S.2d 608, 610 (1978) 
(claim for breach of contract must comply with both six-year limitation and 
U.C.C. § 4-406(4) condition precedent requirement). 

[¶21]   Finally, Appellants assert that 
Achilles's signature was an authorized signature by virtue of the corporate 
authorization resolution and that, therefore, the one-year notification 
requirement for unauthorized signatures did not apply. This argument is useless 
to Appellants because, if the single signature was authorized, First National 
Bank did nothing wrong.

[¶22]   We adopt the majority rule that a 
missing signature falls within the meaning of an "unauthorized signature" when 
more than one signature is required. Since Appellants failed to inform First 
National Bank within the statutory time limitation that the checks contained an 
unauthorized signature, the jury could not have reasonably concluded as it 
did.

[¶23]   Our decision on this issue is 
dispositive of Appellants' remaining issues. We, therefore, will not address 
them.

[¶24]   Affirmed.