Title: Meador v. Ranchmart State Bank

State: kansas

Issuer: Kansas Supreme Court

Document:

213 Kan. 372 (1973)
517 P.2d 123
CHESTER L. MEADOR, Appellee,
v.
RANCHMART SATE BANK, Appellant.
No. 46,997

Supreme Court of Kansas.
Opinion filed December 8, 1973.
Myron L. Listrom, of Sloan, Listrom, Eisenbarth, Sloan and Glassman, of Topeka, argued the cause and was on the brief for the appellant.
Joseph S. Davis, Jr., of Olathe, argued the cause, and Daniel S. Millman, of Kansas City, Mo., was with him on the brief for the appellee.
The opinion of the court was delivered by
HARMAN, C.:
This is an action against a bank for wrongfully honoring a cashier's check drawn by it, which check was initially purchased by plaintiff and issued upon his instance. In trial to the court plaintiff prevailed and the bank now appeals.
The parties submitted the case to the trial court upon a written stipulation of facts together with certain exhibits referred to therein. By way of prelude, although the exact role played by plaintiff in this transaction is not revealed in the record, obviously it was contemplated by him that the proceeds of the check were to be used on his behalf as earnest money in securing from a lending *373 organization a loan commitment for the purchase of a hotel property in Kansas City, Mo. We quote the parties' stipulation:
Some elaboration of certain exhibits referred to should be made:
Exhibit A, the cashier's check in the amount of $30,000, shows plaintiff as remitter and "International Funding & Insurance-Associates and Arthur T. Winters, Their Attorney" as payees.
Exhibit C, the letter dated November 20, 1969, which was shown to the bank when plaintiff purchased the cashier's check, was one from Hutto (apparently a real estate broker interested in the sale of the hotel property), to Roberts (apparently a money finder). In pertinent part it read:
Exhibit D, mentioned in the foregoing letter, was an unsigned copy of a financing commitment instrument by International Funding and Insurance Associates wherein it committed itself, upon named conditions respecting the contemplated hotel property purchase including execution of mortgage, to loan three million dollars to Ambassador On Broadway, Inc., such commitment to become effective upon date of issuance, with closing date not later than December 31, 1969.
Exhibit G is a letter dated November 28, 1969, from Hutto to *375 Roberts transmitting the cashier's check, along with a copy of exhibit C, with instructions to deliver the check to International Funding and "Arthur T. Winters, their Agent and Attorney, upon receipt of a loan commitment issued by International Funding and Insurance Associates in the form attached". This exhibit bore an endorsement signed by Roberts stating that the terms of the letter were agreed to and accepted by him on behalf of Imperial Commercial Corporation.
The record does not disclose the circumstances under which the check got from Roberts to Winters but, in any event, Winters presented it on December 8, 1969, to the Mechanics National Bank of Worcester, Massachusetts, which bank honored it on an endorsement which forms the crux of this lawsuit. The date "December 31, 1969" in the endorsement as initially typed on the back of the check by the defendant bank was partially obliterated by handwritten marks and language was added so that when paid by the Massachusetts bank the complete endorsement appears as follows:
All words following the typed phrase "per agreement" are handwritten. Immediately under this endorsement on the check there appears a small handwritten notation, as follows:
"Cashiers chks
"# F.C. 04634
"# F.C. 04635"
The check bore the foregoing endorsement and notation when on December 10, 1969, the defendant bank received it through ordinary banking channels and paid it.
Based upon the foregoing stipulation and exhibits the trial court made findings of fact and conclusions of law upon which it entered judgment for plaintiff for $30,000. Many of the factual findings are duplicative of those stipulated and will not be repeated. Additional findings and conclusions pertinent here are as follows:
Before stating the contentions of the parties on appeal we should note the nature and character of the instrument in question and the law applicable thereto. In 10 Am.Jur.2d, Banks, § 544, the following appears:
In Scharz v. Twin City State Bank, 201 Kan. 539, 441 P.2d 897, we recognized that a cashier's check circulates in the commercial world as a primary obligation of the issuing bank, substituting for the money represented, and as such cannot be countermanded.
*377 The foregoing traditional view of a cashier's check now finds expression in our uniform commercial code, adopted in this state and effective January 1, 1966 (K.S.A. 84-3-410 [1] and 84-4-303) and as a bill of exchange a bank's liability on such a check must be deemed subject to provisions of that code (K.S.A. Chap. 84).
We take note of certain UCC sections deemed pertinent by the parties: K.S.A. 84-1-103 provides:
84-1-201 (43) defines an "unauthorized" signature as one made without actual implied or apparent authority, including a forgery.
84-3-105 provides:
84-3-116 states in part:
The official UCC comment (representing the opinion of the National Conference of Commissioners on Uniform State Laws and the American Law Institute) pertinent to 84-3-116 (b) is:
84-3-202 provides:
"Negotiation. ...
84-3-302 states in part:
"(a) for value; and
"(b) in good faith; and
84-3-304 provides:
..............
..............
..............
84-3-307 is as follows:
The official UCC comment on 84-3-307 includes the following:
84-3-403 provides in part:
84-3-419 states:
"Conversion of instrument. ...
84-3-407 (1) (b) provides that any alteration of an instrument is material only as it may change the contract of a party to the instrument, and further that no other alteration discharges any party and the instrument may be enforced according to its original tenor.
Essentially the several points on appeal presented by the appellant bank boil down to these: The trial court erred factually in finding the check was never endorsed by International Funding and that its proceeds were wrongfully converted to the use of Arthur T. Winters; it erred as a matter of law in concluding appellant had knowledge of these derelictions from the appearance of the check itself and that the check had been materially altered so as to affect its negotiability or validity.
Appellee responds the trial court found nothing factually beyond the stipulation and exhibits and the legitimate inferences to be drawn therefrom, which made it clear the check had never been endorsed by International, its use and purpose had been changed and it was converted to the personal selfish use of Winters; further, the trial court did not err in its legal conclusions.
As presented, the ultimate determinative question appears to be whether anything appearing on the check at the time it was honored by appellant altered its obligation to do so.
Appellee contends, and correctly so, that a trial court may take into account any inferences legitimately to be drawn from a stipulation or agreed statement of facts and included exhibits. Here, however, it appears the trial court went beyond the facts submitted *380 to it in the findings complained of. The bank was claiming under the signatures shown in the endorsement. By reason of 84-3-307, when effectiveness of those signatures became an issue, they were to be presumed genuine until proof was submitted to support a finding that they were not. Such evidence was lacking, indeed, the record is replete with undisputed evidence pointing the other way  that Winters was the agent and attorney of International and had authority to act for it. This authority was manifest in several of the exhibits: The letter first submitted to appellant wherein Winters was described as agent and attorney for International; the same label was repeated in the transmittal letter from Hutto to Roberts; and finally, as a payee in the check he was described as attorney for International. Where not specifically displaced, the UCC recognizes the continued viability of the common law relating to principal and agent (84-1-103). We see no evidence in the record which, under either our prior law or the UCC, would support a factual finding that Winters lacked authority to endorse the check for International and the statutory presumption of genuineness of the signatures as to authority becomes operative. Likewise, there was nothing in the evidence beyond speculation to support the finding that Winters wrongfully converted the proceeds of the check to his own use.
Appellee also relies on the deletion of the date "December 31, 1969" in the typed endorsement and the addition in it of the handwritten words as constituting knowledge to appellant of misappropriation destroying the validity of the check. The fact the endorsement made reference to another transaction in nowise affected its negotiability (84-3-105 [1]) nor did the addition of the handwritten language constitute a material alteration of the instrument as defined in 84-3-407.
Appellee put the check in commercial channels. Just who may have been guilty of defalcation to his detriment is not made clear from the record. In any event, Winters had authority to endorse the check. When returned to appellant the check contained no alteration affecting appellant's obligation under its initial transaction with appellee to honor it upon presentment, appellee meanwhile not having furnished appellant any reason to dishonor it. The trial court erred in holding otherwise.
The judgment is reversed with directions to enter judgment for appellant.
APPROVED BY THE COURT.