IN THE SUPREME COURT OF MISSISSIPPI NO. 2014-IA-00635-SCT THE PEOPLES BANK OF BILOXI, MISSISSIPPI

v. JOHN McADAMS, IN HIS OFFICIAL CAPACITY AS CHANCERY

CLERK OF HARRISON COUNTY , MISSISSIPPI AND AS GUARDIAN OF SY BIL BOWDEN AND JONATHAN DUNN

DATE OF JUDGMENT: 04/21/2014 TRIAL JUDGE: HON. RICHARD W . McKENZIE TRIAL COURT ATTORNEYS: NATHAN LAMAR PRESCOTT LAUREN REEDER McCRORY LAUREN RUTH HILLERY COURT FROM W HICH APPEALED: HARRISON COUNTY CIRCUIT COURT ATTORNEYS FOR APPELLANT: NATHAN LAMAR PRESCOTT LAUREN REEDER McCRORY ATTORNEYS FOR APPELLEE: LAUREN RUTH HILLERY DONALD C. DORNAN, JR. NATURE OF THE CASE: CIVIL - OTHER DISPOSITION: REVERSED AND RENDERED - 08/06/2015 MOTION FOR REHEARING FILED: MANDATE ISSUED: BEFORE RANDOLPH, P.J., KING AND COLEMAN, JJ. RANDOLPH, PRESIDING JUSTICE, FOR THE COURT: ¶1. John McAdam s , in his of f i c i a l c a p a c i t y a s C h a n c e r y Clerk o f H arrison County (hereinaf ter ref erred t o as the Chancery Clerk), was appointed guardian of Sy bil B owden and Jonathan Dun n. The Chancery Clerk f iled suit a g ainst The Peoples Bank of Biloxi, Mississippi (hereinaf

ter ref erred to as the Bank), alleging gross negligence, n egligence, and conversion of a negotiable i nstrum ent. T he Bank pleaded that the statute o f lim itations hadrun on these claim s and f iled a m otion f

or sum m ary j udgm ent. The trial court denied the

m otion. T he Bank petitioned this Court a nd was granted leave t o f ile this i nterl o cutory appeal. See M.R.A.P. 5.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY ¶2. In October 2003 the Chancery Clerk opened guardianship ac c o u n t s fo r J o nathan Dunn and Sy b i l B o w d e n a t Peoples Bank. W o odrow W

. “ W oody ” Pringle III s erved as the Chancery Clerk’s attorney

. The Chancery Clerk was the sole signatory on both a ccounts. In opening the a c c o u n t s, the Chancery Clerk signed a deposit agreem ent, which stated, inter alia : Statem ents

–

You m ust exam ine y our s t atem ent of account with “reasonable prom ptness.” I f y ou discover (or reasonably should have dis c o v ered) any unauthorized pay

m ents or alterations y ou m ust p rom ptly notif y us of the relevant f acts.

. . . You f u rther a gree that if y ou f ail to report any unauthorized signatures, alterations, f

orgeries or any other err o r s in y our account within 60 d ay s of when we m ake the statem ent available, y ou cannot assert a c laim against us on any item s in that statem ent, and the loss will be entirely y ours. ¶3. On January 2 4, 2005, Pringle closed t he Bowden guardianship, without any authority
to d o so. The Bank i ssued P ringle a cashier’s check pay able to Bowden a nd Pringle, jointly , in the a m ount of $6,609

. 40. Pringle f orged Bowden’s signature, cashed the check, and retained the f

unds f or him self

. The Bank, through its custodian of records, o f f ered evidence that it sent a statem ent to the C hancery Clerk’s of f ice on J anuary 31, 2005, revealing t his closure and disbursem ent at the address listed on the f orm opening the account: “Sy bil

2B o w d e n G

u a r d i a n s h i p , b y J o h n M c A d a m s G u a r d i a n , P O D r a w e r C C , G u l f p o r t , M S 3 9 5 0 2

- 0 8 6 0

. ” ¶4. T h e D u n n a c c ount required a court order bef ore disbursem ents could be m ade. O n June 11, 2008, Pringle presented what purported to b e a court order 1 authorizing the disbursem ent of $ 30,000 pay able to Victoria Dunn (Dunn’ s mo t h e r ) and Pringle’s trust

accou nt. The Bank i ssued a cashier’s check in a ccordance with the order. On the f orged endorsem ent of Victoria Dunn, P ringle cashed the check and r etained the f unds f or him self

. On March 25, 2009, Pringle wrote a check f or $8,000 on the Dunn Gua r d i a n s h ip account
pay able to him self and Jonathan Dun n . T h e check purports to be signed by the C hancery Clerk a nd endorsed by Dunn, b u t both signatures are now alleged t o be f orgeries. The Bank paid the check, in the absence of a court order. ¶5. The Bank, through its custodian of records, of f e red evidence that it s e nt a statem ent
to the Chancery Clerk’s of f ice on June 30, 2008, r evealing the $30,000 disbursem ent at the address listed o n the f

orm opening the account: “Harrison Cty Chancery Clerk, Jonathan A
Dunn Guardianship, John M c Adam s Guardian, PO D r awer CC, Gulf port, M S 39502-0860.”
In like m anner, the Bank of f ered evidence that it sent a statem ent to the Chancery Clerk on March 31, 2009, revealing the $8,000 disbursem ent to the sam e address. ¶6. By af

f idavit f i led in t h i s ma t t e r , the Chancery Clerk claim s he never received these Bank statem ents, because “Pringle obtained possession of any bank statem ents received in

1 T h is o rd er d o es n o t ap p ear in th e r eco rd , b u t i ts ex ist e n c e is n o t d isp u ted

. D u rin g arg u m en ts o n th e m o tio n f o r su m m ary j u d g m e n t , th e trial co u r t ask ed p lain tif

f ’s co u n sel f

o r an ex p lan a tio n f

o r w h y th e o rd er w as “f

rau d u len t.”“[ S ] o m eh o w Wo o d y P rin g le w as ab le to g o a n d b rin g an o rd e r to a j u d g e an d g e t h im to sig n it, w ith o u t an y k in d o f m o tio n o r w i th o u t an y

th in g else.” T h e o rd e r w as n o t certif ied

. Wh ile t h e o rd er p u rp o rted ly b ears Ju d g e S teck ler’s sig n atu re, ev en h e can n o t v erif y if h e sig n ed it o r n o t

. 3the Court Departm ent and took them to his of f ice.” T he Cha n c e r y C l e r k does not know whether the Bank m ai l e d t h e s t atem ents or not. I n January 2011 the Chancery Clerk requested and obtained these stat e me n t s f rom the Bank af

ter discovering Pringle’s

em bezzlem e nt schem e in other cases in Decem b er of the previous y ear. ¶7. O n M a y 8 , 2 0 1 3 , t h e C hancery Clerk f iled his Com

plaint o n b e h a l f o f t h e
gu a r d ianships against the B ank, a sserting negligence, gross negligence, and conversion of

a negotiable instrum ent. T he Bank responded with a m o tion f or sum m ary judgm ent, claim ing

t he C hancery Clerk’s c laim s were tim e-barred by both t he deposit agreem ent and Mississippi law. ¶8. The t rial court heard oral argum ents on the m otion. The trial court e n tered an o r d er deny ing Peoples Bank’s m otion f or sum m ary judgm ent. The B ank p etitioned this Court f or
perm ission to subm it an interlocutory a ppeal which was granted. This interlocutory appeal duly f ollowed.
ISSUES ¶9. Peoples B ank raises the f ollowing f

our issues relating to the trial court’s denial of its

m otion f or sum m ary

judgm ent:
I. Whet h er the C hancery Clerk’s claim s are tim e-barred by the six ty day notice provision contained in each account’s d epos i t a g r e e m e nt that the Chancery Clerk ex ecuted.
II. Whether the C hancery Clerk’s claim s are tim e-barred pursuant to Miss. Code Ann. § 75-4-406(f) w hich i mp o s es a one-y ear notice provision after the statem ent is m a de available to the custom er.

4III. Whether the Chancery Clerk’s claim s for c o n v e rsion of a negotiable instrum ent are tim e-barred by the three-y e ar statute of lim itations contained in Miss. Code Ann. §75-3-118.
IV. Whether the C hancery Clerk’s n egligence and gross negligence claim s are tim e -barred by the three-y e ar st a t u t e of lim itations contained in Miss. Code Ann. §15-1-49. Finding that the three-y ear s tatute of lim itations has run, rendering the other argum ents m oot, this Court will address only the three-y ear statutes of lim itation.
ANALYSIS ¶10. W h en consi d e r i n g i s s u e s o f law, such a s statutes o f lim itations, this Court em ploy s a de novo review. Andrus v . Ellis , 887 So. 2d 175, 179 (Miss. 2004). W h en reviewing a t r i al c ourt’s grant or d enial of a m otion to dism iss or a m otion f o r sum m ary judgm ent, this C ourt likewise a p plies a de n ovo standard of review.
Whitaker v. Lim eco Corp. , 32 So. 3d 429, 433-34 (Miss. 2010). The evidence m

u s t be viewed in the light m ost f avorable to the party

against whom the m otion has been m ade. If , in this view, there is no g enuine issue of m aterial f a ct and, the m oving party is entitled to judgm ent as a m atter of law, sum m ary judgm ent should f orthwith be entered in h i s f a vor. Otherwise, the m otion should be denied. Leslie v. City of Biloxi , 758 So. 2d 430, 431-32 (Miss. 2000). ¶11. The Chancery C l e r k f iled claim s of conversion of a negotiable instrum ents, which have a three-y ear statute of l im i t a t i ons under Mississippi C ode Section 75-3-118, and negligence/gross n e gligence claim s w hich have a three-y e ar statute of lim itat i o n s under Mississippi Code Section 15-1-49. ¶12. Section 75-3-118(g) r eads, in pertinent part, “Unless governed by other law regarding claim s f or indem n ity or contribution an action (I) f or conversion of an instrum ent, f or m oney

5had and received, or like action based on conversion

. . . m ust b e com m enced w ithin three (3) y ears af

ter the cause of a ction accrues.” Notably absent f rom this s ection is any provision
f or a “discovery rule.” Section 15-1-49, in prov i d i n g a t h r ee-y ear s tatute of lim itations f or all actions f

or which no statut e o f l i mi t ations is e lsewhere provided, does contain a “discovery r

ule.” “In actions f

or which n o other period of l im itation is p rescribed and which involve latent injury o r disease, the cause of action does not accrue un t i l the plaintif f has discovered, or by r easonable diligence should h ave d iscovered, the injury .” Miss. C ode Ann. §15-1-49(2)(Rev. 2012).
I. Has the three-year statute of l i mitations for c onversion of a negotiable i nstrument run? ¶13. The C hancery Clerk f il e d h i s c o mp l a i n t May 8, 2013. In C ount II, addressing his claim s f or conversion, he alleges the B ank “is liable f or converting the negotiable instrum ents f

rom Dunn’s guardianship account.” 2 The $30,000 disbursem ent f rom the Dunn account occurred on June 11, 2008; the $8,000 disbursem ent occurred on March 25, 2009.
More t han f

our y e ars elapsed f

r om the tim e o f these t ransactions to the tim e the C hancery Clerk f i led his claim , outside the three-y ear statute of lim itations. ¶14. The Chancery Clerk a sserts all his c l aim s are saved by the “discovery r ule” provision of Section 15-1-49(2). Not only is this argum ent betray ed by a plain r eading of the statutes

as outlined above, it i s contrary to this Court’s precedent. In Sm ith v. Franklin Custodian Funds, Inc. , 726 so. 2d 144, 148 (Miss. 1998), this Court stated, unequivocally ,

2 T h e C h an cery C l erk d o es n o t assert a c o n v ersio n claim reg a r d i n g t h e B o w d en G u ard ian sh i p . 6W e hold today t h a t t h e rule adopted by a m ajority of our s ister jurisdictions 3

is sound and s h ould be applied in our jurisprudence. W e theref ore h old t hat the discovery r u l e i s inapplicable in actions involving conversion of negotiable instrum ents unless t he def endant asserting the statute of l im itations is involved in the f raudulent concealm ent. ¶15. In Sm i

th, a son, acting a s his parents’ f inancial a dvisor, liquidated t he securities of his parents without their knowledge and concealed his actions f rom them

. Id. at 1 46. In 1987, Franklin Funds issued a check t o the parent-com pany of a subsidiary f

or whic h the son worked. Id. The son o btained t h e check, f o rged his parents’ signatures, and retained the
f unds f o r him self

. Id. The parents discovered his acts in 1 993 and s ubsequently brought suit.
Id. T he Court applied the new rule to f ind the discovery rule inapplicable. Id. at 147-48, 151. ¶16. Here, the Chancery Clerk concedes the Bank was not involved in Pringle’s f raudulent concealm e nt. Because t he B a n k w a s not involved in the f r audulent concealm ent, the discovery rule does not toll the statute of lim itations f or the conversion claim s . As such, this
Court f inds that the trial c ourt im properly denied the Bank’s m otion f or sum m ary j udgm ent on this issue, f

inding Sm ith , supra , to be controlling.
II. Has the three-year statute of limitations for negligence/gross negligence run?

3 C itin g M

en ich in i v. G ra n t , 9 9 5 F

. 2 d 1 2 2 4 , 1 2 2 9 (3 d C ir.1 9 9 3 ); H u sk e r N ew s C o . v. M a h a sk a S ta te B a n k , 4 6 0 N .W.2 d 4 7 6 (Io w a 1 9 9 0 ); K u w a it A irw a

ys C o rp . v. A m erica n S e c . B a n k , 8 9 0 F .2 d 4 5 6 , 4 6 0 -6 3 , 4 6 6 (D .C

. C ir.1 9 8 9 ) ; F irst In vesto rs C

o rp . v. C itizen s B a n k , In c. , 7 5 7 F

. S u p p . 6 8 7 , 6 9 0 -9 2 ( W.D .N .C

. 1 9 9 1 ), a f f' d m em
. , 9 5 6 F .2 d 2 6 3 , 1 9 9 2 WL 3 6 8 1 2 (4 th C ir.1 9 9 2 ); W

a n g v . F a rm ers S ta te B a n k o

f W i n n er , 4 4 7 N

. W.2 d 5 1 6 , 5 1 8 -1 9 (S .D

. 1 9 8 9 ); S o u th w est B a n k & T ru st C o . v. B a n k ers C

o m m e rcia l L ife In s . C

o . , 5 6 3 S .W.2 d 3 2 9 , 3 3 1 -3 2 (T ex . C iv

. A p p . 1 9 7 8 ); G erb e r v. M a n u fa ctu r ers H

a n o ver T ru st C o . , 6 4 M isc. 2 d 6 8 7 , 3 1 5 N .Y .S .2 d 6 0 1 , 6 0 3 (1 9 7 0 ). 7¶17. The Chancery Clerk f iled h is com

plaint May 8 , 2013. The three transactions at issue occurred on January 2 4, 2005; June 11, 2008; and March 25, 2009. As with the conversion claim s, the m os t r e c e nt transaction occurred m ore than f our y ears bef

ore the f iling of the

com plaint–well outside the three-y ear s tatute of lim itations. H owever, n e gligence/gross negligence claim s are subject t o the “discovery rule” of Section 15-1-49(2), essentially that
“t h e c a u s e o f action does not a ccrue until the plaintif f has discovered, or by r easonable diligence should have discovered, the injury

. ” ¶18. “The question of whether a statute o f lim itations is tolled by the discovery rule of ten
turns on the f

actual determ i nation of ‘what the plaintif f knew and when.’” Stringer v. Trapp , 3 0 S o . 3 d 3 39, 342 ( Miss. 2 010) (quoting Huss v. Gayden , 991 So. 2d 1 62, 168 ( M i s s . 2008)). Thus, “‘[ o]ccasionally t he questi o n o f whether the suit i s barred by t he statute of
lim itations is a q

uestion o f f

act f or the jury ; however, as with o ther putative f act questions, the question m ay be t aken away f rom the jury if reasonable m inds could n ot dif f er as to the conclusion.’” S

tringer , 30 So. 3d at 342 (quoting Sm ith v. Sanders , 485 So. 2d 1051, 1053 (Miss. 1986)). ¶19. The Bank of

f ered evidence that it sent statem e nts to the Chancery Clerk concerning these transactions on the l ast d a y of e ach m o nth. The Chancery Clerk of f ered no proof to dispute the Bank’s assertion, although he c l aim s he never r eceived a B ank statem e nt 4 because Pringle rem oved the Bank statem ents delivered to the Chancery Clerk.

4 T h is m ean s th e C h an cery C lerk n ev er receiv ed a B an k statem en t f o r m o re th an eig h t y ears f ro m Jan u a ry 2 4 , 2 0 0 5 , th e B o w d en tran sactio n

– u n til f ilin g su it M ay

8 , 2 0 1 3

. 8¶20. In Union Planters Bank, N.A. v. Rogers , 912 S o. 2d 116, 1 1 7

- 1 8 (Miss. 2005), a

h o u s e k e e p e r f

orged num erous checks of her em ploy e rs. The em

ploy e rs (Rogers and her husband) sued the Bank f

or c onversion a nd negligence. Id. Rogers f ailed to inspect the bank

statem ents because the housekeeper took them in order to conceal her schem e . Id. at 121-22. The Court f

ound this concealm e nt to be of no consequence: A reasonable p erson who has not received a m onthly statem ent f rom the Bank would prom

ptly ask the Bank f

or a copy of the statem e nt. Here, Rogers claim s that she did not receive nu me r o u s s tatem ents. W e f ind that she f

a i led to act reasona b l y w hen she f

ailed to take any action to replace the m issing statem ents. Id. at 122. ¶21. Four y ears, one m onth, a n d e i g h t d ay s elapsed b etween t he tim e the m ost recent
statem ent becam e available March 31, 2009 a n d the t im e the Chancery Clerk f iled suit May 8, 2013. He did not request statem ents f rom the Bank until January 2 0, 2011. 5 According to Union Planters , he should have asked the Bank f or a copy , but he f

ailed to take any action
to replace the m issing statem ents. Had he a s k e d t he Bank f or a copy of the m issing
statem ents, he could have discovered Pringle’s f raudulent s chem e and a

n y a l l e g e d n e g l i g e n ce on the part of

the Bank. ¶22. The statute-of

-lim itations i s s u e i s not a question of f act because reasonable m inds could not dif

f er, in light of Union Planters , that t h e Chancery Clerk lacked diligence in
f ailing to obtain and review any account statem ents f or m ore than a y ear and a half on one
account and mo r e than eight y e ars on the other. Stringer , 30 S o. 3d at 342. Based on the

5 T h is m e an s th e C h an cery C lerk w aited o n e y ear, n in e m o n th s, tw en ty d ay s b ef o re req u estin g th e m o st recen t acco u n t statem en t. 9record bef

ore us, t he trial court erred in ref using to grant Peoples Bank’s m otion f or sum m ary judgm ent because t he Chancery Clerk’s claim s are barred by the applicable statutes of
lim itation.
CONCLUSION ¶23. T h e circuit court erred in ref using to grant Peoples B ank’s m ot i o n f o r s u mma r y judgm ent b e c a u s e McAdam s’s claim s have expired due to the running of t he a pplicable three-y ear statutes of lim itation. Theref ore, t he Harrison County Circuit Court’s d enial of the Peoples Bank’s m otion f

or sum m ary judgm ent is reversed, and judgm ent is rendered f or the Peoples Bank. ¶24. REVERSED AND RENDERED. WALLER, C .J., DICKINSON, P . J., LAMAR, KITCHENS, C HANDLER, PIERCE, KING AND COLEMAN, JJ., CONCUR

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