No. 01-014 

iK ;Ti-!E SIJPREhZE COURT OF THE STATE OF \/IONTliA 

200% 21T 152 

'rrARBRO, L.TD., a Ncvada corporation, dibja 

LAKE .MEAD RADIOlLOGlSTS, 

Plaintiff and Pippellant, 

\. 

RIISSOUI.,A FEDERAL CREDIT UNIOX: 

a Montana Banking Corporation, DOE 

INDIVLDUALS I-X, ROE CORPORATIONS I-X, 

Defendants and Respondents. 

APPEAL FIIOM: District Court of the Fourth Judicial District: 

In and for the County oSMissoula, 

l.Ionorable John Larson, Judge Presidiiig 

COUNSEL. OF RECORD: 

For Appellant: 

Jolin F. \;elk, Blakely & Velk, Missoula, Montana 

Cl-rarles I. Lybarger, Lybarger, Burrin & Bunin, Las Vegas, Ncvada 

For Respondent: 

Ronald A. Bendcr, 12'0rdct1, TI~aile & ilaines, P.C., blissoilla, ;\/lor~lana 

Submitted on Briefs June 7, 2001 

Dccrdcd July 3,2002 
Justice Jim Rice cieii\-cred ilie Opinion ni'thc Court. 

*; 1 iipppcil:inr Yar13rot 1-rd., db:a L;iice ticiid Radiologists (l';irbro). iipp-~~is ficirI~ ;hi: 

order ofthe Fo~irllr Juciiciaf District ('oilit. Miss(>i,il:i ('(jiirly g~~itin? ~~t~n~iiy\-i"tdgri~c!~i iii 

hvor of Rcspoxdcnr \fisso~ili: f'eciesal C'reiiit Ljnion (Z11:C'!..:j aild denying Yiirbro's :~?criiori 

for a cllangc af venac. We aff'firm. 

'2 The following issilcs ar-e disposiiivc: 

3 1. Whether t!ic District Coiirt erred in granting surniiiziry judg~neiit to kd\/LFC1; 011 

Yarbro's conversion claiin on the grounds that the claim was barred by the applicable statute 

of limitations. 

7j4 2. L$Tl~el'i~er theDistrict Co~11.t erred in gran~iiig sumrnary judgrncnt to tlFCl, on 

Yarhro's hreach of win-i-anty claini on the grounds that Yarbro \vas rcsponsib!e for tlic acts 

of its own ctiiployccs. 

'I5 3. Whether thc District Court crrcd in cicnying Ynrbro's motion fbr a changc of 

venue. 

FAC'l-l.J.41. r\h'l> Pf<OCE[>I.!R:11. t3;\<,'K(iROl..YD, 

0 31 Yarbro is a racliologisr firm operated as 1.akc %lead Radiolagisis in Ilerrdcrson. 

Ncvada. ICathryn Velean (Mci.canj was employed byVarb!-o from Jar!u;:r-y of 11193 tlirough 

.June of' 1906. %tcl,can's rcsponsibilities iticluclcd tl:ira ci~ii-y. filing, posting payinents, 

processing accounts rci.ci\rablc, sending oiit statenicnts; billing anti ;ic~oiintiiig. During the 

cotiric of 11cr employmcnr, blcl.ca~n forged signi!!:~!-cs oil o\.cr n i~andrcii checks and iiloncy 

orders. *cleI,eitn woi~lcintcrccpt cl1ecks jnid on patient accc!ilnts \\,hich ~verc pnqablc either 

- ? 
to [Lake hfeaii or to indiviciutli c1itcto1-s; she wouiil cndorsc ihc ci~ecks on hehalfof i.ake Mecad 

or il;e injj\i:iual doctors and makc them pa~hli: to !~ziselC T!~crr, ?vf~i.~;iii ~oi!?d cridors;: 

tl:c cl?echs in her name and mail them to fLIFC'l-: fbr ileposil into her- personal :recount ti~ere. 

'l'hc iast deposit to McL.ekin' ClFC'L; account was :made on JLLIIC 7; ILjcii>. Tl~c vaiiic of tlhc 

forged checks and money orders exceecied S00,000.00. 

"i On JutieOi l"lO'i: Yarbro filed a complaint against LIFCC in %fissoula County seeking 

damages in rhe amount of the fbrgecl checks and moricy orders, alleging unlalvkrl conversion 

of negotiable inst~~iments byMFClJ, tinder 3 30-3-41 '4. ?+\;1C.',1\ JUC'C 5 3-41 9). and breach 

of transfer warranties, under 3 30-3-207, MC.4 (I.IC'C 3 4-207). On July 3; 21100; ,!4ppe?lanr 

moved for a cliange of venue, asserting iliat, because k~lonor:ible Edward klct.can, a judge 

of the Fourth Judicial ISistrict. is tile uttcle of McLean, an iinpai-tiai trial couid not hi: 

conductecl ill Misso~ila County. 011 July 0, 2000; hZF('l..T tiled a rnotioii for summary 

judgment, argiiing Varhro's con\-ersion claim was barred by statute of ii~nitations. that 

Yarbro's brcach of warmnty claiin was barred becati~e Yarbro is responsible for the acts of 

its own eniployees. and iitrtlier, that V:irbro could not bring :i claim for l?rcacli of transfer 

warranties against k!I'vZl'C'i:. 011 Septeinhel- 5. Zi)O(i, the i)isirict ('cii1i.t. iioiiorable Julli? YC. 

Larson presiding. deniccl Yarbro's motion for change of venue and granted siimrnary 

jucigntcnt in fhvor of b1CIFC'U. FI-or11 that judgment and order, Yarhro appeals. 

S7':%"L:I)ARD OF KEVlEM; 

78 Summary .jutigmeni is tippropi-iatc when rite pleadings. discovery and ai'iidaviis 

establish that tlzere is no geniline issue as to any maierit~i fact atid that tlie moving itirre is 
. . i.r!>ting sijmrnar> jiidgmcnt dc iio;:o. by iipi?iyil?~ liie iiiilli' e~i:iliiiilc)!l 1:553d On iiui: 56, ~d 

M.R.C'iv.l'.. as &st!-ict coiirt. .Sciiiir~?iri~ki~r r. ;lfei.itiiii;: Oil i't,.. iO"1 8'1' 70. 4; ?4. 388 

Mont. 21 7_ 7: 13, 050 P.2d 1370, *j 14. 

0 li l'he moving parry ni~~st demonstrate that no genuine issues of marerial tkct itxist. 

Then the burden shifts to the non-iiioving party to provc, by more tliaii mere dci~ial and 

speculation, that a genuine issue does exist. Reli & :L.lnrt.cr, I'I.LC v. .Sz~l/iviit?, 200(, b1'T 200, 

* 25? 300 Viotit. 530, rj 25, 6 P.3d 965, rj 25. If tlie court dcternlines that genuine issi~es of 

Fact do not exist, the court must then dcteinninc ~vl~etlicr :he moving party is ci~titlcd to 

judgment as a inattcr of Ian. Uell, !j 25. '1-his Court i.evicix;s a district coiirt's legal 

co~lclusions to detertninc iftlrcy are correct. Hell. ";5. 

7ilO The party opposing suintnary judgrncilt cannot rely on mere allegations in thc 

pleadings, but 111nst present its eviilence raising gcn~iinc issrzes of material fict in the ibiai 

of affidavits or other s~orll testiinoliy. .Schfi~nili;kei.. g; 15: see also Kiwi; I,. T(iii'ii i~[C'~z.vciiijC' 

(1 9971,284 Mont. 167,943 P.2~1 1262. LVhile this Court rcsolves ally infcrciices draw11 from 

the iactual record in favor of the party opposirig sunitnary judgmctit, mere cicniiii, 

speculation, orconclusory state~i~ents arc ins~ifficiciltto raisea ycnuinc issiieiif i-i~aterial hzt. 

.Sci~~imcicitei-~ (1 15. 

D1SCL;SSION 

"1 I 1 i. Dici the Ilisrrict Coiilt en- in graiztiiig suiiiniary judg~~ie~lt oil ihi' gro~!ii(?s that 

Yiirhro's conversion clai~~ls were ha]-rcii by the app!ictib!c sl;rtutc ui'lirnitatinris? 

4 
811 - 5 iil Count i oi- its Compiaint, Yarbro 2illeg~:l ui11awl;ii i:~iivcrsioi! of negotiabla: 

grt3ntcti suml~?;ry,juifgn~e~it tti XiFC'L,' on this counf. lindijrg rhc i.!:n ..?-as time bi:i-rcii tinder 

rhe applicable statute of lin~itations. a11olding which J'arhrii ci)l~tc!iils \v:is CISO~C~LIS 

"i 3 When interpreting the Llnifonii Coniincrciai C'utie, wc bear in rnii-id its purposes itilci 

objectives. I'hcse obicctivcs include thc uniform application ofcoi~~n~ercial law among the 

v:irious jurisdictions, the siri~pliiicatiort and tnoderni~arion of thc 1:iw govcrnirrg cotnrncrciai 

transztcrions, and thc presumption in favor of predictability anti finality of commercial 

transactions. See $ 30-1-102, blCA, "Purposes--rules of construction variation by 

5,13 The applicable statute of lirnit:ttions for eonvcrsion of negiitiablc insti-urncnts is set 

forth in $ 30-3- 122, MCX. Subsection (7) ststtcs: 

Llnlcss governed by orhcr law regarding claims for iridc~nnity orcontribution, an action for conversion of an iiistriirnent, ibr money llad anci 

rcccivcd, or for likc action bascd on conversion: fbr breach of \vztrranty; or to 

enforce an obligation. duty. or right arising under this chapter and not 

governed by this section nltlst bc commenced \vitIiin 3 years after the causc of 

action accrues. 

Section 30-3-122(7). btCL'+. Tlre Oflicial C.onzments state that tliis silbseciioo covers 

conversion cases and other actions to cnfoscc obligations or rights arising under Ariiclc 3. 

and thatthe thrcc-year statute of liii~itations cstahlisbcd by, tile statutc"f<!llows iradiiion~ii iu7.i. 

in stating that the period runs fiorn the time thc cause of aciii?n accnies.'. 
. . 7 15 ,iecTlon 57-2- i02: 1I;1('t\, sets forth tile ti.adiric?:zai rule in \vloiiiaria regarding the 

(1 ) For puposc; ofstatutes relarirlg to the rimc within wl~ich 311 atlion 

must be commenced: 

(a) a claim or cause oi'aition accrucs when ail cien~ei~is oEthc ciaim or 

causc exist or have occurred. 

(2) Cjnless othe~wisc proded by statute, thc per-id oflii~~iiation begins 

when tile claim or cause of action accrues. Lack otl<nowledgc oi'thc claim or 

cause of action, or of its accrual, by the party to whom it has accrued do-. bs not 

postpone the begi~i~iing ofthe pcriod of limitaiion. 

Section 27-2-102(11 and (2), h1C.X 

I In this case. Yarbro's carlsc ofactiotl against MFCI,' for conversion accrueit for cczch 

el~eck at the time the check was deposiiect by M~1~car-i in hcr tlfC'I,' account kind LlFCli: 

credited MeLean's account therefor. It is not disp~itcd that the last cicposii io Mcl_esiii's 

MFCL account \%as 111ailc on June 7. 19%. Becausc the elements of conLetsron for all 

transactions existed or occurred by then, the three-year siatute of limitations for all claims 

bcgan to run, at thc latcst, on JLII)~ 8: 1096. Yarbro's complaint was not tjlcd until .lunc 9, 

!099. 

li 17 Yarbro argues thc discovei-y doctrinc should be applied to the statute of limitations for 

coil-vcrsion in this case. 7'11~ discovery doctril-ie is an cijiiirabic cxccption to the general rule 

that the statute of liniitations begins to run as soon as thc cause ofaction aicnlcs. ikcorclil~g 

tit tile discovcry doctrine, "the applicable staiiitc of limitations begins tii run once the plilintifi' 
. . ,. *,. knctv or sirt>ulci illivc knoivir that !a cause of ac-iron exists. ~iii-iwii K;-gier~~, hi(: 1.. Eisisii/~ 

H/iiik ii,iMiiiitiii~;r ( IO'iii). 242 blont. 155, l00, 7Kii P.2d 567, 576. 

! 8 Varljro iltrirns it had iio reiis~il to st~spi-ct il::~r 23 cor~vcrsioi: had occiirrcci prior tii?ilni: 

10, 1900, lvhcn it first discovcrcd thiit klcl..can !?:id cngagcil in Sriiiidulect iiclivitlc". fFunhcr, 

Yarlxo asserts it \\.as entitled to obtain copics of the checks in qucsriori fion: MFC'I.; and 

inspect tile checks to deterniiiie MFCG's involvement in the matter. b1ore:iver; Yarbro 

claims when it knew or should have known of the forgeries is a question of material FLct that 

needs to be deterniinect, anci thirs, strmrmary judgrncrit is inappropriate. 

7 10 Yarbro's assertion that the discovery doctrine slio~ild be applied here is prerniscd up012 

'. -<' two al.guments. First, it cites the CCC statutes oflitlliiatioli sct Forth at 9 sr_i-4-207(5), "\1C'!i, 

anc! $ 30-3-117(4); MCA, both of n:hich provide that ""a cause of action !'or breach of 

warrant): tinder this section accrucs when the claimant has reason to know of the brc:icl~." 

I-ioucvcr. by the plain meaning or these ptavisions and ihcir placement witlhin statutes 

:iddrcssing breach of ~v~trraiity. they arc applicable only to hrcazh of \v;li-i-:iilt:i actions, nor 

conversion. These statutory provisiotis tllus have no application to Yarbrois cunvcrsiun 

claim. 

320 Secotrdly, Yztrbro cites the eonccalment or\ilcl.e:tn in this maitcr :rnci oris case law's 

applicatioil ofthe discovery doctrine in certain instances. 'llthougl~ tlic app!icatiiin cifthe 

disco.. ~ciy . doctrinc to a LC'C conversion case is one of ilrst impression in YItii~ttiri~i~ 

substar~tia! consideration ofd~ issiic hasocc~~~~'iil in ori~ercuiins. will? sig~~iticantagrceinec~. 
. . 4:2 1 ,[ 1, 3 . j ]:.Ztj 1224, the 1edcr:;l circiirr ~oi:rr 

&ciiiii.d lz, PI?!:; rile $isc(j\~ci-;i doctril~c io a I:('( 4 3-41') cmicrsioi~ ciisc slating, "i.'hcrc 

apart! not engaging in fraudulent concealiiient asserts thcstarriic oflin1itatiiiris cicfiiiisc. ruc;ir 

courts have ref;ascd to apply the discovery rule to negotiable instriirncnts, finding I inimical 

to UC'C policies of finality aricl negotiability." .2lei1icilini, 995 F.2d at 1230. 

7122 In .Jl~isker iVercr Co. I>. ~GIilIii~silcr Sfirte Hr~fiii (Iowa lOOO), 300 N.kV.2~1 476, tile iowa 

Suprcn~e Coutt offered similar reasons for not applying tl3c discovery iioetrinc. to 21 l,yi'i' 3 

-3-310 conversion action and reported that otlier statcs are nearly ~ina~?inrous in tlieir rcftisai 

to appiy tile discover-y rille in cases of conversion. It siiitcti, "tie firlit thcir IICC~S~OIIS 

pcrsuasivc arid note that such ai~iiiority is cntitlcd to cvcn greater. defcrcncc where 

corrsistcricy arid unifht-mity ofapplication i~r-ecsse~itial cicmcnts oTact>mprchcnsive statutory 

scl~erne like . . . the Uniform Cornniercial Coile." Ifztskct. jVci.i;s t,'~.. 460 X.W.2d at 378. 

323 'PhcCourtofi\ppeals for the District ofColumbia C'ircuit also endorseti this approach. 

111 Kuw(iiz dzfirtv~~g~.s C'orj~. v. Ainc~ric,(u~ Set. 13(rtik (L1.C'. Cir. 1980), 800 F.2d 356, the c<jLiri 

relectcd the application of the discovery rulc to a UCC 9 3-11') action and held that "'the 

discovery rulc docs not apply to toll thc srati~te of lirnitatlons where a hailk is silcd ibr 

ccrrr~ersioii o~i a titrgccl endorscriient." rrnless rhc b21nh tiaiiiiuiei~ril;ccii~cc:iictl the it.:insiiciion. 

Kzlivuii z4irw(~.~,.s C'(II~. , 800 F.2~1 at 402; c~uotii?g S(jlii!i~t'c.~f /3(in/c c!i Tr~st <?I. \,. Banker ',< 

('orirt~~crcicil Lifi !/is. C,'o. (Texas 107X)? 503 S.'1ir.2d 320. 

ti24 '1'~vo reasons cificn citeii for rejecting the application of ihc discovery iiocuir~c in 

convcrsion cascs are the neeti for finality in transactions involving negoiiablc instn~rnciiti~ 

8 
and the presiiinption that a property olirler knows u-liai and whcrc his property is. i-itisker 

725 'The facrs in MisXrr leii:s Ci) were similar t(j. bvr cven morc harsh thani those now 

the e~rtployer's indorsement on the checks, itnd depositeci tbe checks into his persocniti 

account. Tlie employee concealed hts ernbc//lemetrt from h~s employer, and the en~plo~ei 

did not cfiscol-er the employee's actions until after lon~a's statute of limitaiions hail already 

run. \Vhen the defendant bank interposed the statute of lim~tat~ons defense to the plaintlft's 

coi~vcr-sion action, the plainxiff stsscrted the discovery doctrine, ciainling the employee's 

fiaudulcntconccain~entpreventcd itiscotery. Citing the i.;C'i' objectives ofpreiiictahilityand 

finality in com~nercial transactions, thc Iowa Supreme Court refiised ti? apply the iiiscoi-ery 

doctrine to conversion actrons, 

1Vc thinic the consicterations of finality and predicbtbility represenred by the 

majority r~11e are substantial and outweigh the countervailiilg equities which 

Icd us to apply the discovery rule iri other cases. T1ic strength of our system 

of commerce depends on a negotiable instrument law that is mechanical in 

application. . . . In cotlclusion, we hold that the discovery rttle does not apply 

toconversion actions under lovw,a.rodescctioil 554.34iO(l)(c) [1:CC 5 3-41 91. 

'l'hc plaintifl-s cause of action against the Maliaska State Uank is therefore 

barrcd by the statute oflirnitations. The decision ofthe district court granting 

the bank's motion for summery judgment is affirmed. 

"25 'T'l?c court's rationale it1 Siitviiii Aii-ivitj:~ ('oip. was that art employer shurr!ci bc abic 

10 ciiscover 311 en~pIoyee tvho is forging checks within thc ;ipplic;?blc pcriod oi'iiil~itaii~~i by 

evercisiilg reasonable and prudent business practices. '~'therc in bc no cjucstioii in tiic 
ilisiarri casc that sn oriliiia1.y business could iial;c dt.ieciecl ihu sipiliinii~g oiioifmi!s wi!i:iil 

;i three-year period (if t1;eir convci-sioin." iiztiiiiii ;I!rr;.i~j..s C,'oq?., 890 F.2.d ar 461 

9127 Yarbro's attempt to trigger i~ppiication of ;lie discovery doctrinc by asscrling 

Vlcl.can's frauiiuicilr concei~lmcnt is not l\:ell founded. biclcaii was Yarbro's cmploycc. 110t 

biFCU's cniployee; and Yarlxo has not ailcgcd any conccalrnent on tlzc part of zi1f'C'I.i. \+~c 

have held that "when defendant's 'iiaudulent conccalr~~cnt' prevents a plaintiff konl 

discovering a cause of action? the statute of limitations is gcrlcrall) tolled." kllowsto~ic 

(2>rzfiritr1ce ofriie L'riiteni ,Mc~rilodi.st (%l~r-c/i 1,. [).A. I>c~~;i(i.soii, /PIC. (1987). 228 24ont. 288. 

204, 741 iJ.2d 794: 798. For frauciuicnt concealrrient to ctccur; "tl~cre must bc art afiir~native 

act corn~niired by the dclcnciant, and il~e afirl~rativc act must be calciilated to obscure the 

cuistcnce of the cause ofaction." Yc://o\t~.si(>i~c C~o~~j>~.eric~c~ o,f/l!e L!/ii!e(i /L/cr/~o(ii,st C.Imt~~tJi, 

228 biont. at 294, 741 P.2d at 798. Yarhro has set hrth no evictence claiini~lg MI;C'I' 

fraudulently co~lccalcd Mc1,cart's actions or Yarbro's discovery thereof. 

728 We decline Yarbro's suggestion to apply thc discovery doctrinc to Yarbro's 

colivcrsion claim. 'The plain meaning of5 30-3-122(7), CIC'Al requires commencenleot of 

a conversion action wit1ii11 three years ofthe action's accrual. Further, the public \3!ould he 

poorly served by a rule tha~ effectively shifis the respo~isihilitv for caref'ul bookkeeping aiild 

employee supervisioi~ a\vay ii-om rirose in the best position to nio~litor accounts ailc'i 

employees. The strict applicatiol: oftlie t!?r-ee-year statute oi'limitaiions, v-hiie i)re:iicrabiy 

harsh in sorirc cases, best serves tl~c goals adv::~-rccd by the ilr~ifor-~n Coinrrrcrcia! Code. 
4;29 [lairing detcrmjncd tbc discoyery doctrine is nor applicahlc in this case. and that the 

:statute of limitations wris not tolied h:- conzcalr?rcnt, t"ai.hro's argiiineilt that surnrilary 

juitgmcnt cannot be entered hccausc a questioii off;~ct rcmains regirding ivhen Yi~iliro knew 

or should havc kliown of Mc1,can's forgerie rnust fiii. 'The 111ateri;il facts ncccssaq kir 

determining if sttrnnlary judgrnent is appropriate by reason of statute of limitations arc the 

clirtes of the convcrsion and the filing of Yarbro's Complaint. These facts arc noi in dispute, 

and therethre, tl?c 1)istriet ('our7 correctly licld that ?VZI;C'I.: is catitled to judgmc~lt as a illatleiof law 011 Y arbro's con\crsion clann 

"30 :I- 2. Did thc District Court err in granting summary judgment to b1FC;U on Yarbr0.s 

breach oftvarranty claim on the grounds that Yarbro \+-its responsible for the acts of its own 

crnployces'? 

731 In Count ll of its Complaint, Yarbro alleged that MFCl.! is a eollectirtg beilk and 

sougllt damages against MFCV for brcacli of transfir marrantics under $ 30-4-207? lilC1. 

Sectton 30-3-207, MC.4, sratcs in part. 

(1 ) :I custotner or collecting bank that iransiers iin item and rcccivcs o 

settlement or other consideration warrants to rlie transferee and to any 

subsequent collecting bank that: 

(a) the warrantor is a person elrtitleci to cnhrcc the item; 

(b) all signatures on the item arc authentic and autlrorizcd; 

(c) the rtenl has not been dltered; 

(d) the ircnl is no! subject to a ileknsc or claini iii recoLzplnent stated in 

30-3-305(1) of any party to 111e itern that call be asserted against the warrantor; 

and 
(el the warrantor has 110 knowlec!ge of any iiisolveiicy pn>cccdi!ig 

cotnnicnced with respect to tile maker or acceptor or, in rk case of an 

unacceprcd draft* the cirawcr. 

*;?2 The District Co~i1.t granted sutntnary judg~~lcnt ro k4IZ('11 on Varbro's brcach of 

warranty claim, holding, pursuant to 5 30-3-420, ?/1C.A9 that an eiiiployer ~vho entrust an 

employcc with responsibility tbr processing insti-uments is liable if that cmployec 

ti-a~tdulcntiy endorses an instrument. except ttt the extent th;tt a party taking the irrstrulneilt 

for value fails to exercise ordinary care and tltereby contributes to the loss. The Llistrict 

Court found that Yarbro produced iio cvidence to rctiitc hfFCl;'s factua! :~ssertions that 

blcL.can was an emplopec ei~lrustcd wiili responsibility ii,r processing instrunlcnts and that 

'1.IFC'I: had exercised ordinary care in accepting the instruniei-its for payrncnt. Thcrcfore, it 

entered sumrnary jrtcigmcnt on the breach of warranty clairn. On appeal, Yarbro argues that 

blcl..ean's actual or apparent authority to process instruments and \vhether MFCC cxcrciscci 

ordinary care, \\ere questiotis of fact which precluded surnmary jirdg~ncnt. 

'33 VlFC1 argued to tlic District Court, and also to this <'our( on appeal, that while 

Y;irbro was indeed responsible for thc actions of irs own employees, and illat 'ilii('l; 

exercised ordinar;. care in taking the instruments for payment, it ivas unnecessary to reach 

these issties bccausc the law iioes riot provide Yarbro a breach of iiiirrar~tq ren~edy iigainst 

blF<:C in the first instance. X2FCl:'s analysis is correct. 

7'34 Scction 3(i-4-207(1 j, hlC'A, provides that a ctisti:mer or cc>licciing hank that tra:isfers 

an instru~ncnt and reccives consideration therefor makcs certain wal-ranties "to tlic trar'isfcrec 

12 
~ , ~* . and to ;ii~y subscyiicnt coilccriiig i~iin~. I'hus. rmnsikrors, who ipiaci: ui- r;.arlsCk'i?i an 

insrri~;nent ividlii~ the i of COIII~IICIC~~~~ ir;i:i?i-?ciioi~s i.cpcalciily iccicfia ihi 

ii~strurncni and pay il~crcon until the instrun~c!it rcaehcs tl1c payor bank whicli miik~s ti?,: final 

payrncni from ihc customer's iiccount, warrant to their transkrccs, who are thoic to vdlhon? 

they pass the insrrument and from ~vlianl 111ey receive payn~ciit, as folio\?vs: that ti~cy, the 

aanslerors, are entitlcd to enforce the instrumertt for payment, that rhc signatures on ihc 

iilstrurnent arc authentic and authori~cd, that the instrument ltas riot beer! aiicrcci. that the 

instrument is not subject to a dcfensc or claim of recouprnent undcr 5 30-3-305. ?vii';\ :ad 

that lllc transkror is rtot atvare ofali it~solvcncy proceeding which mayafCeci paylienr on the 

instrunrent. '4 tra~~sfircc rcceivcs thc instrun~cnt aild rnakcs payntent to the transficror c.in tl:e 

basis of these m~arra~ities, and is entitled to makc a breiicli of wan-ant? claim against i11c 

transfer-or in the cvcnt the instrunicnr is later determined to he kaudulcni anti a rcimbnrsing 

payment to tlic transferee is denied. 

735 Clrrder these provisions, and tlic facts liere; Yarbro is not a transt'ercc. It dici not 

receive the instru~nents and tltc associated transfer wa:-raniies from MFC'II, a11d did iiot make 

pay~ncrito b1FC'l.i in consideration tbr the insir~imcnts. As i'arhro rcccived no instrument 

itr t-t-~lnsfer tvarranty from MFi't.'. it is not entitled. undcr thc tcrms oi'the statiitc, to bring a 

cause of action for brcach ofthar vvarral~ty against MFC'I.,. Thc [I('(' proridcs i.clnc.dics to 

Yarbro for the losses it sustained. but brcacl~ ofir;inskr ..i.xrrar!ty against \:ti'<'!' is not one 

t~l~lll. 
, . ""^ -,() "it"" or? tlic groiinds tiliir 'iilrbri; was rcsponsib!c for h4ci~ian's actiol;.; tinder c: 3~-.>-4;. . . i ii. 

Altl~ougli!ic basis oi'thc District ('ciiirt's surnmaryjudgi~~c~~t iirdcr was iniorrcit, it riacl~cil 

. . ijic COI.I.CCT restilt. if thc district coui-t is comcct iii its concliisions. It rs ii?n:nii!crial what 

icasons ucre ;issigned thcrcibr. I,(iiir.ic 1,. M. & L. fic'olti, Ch,li>. (I()??). 15'1 ?ilo~!i. 304. 4081 

498 P.2d 1102. 1194. l'he District Cou~n correc!ly concluded that sumrnaryjiidgil~eiit on 

Yarbri~'~ breach of n.arranty claim against MFCU was appropriate 

737 1. Did the District Court err in denying Yarbro's motion for a change of venue? 

818 Varbro argues tllat the District Court encd in denying the motion for a cirange of 

Lenue it filed, asserting tllat because livnorablc Fdi~ard ?i?cl.,ean \vas a potential ~virncs.; in 

the case, a conflict of interest was presented that justified rnovirig the case to ani,thcrj~iiiiciai 

district. Section 25-2-201, ill("/\. states wl~cn change of venue is r-ecluircd: 

, , Ihe court or judge ruusr, oil motion, cliangc the place of trial in the foilo~ving 

cases: 

(1) 1~1ll1en the COLIII~~ des~gilated rn the complaint rs not thc proper 

count): 

(2) u hen there is reasoli to believc that an irnpa~i~ai tr~al ca11not he had 

therein; 

(3) nlren the cou\.enlcnce of a ~tncsscs and the ends of just~ce \~cw!d be 

pr omoted b> the change 

Yarbro's motion was based upon 5 25-2-201(2), MC'A. Yarbro asserts that an impartitil trial 

cannot hc had in Clissoi~!a C'cxirity because Kathryn M/iri.e.*r: is Judge Mci2enn's iiiccc. 
iiecal~sc Katltryn Mcl.ca!i is a party "3 tiis action.' aird i~icigc hlci.eiin is ajiicigc iir .blissiii!a 

C'o:jncy. V;rrbro assefls that ii is a conflict cif intcrcsi hr 1-ic>::orabi;- John tV. i.aiion to 

presidi: aver this mattes* as Judge Larsun and Judge ?Mci,can work ii? thc same courihouse 

and are judges in tile same jadiciai district 

739 Yarbro filed its motion for change of vcnuc on Jul! 7, Z(iii!). .CZI:CI ... ",. s answer liitd 

hc~il tileti cln September 10, 1999. A plaintiff must raise zhe issue of i-enur \vithin 20 tkiys 

of the filing of tile dcfendanr's answer or 

wlieriever at SOI~C time more than 20 days after the last pleading has been filcit 

an event occurs which thereafier atyords good cause to believe that an 

inipartiai trial cannor be had under ground 2 of said section 25-2-201, and 

competent proof is submitted to the court that such cause of impartiality did 

not exist \vithin the 20-day period aftcr tire last plcadiilg tvas filed, then the 

court may entertain a niotion to change the place of trial under ground 2 of 

section 25-2-201 within 20 days after that latcr event occurs. 

Rulc 12(b)(iiif, h1.R.Civ.P. Yarhro's motion for charrgc of venue was not filed within 2(J 

days of MFC'l.'s ans\vcr. Moreover, Yarbro has not pointed to any evcnt that i>ccurrcd 20 

days before Yarbro filed its niotion for change of vcnue that establishes good caiisc to 

be1ici.e that an in~pal-ti;~l trial cannot hc had in klissouia County. To thc contrary, the rccortl 

~ctlccts that Yarbro learned ofthe rclatrc>nshtp hct\\ccci Kathrqn ClcLean and Judge \lei edrl 

in rbc fall oF lOO9, yet dici not file its motion for chainge of venue until July 3, 2000, iong 

after expiratio11 of tlrc 20 days provided by Kr~lc 12, \/Z.ii.Civ.P. Bccilrise Yarhro's rnoiion 

for change ofvei~ue was not tintelq, ihc District Cotit? correctly denied the morion 

'i\!t!iough not ilnincii in the captioil, Mcl.ean ~vasJoinci1 iil the action as a third party deiei1iia:;t. 

15 
The IIistrict Court prciperiy granted summary judgmcnt in ht:ar of %.jli:Ci; or1 

Yarhro's coi~version and brcaciz ofwarntr~ty clairtls. anti COI-~CCI~~ dl"ilii3d V~lj3i.0~~ iilOlj~i? 

fix change of venue. itsjudgmcnt is aiiinncd. 

We concur: 
Justice Tcrry N. I'rie\r;cilcr concurring 

ffj41 I concur .with thc 111ajority Opinion. 

152 i write scparatcly to note that while I agree sith the majority's rcjeciion of thc 

disco\-ery doctrine as applied to the facts in this case, I would not foreclose possiblc 

a~plieation of that doctrine to conversion actions presented under other circumstances. 

y43 The discovel-y doctrine is an equitable principle which may depend on the 

circumstmccs of each case. For example, in spite of niy great respect for the state of Iowa: 

I would not follow Husker !t7erv~7 Co. v. :2lirJtush State Bank (Iowa 1090)i 460 N.\V.2d 476. 

I mcntiort tliat because it is apparently cited with approval in the majority Opinion. 

744 Except for this qualificatiorr, I otlrci-wise agree with thc majorit;' Opinion.