2011 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

5-12-2011

John Marquess v. Pennsylvania State Employees C

Precedential or Non-Precedential: Non-Precedential

Docket No. 10-3877

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Recommended Citation

"John Marquess v. Pennsylvania State Employees C" (2011). 2011 Decisions. Paper 1251.

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

____________

No. 10-3877

____________

JOHN MARQUESS, ADMINISTRATOR OF THE ESTATE OF WILLIAM MARQUESS, 

DECEASED; JASON MARQUESS

v.

PENNSYLVANIA STATE EMPLOYEES CREDIT UNION,

 Appellant

____________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

(D.C. No. 09-cv-04256)

Magistrate Judge: Honorable Jacob P. Hart

____________

Submitted Under Third Circuit LAR 34.1(a)

April 29, 2011

____________

Before: BARRY, HARDIMAN and TASHIMA,

* Circuit Judges

(Opinion Filed: May 12, 2011)

____________

OPINION

____________

 

 * Honorable A. Wallace Tashima, Senior Judge of the United States Court of Appeals 

for the Ninth Circuit, sitting by designation. 
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TASHIMA, Circuit Judge

The Electronic Fund Transfers Act (EFTA) and its implementing regulations 

impose, in certain situations, liability on banks for unauthorized electronic fund transfers 

(EFTs) drawn against their customers’ accounts. 15 U.S.C. § 1693 et seq.; 12 C.F.R. § 

205.6 et seq. The question is whether the EFTA applies to bank accounts opened through 

forgery. 

After a bench trial, the District Court made factual findings that neither party 

challenges. William Marquess, now deceased, opened a bank account at Pennsylvania 

State Employees Credit Union (PSECU) in the name of his adult son, Jason, by forging 

Jason’s signature. William never told Jason about the forgery or the account. William 

used his own Philadelphia address for the account instead of Jason’s Florida address. 

Later, William made himself a joint holder of the account by forging Jason’s signature on 

another form. Later still, William authorized electronic transfers from the joint 

Jason/William account to an account in the name of David Marquess, William’s other 

son, by forging Jason’s signature on yet another form. 

When William died, the joint Jason/William account held over $25,000, although 

Jason still had no idea that the account existed. David, however, learned of the account 

through a letter that PSECU sent to William’s home. David then called PSECU, 

impersonated Jason, obtained the account’s PIN number and on-line banking password, 

and stole the $25,000 balance. When Jason finally learned what had happened after 
3

receiving notice that he owed inheritance tax on the joint account, PSECU refused to 

refund the stolen money.

William’s estate and Jason sued PSECU for violation of the EFTA and breach of 

contract. The district court found for Jason on the EFTA claim, but found for PSECU on 

all other claims. PSECU appeals. We have jurisdiction under 28 U.S.C. §1291. We 

review the district court’s findings of fact for clear error and its conclusions of law de 

novo. Feesers, Inc. v. Michael Foods, Inc., 591 F.3d 191, 194 (3d Cir. 2010). 

Under the Federal Reserve Board’s official staff interpretation, the EFTA does not 

apply unless the consumer has entered an agreement for EFT services:

1. Accounts covered. The requirements of the regulation apply only to an 

account for which an agreement for EFT services to or from the account has 

been entered into between:

i. The consumer and the financial institution (including an account for which 

an access device has been issued to the consumer, for example);

ii. The consumer and a third party (for preauthorized debits or credits, for 

example), when the account-holding institution has received notice of the 

agreement and the fund transfers have begun.

12 C.F.R. Pt. 205, Supp. I § 205.3. We credit this interpretation because it is not 

“demonstrably irrational.” Chase Bank USA, N.A. v. McCoy, 131 S. Ct. 871, 882 (2011) 

(quoting Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 565 (1980)); Aronson v. 

Peoples Natural Gas Co., 180 F.3d 558, 563 (3d Cir. 1999). Only subsection (i) of the 

interpretation applies to this case, because the unauthorized transfer did not involve 

preauthorized debits or credits by a third party.
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No agreement for EFT services existed between PSECU and either Jason or 

William. Obviously Jason never entered any such agreement; he did not even know that 

the account existed until after David stole the money. As for William, he purported to 

establish an EFT agreement by forging Jason’s signature on the PSECU form, but this 

agreement – like the antecedent account-opening agreement – was forged and is therefore 

void. See Tonkin v. Tonkin, 94 A.2d 192, 196 (Pa. Super. Ct. 1953) (“[T]he legal effect 

of [forgery] is to void the instrument.”); FDA Packaging Inc. v. Advance Personnel 

Staffing, Inc., 73 Pa. D. & C. 4th 420, 430 n.4 (Ct. Com. Pl. 2005) (“Void contracts 

generally arise in cases of forgery of a party’s name or unauthorized execution of an 

agreement on behalf of another party.”). 

Plaintiffs argue, incorrectly, that PSECU somehow created an agreement with 

Jason by treating him as the account owner after William’s death. One cannot, however,

ratify a contract that never existed. Long v. Sears Roebuck & Co., 105 F.3d 1529, 1535 

n.10 (3d Cir. 1997). 

Because no agreement existed between any plaintiff and PSECU, the EFTA does 

not apply. See 12 C.F.R. Pt. 205, Supp. I § 205.3 (1)(i).

CONCLUSION

Accordingly, we will reverse the judgment of the District Court against PSECU.