Opinion ID: 2207421
Heading Depth: 1
Heading Rank: 1

Heading: It was proper to direct a verdict in favor of the bank.

Text: As we have previously said, directing a verdict on an opening statement is an extreme measure and trial judges should invoke it most cautiously, for the opening statement is to be construed liberally and favorably to plaintiff's case. [1] But where it is clear from plaintiff's opening statement that there can be no recovery, a directed verdict is proper. [2] We think such action was justified in this case. The trial judge was careful to elicit from plaintiff's counsel a full explanation of his position and a clarification of what he expected to be able to prove against the bank. In essence it was this: That plaintiff's check for $2500 drawn on the City Bank and made payable to Chalmers Co., Inc. was presented at the Security Savings and Commercial Bank by Mr. Prentice personally, who had indorsed on the back of it, Chalmers Co. Inc. James H. Prentice Pres. and under that indorsement signed his own name, James H. Prentice, as an individual; that the bank credited the amount of the check to the personal account of Mr. Prentice and that he used it for purposes other than for which it was intended. Plaintiff based her claim of liability largely on Code 1940, § 28-2304, which provides in part that if an instrument is transferred by a fiduciary in payment of a personal debt of his own to the actual knowledge of the creditor, or is transferred in a transaction known by the transferee to be for the personal benefit of the fiduciary, the transferee becomes liable to the principal if the fiduciary in fact commits a breach of his obligation in making the transfer. But even if we could assume (which we think we cannot) that the bank was a fiduciary, we note that the same section provides that the indorsee is not bound to inquire whether the fiduciary is committing a breach of his obligation as fiduciary in indorsing or delivering the instrument, and is not chargeable with notice that the fiduciary is committing a breach of his obligation as fiduciary unless he takes the instrument with actual knowledge of such breach or with knowledge of such facts that his action in taking the instrument amounts to bad faith. Here there was no suggestion of bad faith on the part of the bank and no offer to prove any facts which should have put it on notice that Prentice was guilty of a breach of faith in negotiating the check and depositing the proceeds to his own credit. [3] This situation is entirely different from those in which a bank pays trust funds to itself or sets them off for its own benefit or to cover a debt due it from a fiduciary. [4] This situation is also different from those in which a principal (here it would be the corporation, Chalmers Co., Inc.) is in a position, as this plaintiff was not, to show privity with the bank and notice on the part of the bank. [5] Nor is there any support for plaintiff in the theories of subrogation and constructive trust which she advances. Without attempting an analysis of those theories, we rule that they have no application to the facts of this case. We do not say that banks are never to be answerable in situations like this. We limit the scope of our ruling to the specific facts here involved.