Opinion ID: 2086756
Heading Depth: 1
Heading Rank: 2

Heading: endorsements

Text: Five of the nine checks at issue on appeal [check No. 1324, dated 10/14/74; check No. 1331, dated 10/18/74; check No. 1693, dated 1/24/75; check No. 2005, dated 2/28/75; and check No. 2007, dated 3/03/75], although having no signature endorsement of the payee, Wayne Anderson, contain a statement stamped on the back of each check by Western that the check was deposited for credit to Wayne Anderson's account and also stating, absence of endorsement guaranteed. Subsection 1 of Section 41-04-15, N.D. C.C., provides: 41-04-15. (4-205) Supplying missing endorsement No notice from prior endorsement.1. A depositary bank which has taken an item for collection may supply any endorsement of the customer which is necessary to title unless the item contains the words `payee's endorsement required' or the like. In the absence of such a requirement a statement placed on the item by the depositary bank to the effect that the item was deposited by a customer or credited to his account is effective as the customer's endorsement.  [Emphasis added.] The objective of Section 4-205, U.C.C. [§ 41-04-15, N.D.C.C.], is explained by Anderson, Uniform Commercial Code (2d Ed. 1971), Vol. 3, p. 225, as follows: As part of its objective of expediting bank collections, the Code recognizes the common practice of accepting unindorsed checks for deposit and authorizes a collecting bank to supply missing indorsements as a matter of course. In practice, a bank complies with Code § 4-205 by stamping the item `deposited to the account of the named payee' or some similar formula. ..... . . . Assuming the absence of any provision requiring the customer's own indorsement, a notation made by the depository bank on the item itself that the item was deposited by the customer or was credited to his account is effective as an indorsement of the customer. Under Code § 4-205, a check is deemed indorsed when a depositary bank states on the check that it was deposited by the customer or credited to his account. [Footnotes omitted.] Alma Hale, vice-president and cashier at Citizens, testified that Western's statement on each of the five checks to the effect that the check was deposited or credited to Wayne Anderson's account constituted a satisfactory endorsement which employees at Citizens were instructed to accept in making payment on a check. There is no testimony or other evidence in the record that the acceptance of checks endorsed in this manner would constitute lack of ordinary care by a payor bank. Although the trial court stated in its memorandum opinion that . . . thirteen checks bearing the endorsements as in this case should have aroused the suspicions of the payor bank, there is no additional finding of fact or explanation by the trial court as to why Citizens' acceptance of the endorsements on these five checks would constitute failure to exercise ordinary care. We conclude that the trial court's determination that Citizens failed to exercise ordinary care in payment of these five forged checks [checks No. 1324, 1331, 1693, 2005, and 2007] was clearly erroneous. Accordingly, Citizens is entitled to a new trial on the issue of its liability to Thoreson on these five checks. Four of the nine forged checks at issue on appeal [check No. 1416, dated 11/02/74; check No. 1414, dated 11/08/74; check No. 1425, dated 11/19/74; and check No. 1518, dated 1/18/75] carried neither the endorsement of the payee, Wayne Anderson, genuine or forged, nor a statement by Western to the effect that the checks were deposited or credited to Wayne Anderson's account. Both Alma Hale and Patsy Ferguson testified that these four checks, having no endorsement or statement of deposit by Western, would not meet the endorsement requirements of Citizens for payment of checks and that such checks should have been returned to Western by Citizens. Zweber, president of Citizens, also testified that these four checks did not meet the endorsement requirements under Citizens' procedures for making payment on checks. There is no other evidence in the record as to what would constitute ordinary care or reasonable banking practices by a payor bank for examining endorsements on checks presented for payment. We believe the foregoing testimony of Citizens' personnel supports the trial court's determination that Citizens did not exercise ordinary care in making payment on these four forged checks [checks No. 1416, 1414, 1425, and 1518]. On the record before us we cannot say that the trial court's determination that Citizens failed to exercise ordinary care in making payment on these four forged checks was clearly erroneous, and therefore such determination will not be set aside. Citizens' appeal in this case is from the trial court's order denying Citizens' motion for a new trial. No appeal was taken from the judgment itself. We therefore reverse the trial court's order denying the motion for a new trial and remand the case for a new trial with regard to the issue of Citizens' liability on only the following five checks: No. 1324, No. 1331, No. 1693, No. 2005, and No. 2007. SAND and PAULSON, JJ., and GLASER, District Judge, concur. GLASER, District Judge, sitting in stead of ERICKSTAD, C. J., disqualified.