Court Opinion

ID: 1793991
Source: CourtListenerOpinion
Date Created: 2013-10-30 07:27:41.404293+00
Date Added: 2024-06-11T09:50:46.640150
License: Public Domain

547 N.W.2d 336 (1996)
215 Mich. App. 549
PURINA MILLS, INC., Plaintiff-Appellant,
v.
SECURITY BANK & TRUST, Defendant-Appellee.
Ronald D. HARMON, Sidne T. Harmon, and Helen M. Charles, Plaintiffs-Appellees,
v.
Paul V. BAUERS, Defendant/Cross-Defendant.
Docket Nos. 163179, 166948.
Court of Appeals of Michigan.
Submitted December 5, 1995, at Detroit.
Decided February 20, 1996, at 9:20 a.m.
Released for Publication April 29, 1996.
Warner, Norcross & Judd by Edward Malinzak and David P. Trummel, Grand Rapids, for Purina Mills, Inc.
Fred S. Steingold, Ann Arbor, for Ronald D. Harmon and others.
Raymond & Prokop, P.C. by John R. Trentacosta and Mark A. Aiello, Southfield, for Security Bank & Trust.
*337 Elias Muawad, Detroit, for First of America Bank-Ann Arbor and Manufacturers National Bank of Ann Arbor.
Before MICHAEL J. KELLY, P.J., and REILLY and SOSNICK,[*] JJ.
REILLY, Judge.
In Docket No. 163179, plaintiff Purina Mills Inc., appeals as of right a circuit court order and judgment granting summary disposition for defendant Security Bank & Trust. In Docket No. 166948, defendant/third-party plaintiff/cross-defendant First of America Bank-Ann Arbor (FOA) and third-party defendant Manufacturers National Bank of Ann Arbor (MNB) appeal by leave granted orders and judgments entered against FOA for plaintiffs and against MNB for FOA with regard to its third-party complaint. These consolidated appeals concern the meaning of a virgule when used by a drawer to separate the names of payees on a check. We conclude that the virgule is synonymous with the word "or" and indicates a direction for payment in the alternative. Accordingly, we affirm the order and judgment in Docket No. 163179 and reverse in the orders and judgments in Docket No. 166948.

Docket No. 163179
From February 10, 1992, to June 17, 1992, K-R Summers & Sons Livestock drew ten checks totaling over $21,000[1] on its account at Security Bank & Trust. The checks were made payable to "International Livestock/Purina Mills." International Livestock indorsed the checks and presented them to Mid America Bank in Wisconsin. Mid America honored the checks and presented them to Security as the drawee bank, which also honored the checks without Purina's indorsement. Purina filed this action to recover the amount of the checks from Security. Security filed a motion for summary disposition pursuant to MCR 2.116(C)(8) and (10) in which it argued, in part, that the checks were properly honored because the virgule indicates alternative payees. The court agreed with this argument and granted Security's motion.

Docket No. 166948
Plaintiffs gave defendant Paul V. Bauers several checks for the purpose of paying for insurance policies and investment securities. This appeal concerns only one of the checks, number 4971, which was made payable to "Golden American/PVB Ins. & Fin." in the amount of $32,465.92.[2] Bauers indorsed the check as "Paul V. Bauers Insurance & Financial Services" and deposited the check into an account under that name at MNB without Golden American's indorsement. MNB presented the check to FOA as the drawee bank, which honored the check.
Plaintiffs brought this action against Bauers for conversion and against FOA for honoring the check without the necessary indorsements. FOA filed a third-party complaint against MNB. In ruling on motions for summary disposition by FOA and MNB, the court concluded that the virgule meant "and" and required the indorsements of both payees. On the basis of this determination, motions for summary disposition were filed by plaintiffs and by FOA regarding its third-party claim against MNB, and were granted by the trial court. Judgments were thereafter entered against FOA with regard to the complaint and against MNB with regard to the third-party complaint brought by FOA.
Whether the virgule separating the names of two or more payees on an instrument indicates that the instrument is payable to all parties listed, or to the parties in the alternative, is an issue of first impression in Michigan.
Courts in other jurisdictions that have decided this issue have concluded that its use indicates that the instrument is payable in *338 the alternative. Dynalectron Corp. v. Union First Nat'l Bank, 488 F. Supp. 868 (D.D.C. 1980), aff'd sub nom Dynalectron Corp. v. Equitable Trust Co., 704 F.2d 737, 739 (C.A. 4th, 1983) (applying Maryland law); Kinzig v. First Fidelity Bank, NA, 277 N.J.Super. 255, 649 A.2d 634 (1994); Mumma v. Rainier Nat'l Bank, 60 Wash.App. 937, 808 P.2d 767 (1991); L.B. Smith, Inc. v. Bankers Trust Co. of Western New York, 80 A.D.2d 496, 439 N.Y.S.2d 543 (1981), aff'd 55 N.Y.2d 942, 449 N.Y.S.2d 192, 434 N.E.2d 261 (1982); Ryland Group, Inc. v. Gwinnett Co. Bank, 151 Ga.App. 148, 259 S.E.2d 152 (1979).
We agree with these authorities that a check drawn to payees whose names are separated by a virgule allows payment to the payees alternatively. A virgule is defined as "an oblique stroke (/) used between two words to show that an appropriate one may be chosen to complete the sense of the text." The Random House College Dictionary, Revised Edition (1975). Thus, the virgule is used to separate alternatives. According to M.C.L. § 440.3110(4); M.S.A. § 19.3110(4), "[i]f an instrument is payable to 2 or more persons alternatively, it is payable to any of them and may be negotiated, discharged, or enforced by any or all of them in possession of the instrument." The banks properly honored the checks that were presented with the indorsement of one of the payees.
In Docket No. 163179, we affirm the trial court's order and judgment granting Security's motion for summary disposition. In Docket No. 166948, we reverse the orders and judgments entered against FOA and MNB with respect to check number 4971.
NOTES
[*]  Edward Sosnick, 6th Judicial Circuit Judge, sitting on Court of Appeals by assignment pursuant to Const. 1963, Art. 6, Sec. 23, as amended 1968.
[1]  The total referred to by the parties in their briefs, $21,160.49, appears to be based on the amount of check number 6712 being $614.40, rather than "Six Hundred Seventy one & 40/100" as the check is written.
[2]  Because this appeal concerns only one of the checks, we will not discuss the parties and procedural history of the claims relating to the other checks.