Court Opinion

ID: 9633498
Source: CourtListenerOpinion
Date Created: 2023-08-22 11:49:33.52603+00
Date Added: 2024-06-11T18:08:36.528211
License: Public Domain

McDEVITT, Justice,
specially concurring:
While I concur in this opinion, I write to emphasize that my concurrence is based solely upon the fact that Valley Bank’s evidence as to commercial reasonableness was unrebutted.
Valley Bank maintains that I.C. § 28-3-406 precludes the Neibaurs from asserting Palmer’s lack of authority. In order to prevail under this statute, Valley Bank had to prove that the Neibaurs’ negligence contributed to the unauthorized endorsement and that the Bank’s actions were consistent with reasonable commercial standards of the banking industry. To determine what course of conduct is commercially reasonable, we inquire into the custom and usage of trade within the applicable industry. Custom and usage must be clearly proven, where the evidence is conflicting and contradictory, the custom is not established. Martin v. Whiteley, 89 Idaho 429, 405 P.2d 963 (1965); Dingier v. Simpson, 83 Idaho *737439, 364 P.2d 181 (1961). Custom and usage is established by testimony of specific uses and acts or by other evidence indicating an established practice within the industry. Commercial Insurance Co. v. Hartwell Excavating Co., 89 Idaho 531, 407 P.2d 312 (1965).
Valley Bank’s employees testified that it was a common and reasonable practice for the bank to exchange a personal check for a cashier’s check without inquiring into Palmer’s authority to endorse the check. This evidence was not objected to and was unrebutted and uncontradicted. Consequently, Valley Bank established custom and usage for this case only.
I do not believe that Valley Bank’s actions comported with reasonable banking practices. Valley Bank’s actions in allowing an agent to endorse a check without inquiring into and verifying his authority to do so is a substandard practice of which I cannot approve. Based on the evidence adduced in this case, the trial court erred in finding that Valley Bank did not pay the check in accordance with reasonable banking standards. Therefore, I concur in reversing the decision of the trial court.