Court Opinion

ID: 9792522
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:30:21.703991+00
Date Added: 2024-06-11T07:37:43.442663
License: Public Domain

BAKES, Chief Justice,
dissenting,
I respectfully dissent from Part II of the Court’s opinion. The majority’s attempt to bring a clear, reasonable and unified reading to the Uniform Commercial Code (U.C.C.) and the Uniform Fiduciaries Act (U.F.A.), is commendable. However, it is flawed, I believe. Furthermore, I do not agree with the majority’s conclusion that the result in this case would be the same regardless of whether the U.C.C. or the U.F.A. is controlling. Rather, I concur with the district court’s conclusion that the U.F.A. governed this case as a matter of law. The district court wrote:
Idaho Code § 68-309 upon which FNB relies is a specific statute dealing only with the actions of fiduciaries and their depositing banks. To the extent that the *828UCC and UFA conflict the specific provisions of the UFA prevail over the general provisions of the UCC. See Hook v. Horner, 95 Idaho 657[, 517 P.2d 554] (1973).
As the district court pointed out, the U.F.A., I.C. § 68-301, et seq., was specifically intended to relax the common law standard of care owed by banks to principals and third parties when dealing with fiduciary accounts. The district court wrote:
To narrow the protection afforded by the UFA as urged by CDA would be to overturn the clear legislative policy expressed by the UFA. That policy is that the risk of loss occasioned by the dishonest fiduciary falls upon the principal who retained him. See Sugar House v. Zion’s First National Bank, [21 Utah 2d 68] 440 P.2d 869 (Utah 1968).
The U.F.A. established the rule that the principal, not the bank, should be primarily responsible for the competency and honesty of the fiduciary agent which the principal has empowered to endorse and deposit negotiable instruments.
Further, I would note that, unlike the majority, I find nothing in the wording of, or comments to, the U.C.C. which indicate that the legislature envisioned a lessening or repeal of the U.F.A. as it applies specifically to the limited immunity from liability provided for banks under I.C. § 68-309. Rather, as I read I.C. § 68-309, FNB is absolved from liability to CDA under the facts presented.
BISTLINE, Justice, concurring in the opinion of BAKES, C.J. and dissenting.
While the reasons provided by Chief Justice Bakes for not joining the majority opinion are sufficient, it may be instructive to also add the philosophy which Justice Givens interjected into Idaho case law. He was often heard to say, as he saw and as he wrote, that where one of two innocent parties must suffer damages proximately caused by the misdeeds of a miscreant, the responsibility for the loss will fall upon the shoulders of the party whose actions made possible the success of the miscreant. In Dissault v. Evans, 74 Idaho 295, 261 P.2d 822 (1953), Justice Givens held for the Court that an association that owned an auto could not replevy it from a bona fide purchaser when the association had cloaked its agent and the seller of the auto with apparent ownership in the form of a clear title. The loss fell on the party responsible for the agent’s ability to possess a title which showed no right, title or interest on the part of the association. By substituting the names, this scenario fits neatly into that portrayed by the instant case.
In this case, Mr. Gardiner (like the association in Dissault) made the loss possible. Although he may have been justified in having faith in his agent, the letter of authority to the agent, with just a modicum of care, would have and should have spelled out the requirements of an endorsement. A proper letter of authority would not have made it so easy to misappropriate the missing funds. However, Mr. Gardiner did not send a proper letter. This shortcoming was not attributable to the bank. Nevertheless the bank is being shouldered with the loss.
As noted, in times past this Court has not been so readily misled, and injustice has been avoided. I bring to the attention of the majority, in addition to Dissault, the case of Ralls v. Fouraker, 109 Idaho 488, 708 P.2d 893 (1985). In Ralls a unanimous Court cited with approval to Dissault and other cases for the proposition that:
[i]t is fundamental in the law of property that, when an owner of property furnishes a second party with indicia of title and that second party purports to convey to an innocent third party purchaser for value, the original owner is estopped from asserting title to the property as against the third party bona fide purchaser. [Citations omitted.]
Ralls, 109 Idaho at 491, 708 P.2d at 896. Though Ralls and Dissault might be characterized as title disputes, in that the titles in both cases were indisputable evidence as to the ownership, respectively, of a parcel of real property and a motor vehicle, and *829the actions in both these cases was brought to secure the tangible property, and this suit is a dispute between a principal, an agent, and an innocent third party bank, I find no rational reason, especially in light of the statutory law as discussed by Chief Justice Bakes in his opinion, not to apply the sound reasoning of these precedents to this case.