959 N.E.2d 909
Ind. Ct. App.2011Background
- Wroblewski executed a general power of attorney (POA) naming Milovanovic and a will leaving everything to her, making Milovanovic personal representative.
- Milovanovic used the POA to obtain two cashier's checks totaling $513,105.78 payable to Wroblewski and deposited them into her own savings account at American Savings, then used funds to purchase a CD and later pledged it as mortgage collateral.
- Wroblewski died in 2004; Milovanovic was appointed personal representative in 2004, and heirs later contested the will as unduly influenced.
- American Savings allowed Milovanovic to deposit the cashier’s checks into her account and did not notify the attorneys named in the notice of restriction.
- Fifth Third Bank (later Tokarski’s predecessor) asserted the estate’s claims; a 2005 federal judgment against Milovanovic for the $513,105.78 was entered, and Tokarski became personal representative in 2005.
- The trial court granted summary judgment to Tokarski on Counts I and II and denied Tokarski on Count III; the Indiana Court of Appeals reversed and remanded, finding genuine issues of material fact and applying different legal theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Count I—contractual basis for bank liability | Tokarski argues a contract existed between Wroblewski and bank | Savings had no contract with Wroblewski; Milovanovic deposited funds as owner | Count I summary judgment reversed; no contract found; conversion theory abandoned by Tokarski |
| Count I—statutory and carrier of fiduciary duty via UCC 3-307 | Section 307 makes bank liable where fiduciary breach affects proceeds | No holder in due course claim; no breach of fiduciary duty claim tied to instrument proceeds | Count I summary judgment reversed; Section 307 inapplicable given no viable fiduciary claim tied to instrument proceeds |
| Count II—Adverse Claims Act applicability | Bank liable for applying CD to Milovanovic’s mortgage despite restriction | Notice of restriction insufficient under Adverse Claims Act; bank not liable | Count II summary judgment reversed; bank not liable due to improper notice and timing; remanded for further proceedings |
| Damages and set-off | Damages and set-off ripe for consideration | Damages depend on counts I–II outcomes | Not addressed due to reversal on Counts I–II |
| Overall disposition | Reversed and remanded for entry of judgment for American Savings on Counts I–II as appropriate per findings |
Key Cases Cited
- In re Estate of Rickert, 934 N.E.2d 726 (Ind. 2010) (attorney-in-fact fiduciary; presumptively invalid transfers unless proven voluntary and fair)
- In re Unsupervised Estate of Harris, 876 N.E.2d 1132 (Ind. Ct. App. 2007) (Dead Man's Statute protects decedent’s estate from survivor testimony)
- Hendricks Cnty. Bank & Trust Co. v. Guthrie Bldg. Materials, Inc., 663 N.E.2d 1180 (Ind. Ct. App. 1996) (Adverse Claims Act protective framework for banks regarding adverse claims)