*1
Appellant,
STAPLETON,
v.
Plaintiff
ELEANOR
Respondent.
BANK,
Defendant
SECURITY
FIRST
No. 82-303.
Sept.
1983.
Submitted
Decided Dec.
1983.
Rehearing
Feb.
Denied
Milodragovich, Dye; Dale and Lon soula, plaintiff appellant. Delaney
Mulroney, argued, Delaney Dalby, Dexter Missoula, respondent. for defendant and *3 Opinion
MR. of JUSTICE WEBER delivered Court. statutory for conversion Stapleton
Plaintiff Eleanor sued the Fourth $32,600. of of appeals She from the Court, in favor three County, Judicial District Missoula for further and defendant banks. We reverse remand proceedings.
The relevant issues are: determining, in as drawee
1. Did the District Court err (Western) and banks Western Montana National Bank (Federal), plain- Home Bank of Seattle Federal Loan face amount payee tiff could less than the joint as a recover of the converted instruments. determining in collateral
2. Did the District Court err plaintiff? precluded by the estoppel recovery wife, had Stapleton, husband and Arthur and Eleanor (First Secur- Security Bank joint checking account at First ity). by 1, 1974, On October Eleanor closed the account withdrawing remaining writing all funds and “closeout” portion Security recognized the memo of her check. First closing by carrying account on not the account computer by sending the bank’s trial balance and state- October, ments after April deposited joint-payee
In Arthur checks payable the closed account. Both checks were Arthur M. Stapleton. payment and Eleanor M. The two checks inwere property for sale of Missoula, real located and Montana by joint owned Eleanor and Arthur as tenants. checks approximately Security reopened $32,600. totaled deposited closed account and the checks. The District expressly longer Court found that Eleanor was no a cus- Security accepted tomer the bank. First both checks payee without the endorsement of either and without knowledge Despite or consent of en- Eleanor. the absence of dorsements, Federal, banks, Western and ac- drawee cepted respective by checks when received Shortly depositing them. checks, after Arthur withdrew knowledge $32,500from the account without or consent of Eleanor.
Later Arthur left Montana and initiated divorce proceedings against Elea- State Nevada. participated repre- proceedings nor in the Nevada by sented counsel. The Nevada District Court determined Stapletons, including proceeds the marital assets property. from the sale of real The Court found assets approximately $125,000. the amount of property The Court referred to sale the Missoula proceeds represented and noted that the from the sale the two checks were converted Arthur. But the decree specifically proceeds did not find that the were available *4 specifically distribution. The Court did not determine dissipated proceeds. whether Arthur or had retained those Security proceeds First now claims were for those available attempts recognized distribution. The Court Arthur’s to ab- Elea- Finally, with assets. the Court awarded scond marital $25,000 nor plus personalty. miscellaneous prior to deci- but appealed judgment, Arthur Nevada a parties They Agree- sion Settlement settled. executed whereby Eleanor re- Judgment, ment and Satisfaction of from the emanating obligations leased Arthur from all ap- $13,500 dismissal of the divorce decree return for and peal. The stated it was an effort Agreement Settlement parties the State litigation” all between the “resolve Ne- “emanating” from the Nevada and other actions Judgment incorporated judgment. vada Satisfaction had parties stated that Agreement the Settlement and ... controversy between them all matters “settled $13,500.” Agreement . . The Settlement consideration . more than two were executed Judgment Satisfaction of filed. months after this lawsuit was statutory conversion filed for Eleanor suit Montana (UCC) Commercial Code under Montana Uniform bank, January Security, against depository First to include de- complaint 1977. Eleanor later amended Federal, Both drawee drawee banks. fendants Western Security for indemnifica- against banks cross-claimed First First Secur- warranty provisions tion under of the UCC. third-party ity against and filed counterclaimed Court severed the third- against action Arthur. The District stipulated facts to party The case was submitted on action. and con- sitting jury. Findings Court without District for de- on 1982 and clusions were entered June Plaintiff Eleanor June fendants was entered on Nonap- “Stipulation for appeals. parties executed Security pearance” because First of Western and Federal any liability indemnify Federal must Western and on as a defendant Only Security appears this matter. appeal.
I. 30-3-419(2), MCA al- Appellant argues that Section *5 lows her recover face the converted to the full amounts of checks from Western and Federal. She contends the Dis- trict in determining anything Court erred that her award is less face than the amount of the checks. The District Court respec- held that all three banks the defendant converted tive the endorse- they paid checks because checks without 30-3-419(1) (c), provides: ment. MCA Section “(1) An instrument is converted when: “(c) it is on a forged endorsement.” Payment a “forged payment on endorsement” includes on an any unauthorized endorsement or endorsement. without Beyer v. National (Mont. First Bank Dillon 1980), 1285, 1289, 1035, 1040. P.2d 37 St.Rep. The District Court’s holding conversion is challenged appeal. on A collecting bank, bank warrants to a drawee accord ing 30-4-207, to the terms of MCA, payment Section is authorized. The objective of theUCC is place to loss on or, the wrongdoer wrongdoer usually because the is unavail able or to pay, unable upon party who last dealt with the wrongdoer. This party prevent is best able to the con version by carefully endorsements. Perkins State checking Bank (5th Connolly v. 1980), Cir. 632 F.2d Thus, although Security indemnify must drawee banks, the issue remains the measure of drawees’ liability. Eleanor argues proper the District failed apply Court to measure damages. District held that Court under 30-3-419(2), Section liability MCA the measure of for con may version be shown less than whole amount of to be Appellant converted argues instruments. the Dis trict Court authority was without to reduce the amount of her recovery against drawee banks. 30-3-419(2) provides: MCA
“(2) drawee (1) In action against an under Subsection liability of the face amount of measure drawee’s is the (1) any In action other subsection instrument. under presumed of liability measure is to be the face amount added.) (Emphasis of the instrument.” (2) Official Comment to this section states: “Subsection adopts applied . . . generally the rule to the conversion instruments, any party on negotiable obligation is ... worth its face value. presumed instrument . . . the Evidence that for reason is admissible show less, it is obligation is worth or even that without fact however, drawee, In presumption the case value. replaced a rule absolute liability.” (Emphasis added.) argues
Plaintiff
Official Comment Western
that under
*6
absolutely
for
full
and Federal are
liable
amount of
payable
made
to two
though
checks even
the checks are
Security
First
persons.
might
Plaintiff would admit
that
prove
less
face
something
able to
her interest
is
than the
checks,
liability
emphasizes
amount of the
but
the absolute
537,
Annot.,
See
of the drawee banks.
47 A.L.R.3d
un
statutory
We
conversion is
agree
liability
for
here,
recovery by joint payee
of
a
disputed
but the amount
is not
the statute nor the comment addresses
fixed. Neither
Comment,
upon
Official
joint-payee instruments. Based
is
statute to col
plaintiff argues that she
entitled under the
in
$32,600,
Plaintiff’s
lect
amount of both checks.
face
joint payee who
terpretation
to a
would allow a windfall
the
of
check. Under that
owns less than the face amount
a
could recover
ory,
joint payees,
wherever there
each
are
check,
pay
requiring a
bank
face amount of
drawee
do not con
or more. We
times the amount of the checks
regard to
requires recovery without
clude that
the statute
check.
joint payee’s
actual
interest
of
position
appel
authority
the absolute
There is some
for
(1979),
Casualty Co. Wisconsin
In Smith v. General
lant.
of
804,
$7,000
602,
a
Ill.Dec.
394 N.E.2d
Ill.App.3d
his client as
attorney and
payable
made
to an
check was
forged
a
endorsement
payees.
over
joint
check
for
drawee,
Casualty,
attorney.
General
The client sued
reim-
trial,
partial
client
received
Before
conversion.
Security
$2,500
bursement
from the
Illinois Client
Fund.
rejected
603-604,
Ill.Dec. at
“There
no
the amount
recov-
ery
general
regard-
statute,
thus established
and the
rule
ing
against
[citations
collateral
omitted]
sources
militates
creating such a rule here. We believe the trial court cor-
rectly
plaintiff
awarded
the face
amount of
converted
instrument.” 31 111.Dec. at
We conclude that Western and abso Federal are lutely $32,600, liable for of the face amount the checks. joint payees However, relative interests of the amount must be The of determined. total of the shares joint payees up $32,600. should add to We have concluded by recovery joint payee that the of amount a amount including may up entitled, to which he is which be to and the face amount of the check. employed concept
Other courts have
this
on similar facts.
(1961),
Fidelity
v.
Baltimore National Bank
Mueller
In
789,
629,
purchaser
real estate issued
Md.
174 A.2d
had in-
joint-payee
and wife. Husband
checks to
husband
forged
his
herited the real estate from
father. Husband
Wife sued the
wife’s endorsements
and cashed the checks.
checks,
cashing bank to
of the two
but
recover the amounts
recovery
it found that wife
the trial court denied
because
proceeds.
257 and Arthur or Eleanor and the banks. 30-1-103(1), argues fur MCA supports
ther recovery her claim for of the face amount. That section states: provided
“The by remedies this code shall be [the UCC] liberally aggrieved party administered to the end that may be put in as if good position party a as the other had fully performed but neither consequential special pe- or nor damages may nal except specifically be had as provided this code or other rule of law.” While agree we with damages Eleanor that the measure of section liberally administered, should be we note that this emphasizes section goal putting party good a “as position,” not position. procedure better We believe the precisely outlined above will accomplish what this statute demands.
II. Appellant argues that the District in applying Court erred estoppel collateral deny recovery. argues She under either of suggested tests, estoppel collateral does apply. agree. We
In Gessell v. Jones
(1967),
418,
149 Mont.
427 P.2d
295, we stated:
“
estoppel’.
may
‘Collateral
. .
be considered as a branch
of the doctrine of the res
but
judicata
distinguishable
from
normally
the bar to
judicata.
called res
The distinc-
tion is
judicata
parties
that res
relitigat-
bars the same
from
ing the same cause of
while collateral
bars
estoppel
action
parties
same
relitigating issues
were de-
which
from
cided
respect
with
to a
....
different cause
action
bar
ques-
that arises from collateral
extends to all
estoppel
tions essential
actually
determined
Mont,
prior
judgment.”
valid
Collateral from to re- attempting already determine issues decided. of Smith v. parties cite the four-part test
County Musselshell (1970), Mont. P.2d estoppel applies: to determine whether collateral “These (1) parties privies criteria are: or their must be the *9 same; (2) must the subject-matter the of the action be (3) same; same, and must relate to the issues must be the (4) capacities per same subject-matter; the and the the in subject-matter sons be the to the must same reference Mont, 378, and to issues 155 at 472 between them.” P.2d at 880. Security regard makes extended with arguments changes in the collat- four-part suggests test and certain be- estoppel arguments
eral rule. We do consider these not test, (3) part we the issues cause conclude that matter, is must be same subject and relate to same County and Clark In Brannon v. Lewis not met here. (1963), 706, Mont. P.2d this Court concluded 387 criteria, im- identity that of the four of issues is the most Further, “pre- portant. identity requires issues question” prior in the action. litigated cise has been Mont, prin- these at 387 P.2d at reiterated 710-11. We 1099, 1101, (Mont. 1980), ciples Harris v. Harris 16 P.2d St.Rep. did not involve the proceedings Nevada divorce The The action. UCC conversion “precise litigated issues” El and assets of findings Nevada listed the various monies made in the was Stapleton. eanor and Arthur No reference conversion action right of a proceedings Nevada re this action Federal. issues against Western and the defendant banks quire a of whether determination determina and joint payees’ checks without endorsements the relative interests of the of the checks and tion amount Arthur, These issues were joint payees. and of Eleanor in fact were proceedings and not determined in the Nevada even Nevada Court. not considered proceeding in the Nevada litigated that the issues We hold and that not identical in this action are litigated and those recovery. collateral estoppel plaintiffs does bar judgment the District Court is reversed and Stapleton’s cause remanded for determination interest the checks. HASWELL,
MR. CHIEF JUSTICE MR. JUSTICES HARRISON and GULBRANDSON and The Honorable McCARVEL, JOHN M. District Court Judge, concur. SHEEHY, MR. concurring JUSTICE dissenting: I portion majority plain- dissent to the of the opinion that tiff only is entitled to one-half of the of the face amount Instead, two checks in the absence of I proof. additional would order on remand that entered favor for the face amount of the two checks.
There is no reason for us legislature to assume did not know what it absolute doing imposed when it liability on 30-3-419(2), the drawee bank MCA. *10 It is evident to me legislature thought that the important it to prescribe liability full for of the face the as a instrument prevent measure to happening here, happen what did careless negotiation in a closed account of unendorsed presented by checks payees. one of two named The statute imposes a heavy liability pay- even of though joint one the ees wrong-doer. believe, is a important, It is more I and the legislature surely believed, preserve so the of integrity to banking process the in negotiable for handling instruments all, the benefit the commercial community. After the produced bankers, UCC largely by in they and saw the provision of liability protection absolute as to themselves well public as to the dealing with banks.
The majority pay large attention to the circumstance of two in names these in checks which not mentioned Sec- 90-3-419(2). tion placed Here have majority molehill on desk, the managed The solu- to make a mountain it. tion simple: should be absolutely banks are liable instruments, the face the It is of the once. the business joint payees proceeds how the should be divided between majority super- Instead, 70-1-311, them. Section MCA. plain refusing in to im- sede mandate of lawmakers pose liability. absolute
Although disagree majority whole, I I must with the point ownership misinterpretation joint law out also their assuming in proceeds. wife at one-half of the is entitled to least assumption that result is based on the there
That tenancy joint exists existed here a interest. No such interest on the record here. persons
Every two more is a created favor of or interest tenancy including wife, common, unless husband and expressly provides creating for a instrument interest only tenancy. joint we know 70-1-312, MCA. Here payable persons, without to two the checks were made tenancy tenancy. Property joint in common a creation may any proportion. parties On the be owned tenancy joint hand, the law dictates other if a is created equal persons 70-1- shares. Section that the own in several provide banking Thus, even in MCA. laws may tenancy, deposit joint of the the whole depositors demanding 32-1-442, same. Section of the right to the whole of statute MCA. Here the wife had put should not be of the checks. She face amount ownership proof, of a bank, her as to between deposit. portion of the opinion.
I in the rest of the concur dissenting: SHEA MR. JUSTICE exception opinion join majority I with the also in the Sheehy Judgment join should be I in his dissent. Justice plaintiff amount of for the face entered favor checks.