Alpine State Bank v. Ohio Cas. Ins. Co.

• Decision Date: 23 August 1991
• Docket Number: 90-1802,Nos. 90-1561,s. 90-1561
• Citation: 941 F.2d 554
• Parties: ALPINE STATE BANK, an Illinois banking corporation, Plaintiff-Appellee-Cross-Appellant, v. OHIO CASUALTY INSURANCE COMPANY, a corporation, Defendant-Appellant-Cross-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 554

941 F.2d 554

21 Fed.R.Serv.3d 611

ALPINE STATE BANK, an Illinois banking corporation Plaintiff-Appellee-Cross-Appellant, v. OHIO CASUALTY INSURANCE COMPANY, a corporation Defendant-Appellant-Cross-Appellee.

Nos. 90-1561, 90-1802.

United States Court of Appeals Seventh Circuit.

Argued Jan. 7, 1991.

Decided Aug. 23, 1991.

Thomas D. Luchetti, James F. Black (argued), Rockford, Ill., for plaintiff-appellee.

James T. Ferrini, Charles A. Gilmartin, Cherie R. Galarnyk, Mark J. Seplak (argued), Clausen, Miller, Gorman, Caffrey & Witous, Chicago, Ill., for defendant-appellant.

Before FLAUM, RIPPLE, and KANNE, Circuit Judges.

RIPPLE, Circuit Judge.

A bank was sued for permitting a customer wrongfully to deposit misappropriated checks into his personal account. The bank filed a declaratory judgment action seeking the district court's determination of its rights under a bond issued by its insurance company to cover potential loss as a result of the wrongful deposits. The bank and the insurance company filed cross-motions for summary judgment. The court granted the bank's motion. The insurance company now appeals. For the following reasons, we reverse the judgment of the district court.

I BACKGROUND

A. Facts

Ohio Casualty Insurance Company (OCIC) issued a financial institution bond covering Alpine State Bank (the Bank) from August 19, 1985 to August 19, 1988. The bond insured the Bank against any loss resulting directly from forgery of any negotiable instrument. Forgery is defined in the bond as "the signing of the name of another with intent to deceive; it does not include the signing of one's own name with or without authority, in any capacity, for any purpose." R. 1 Ex. A. The bond also insured the Bank against loss resulting directly from "theft, false pretenses, common law or statutory larceny, committed by a person present in an office or on the premises of the Insured, while the Property is lodged or deposited within offices or premises located anywhere." Id. From July 1985 through April 1986, William Secrest, a customer of the Bank and owner of account number 58-070-8, misappropriated more than $100,000 in checks that had been drawn to the order of his employer, Rockford Fluid Power International, Inc. (Rockford). ¹ Secrest accomplished this by endorsing the checks with a rubber stamp that read "for deposit only--account number 58-070-8." The checks then were deposited into his personal account at the Bank. Eventually, Secrest was caught and convicted of conspiring to defraud a United States agency.

Sometime during these events, Rockford filed for bankruptcy under Chapter 7 of the Bankruptcy Code. Rockford's trustee in bankruptcy filed an adversarial proceeding against the Bank in bankruptcy court alleging that the Bank was liable to Rockford's estate for the amount of the checks. Thereafter, the Bank made a claim against the bond, which OCIC denied. The Bank then filed a declaratory judgment action seeking the district court's determination of the parties' rights under the bond. Both parties filed motions for summary judgment, and the court granted the Bank's. OCIC now appeals. ²

B. District Court's Opinion

The district court determined that Illinois law governed this case. See Alpine State

                Bank v. Ohio Cas. Ins. Co., 733 F.Supp. 60, 63 (N.D.Ill.1990).   Relying on the definitions of "signature" contained in both the Illinois Uniform Commercial Code and an Illinois appellate case, People v. Stephens, 12 Ill.App.3d 215, 297 N.E.2d 224, 226 (1973), the court reasoned that the Bank was covered by the bond because the rubber stamp "constitutes a signature endorsement within the meaning of the bond."  733 F.Supp. at 63.   Moreover, the court held that Secrest's stamping the back of the checks was forgery within the meaning of the bond.   It relied on the definition of forgery in the Illinois criminal code and believed that the case was governed by this court's decision in Quick Service Box Co. v. St. Paul Mercury Indem. Co., 95 F.2d 15 (7th Cir.1938).   The Quick Service court held that "an unauthorized signature of an employee 'with an intent to defraud was a publication of a false signature and constituted a forgery' of a signature within the terms and provisions of the bond."  733 F.Supp. at 64 (quoting Quick Service, 95 F.2d at 17).   The district court concluded by stating that it did not believe "the terms used by the bond in defining fraud change the result in this case" because "[w]hile Secrest did not sign the actual name of another in endorsing the checks, in practicality he did so."  Id
                

II ANALYSIS

A. Final Judgment

Although neither party has raised the issue, we must determine, as a threshold matter, whether the district court has entered a final, appealable order sufficient to confer jurisdiction upon this court. See Goodyear Atomic Corp. v. Miller, 486 U.S. 174, 178, 108 S.Ct. 1704, 1708, 100 L.Ed.2d 158 (1988); Horn v. Transcon Lines, Inc., 898 F.2d 589, 591 (7th Cir.1990). The requirement of finality is a statutory mandate, not a rule of discretion. See 28 U.S.C. § 1291. During the progress of this case, the district court's magistrate held numerous status hearings. These hearings routinely were continued for approximately sixty days. At a December 8, 1989 status hearing, the magistrate set the next meeting for February 9, 1990. Thereafter, on January 8, 1990, the district court granted the Bank's motion for summary judgment. In doing so, the court issued a memorandum opinion, a "minute order," and a form prescribed for judgment in a civil case. None of these documents canceled the February 9, 1990 status hearing. On February 9, 1990, counsel for OCIC learned that the status hearing had been canceled and the case file closed. Counsel for OCIC then filed a motion to vacate the district court's January 8, 1990 order and specifically to declare the rights of the parties as required in a declaratory judgment action. The district court denied the motion, stating that its order was final.

As we discussed, this is a declaratory judgment action; the complaint contains essentially no other requested relief. The district court generated three documents in disposing this action: (1) the memorandum opinion granting the Bank's summary judgment motion and denying OCIC's; ³ (2) the minute order accompanying the opinion; ⁴ and (3) a form prescribed for "judgment in a civil case." ⁵ None of these documents actually declares the rights of the parties. The district court should have done so. Rule 58 of the Federal Rules of Civil Procedure instructs that "[e]very judgment shall be set forth on a separate document." In the context of a declaratory judgment action, we have commented that "Rule 58 ... says that the judgment must appear on a separate piece of paper--separate, that is, from the court's opinion. We take this requirement seriously." Azeez v. Fairman, 795 F.2d 1296, 1297 (7th Cir.1986). ⁶ In satisfying the requirement of Rule 58, neither the memorandum opinion explaining the ruling on summary judgment, nor the minute order announcing the summary judgment can be substituted for a declaratory judgment. See Horn v. Transcon Lines, Inc., 898 F.2d 589, 591 (7th Cir.1990) ("An opinion is not a sufficient substitute for a judgement.... An opinion explains the reasons for entering a judgment but is not itself a source of legal obligations."); American Interinsurance Exch. v. Occidental Fire & Cas. Co., 835 F.2d 157, 159 (7th Cir.1987) (both opinion and form prescribed for judgment in a civil case that granted and denied summary judgment not appealable because the "judgment must be self-contained and complete"); Foremost Sales Promotions, Inc. v. Director, Bureau of Alcohol, Tobacco & Firearms, 812 F.2d 1044, 1045 (7th Cir.1987) (minute order not appealable because it "refers to the opinion for 'particulars', but a final judgment should contain the whole disposition (though not the reasoning behind it)"); Azeez v. Fairman, 795 F.2d 1296, 1297 (7th Cir.1986) (opinion granting relief in favor of party without separate document declaring rights of parties not appealable). ⁷

The rule articulated in Azeez and its progeny continues to be firmly planted in this circuit. Pursuant to Rule 58, in declaratory judgment actions, district courts must declare specifically and separately the respective rights of the parties, not simply state in a memorandum opinion, minute order, or a form prescribed for judgment in a civil case that a motion has been granted or denied. "Under [Rule] 58 the judgment must be self-contained and complete. It must describe the relief to which the prevailing party is entitled and not simply record that a motion has been granted." American Interinsurance, 835 F.2d at 159. And we shall not hesitate to hold that we lack jurisdiction if the judgment ambiguously declares the rights of the parties or is unclear or calls into serious question the matter of finality.

In making such jurisdictional determinations, the Supreme Court approvingly has noted Judge Posner's comment that " 'law is an instrument of governance rather than a hymn to intellectual beauty, some consideration must be given to practicalities.' " Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 837, 109 S.Ct. 2218, 2225, 104 L.Ed.2d 893 (1989) (quoting Newman-Green, Inc. v. Alfonzo-Larrain R., 854 F.2d 916, 925 (7th Cir.1988)). Although in the present case the district court technically did not enter a declaration of the parties' rights, "the practicalities weigh heavily," Id. 109 S.Ct. at 2225, toward a common sense conclusion that the district court intended to enter a final judgment. The present case, therefore, is unlike Horn, American Interinsurance, Foremost, and Azeez. In those cases, the court contemplated further proceedings (or it was unclear whether the court believed the case was over), or it was unclear what relief the court granted. Here, by contrast, OCIC moved to vacate the order and requested ...