American Exchange Bank, Collinsville, Okl. v. Cessna, 73-C-236.
Decision Date | 03 October 1974 |
Docket Number | No. 73-C-236.,73-C-236. |
Citation | 386 F. Supp. 494 |
Parties | AMERICAN EXCHANGE BANK, COLLINSVILLE, OKLAHOMA, Plaintiff, v. Dick CESSNA, Defendant. |
Court | U.S. District Court — Northern District of Oklahoma |
David L. Sobel, Tulsa, Okl., for plaintiff.
Morris & Morris, El Cajon, Cal., Michael L. Green, Tulsa, Okl., for defendant.
This action arises from a check in the amount of $26,000.00 made by Defendant on March 15, 1973, payable to Bill Poulos. Said check was deposited by the Payee in Plaintiff bank. The check was drawn on the Wells Fargo Bank, El Cajon Branch, El Cajon, California. Payment on the check was stopped by Defendant and Plaintiff thereafter brought this action for the full amount of said check asserting it had advanced the full amount to its depositor, the Payee of the instrument in question. Plaintiff claimed to be a holder in due course. It seeks attorney fees in the action.
Defendant set out as his first defense, an assertion that he executed the instrument in question as an officer in a California corporation, Cessna Ranch. Defendant claimed that Plaintiff was not a holder in due course because its officers and employees had knowledge of the circumstances surrounding the issuance of the check and the subsequent stop payment order. The Defendant at the time of trial abandoned a contention raised in his Amended Answer that Plaintiff failed to seasonably post and forward the check through banking channels. He also defends on the basis that Plaintiff violated unspecified provisions in the Oklahoma Uniform Commercial Code and its own rules and regulations in allowing credit on the check prior to final settlement. Defendant alleged in his Amended Answer that he had satisfied the underlying obligation to the Payee, Bill Poulos, and that this would offset his obligation to Plaintiff.
The first aspect of the case to be determined is whether Defendant is personally liable on the check in question. The instrument discloses that it was signed by an individual. The Defendant admits that it is his signature and that only his personal signature appears in what is commonly known as the signature block of the check. (A notation on said check "Refer to Maker" was apparently placed thereon while same was in the banking channels.) The check does have the name "Cessna Ranch" along with an address and telephone number printed in the lower left hand corner. The Defendant has introduced a copy of the Articles of Incorporation certified by the California Secretary of State showing that the name of his corporation is "Cessna Ranch". Defendant asserts that this evidence shows that he signed in a representative capacity as President or General Manager of Cessna Ranch.
The provisions of the Uniform Commercial Code (UCC) are applicable relating to the obligations and rights of the parties as to the check in question. No conflicts of laws problem exists as the UCC is the law of Oklahoma, where this action is brought, and California, the place of Defendant's residence and where the payee bank is located. For convenience, the references to the UCC will be as codified under Oklahoma Statutes.
12A Oklahoma Statutes 1971 § 3-403 relates to signatures in a representative capacity. The statute provides:
Parol evidence as to such capacity is only proper in disputes between the immediate parties as per sub-section (2)(b).
Anderson, Uniform Commercial Code, 2d Ed. § 3-403:5 states:
"Where a transferee is the holder of an instrument, proof is not admissible as to any agreement between the payee and a signer as to the capacity in which the signer was acting."
This is the situation present in the case at bar and thus any knowledge by Poulos that Defendant operated his ranch as a corporation is not admissible in this action by the holder of the instrument in question.
The provision in the above statute relevant to corporate officers is found in subsection (3). This subsection which is self-explanatory is further explained in Anderson, Uniform Commercial Code, 2d Ed. § 3-403:6 as follows:
In the instant case, the signature of Defendant does not show the title of his office and thus Defendant is personally obligated on the instrument in question.
The Plaintiff is a holder of the instrument. The rights of a holder are set out in 12A Oklahoma Statutes 1971 § 3-307 which provides:
"When signatures are admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defense."
In the case now before the Court, the Defendant's signature has been established by Plaintiff and it is now necessary to determine if the Defendant has established a defense. In Oklahoma Nat. Bank v. Equitable Credit Finance Co., 489 P.2d 1331 (Okl.1971) the Court stated:
". . . .
In the instant case, the only matter contained in Defendant's Amended Answer which resembles a defense, is an allegation that the indebtedness for which the check was written has been satisfied by payment to Bill Poulos and that this offset should defeat Plaintiff's action. This allegation can be considered as setting up the defense of failure of consideration.
The contention raised by Defendant that he has made a settlement with the Payee, Bill Poulos is not supported by the evidence. The Defendant testified that "the whole thing is a mess, it can't be determined who owes who." He also testified that an accounting between himself and Poulos has not been completed.
It appears to the Court that Defendant has failed to meet his burden of showing that the consideration for the instrument in question has failed. His contention that he may have paid Poulos too much money does not constitute proof that he has a defense to the instrument. It thus appears that Plaintiff would be entitled to recover as a holder on the instrument herein even if it cannot be determined it is a holder in due course.
If Defendant herein had established that he had a good defense to the instrument, the burden would then shift to the Plaintiff to establish that it is a holder in due course. 12A Oklahoma Statutes 1971 § 3-307(3) provides:
"After it is shown that a defense exists a person claiming the rights of a holder in due course has the burden of establishing that he or some other person under whom he claims is in all respects a holder in due course."
Although the Court finds that Defendant herein has failed to establish a defense to the instrument sued on by a preponderance of the evidence, it will make a determination of the Plaintiff's status as it claims to be a holder in due course. Such a determination is helpful in determining the amount due Plaintiff in this action. A holder in due course is generally defined in 12A Oklahoma Statutes 1971 § 3-302 which provides:
The rights of Plaintiff bank are further set out in 12A Oklahoma Statutes 1971 § 4-209 which provides:
"For purposes of determining its status as a holder in due course, the bank has given value to the extent that it has a security interest in an item provided that the bank otherwise complies with the requirements of Section 3-302 on...
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