Birmingham Trust Nat. Bank v. Central Bank & Trust Co.
| Decision Date | 24 January 1973 |
| Citation | 275 So.2d 148,49 Ala.App. 630 |
| Parties | , 12 UCC Rep.Serv. 468 BIRMINGHAM TRUST NATIONAL BANK, a corporation, v. CENTRAL BANK & TRUST COMPANY, a corporation. Civ. 63. |
| Court | Alabama Court of Civil Appeals |
Mark L. Taliaferro and Mark Taliaferro, Jr., Birmingham, for appellant.
Robert E. Parsons, Birmingham, for appellee.
The Birmingham Trust National Bank brought suit for breach of warranty against Central Bank & Trust Company.
The facts out of which the suit arose are briefly as follows: On July 21, 1969, one Boehmer, a customer of Birmingham Trust, secured a loan from Birmingham Trust for the principal sum of $5500.00. The loan was granted for the purchase of a boat allegedly being manufactured for Boehmer by A. C. Manufacturing Company, Inc., of Florida. Upon signing of a note and security instruments by Boehmer granting them a mortgage upon the boat, Birmingham Trust issued its cashier's check to Boehmer and A. C. Manufacturing Company as payees. The check was given into the possession of Boehmer.
Apparently Boehmer immediately went to Central Bank and deposited the check in an account which he had established there and to which he was the only authorized signatory. It is stipulated that the endorsement of A. C. Manufacturing Company on the check was a forgery and was upon the check when it was presented to Central Bank. The account of Boehmer was credited with the amount of the check. Central placed its legend 'P.E.G.' meaning in the banking business 'Prior Endorsements Guaranteed' on the check on July 21, 1969, and it was received by Birmingham Trust and paid by them on July 22, 1969, to Central.
After some difficulty in collecting payments on the loan, and after it ultimately became delinquent, Birmingham Trust in the latter part of March 1970 contacted A. A. Manufacturing Company in Florida attempting to learn the location of the boat. They learned at that time that the boat had never been purchased by Boehmer. At about the same time it was learned that Boehmer had died or killed himself on January 24, 1970.
On April 27, 1970, Birmingham Trust received an affidavit from A. C. Manufacturing Company stating they had not endorsed the check or received any funds therefrom. On May 1, 1970, Birmingham Trust called upon Central for reimbursement under its warranty of prior endorsements. Central refused repayment. Thus this suit.
The amended complaint was as follows:
'COUNT ONE
Plaintiff claims of the defendants the sum of Five Thousand Five Hundred Dollars ($5,500.00) together with interest, as damages for a breach of warranty when on, to-wit, 22 July 1969 defendants endorsed and transferred to plaintiff for payment Birmingham Trust National Bank cashier's check #250332, dated 21 July 1969 in the amount of Five Thousand Five Hundred Dollars ($5,500.00) and plaintiff paid defendants Five Thousand Five Hundred Dollars ($5,500.00) for said check, relying on defendants' warranty that all signatures were genuine or authorized, when in fact, all signatures are not genuine or authorized as the endorsement of A. C. Manufacturing Company is a forgery. Thus defendants have breached their warranty to plaintiff, all to the plaintiff's damage in the sum aforesaid.'
To the complaint defendant filed a plea of the general issue and ten affirmative pleas as follows:
'PLEA I
That the plaintiff itself was guilty of negligence in the handling of said cashier's check #250332 which negligence proximately caused or contributed to the damages allegedly suffered by the plaintiff.
'PLEA II
That the plaintiff itself was guilty of negligence in the issuance of said cashier's check which negligence substantially contributed to the damages allegedly suffered by the plaintiff.
'PLEA III
That the plaintiff itself was guilty of negligence in acceptance and payment of said cashier's check which negligence substantially contributed to the damages allegedly suffered by the plaintiff.
'PLEA IV
That the plaintiff failed to give notice of the unauthorized endorsement to the defendant within a reasonable time after discovery of the unauthorized endorsement, or within a reasonable time after the unauthorized endorsement could have been discovered by plaintiff upon the plaintiff's exercise of due caution and diligence in accepting and paying the check.
'PLEA V
That the plaintiff failed to exercise reasonable diligence in discovering the unauthorized endorsement upon the plaintiff's acceptance, payment and other handling of said cashier's check.
That the plaintiff failed to give the defendant reasonably prompt notice of the unauthorized endorsement after its discovery, or after the unauthorized endorsement could have been discovered upon the exercise by the plaintiff of ordinary care in the examination, acceptance, payment and other handling of the check.
'PLEA VII
That the plaintiff itself was guilty of negligence which proximately caused or contributed to damages allegedly suffered by plaintiff in that the plaintiff failed to exercise reasonable care and promptness in examining the cashier's check and the endorsement thereon.
'PLEA VIII
That the plaintiff to the detriment of the defendant unjustifiably impaired the collateral which secured the payment of the proceeds of the cashier's check.
'PLEA IX
The plaintiff waived its claim of breach of warranty against the defendant.
'PLEA X
The defendant is not liable to the plaintiff for any breach of warranty for the reason that the plaintiff was guilty of laches after the plaintiff paid the cashier's check.'
Demurrer to the pleas was overruled. Such ruling by the court is assigned as error.
The clear purpose of Pleas I through VII was to charge contributory negligence to plaintiff. Pleas I and II are designed to charge negligence to Birmingham Trust in the issuing of the check or in the manner in which it issued it. Pleas III, V, and VII allege negligence in accepting and paying the check after it had been endorsed by Boehmer, deposited with Central, and forwarded to Birmingham Trust for payment. Let us hasten to say that what we have said in the preceding sentence is not in the words of the pleas, but amounts to our construction or conclusion from the allegations of the pleas. Pleas IV and VI appear designed to charge negligence by Birmingham Trust in giving notice of the forged endorsement after discovery of it or in failing to give notice after the endorsement could have been discovered by use of ordinary care. Pleas VIII, IX and X are so insufficient and conclusionary in allegation as to utterly fail to inform as to their basis or purpose.
Plaintiff by demurrer charges that the pleas are mere conclusions and state no basis in fact for a charge of contributory negligence. We think such demurrer is well taken as to those pleas alleging negligence, both before and after the endorsement of the check.
'To support a claim of contributory negligence, the plea must aver facts which raise a duty to defendant imposed on plaintiff by law and a negligent breach of that duty which must be shown by the allegation of the plea to have been a proximate contributing cause of plaintiff's injuries.' Williams v. Pope, 281 Ala. 382, 203 So.2d 105; Walker v. Bowling, 261 Ala. 46, 72 So.2d 841.
Plea I merely alleges as a conclusion that plaintiff was 'guilty of negligence in the handling' of the check. Plea II avers that plaintiff was guilty of negligence in the 'issuing' of the check. Plea III avers plaintiff was guilty of negligence in acceptance and payment of the check. Plea V avers that plaintiff failed to exercise reasonable diligence in discovering the unauthorized endorsement. Plea VII avers negligence for failure to exercise 'reasonable care and promptness in examining the check.' None of these allegations aver facts which raise a duty owed to defendant imposed upon plaintiff by law or a negligent breach of that duty. Pleas II, III, IV, V, VI and VII fail to charge that the concluded negligence of plaintiff proximately contributed to plaintiff's damages. Pleas II and III rather charge that plaintiff's negligence 'substantially contributed' which cannot be said to be the same as a proximate contribution. All of the aforesaid pleas are insufficient in substance and form and demurrer should have been sustained.
The cause of action brought here by Birmingham Trust arose under the provisions of Title 7A, § 4--207 which in pertinent part are as follows:
'(a) he has a good title to the item or is authorized to obtain payment or acceptance on behalf of one who has a good title; and. . . .
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