Chesler v. Bank
| Decision Date | 07 April 2011 |
| Docket Number | No. 95435.,95435. |
| Citation | 951 N.E.2d 1098,74 UCC Rep.Serv.2d 209,193 Ohio App.3d 343 |
| Parties | CHESLER, Appelleev.DOLLAR BANK, FEDERAL SAVINGS BANK, Appellant. |
| Court | Ohio Court of Appeals |
OPINION TEXT STARTS HERE
O'Shea & Associates Co., L.P.A., and Michael J. O'Shea, Rocky River, for appellee.Chernett Wasserman Yarger, L.L.C., and David M. Dvorin, Cleveland, for appellant.JAMES J. SWEENEY, Judge.
[Ohio App.3d 344] {¶ 1} Defendant-appellant, Dollar Bank, Federal Savings Bank (“Dollar Bank”), appeals from the judgment of the trial court rendered in favor of plaintiff-appellee, David Chesler, in Chesler's action against the bank for improper payment of forged checks. For the reasons set forth below, we affirm.
[Ohio App.3d 345] {¶ 2} Chesler filed this action against Dollar Bank on October 3, 2008, and alleged that the bank negligently cashed a series of checks, which totaled $18,720, forged by Pedro Velez. Dollar Bank denied liability and asserted, as an affirmative defense, that Chesler failed to use ordinary care over his account and failed to promptly notify the bank of the forgeries.
{¶ 3} The matter proceeded to a bench trial on August 7, 2009.
{¶ 4} Chesler testified that he lives at East 71st Street and Euclid Avenue, in a loft above a commercial establishment. A portion of the loft is used for business operations and has a long table, bookshelf, and computer. Chesler keeps his checkbook in a drawer in this business area. The checkbook is a large aluminum-covered book that has a register and attached carbon-copy forms for recording the information on each check that is written. Chesler further established that he opened the account at the downtown branch and provided Dollar Bank with his telephone number and a completed signature card.
{¶ 5} Finally, Chesler established that he noticed the forgeries on June 16, 2008. He became suspicious on this date after observing that the check statement contained a large amount of checks. He did not suspect prior to this time that Velez had stolen checks from him or that checks from his checking account were being forged, and no checks had bounced. In total, Velez had forged and negotiated 28 checks from Chesler's checking account and had improperly obtained $19,135 in the time period from April 7, 2008, to June 10, 2008. Dollar Bank cashed a number of the checks; prior to doing so, the bank did not call Chesler to determine whether the checks were authorized and did not compare the signature on the check with the signature card on file for the account.
{¶ 6} On cross-examination, Chesler acknowledged that when he opened the checking account, he had signed the following agreements:
I/we agree to conform to the agreement set forth on the reverse side of this card, and hereby acknowledge receipt of the rules and resolutions * * * governing this account.
We agree to conform to, and to be bound by the bylaws of Dollar Bank, and rules and regulations governing this account, including any amendments thereto.
We acknowledge this account is subject to all applicable laws, governmental regulations, and Dollar bank's procedures and policies.
{¶ 7} An additional deposit agreement was promulgated on June 1, 2007. This agreement stated that the bank is not barred by any acts of waiver, recognized that automated procedures are in place and that the bank does not require verification of the maker's signature on all checks, and limited recovery for reimbursements on forged instruments to the 30–day period after the statement [Ohio App.3d 346] is sent to the customer, regardless of whether the bank used ordinary care.1 Chesler denied ever seeing this new agreement.
{¶ 8} Chesler testified that Velez was permitted to sleep at the loft two or three times a week for a few weeks when he needed a place to stay but he did not know that Velez had a criminal record. He further testified that there were loose checks in the checkbook and it was not kept in a locked drawer.
{¶ 9} Chesler acknowledged that he usually received the checking-account statements by the 15th of each month but it was not uncommon for him to ignore the statements for a week or two. The statement for the time period from April 1, 2008, to May 1, 2008, contained copies of three forged checks that had signatures unlike his own and totaled $485. The statement reflected that the forged checks contained numbers that were out of sequence for the checkbook. Chesler did not review this statement until June 16, 2008.
{¶ 10} The statement for the time period of May 2, 2008, to June 1, 2008, contained forged checks and again listed checks out of the proper sequence for the checkbook. Chesler notified the bank of these forgeries on June 16, 2008.
[Ohio App.3d 347] {¶ 11} Upon cross-examination, Chesler called Dollar Bank's security investigator, Melinda Augustine. Augustine indicated that during the course of the bank's investigation of this matter, Chesler submitted affidavits for 25 forged checks from May through June 2008. She subsequently discovered that there were earlier forgeries from Velez in April 2008. Following its investigation, the bank determined that it would reimburse Chesler for only the April checks, for $485, but denied reimbursement on the remaining checks because it concluded that if Chesler had promptly reviewed the statement containing the April forged checks, then Velez's later forgeries, after the original 30–day time period, could have been prevented.
{¶ 12} Augustine testified that not all of the forged checks were cashed at Dollar Bank branches. With regard to the checks cashed at Dollar Bank, the teller must ask for the payee's identification, but if the payee is a Dollar Bank customer, then the Dollar Bank card will suffice. She admitted that the bank has the ability to verify that the drawer's signature is genuine. The bank does not do so, however, unless the check is written for over a specific amount. In general, the teller is not responsible for verifying the drawer of the check, and the customer is supposed to review the statement each month and notify the bank of any irregularity. The bank does contact the customer if it detects suspicious activity such as check kiting2 and does monitor certain debit-card transactions. Finally, Augustine testified that in the criminal proceeding against Velez, Dollar Bank is listed as the victim to whom restitution must be made, and the amount of restitution is $18,720.
{¶ 13} At the conclusion of the plaintiff's case-in-chief, Dollar Bank moved for a directed verdict pursuant to R.C. 1304.35. The trial court denied this motion, and Dollar Bank presented testimony from Melinda Augustine and Cynthia Grey.
{¶ 14} Augustine testified that the forgeries that plaintiff reported to the bank were all from his June 2008 statement. Augustine then conducted an investigation and learned that Velez had forged other instruments in April 2008. On this information, the bank determined that the forgeries were not reported in a timely fashion, so it denied reimbursement for all but $485 from April 2008.
{¶ 15} Augustine further testified that Velez opened a Dollar Bank checking account in May 2008. As a Dollar Bank customer, he could present his bank card in order to cash a check.
[Ohio App.3d 348] {¶ 16} On cross-examination, Augustine admitted that if an individual attempted to cash a check for $10,000, the teller would attempt to verify the drawer's signature. She also admitted that the bank subsequently had an investigator go to Chesler's home, but she denied that the bank conspired to blame him for the manner in which he stored the checks as a pretext for denying reimbursement in this matter.
{¶ 17} Cynthia Grey, a private banker with Dollar Bank, testified that the May 2, 2008 statement was printed on that date and then mailed the following day from the Pittsburgh operation center. The June 2, 2008 statement was mailed on June 4, 2008. On each statement, the checks are listed in numerical order.
{¶ 18} Based upon the 30–day period for asserting that the bank has paid on a forged indorsement, Grey stated that Chesler had 30 days from the May 2, 2008 statement in which to report any forgeries. She further stated that by operation of the June 1, 2007 agreement, the 30–day period takes priority and applies regardless of whether the bank exercised ordinary care in paying the forged instrument.
{¶ 19} In a written opinion, the trial court concluded:
There was no testimony that the appearance of three checks totaling less than $500.00 made payable to a man Plaintiff regularly paid, would have been sufficient to trigger any belief that multiple forgeries were occurring on Plaintiff's corporate checking account. * * * [T]here is no evidence that additional security measures alone would have prevented the theft. * * * Although each bank teller requested and received Mr. Velez's driver's license, not one teller attempted to match or compare [this signature to Chesler's signature card].
{¶ 20} The trial court rendered a verdict in favor of Chesler and against Dollar Bank in the amount of $18,720. Dollar Bank now appeals and assigns two errors for our review.
Assignment of Error One:
The trial court erred, as a matter of law, in not concluding that the appellee's claims against Dollar Bank were barred pursuant to O.R.C. sec. 1304.35 and/or Dollar Bank's policies and procedures because plaintiff failed to exercise “reasonable promptness” in reviewing his monthly account statements.
{¶ 21} Within this assignment of error, Dollar Bank asserts that the trial court erroneously required Dollar Bank to reimburse Chesler for the forged checks because Chesler failed to exercise “reasonable promptness” in examining his bank statements, so he is therefore barred from recovering under R.C. 1304.35(D).
{¶ 22} Judgments supported by some competent, credible evidence relating to all the essential elements of the case will not be reversed by a reviewing ...
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...v. Geevers, 226 F.3d 186, 190 n. 2 (3d Cir.2000) (internal quotations and citations omitted). See Chesler v. Dollar Bank, Fed. Sav. Bank, 193 Ohio App.3d 343, 951 N.E.2d 1098, 1101 n. 2 (2011) (“Check kiting has been defined as the tender and deposit of checks between two accounts, artifici......
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