Crescent Women's Med. Group, Inc. v. KeyCorp, 2003 Ohio 7367 (OH 4/4/2003)
Decision Date | 04 April 2003 |
Docket Number | Case No. A-01-06592. |
Parties | Crescent Women's Medical Group, Inc., Plaintiff, v. KeyCorp, D.B.A. KeyBank, Defendant.<SMALL><SUP>*</SUP></SMALL> |
Court | Ohio Supreme Court |
The Brown Firm Inc., L.P.A., and Robert S. Brown, for plaintiff.
Green & Green and Erin Moore, for defendant.
MOTION FOR SUMMARY JUDGMENT
{¶1} This matter is before the court upon motion for summary judgment filed on behalf of defendant.
{¶2} In January 1977, Mary Kurtz was hired as executive director of Crescent Women's Medical Group, Inc., with authority to fill out, sign, and issue checks on behalf of Crescent. From August 1999 to March 2001, Kurtz and Mary Suhr, a subordinate employee, used ATM machines to deposit to their own accounts 40 Crescent checks made payable to various corporate Crescent creditors. All of the checks were unendorsed, six of them having the words "for deposit only" written on the back. Apparently, defendant KeyBank did not check the name of the payee on any of these checks.
{¶3} Various theories of defense have been asserted by defendant, one of them pertaining to a contractual limitations period.
{¶4} The KeyBank "business non-personal signature card", executed September 30, 1997, authorizing KeyBank to accept the signature of Mary Kurtz (and others) on checks, reads:
{¶5} The relevant deposit account agreement, effective June 17, 1996, reads, at pages 5 and 6:
(Emphasis added.)
{¶6} An agreement reducing the statutory time for bringing an action against a bank can be legally enforceable:
Borowski v. Firstar Bank Milwaukee (1998), 217 Wis.2d 565, 574, 578; 579 N.W.2d 247.
{¶7} In the instant matter, it is undisputed that no notice was given to KeyBank of the missing endorsements for well over 60 days. KeyBank claims that it is entitled to summary judgment pursuing to the foregoing authority.
{¶8} The court finds that the contractual obligation placed upon the check writer to check for "missing signatures" pertains to signatures missing on the face of the check, not to missing endorsements, and further finds that the contractually shortened limitation period does not apply in this case. These findings are based upon several considerations:
{¶9} First, R.C. 1304.35 (UCC 4-406) reads:
"(C) If a bank sends *** a statement of account or items *** the customer must exercise reasonable promptness in examining the statement or the items to determine whether any payment was not authorized because of an alteration of an item or because a purported signature by or on behalf of the customer was not authorized. ***"
{¶10} The official comments to the Uniform Commercial Code regarding this section read:
"Section 4-406 imposes no duties on the drawer to look for unauthorized endorsements."
{¶11} There is no reason to believe that the contractual requirements for examining the statement exceed those required by statute. Thus, the phrase "missing signatures" should not be interpreted to include a lack of endorsement.
{¶12} Second, a significant number of unendorsed Crescent checks were processed by both KeyBank, and later Fifth Third Bank. This processing indicates that such processing was common and, in itself, no evidence of misappropriation.
{¶13} Third, it is legally permissible to pay a check to the payee without the payee's endorsement, and thus lack of endorsement is not, in itself, evidence of misappropriation:
(Emphasis added.) Ohio Bell Tel. Co. v. BancOhio Natl. Bank (1985), 27 Ohio App.3d 8, 9, 499 N.E.2d 327.
{¶14} Fourth, nothing on the back of the unendorsed checks involved in the instant matter indicated that the check funds were deposited in the wrong account:
***
Affidavit of Thomas J. Ruberg.
{¶15} Fifth, Parent Teacher Assn., supra, provided the precedent for the Borowski rationale. Parent Teacher Assn. holds:
"Neither provision constitutes an unlawful disclaimer of the bank's liability." (Emphasis added.) Parent Teacher Assn. v. Manufacturers Hanover Trust Co. (1988), 138 Misc.2d 289, 292; 524 N.Y.S.2d 336.
{¶16} The deposit account agreement in the instant matter, quoted from...
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