Florida Nat. Bank v. Isaac Industries, Inc., 92-743

• Decision Date: 08 December 1992
• Docket Number: No. 92-743,92-743
• Citation: 610 So.2d 57
• Parties: 17 Fla. L. Weekly D2758, 19 UCC Rep.Serv.2d 823 FLORIDA NATIONAL BANK, et al., Appellants, v. ISAAC INDUSTRIES, INC., Appellee.
• Court: Florida District Court of Appeals

Page 57

610 So.2d 57

17 Fla. L. Weekly D2758, 19 UCC Rep.Serv.2d 823

FLORIDA NATIONAL BANK, et al., Appellants, v. ISAAC INDUSTRIES, INC., Appellee.

No. 92-743.

District Court of Appeal of Florida Third District.

Dec. 8, 1992.

Friedman, Baur, Miller & Webner, P.A., and Douglas L. Oppenheimer, Miami, for appellants.

Dunn & Lodish, P.A., and Barbara A. Eagan and Mitchell E. Widom, Miami, for appellee.

Before JORGENSON, LEVY and GODERICH, JJ.

PER CURIAM.

First Union National Bank appeals from a final judgment in an action for conversion of checks. We affirm.

This case recurs following our reversal of a summary judgment in favor of Florida National Bank and our remand for a determination of whether there was actual or constructive delivery of the checks to Isaac Industries. Florida National Bank v. Isaac Industries, Inc., 560 So.2d 1203 (Fla. 3d DCA1990). Because the facts are set forth in the prior appeal, only the salient facts will be discussed here.

Roger Khemlani, on behalf of Nirmaco Corp., ordered chemicals from Isaac Industries to be shipped to Issar Company in Jamaica. Isaac Industries obtained two post dated checks, and the chemicals were shipped to Issar Co. When Isaac Industries, the payee, attempted to cash the checks, it found out that an order to stop payment had been requested. The payee subsequently discovered that two other checks payable to the payee had been issued. Under Jamaican law, Issar Co. could not write a check directly to the payee. Thus, Jamaica Citizens Bank issued the checks payable to the payee to be drawn against its account at Florida National Bank. The payee never received the checks. Mr. Khemlani somehow ended up with possession of the checks. He forged the payee's endorsement and deposited the checks in Nirmaco's account at Southeast Bank. Florida National paid the checks.

The payee sued Florida National for conversion pursuant to section 673.419, Florida Statutes (1987). On remand, the trial court agreed with the general master's findings that the payee received constructive delivery of the checks. First Union National Bank now appeals. ¹

Isaac Industries received constructive delivery of the checks, and thus, it can sue First Union for conversion of checks under section 673.419. A payee has a cause of action against a drawee bank if the bank pays a check on a forged endorsement. Sec. 673.419, Florida Statutes (1987); Bloempoort v. Regency Bank of Florida, 567 So.2d 923 (Fla. 2d DCA1990). The payee, however, acquires no rights on a check before delivery. City National Bank of Miami v. Wernick, 368 So.2d 934, 936 (Fla. 3d DCA), cert. denied, 378 So.2d 350 (Fla.1979). Thus, a payee can recover against the drawee bank only if the payee received actual or constructive delivery of the checks. Bloempoort, 567 So.2d at 924; Wernick, 368 So.2d at 936-937. Constructive delivery occurs "when the maker in some way evidenced an intention to make ... [the check] an enforceable obligation against himself, according to its terms, by surrendering control over it and intentionally placing it under the power of the payee or some third person for his use." Wernick, 368 So.2d at 937 (emphasis added).

This case is similar to Bloempoort, where the court held that the payees had a cause of action against the drawee bank because they received constructive delivery. 567 So.2d at 924. In Bloempoort, purchasers of a house gave a mortgage on the house to the sellers. The purchasers later refinanced the mortgage without the sellers' knowledge. The maker, a closing agent, wrote a check in the sellers' name in the exact amount unpaid on the mortgage and gave it to the purchasers. The purchasers, who had an outstanding obligation to the sellers, forged the sellers' signature and cashed the check. The court held that constructive delivery had occurred because by surrendering the check to the purchasers in an amount equal to that due the sellers, the maker of the check intended for the check to be an enforceable obligation. Bloempoort, 567 So.2d at 924.

In this case the maker, Jamaica Citizens, issued a check to the payee and gave it to Issar Co., who had an outstanding obligation to the payee. Jamaica Citizens issued checks to the payee in the exact amount of Issar Co.'s outstanding obligation. Moreover, Jamaica...