Florida Nat. Bank v. Isaac Industries, Inc.

Decision Date06 March 1990
Docket Number89-1100 and 89-1367,Nos. 89-810,s. 89-810
CourtFlorida District Court of Appeals
Parties15 Fla. L. Weekly D624, 11 UCC Rep.Serv.2d 898 FLORIDA NATIONAL BANK, et al., Appellants, v. ISAAC INDUSTRIES, INC., Appellee.

Frates, Bienstock & Sheehe and Patrick Patrissi, Miami, for appellants.

Dunn, Dresnick, Lodish & Miller and Mitchell E. Widom, Miami, for appellee.



Florida National Bank ("Florida National") and Southeast Bank, N.A. ("Southeast") (collectively referred to as "banks") appeal from a final summary judgment entered in favor of Isaac Industries, Inc. ("Isaac") holding the banks liable under section 673.419, Florida Statutes (1987), for conversion of certain checks due to their payment on a forged instrument. We reverse.

Isaac appeals an order granting the banks' motion to dismiss the negligence counts against the banks. We affirm. Additionally, Isaac appeals a denial of its motion for attorney's fees and sanctions. We find this issue to be moot as a result of the resolution of the other issues.

Roger Khemlani ("Mr. Khemlani") on behalf of Nirmaco Corporation ("Nirmaco") ordered chemicals from Isaac, a chemical exporter. The chemicals were to be shipped directly to Issar Company, Ltd. ("Issar") in Kingston, Jamaica. In order to secure payment by Issar, Mr. Khemlani presented Isaac with two post-dated checks. Mr. Khemlani was the purchasing arm for Issar in the United States. Isaac shipped the chemicals to Issar in two lots which were invoiced at the price of $12,916.60 and $37,756.00, respectively. Isaac rendered invoices to both Issar and Nirmaco.

Isaac attempted to cash the post-dated checks; however, stop payments had been issued. In an attempt to collect the payments from Issar for the two invoices, Isaac discovered that two other checks made payable to Isaac had been issued. The two checks were drawn on an account at Florida National in the name of Jamaica Citizens Bank Ltd. ("Jamaica Citizens") and were made payable to Isaac. 1 However, there was no testimony as to whom the checks were delivered. Isaac never received the checks. The checks came into the hands of Mr. Khemlani, the president of Nirmaco. The checks were deposited in Nirmaco's checking account at Southeast. Isaac's endorsement was improper and forged. The forger misspelled the name of the payee, Isaac Industries, Inc. "Isaac" was spelled "Issac" on both checks. Despite this improper endorsement, Southeast collected the checks and Florida National paid the checks.

Isaac filed an action against the banks for negligence and for conversion pursuant to section 673.419, Florida Statutes (1987). Isaac alleged that the endorsements on the backs of the checks were a forgery and that Isaac never received payment on the checks. The trial court dismissed the negligence counts with prejudice. In addition, the trial court granted Isaac's motion for final summary judgment. Lastly, the trial court denied Isaac's motion for attorney's fees and sanctions.

We find that there exist genuine issues of material fact as to whether there was delivery or constructive delivery of the checks to the payee, Isaac, and whether or not the banks acted within reasonable commercial standards in paying the checks.

Section 673.419, Florida Statutes (1987), specifically gives the payee a cause of action against the collecting bank that pays a check on a forged endorsement. This provision recognizes the principle of negotiable instruments law that the payee acquires no rights in an instrument until the instrument is delivered to him. Hence, a payee cannot recover from the collecting bank that pays on a forged endorsement if the check was never delivered to the payee. The reasons...

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4 cases
  • Flavor-Inn, Inc. v. NCNB Nat. Bank of South Carolina
    • United States
    • South Carolina Court of Appeals
    • October 7, 1992
    ...Okey's result and its reasoning. Berthot v. Security Pac. Bank, 170 Ariz. 318, 823 P.2d 1326 (Ct.App.1992); Florida Nat'l Bank v. Isaac Indus., 560 So.2d 1203 (Fla.Dist.Ct.App.1990); cf. Cartwood Constr. Co. v. Wachovia Bank & Trust Co., 84 N.C.App. 245, 352 S.E.2d 241 (1987), aff'd, 320 N.......
  • RACSO DIAGNOSTIC v. Community Bank
    • United States
    • Florida District Court of Appeals
    • May 5, 1999
    ...count, we agree with plaintiff that this order was improperly entered in reliance on our opinion in Florida Nat'l Bank v. Isaac Indus., 560 So.2d 1203, 1204 (Fla. 3d DCA 1990). We note, as plaintiff contends, that the applicable section of Florida's version of the Uniform Commercial Code [U......
  • Florida Nat. Bank v. Isaac Industries, Inc., 92-743
    • United States
    • Florida District Court of Appeals
    • December 8, 1992
    ...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 Roger Khem......
  • Isaac Industries, Inc. v. Florida Nat. Bank
    • United States
    • Florida District Court of Appeals
    • May 11, 1993
    ...and Dale Webner, Miami, for appellees. Before BASKIN, GERSTEN and GODERICH, JJ. PER CURIAM. Affirmed. Florida National Bank v. Isaac Industries, Inc., 560 So.2d 1203 (Fla.3d DCA 1990); DeBiasi v. S & S Builders, Inc., 593 So.2d 314 (Fla. 4th DCA ...

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