Lamp v. First Nat. Bank of Garretson

Decision Date03 February 1993
Docket NumberNo. 17693,17693
Citation496 N.W.2d 581,20 UCCRep.Serv.2d 1305
Parties20 UCC Rep.Serv.2d 1305 Marjorie LAMP, Administratrix With Will Annexed of the Estate of Louise Edmundson, Deceased, Plaintiff and Appellant, v. FIRST NATIONAL BANK OF GARRETSON, South Dakota, Defendant and Appellee.
CourtSouth Dakota Supreme Court

Jerome B. Lammers, Lammers, Lammers, Kleibacker & Parent, Madison, for plaintiff and appellant.

Robert E. Hayes, Davenport, Evans, Hurwitz & Smith, Sioux Falls, for defendant and appellee.

SABERS, Justice (On reassignment).

Marjorie Lamp (Lamp) appeals from summary judgment in favor of First National Bank of Garretson (Bank). We reverse and remand for trial.


Lamp is the administratrix of the estate of her mother, Louise Edmundson (Edmundson). Edmundson was residing in a nursing home in Garretson, South Dakota, at all times relevant to this appeal. Edmundson maintained a checking account at Bank, and her daughter, Carol Braa (Braa) was named as an authorized signature on the account. Edmundson also owned a Time Savings Certificate (CD) issued by Bank which is the subject of this appeal. Braa was not, however, an authorized signature on the CD.

On August 7, 1985, Braa negotiated this CD for deposit in the checking account by signing her and Edmundson's names to the back of the CD. The amount deposited was $42,695.51. The amount of this deposit was noted on the September, 1985, checking account statement. An IRS Form No. 1099 reflecting the payment of the CD was sent to Edmundson no later than January 31, 1986.

On December 31, 1987, Edmundson wrote a letter to Bank's president, Allan Hammer (Hammer), advising that she had been informed that her money was gone, never had access to her bank statements, and requesting an accounting of all her banking transactions from June 1, 1983, to July 31, 1987. Hammer responded by letter on January 4, 1988, informing Edmundson that she could get that accounting from Braa but that if she wanted Bank to provide same, it would do so. Edmundson died on April 10, 1988, without having received the requested accounting.

Lamp and her brother, Milton Edmundson (Milton) commenced an action against Bank on July 3, 1990, alleging that it had permitted Braa to endorse the CD by forgery, and that by reason of such forgery, Braa was able to convert those funds to her own use. After completion of discovery, Bank moved for summary judgment on the ground that no notice had been given Bank of the forgery and therefore, the action was precluded by the statute of limitations. Trial court granted summary judgment in favor of Bank based on the statute of limitations and dismissed Lamp's action. Lamp appeals.


Whether genuine issues of material fact exist precluding summary judgment in favor of Bank regarding notice of the forgery of the CD under SDCL 57A-4-406(4).

We hold that genuine issues of material fact exist precluding summary judgment.

Summary Judgment

Our standard of review for a grant or denial of summary judgment is well settled. In Waddell v. Dewey County Bank, we stated:

In reviewing a grant or a denial of summary judgment under SDCL 15-6-56(c), we must determine whether the moving party demonstrated the absence of any genuine issue of material fact and showed entitlement to judgment on the merits as a matter of law. The evidence must be viewed most favorably to the nonmoving party and reasonable doubts should be resolved against the moving party. The non-moving party, however, must present specific facts showing that a genuine, material issue for trial exists. Our task on appeal is to determine only whether a genuine issue of material fact exists and whether the law was correctly applied. If there exists any basis which supports the ruling of the trial court, affirmance of a summary judgment is proper.

Waddell v. Dewey Cnty. Bank, 471 N.W.2d 591, 593 (S.D.1991) (citations omitted).

"Summary judgment is generally not feasible in negligence cases because the standard of the reasonable man must be applied to conflicting testimony.... It is only when the evidence is such that reasonable men can draw but one conclusion from facts and inferences that they become a matter of law and this occurs rarely."

Trammell v. Prairie States Ins. Co., 473 N.W.2d 460, 462 (S.D.1991) (quoting Wilson v. Great N.R.R. Co., 83 S.D. 207, 212-13, 157 N.W.2d 19, 22 (1968) (citations omitted)). In reviewing a grant of summary judgment, we are not bound by the trial court's factual findings and must conduct an independent review of the record. Taggart v. Ford Motor Credit Co., 462 N.W.2d 493, 499 (S.D.1990); Koeniguer v. Eckrich, 422 N.W.2d 600, 601 (S.D.1988).

Lamp argues that Braa's endorsement of Edmundson's CD constituted an unauthorized endorsement and that this fact was discovered and reported to Bank within the three-year statutory limitation period. SDCL 57A-4-406(4) provides:

Without regard to care or lack of care of either the customer or the bank a customer who does not within one year from the time the statement and items are made available to the customer (subsection (1)) discover and report his unauthorized signature or any alteration on the face or back of the item or does not within three years from that time discover and report any unauthorized endorsement is precluded from asserting against the bank such unauthorized signature or endorsement or such alteration. (Emphasis added.)

There is no dispute that Bank sent statements to Edmundson concerning her account and that she would have received an IRS form 1099 no later than January 31, 1986. Accordingly, the three-year period would not have run until January 31, 1989 under SDCL 57A-4-406(4). The "notice," which Lamp argues was sufficient, was the December 31, 1987, letter Edmundson wrote to Bank. The trial court concluded this letter did not provide adequate notice to Bank that the CD had been negotiated with an unauthorized signature. Edmundson's letter to Hammer states:

I have been informed that my money is gone. I have never had access to my bank statements. I would appreciate an accounting of all banking transactions from June 1, 1983 to July 31, 1987. My account is # 9-083-7. Thank you.

We must determine whether a genuine issue of material fact exists and whether the trial court correctly applied SDCL 57A-4-406(4). Waddell, 471 N.W.2d at 593. We think a fair reading of Edmundson's letter put Bank on notice that Edmundson wanted an accounting of her checking account # 9-083-7. There is no mention, however, of Braa, any endorsement or unauthorized signature, or Edmundson's CD. Nothing in Edmundson's letter mentions that the CD had been negotiated, much less negotiated with a forged endorsement. Accordingly, we find nothing in this letter which put Bank on the notice required by SDCL 57A-4-406(4) that Braa's unauthorized signature or endorsement appeared on Edmundson's CD.

Lamp asserts that Bank teller Mary Schreurs (Schreurs) negotiated the CD for Braa and was aware of the unauthorized endorsement and, therefore, Bank was on notice. Schreurs stated in her deposition that she did not recall whether Braa endorsed the CD in her presence, only that Braa presented the CD for payment. Schreurs also stated that while she was unaware of any actual authority Edmundson had given Braa to negotiate the CD, she perceived no problem since the money was being deposited into Edmundson's checking account.

The fact that Schreurs claims in her deposition that "she did not recall whether Braa endorsed the CD in her presence," is immaterial because it was a forgery, whether it was endorsed in or out of her presence. Carol Braa signed her mother's name to the CD and converted the funds to her own use. 1 The Bank has the mother's signature on file and is, therefore, bound by it. At the very least, the evidence raises a genuine issue of material fact whether the Bank had notice pursuant to SDCL 57A-4-406(4). Id. Therefore, the trial court erred in its conclusion that no genuine issue of material fact existed concerning the plaintiff's right to assert an action against Bank. Koeniguer, 422 N.W.2d at 602-03.

Lamp and Milton also argue they gave Bank notice of Braa's unauthorized endorsement through conversations they had with Bank officials in the summer of 1988. The record reflects that neither Lamp nor Milton placed a date on these conversations during their depositions, but instead submitted an affidavit in resistance to Bank's motion for summary judgment placing a date on these conversations of "prior to August 1, 1988." The trial court concluded that the statements in the affidavit contradicted the deposition testimony of Lamp and Milton and held that this affidavit did not raise a genuine issue of fact. We disagree.

The record reflects that in Lamp's deposition she stated she learned of the CD cashed by Braa "sometime in 1988." She also stated she had spoken with Hammer several times, remembering specific discussions about the status of the checking account, although never about the CD.

The record also reveals that Milton stated in his deposition that he was present during one of Lamp's conversations with Hammer and that Hammer had said Bank made a mistake. 2 Milton did not ask Hammer what the mistake was and the CD was not specifically mentioned in this conversation. The Bank claims that this deposition testimony is insufficient to give the required notice because neither Lamp nor Milton specified that the mistake was the forgery or the unauthorized endorsement. For summary judgment purposes, the Bank cannot pretend not to know what this mistake was. Even if the Bank could, ostrich-like, pretend not to know the specifics of the mistake, knowing of the "mistake" itself was enough to put the bank on notice of the claim.

On summary judgment, the evidence must be viewed in the light most favorable to the nonmoving party. That means every reasonable inference. All reasonable doubts...

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