Levy v. First Pennsylvania Bank N.A.
| Decision Date | 09 January 1985 |
| Citation | 338 Pa.Super. 73,487 A.2d 857 |
| Parties | , 40 UCC Rep.Serv. 184 Sidney LEVY and Frieda Levy, as Assignees of Sid-Fried Enterprises, Inc., and Sidney Levy and Frieda Levy, Trustees of Novelty Printing Co. Profit Sharing Trust v. FIRST PENNSYLVANIA BANK N.A., Appellant v. Robert V. BOLGER, II, Bennett G. Picker, Arthur W. Hankin, Carl S. Tannenbaum and Steven R. Waxman, Individually and t/a Bolger & Picker, a partnership, and Richard S. Robinson. |
| Court | Pennsylvania Superior Court |
J. Dennis Faucher, Philadelphia, for appellant.
Richard M. Jordan, Philadelphia, for appellees.
Before McEWEN, OLSZEWSKI and HOFFMAN, JJ.
First Pennsylvania Bank appeals the dismissal of its exceptions to the Opinion of Judge Lois G. Forer, awarding appellee $222,776.87 with interest. The underlying action is a suit for conversion of three checks paid to a person other than the owner.
The facts are simple. The Levys were clients of the law firm of Bolger & Picker. When they sold their business, Novelty Printing, in February, 1978, the Levys instructed Richard Robinson, a partner at Bolger & Picker, to open an account for them in the name of B & J Corp. 1 at a local brokerage firm. When the treasury bills purchased by the broker matured, Robinson was directed to deposit checks sent to him by the broker into the Levy's bank accounts at Girard Bank and Industrial Valley Bank.
Robinson received three checks in the sums of $75,000, $75,000 and $72,776.87 from the broker. Instead of depositing them in the Levy's bank accounts, he deposited them in his own personal account at First Pennsylvania. Robinson accomplished this by signing the back of the checks with the names of the payees, 2 B & J Corp. and Novelty Printing Company Profit Sharing Trust, and the notations "deposit to account No. 773-784-4". This was Robinson's personal account. He later withdrew the money and disposed of it. 3 When the scheme was discovered, the law firm's insurer paid to the Levys the amount of the checks. 4
The Levys then brought this action against First Pennsylvania for conversion. The bank joined Bolger & Picker and Robinson as co-defendants. 5 At a non-jury trial, the Levys were awarded $222,776.87 with interest from September 14, 1979, the date upon which the insurer reimbursed the Levys.
Here, the bank appeals the trial court's dismissal of its exceptions.
Appellant assigns a number of errors to the lower court's opinion; we address them seriatim. Appellant first argues that it cannot be held liable for making final payment on the instruments because Robinson's endorsements were not forgeries. The argument is rooted in the language of 13 Pa.C.S. § 3419 (Purdon's 1984 Pamphlet) 6, which states:
§ 3419. Conversion of instrument; innocent representative
(a) Acts constituting conversion. An instrument is converted when:
(1) a drawee to whom it is delivered for acceptance refuses to deliver it on demand;
(2) any person to whom it is delivered for payment refuses on demand either to pay or return it;
(3) it is paid on a forged instrument.
Appellant avers that the endorsement was not forged because Robinson had the authority to endorse the checks. If he did have the authority to endorse, appellant claims Robinson's writing of the payees' names constituted an endorsement in blank, and then the checks were properly payable to anyone under 13 Pa.C.S. § 3204. 7 What subsequently happened to the checks would be irrelevant to the bank's liability, in appellant's view.
The trial court found that Robinson's authority was limited to endorsing checks for deposit into the Levy's accounts at Girard and IVB. 8 It found that neither express nor implied authority to endorse in blank existed, and that the endorsements were unauthorized. Lower court opinion at 27.
Under Pennsylvania law, the issue of agency is for the finder of fact. Breslin by Breslin v. Ridarelli, 308 Pa.Super. 179, 454 A.2d 80 (1982). Here, the court, as finder of fact, concluded that Robinson had no authority to endorse the checks as he did. When a finding of fact is adequately supported by the record, we will not overrule the trial court. Spatz v. Nascone, 283 Pa.Super. 517, 424 A.2d 929 (1981). The record indicates that the Levys told Robinson to deposit the checks in their accounts. N.T. at 47.2-48.2. Accordingly, we do not disturb the court's finding. 9
The question remains as to whether an unauthorized endorsement is the same as a forged instrument under 13 Pa.C.S. § 3419. Although no court in the Commonwealth has held on this point, to our knowledge, other courts have held that "forgery" under UCC § 3-419 includes "unauthorized signature." 10 We conclude that an unauthorized signature is the same as a forgery for purposes of an action for conversion under 13 Pa.C.S. § 3419. The trial court properly found the bank liable for paying the checks to Robinson. 11
Appellant also argues that 7 P.S. § 6393 (Purdon's 1984-85 Supp.) shelters it from liability. Under this section of the Uniform Fiduciaries Act, a bank is relieved of the burden of inquiry when a fiduciary makes a deposit to his personal credit of checks payable to the principal. 12 The court below noted, however, that Robinson had no power to endorse the checks as he did, and the section relieves banks of liability only when the fiduciary has the power to endorse. Lower court opinion at 21. We agree with the lower court that 7 P.S. § 6393 does not shield the bank from the consequences of its acts. 13
The bank also maintains that the law firm should have been found liable for Robinson's acts, and, on that basis, the bank is entitled to contribution or indemnification from the law firm. The trial court found that the law firm was not liable under 59 Pa.C.S. §§ 321, 325 and 326 (Purdon's 1984-85 Supp.), and that no right of contribution or indemnification existed.
The law of indemnity states that when a person who, without active fault on his own part, has been compelled by reason of some legal obligation to pay damages occasioned by the negligence of another, he may recover from the person who is primarily liable. 14 Our Supreme Court, in Burbage v. Boiler Engineering & Supply Co., 433 Pa. 319, 249 A.2d 563 (1969), stated:
Secondary, as distinguished from primary liability, rests upon a fault that is imputed or constructive only, being based on some legal obligation between the parties or arising from some positive rule of statutory or common law ...
The bank argues that it is being required to pay damages, and that the loss is based on a positive rule of statutory law, § 3419. It argues that it was not primarily at fault, and that the Commonwealth's partnership statutes, 59 Pa.C.S. §§ 325, 326 and 327, impose liability on a partnership for wrongful acts of a partner. 15 The bank argues that the partnership statutes require the partnership, not the bank, to pay the loss.
The statutes in question would appear to impose liability on a partnership, and on the individuals comprising the partnership, without regard to fault when a partner causes a client's loss:
§ 325. Wrongful act of partner
Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the partnership, or with the authority of his co-partners, loss or injury is caused to that person, not being a partner in the partnership, or any penalty is incurred, the partnership is liable therefor to the same extent as the partner so acting or omitting to act.
§ 326. Breach of trust by partner
The partnership is bound to make good the loss:
(1) Where one partner, acting within the scope of his apparent authority, receives money or property of a third person and misapplies it.
(2) Where the partnership in the course of its business receives money or property of a third person, and the money or property so received is misapplied by any partner while it is in the custody of the partnership.
§ 327. Nature of liability of partner
All partners are liable:
(1) Jointly and severally, for everything chargeable to the partnership under section 325 () and section 326 ().
(2) Jointly for all other debts and obligations of the partnership; but any partner may enter into a separate obligation to perform a partnership contract.
59 Pa.C.S. § 325, 326 and 327 (Purdon's 1984-85 Supp.).
In our opinion, these are not statutes of strict liability. They are statutory causes of action derived from the respondeat superior theory of recovery. See First National Bank of Altoona v. Turchetta, 407 Pa. 511, 181 A.2d 285 (1962) (); Blackmon v. Hale, 1 Cal.3d 548, 83 Cal.Rptr. 194, 463 P.2d 418 (1970) (); Cook v. Brundidge, Fountain, Elliot and Churchill, 533 S.W.2d 751 (Texas 1976) (partnership liable). The statute appears to place the partnership in the position of an insurer, and guarantees that the innocent client will not bear the loss.
Therefore, the particular statutes at issue do not mean that the partnership has done a wrong when a partner does a wrong. It requires the partnership to reimburse the innocent client, and permits the partnership to recover its loss from the truly guilty party. The bank cannot use the Uniform Partnership Act to recover from the partnership for its own negligence. 16
Finally, appellant bank argues that the court below erred in awarding damages for delay at the rate of 10 percent. Appellant argues that 6 percent is appropriate, and that the court's determination was based incorrectly on the rate specified in Pa.R.Civ.P. 238, which applies to personal injury claims.
The rate of interest in damages for delay, as well as the decision as to its award, is in the discretion of the trial court. Sack v. Feinman, 495 Pa. 100, 432 A.2d 971 (1981). The court below found that damages...
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