Patterson Produce Co., Inc. v. First Nat. Bank of Florida

• Decision Date: 04 October 1985
• Docket Number: No. 84-1787,84-1787
• Citation: 475 So.2d 1368,10 Fla. L. Weekly 2292
• Parties: 10 Fla. L. Weekly 2292, 41 UCC Rep.Serv. 1369 PATTERSON PRODUCE COMPANY, INC., Appellant, v. FIRST NATIONAL BANK OF FLORIDA, formerly the First National Bank of Plant City, Appellee.
• Court: Florida District Court of Appeals

Page 1368

475 So.2d 1368

10 Fla. L. Weekly 2292, 41 UCC Rep.Serv. 1369

PATTERSON PRODUCE COMPANY, INC., Appellant, v. FIRST NATIONAL BANK OF FLORIDA, formerly the First National Bank of Plant City, Appellee.

No. 84-1787.

District Court of Appeal of Florida Second District.

Oct. 4, 1985.

Gary A. Gibbons and Dana G. Toole of Blain & Cone, P.A., Tampa, for appellant.

Charles S. White of Edwards, Sawyer & White, Plant City, for appellee.

HALL, Judge.

First National Bank filed suit against Patterson Produce Company for damages due to the company's default on two prommissory notes. Patterson Produce answered and filed a three-count counterclaim, count I of which was directed to the bank's alleged mishandling of certain deposits to the company's accounts. The trial court entered summary judgment in favor of the bank on the authority of section 674.406, Florida Statutes (1983), as to count I of the counterclaim. ¹ This appeal ensued.

The relevant facts reveal that Patterson Produce maintained a payroll account and corporate account with the bank. Richard H. Patterson, president of Patterson Produce, and Richard S. Patterson were the only persons authorized to sign on those accounts on behalf of Patterson Produce Company.

In November of 1981, Patterson Produce employed a bookkeeper, Rosa Sellers, whose responsibilities included making deposits to the company's corporate and payroll accounts at the bank. On at least seven occasions between November of 1981 and April of 1982, Ms. Sellers deposited checks received by Patterson Produce from its customer into the company's accounts at the bank. Although these checks had been intended for deposit only (indeed, some of the checks had been restrictively designated to that effect), in each transaction the bank allowed Ms. Sellers to deduct some cash from the total amount of the deposit. As to the checks containing the designation, the bank allowed Ms. Sellers to strike through and cancel it. Ms. Sellers then proceeded to embezzle the money.

Patterson Produce was unaware of Ms. Sellers' conduct. The statements sent to Patterson Produce during this period of time contained copies of the deposit slips showing the deducted amounts. The statements did not include the deposited checks as they had been returned to the company's customers, the drawers of the checks.

At the hearing on the motion for summary judgment, the bank argued that section 674.406(4) requires the bank customer to discover and report to the bank an unauthorized signature or any alteration on the face or back of an item within one year of the time that the bank statements and items are made available to the customer. The trial court apparently adopted this argument in granting the summary judgment, notwithstanding the existence of an unresolved question of fact as to when the bank first received notice of the unauthorized withdrawals.

The sole issue on appeal is whether the trial court correctly applied the one-year limitation of section 674.406(4) to the instant cause. Having examined the language of the statute and the case law interpreting it, we conclude the legislature intended the one-year limitation of section 674.406(4) to deal exclusively with the subject of forgeries or unauthorized signatures upon checks or other instruments drawn against the customer's account as well as the alteration of such checks or instruments. ² See 19B Fla.Stat.Anno. 446, n. 4 (1983); Ossip-Harris Insurance, Inc. v. Barnett Bank, 428 So.2d 363 (Fla. 3d DCA 1983); Space Distributors, Inc....