Robbins v. First Federal Sav. Bank

• Decision Date: 19 October 1987
• Docket Number: No. 1073,1073
• Citation: 294 S.C. 219,363 S.E.2d 418
• Court: South Carolina Court of Appeals
• Parties: , 5 UCC Rep.Serv.2d 1420 Bert ROBBINS, Respondent-Appellant, v. FIRST FEDERAL SAVINGS BANK, Southern Bank & Trust Company, and The Citizens and Southern National Bank of South Carolina, Defendants, of whom Southern Bank and Trust Company is Appellant-Respondent. . Heard

Page 418

363 S.E.2d 418

294 S.C. 219, 5 UCC Rep.Serv.2d 1420

Bert ROBBINS, Respondent-Appellant, v. FIRST FEDERAL SAVINGS BANK, Southern Bank & Trust Company and The Citizens and Southern National Bank of South Carolina, Defendants of whom Southern Bank and Trust Company is Appellant-Respondent.

No. 1073.

Court of Appeals of South Carolina.

Heard Oct. 19, 1987.

Decided Dec. 14, 1987.

Edward W. Miller, of Miller & Paschal, Greenville, for appellant-respondent.

Earl R. Gatlin, of Hayes, Brunson & Gatlin, Rock Hill, for respondent-appellant.

SHAW, Judge.

Respondent-Appellant Bert Robbins (hereinafter Robbins) commenced this action against Southern Bank and Trust Company (hereinafter Southern) and two other banking institutions which were later removed from the case. Following a pretrial hearing, the trial judge denied Southern's motions to dismiss and to join parties, granted Robbins' motion for summary judgment and denied Robbins' motion to amend his complaint to seek prejudgment interest. We affirm in part and reverse in part.

This case arose out of the representation of Robbins and his wife by an attorney, John A. Marion, in a real estate matter. In the course of his representation of the Robbinses, Marion came into possession of three separate checks made out to either himself and Robbins or himself and Robbins' wife. Robbins brought this action against Southern alleging Marion forged his and his wife's names on the checks, deposited them in his trust account, and Southern paid on the forged endorsements thus converting the checks. Robbins also alleged he was assigned all of his wife's interest in these checks.

Southern contends the trial judge erred in granting Robbins' motion for summary judgment on the ground that a genuine issue of material fact exists. Specifically Southern argues there is a genuine issue of fact as to whether Marion had authority to endorse the Robbinses' names on the checks.

Summary judgment is proper where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Moss v. Porter Brothers, Inc., 292 S.C. 444, 357 S.E.2d 25 (Ct.App.1987). Southern admits, "It is undisputed that John A. Marion forged the Respondent's signature on the subject checks...." The liability of Southern is predicated on § 36-3-419(1)(c) of the South Carolina Code of Laws, 1976, which declares an instrument to be converted when it is paid on a forged endorsement. The South Carolina Reporter's Comments state this section codifies the common law rule as expressed in the leading case of Charleston Paint Co. v. Exchange Banking and Trust Co., 129 S.C. 290, 123 S.E. 830 (1943). There, it was held a bank would be liable to the true owner of a check where the bank paid on a forged instrument, regardless of whether or not the bank knew or had reason to know of the forgery.

Southern further argues the trial judge erred in denying its motion to dismiss based on the running of the Statute of Limitations as set out in § 36-4-406(4) South Carolina Code of Laws (1976). This section 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 indorsement is precluded from asserting against the bank such unauthorized signature or indorsement or such alteration.

It is clear from the record the Robbinses first discovered a conversion had occurred on March 17, 1982 when Marion notified them by letter. It is also clear this action was not filed against Southern until March 13, 1986. Southern thus argues the three year statute of limitations had already run. We disagree. Section 36-4-406(4) does not apply to this case. South Carolina Code of Laws (1976) Section 36-4-104(1)(e) defines "customer" as "any person having an account with a bank or for whom a bank has agreed to collect items...." No such relationship existed between the Robbinses and Southern and the Robbinses were therefore not customers under Section 36-4-406(4).

Southern next contends the trial judge erred in denying its motion to dismiss under South Carolina Code of Laws (1976) Section 36-3-419(3). This section provides:

... a representative, including a depositary or collecting bank, who has in good faith and in accordance with the reasonable commercial standards applicable to the business of such representative dealt with an instrument or its proceeds on behalf of one who was not the true owner is not liable in conversion or otherwise to the true owner beyond the amount of any proceeds remaining in his hands.

Southern's motion to dismiss does not specifically raise this section as a ground for dismissal. In arguing the motion, Southern argued the statute of limitations but failed to argue Section 36-3-419(3). Therefore, the issue is not properly before this court since this argument was not made to the circuit court. See Austin v. Conway Hospital, Inc., 292 S.C. 334, 356 S.E.2d 153 (Ct.App.1987).

Finally, Southern contends the trial judge erred in denying its motion to join the Client Security Fund (C.S.F.) and John A. Marion as necessary parties. Southern argues the C.S.F. made substantial payments to Robbins as a result of Marion's actions and since the C.S.F. has a subrogated interest in Robbins' claim, it is a necessary party to the action. Southern also contends, because it was Marion's culpable conduct which brought about the claims being made in this case, a complete adjudication could not be had without the joinder of Marion.

Under current South Carolina rules of civil procedure, one may be joined as a party in an action if, in his absence, complete relief cannot be accorded among those already parties or he claims an interest in the subject of the action and is so situated that disposition of the action in his absence may impair his ability to protect that interest or may subject those already parties to a substantial risk of incurring multiple or otherwise inconsistent obligations by reason of his claimed interest. S.C.R.C.P. Rule 19(a). When the issue of an absent party is raised, S.C.R.C.P. 19(a) directs the court to consider whether such absence affects the interests of the absent party or those already parties to the action. See H. Lightsey, J. Flanagan, South Carolina Civil Procedure 177 (1985).

Because the C.S.F. has a right to subrogation, its...