Seifert v. Seifert
| Decision Date | 19 November 1985 |
| Docket Number | No. 49208,49208 |
| Parties | 42 UCC Rep.Serv. 497 Janet Marie SEIFERT, Appellant, v. David R. SEIFERT, et al., Respondents. |
| Court | Missouri Court of Appeals |
Joan Marie Burger, St. Louis, for appellant.
Willard Dudley McCarter, Edward C. Vancil, Clayton, for respondents.
Garnishor, Janet Seifert, appeals from the trial court's order denying her request for execution and garnishment and her petition for declaratory and injunctive relief. Garnishor sought to garnish a certificate of deposit owned by her ex-husband, David Seifert. Garnishor alleged that the certificate of deposit was located in David Seifert's account at the United Missouri Bank of St. Louis, which was named as garnishee. The American Druggists' Insurance Company filed a petition to intervene, claiming superior rights in the certificate of deposit by virtue of a collateral agreement executed by David Seifert.
On appeal, garnishor argues that the trial court erred in: (1) applying a ten-year statute of limitations to a lost cashier's check; (2) failing to properly balance the equities in considering garnishor's petition for declaratory and injunctive relief; (3) finding that the American Druggists' Insurance Company (intervenor) had a perfected security interest in the certificate of deposit; (4) finding that David Seifert had validly pledged the certificate of deposit to intervenor; and (5) making certain findings of fact that were either not supported by any evidence or were against the weight of the evidence. Finding no error on any of these points, we affirm.
The relevant facts are largely undisputed. Garnishor married David Seifert in 1968. David Seifert suffered an industrial accident in 1972, and in 1979 he received $146,137.70 as the net proceeds of a lawsuit arising from that accident. On January 7, 1980, the garnishee bank issued him a cashier's check in the amount of $130,000.00. One week later, on January 14, he presented the cashier's check to the garnishee and received $15,000.00 in cash and a $115,000.00 cashier's check. He put the $115,000.00 check in an envelope and placed the envelope in his hip pocket. He then went to a local tavern and had a few drinks. Later that day he discovered that he had lost the envelope and the cashier's check.
The following morning, January 15, David Seifert went to the garnishee bank and gave notice that he had lost the cashier's check. He signed an affidavit stating that the check had been lost, stolen or destroyed, that it was not in the possession of any person having a lawful right or claim to it, and that he had no knowledge of its whereabouts. Garnishee thereupon issued him a duplicate cashier's check to replace the lost check, and prepared a debit memo stating: "Affidavit on file, waiting for indemnity bond." That same day, David Seifert presented the duplicate check to garnishee and received $5,000.00 in cash and a $110,000.00 cashier's check. Between January 15 and February 26, 1980, garnishee distributed an additional $10,000.00 in cash to him.
On February 26, 1980, David Seifert purchased from garnishee a certificate of deposit in the amount of $100,000.00. On that same date, he purchased a "lost securities bond" from intervenor. The bond provided that intervenor would indemnify garnishee in the event that the lost cashier's check was ever presented for payment. David Seifert thereupon transferred physical possession of the certificate of deposit to intervenor, and signed a collateral agreement providing that intervenor could hold the certificate of deposit as collateral for the bond.
On September 28, 1982, the St. Louis County Circuit Court entered a decree dissolving the marriage of Janet and David Seifert. The court held that the $146,137.70 that David Seifert received as a result of his industrial accident was marital property, including the $100,000.00 certificate of deposit. The court ordered that such property be divided equally between them.
Garnishor brought this action on February 7, 1983, to recover her one-half interest in the certificate of deposit, together with accrued interest. After a hearing, the trial court held that the certificate was not subject to garnishment, and thus denied the requested relief. Specifically, the trial court found that garnishee had properly required David Seifert to post security in the form of a lost securities bond after it issued him a duplicate cashier's check. The court further found that intervenor properly required David Seifert to post the certificate of deposit as collateral for the lost securities bond. The court found that the lost securities bond must continue in effect until the statute of limitations on the lost cashier's check has run, because until that time the garnishee would be subject to the risk of double liability if the lost cashier's check was found and presented for payment. The court then applied a ten-year statute of limitations (§ 516.110(1), RSMo 1978) to the cashier's check, thereby extending the limitations period until January 17, 1990. The court thus held that the lost securities bond must remain in force until January 17, 1990, and that the certificate of deposit--which presently serves as security for the bond--is not subject to garnishment because intervenor's security interest gives it superior rights in the certificate of deposit. Garnishor appeals from that decision.
Preliminarily, we note that this case was tried without a jury, and our scope of review is therefore controlled by Rule 73.01. We must sustain the trial court's order "unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law." Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).
In her first allegation of error, garnishor argues that the trial court erred in applying a ten-year statute of limitations to the lost cashier's check. Although the court's order did not explicitly set forth the applicable limitations period, the parties agree that the court applied § 516.110(1), RSMo 1978. That section provides that "[a]n action upon any writing ... for the payment of money" shall be commenced within ten years.
Garnishor contends that the "reasonable time" standard set forth in the Missouri Uniform Commercial Code (ch. 400, RSMo 1978) is the appropriate limitations period for a cashier's check. Section 400.3-503, RSMo 1978, provides that a party to a demand instrument may not be charged unless the instrument has been presented for acceptance within a reasonable time. 1 Garnishor cites several early cases predating the Uniform Commercial Code in which courts applied these presentment standards as limitations periods for cashier's checks and other negotiable instruments. See e.g., Smalley v. Queen City Bank, 94 S.W.2d 954 (Mo.App.1936). Similarly, garnishor notes that a person presenting a demand note instrument an unreasonable length of time after its issuance cannot be a holder in due course. 2 See, e.g., Franklin Bank v. St. Louis Car Co., 321 Mo. 199, 9 S.W.2d 901 (1928). Garnishor contends that a reasonable time has elapsed since garnishee issued the lost cashier's check, and thus the check is no longer properly payable.
Garnishor's argument fails, however, because the reasonable time provisions on which she relies have no relation to cashier's checks. A cashier's check is a unique instrument, differing in several important respects from an ordinary check. An ordinary check is a three-party instrument, involving the bank (as drawee), its customer (as drawer) and the payee; a cashier's check, on the other hand, is a two-party instrument, involving only the bank (as both drawer and drawee) and the payee. Although the Uniform Commercial Code does not contain any specific provisions relating to cashier's checks, 3 the Missouri Supreme Court has recognized the significance of the above distinction:
A cashier's check, unlike an ordinary check, is a check drawn by a bank on itself and is accepted by the mere act of its issuance.... Thus, when issued, it becomes the primary obligation of the bank (rather than the purchaser) to pay it from its own assets upon demand, and the purchaser has no authority to countermand a cashier's check because of fraud allegedly practiced on the purchaser by the payee.
State ex rel. Chan Siew Lai v. Powell, 536 S.W.2d 14, 16 (Mo. banc 1976). Given that a cashier's check is "accepted by the mere act of its issuance," presentment for acceptance is not necessary in order to charge the issuing bank. Cf. Burns v. Weber, 399 S.W.2d 446, 448 (Mo.App.1966); § 400.3-501, comment 4, V.A.M.S. The reasonable time provisions which garnishor argues should be applied in the instant case all relate to the time during which presentment for acceptance must be accomplished. Those provisions are, therefore, inapplicable to the instant case.
Garnishor's argument for the application of a reasonable time limitations period is also inconsistent with the purpose of a cashier's check.
The nature and usage of cashier's checks in the commercial world is such that public policy does not favor a rule that would permit stopping payment of them....
Chan Siew Lai, supra at 16, quoting National Newark & Essex Bank v. Giordano, 111 N.J.Super. 347, 268 A.2d 327 (1970). Allowing a bank to forsake its obligation on a cashier's check after a reasonable time has elapsed (which might be as little as thirty days) would diminish the cash-like quality of cashier's checks and defeat the purpose for which they were created. 4
Although public policy disfavors stopping payment on a cashier's check, this does not mean that such instruments should...
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