Swiss Baco Skyline Logging, Inc. v. Haliewicz, 1868-II

• Decision Date: 07 July 1977
• Docket Number: No. 1868-II,1868-II
• Citation: 567 P.2d 1141,18 Wn.App. 21
• Parties: , 22 UCC Rep.Serv. 441 SWISS BACO SKYLINE LOGGING, INC., a Washington Corporation, Appellant, v. Emil HALIEWICZ and Jane Doe Haliewicz, William Bellm and Jane Doe Bellm, d/b/a General Log and Timber Company, Bank of California, a National Banking Corp., and Washington Mutual Savings Bank, Respondents.
• Court: Washington Court of Appeals

Page 21

18 Wn.App. 21

567 P.2d 1141, 22 UCC Rep.Serv. 441

SWISS BACO SKYLINE LOGGING, INC., a Washington Corporation, Appellant, v. Emil HALIEWICZ and Jane Doe Haliewicz, William Bellm and Jane Doe Bellm, d/b/a General Log and Timber Company, Bank of California, a National Banking Corp., and Washington Mutual Savings Bank, Respondents.

No. 1868-II.

Court of Appeals of Washington, Division 2.

July 7, 1977.

Jerome L. Buzzard, Buzzard & Glenn, P. S., Olympia, for appellant.

Fred D. Gentry, Olympia, Philip Williams, Seattle, Charles Nomellini, Foster, Pepper & Riviera, James A. Smith, Jr., Bogle & Gates, Delbert Miller, Seattle, for respondents.

PETRIE, Chief Judge.

This is a dispute over proceeds from the sale of two federal timber contracts once owned by the plaintiff, Swiss Baco Skyline Logging, Inc. The complaint alleged that plaintiff's former president, Emil Haliewicz, and one William Bellm d/b/a General Log and Timber Company, acted fraudulently and without authority in selling the two timber contracts and in converting the proceeds to their own use. More pertinent to this appeal are plaintiff's further allegations that (1) the Bank of California, N.A., negligently deposited and subsequently disbursed the proceeds of the sale, and (2) the Washington Mutual Savings Bank negligently honored checks representative of a portion of those proceeds.

After extensive discovery, briefing and oral argument, the plaintiff and the two defendant banks moved for summary judgment. The trial court entered summary judgment orders in favor of the Bank of California and Washington Mutual, dismissed with prejudice plaintiff's claims against both banks, and, pursuant to CR 54(b), designated those orders as final judgments. Swiss Baco appeals from these judgments. We affirm the judgment entered in favor of the Bank of California, and we partially affirm and partially reverse the judgment entered in favor of Washington Mutual Savings Bank.

The determinative facts are not seriously in dispute. However, the parties do not agree on the legal conclusions which flow from those facts.

In April and August of 1973, Swiss Baco, through its then president, Emil Haliewicz, purchased two United States Forest Service timber contracts, known respectively as the Calasit and Sitkum contracts. On October 31, 1973, Haliewicz resigned as plaintiff's president but continued to negotiate for the sale of the two timber contracts. After his resignation as president, and pursuant to a written agency agreement, Haliewicz was expressly authorizied to continue negotiating for the sale of the Calasit contract. Swiss Baco contends, however, that it was unaware of Haliewicz's continuing efforts concerning the Sitkum contract until just prior to commencing this lawsuit.

In the course of his negotiations, Haliewicz came into contact with William Bellm, principal of General Log and Timber Co. In December of 1973, Bellm took primary responsibility as broker in the proposed sale of the two timber contracts to a Portland organization known as West Coast Orient Timber Co. The parties' negotiations culminated in a sales agreement under the terms of which West Coast Orient agreed to pay a cash advance of $250,000 on the Calasit contract and $85,000 on the Sitkum contract. ¹

In order to complete the sale, a "third party agreement" had to be executed and filed with the United States Forest Service in which West Coast Orient agreed to assume Swiss Baco's contract obligations. Before the Forest Service would accept this agreement, it was necessary that Swiss Baco certify that the party representing it was actually president at the time of certification. The secretary of Swiss Baco supplied the needed authorization even though he knew that Haliewicz had resigned as president almost 2 months earlier.

After the preliminary negotiations were completed, West Coast Orient proceeded to transfer the cash advance in accordance with instructions from Bellm and Haliewicz. The negotiating parties agreed that West Coast Orient would have its bank, United States National of Oregon, "wire" the funds to Bellm's Seattle bank, the Bank of California. Bellm, who had been an established customer at the Seattle branch of the Bank of California, opened a new account for the sole purpose of receiving the contract sales proceeds. This account bore the name "General Log and Timber Co." and was numbered "04 01972-5." Bellm instructed West Coast Orient's accounting department to wire the cash advance to this account.

United States National wired the appropriate sums to the San Francisco branch of the Bank of California. The terms of that communication have not been made a part of the record, but we do know that the funds were subsequently transferred from San Francisco to Bellm's Seattle account pursuant to the following interbranch credit wire:

1177 WE CREDIT YOU 348,000,000 ATTN ROBERT JASPER FOR ACCT GENERAL LOG AND TIMBER CO AND SWISS BACO SKYLINE LOGGING A/C N BR 004 01972 5 (sic ) BY ORDER WEST COAST ORIENT AND THEIR INTERSTATE AND GOING BR REMTD BY U S N/B PORT VALUE TODAY.

The message concluded with the notation:

CREDIT 04-01972-5

OR GENERAL LOG AND TIMBER CO

PAY 615 W LEE

SEATTLE WA xxxxxxx 98119 On the day that the Seattle branch of the Bank of California received this credit wire, Bellm and Haliewicz went to the bank's office, and Bellm introduced Haliewicz to Robert Jasper, a bank officer, as the owner of Swiss Baco. Bellm and Haliewicz thereupon instructed Mr. Jasper to disburse a portion of the funds in the form of cashier's checks. Pursuant to those instructions, checks were issued in the following manner:

1. Check No. 04 39339, Remitter "General Log and Timber Co." payable to the order of "Emil Haliewicz, Swiss Baco Skyline Logging, Inc." in the amount of $48,000.00, dated December 28, 1973.

2. Check No. 04 39352, Remitter "General Log and Timber Co." payable to the order of Emil Haliewicz" in the amount of $80,000.00, dated December 28, 1973.

3. Check No. 04 39357, Remitter "General Log and Timber Co." payable to the order of "Emil Haliewicz, Swiss Baco Skyline Logging, Inc." in the amount of $120,000.00, dated December 28, 1973.

4. Check No. 04 39341, Remitter "General Log and Timber Co." payable to the order of "Joe A. Tudor" in the amount of $9,000.00 dated December 28, 1973.

5. Check No. 04 39340, Remitter "General Log and Timber Co." payable to the order of "Joe A. Tudor" in the amount of $12,500.00 dated December 28, 1973.

Upon receipt of these checks, Haliewicz drove to the Olympia branch of Washington Mutual Savings Bank, where he maintained a personal savings account. He presented check No. 39339 to a teller and requested that $40,000 be deposited to his savings account, $2,000 be returned to him in cash and the remaining $6,000 be exchanged for a draft made payable to Seattle-First National Bank. He endorsed the check by printing the words "Swiss Baco Skyline Logg. Inc." on the reverse side and signing his name below that. The teller, who knew Mr. Haliewicz, consulted with the bank manager before taking the check, and she was instructed "to call the Bank of California." She called "for a check verification" and was informed by a Bank of California employee that, of course they would honor their own cashier's check. The teller thereupon took the check and applied the funds pursuant to Haliewicz's request. She did not question Haliewicz or the Bank of California regarding Haliewicz's authority to cash this check.

Check No. 39352 was kept by Haliewicz and later converted to bank checks which were placed in a safe deposit box. Check No. 39357, made payable to "Emil Haliewicz, Swiss Baco Skyline Logging, Inc.", was endorsed "Emil Haliewicz" and delivered to the then president of Swiss Baco, Lazart Wracsaricht. He, in turn, stamped the check "For deposit only to the account of: Swiss Baco Skyline Logging, Inc.", placed his signature below and deposited it in Swiss Baco's Seattle-First National Bank account. The remaining two checks were delivered to another party from whom Haliewicz had allegedly borrowed funds used to pay the Sitkum contract surety bond.

On January 24, 1974, Haliewicz returned home from a trip abroad and found a United States Forest Service check in the sum of.$19,000 made payable to the order of "Swiss Baco Skyline, 2416 Holly Lane, Olympia, Wa 98501." This check represented a refund of the surety deposit required on the Sitkum contract. It bore Haliewicz's home address because that continued to be the registered corporate office of Swiss Baco even though Haliewicz had resigned as president. Haliewicz took this check to the Olympia branch of Washington Mutual and purchased a.$19,000 certificate of deposit in his own name. He endorsed the check "Swiss Baco Skyline" on the reverse side and signed his name.

On appeal to this court, Swiss Baco initially contends that the Bank of California owed a duty to the plaintiff to exercise due care in the deposit and disbursement of the contract proceeds forwarded to it and, by breaching that duty, is subject to liability for negligence. ² We conclude that, under the circumstances of this case, the trial court was correct in holding that the Bank of California owed no duty to Swiss Baco.

Absent a statutory or common-law rule which imposes a duty upon the defendant to refrain from the complained of conduct and which is designed to protect the plaintiff against harm of the same general character, an action in negligence will not lie. See Rikstad v. Holmberg, 76 Wash.2d 265, 456 P.2d 355 (1969). Swiss Baco contends that the Bank of California owed it a duty because it was a "customer" of the bank. A bank does owe a duty to its " customers" to use due care in the issuance and payment of checks on customers' accounts. RCW 62A.4-401, 4-402. Swiss Baco, however, was not a "customer" of the Bank of California, because it did not have an account with the defendant bank nor did the Bank of...