No. 86-195
I N THE SUPREME COURT OF THE STATE OF MONTANA
1987
F I R S T NATIONAL BANK I N EUREKA, a
N a t i o n a l R a n k i n g corp.,
P l a i n t i f f and R e s p o n d e n t ,
-vs-
MARY G I L E S ,
D e f e n d a n t and A p p e l l a n t .
APPEAL FROM: D i s t r i c t C o u r t of t h e N i n e t e e n t h J u d i c i a l D i s t r i c t ,
I n and f o r t h e C o u n t y of L i n c o l n ,
T h e H o n o r a b l e R o b e r t M. H o l t e r , Judge p r e s i d . i n g .
COUNSEL OF RECORD:
For Appellant:
K e l l e r & G e r m a n ; A n n G e r m a n , Tlibby, Montana
F o r Respondent:
David Harman, L i b b y , Montana
S u b m i t t e d on B r i e f s : Nov. 13, 1986
Decided: March 4 , 1 9 8 7
-
Clerk
Mr. Justice John C. Sheehy delivered the Opinion. of the
Court.
Mary Giles appeals a decision by the District Court of
the Nineteenth Judicial District, Lincoln County, granting
plaintiff-respondent First National Bank in Eureka's motion
for summary judgment.
The issue on appeal is whether the District Court
properly granted the bank's motion for summary judgment.
In February, 1985, plaintiff First National Bank in
Eureka (hereafter bank) filed. a complaint against Mary Giles
for "forgery and misrepresentation." The alleged forgery
involved four Veterans' Administration disability checks made
payable to Mary's then-husband James Giles. The checks were
mailed to the Giles' home in Libby in September, October,
November, and December, 1982. James Giles was incarcerated
in Montana State Prison during this period. On receipt of
each of the checks, Mary took them to the Eureka bank to
cash. In each instance, the bank personnel made no objection
when she endorsed the checks by signing both her husband's
name and her own. Her name appears below her husband's on
the endorsed checks.
Mary Giles claims she had authority from James to cash
the checks to support herself and their children. James
claims he was unaware that he had been awarded VA benefits.
Yet, while in prison, James wrote the VA notifying them that
Mary was improperly receiving his benefits, and asserted that
she was using them without his authorization. The record is
not clear as to who made the initial application for the
benefits.
On notification from James, the VA contacted the
Treasury Department, and it, in turn, requested reimbursement
from the bank. The bank voluntarily reimbursed the Treasury
Department for the face value of the checks plus accrued
interest. The bank then filed the present action against
Mary Giles alleging that she had no authority to cash the
checks or use James' name as endorser. Based on these facts,
the bank moved for summary judgment. The District Court
granted the bank's motion and the bank satisfied the judgment
in a sheriff's sale. The bank moved to dismiss this appeal
on the grounds of mootness, however, we denied that motion
and this appeal continued. First National Bank of Eureka v.
Giles (Mont. 1986), - P.2d , 43 St.Rep. 1326.
It is important to note that on being sued by the bank,
Mary Giles counterclaimed for breach of the fiduciary
relationship. She also filed a third-party complaint against
James for damages incurred as a result of his claim that she
cashed his checks without authorization.
The issue in this case is whether summary judgment was
properly granted. Rule 56(c), M.R.Civ.P., provides that
summary judgment is proper if the pleadings, depositions,
answers to interrogatories and admissions on file show that
there is no genuine issue as to any material fact and that
the moving party is entitled to judgment as a matter of law.
Mayer Brothers v. Daniel Richard Jewelers, Inc. (Mont. 19861,
,
- P.2d - 43 St.Rep. 1821. The party moving for summary
judgment has the burden of showing a complete absence of
genuine issue as to all facts deemed material in light of the
substantive principles that entitle that party to a judgment
as a matter of law. Cereck v. Albertson's, Inc. (1981), 195
Mont. 409, 637 P. 2d 509 (and cases cited therein) . All
reasonable inferences that may be drawn from the offered
proof are to be drawn in favor of the party opposing the
summary judgment. Cereck, supra; Reaves v. Reinbold (Mont.
1980), 615 P.2d 896, 37 St.Rep. 1500.
The problem we confront is whether genuine issues of
material fact exist. In turn, determining the materiality of
any issue of fact depends on the applicable statutes, which
are, in this case, Montana's Uniform Commercial Code's
chapter on commercial paper, 5 5 30-3-101, MCA, et seq. and 5
30-4-207, MCA.
Section 30-4-207, MCA, contains the warranties of a
customer and collecting bank on transfer or presentment of
items. Appellant bank contends that Mary was a "customer"
and as such under the law, she warranted that she had good
title to the check and was therefore liable for damages for
breach of that warranty. This argument fails, however,
because the record indicates Mary was not a "customer" of the
bank. Customer means any person having an account with a
bank or for whom a bank has agreed to collect items. Section
30-4-104 (1)(e), MCA. Section 30-4-207, states: "Each
customer ... ...
warrant to the payor bank [that] (a) he
has a good title to the item or is authorized to obtain
payment or acceptance on behalf of one who has good
title . . ." The motion granting summary judgment indicates
that Mary had no account with the bank, stating "Mary Giles
was not a depositor with the Plaintiff Bank and the bank was
unable to charge back the checks against her account." As
the other provisions of the definitional sections of S
30-4-104(1) (e) do not apply, its clear that Mary is not
liable under § 30-4-207. In other words, because she was not
a customer, she made no warranties to the bank when it cashed
the checks. If Mary did in fact cash the checks without
authorization (an issue of fact as yet unresolved) then at
most she entered a debtor-creditor relationship with the
bank. The provisions of 5 30-4-207, are inapplicable.
Appellant bank next contends that the language of the
UCC on commercial paper speaks to Mary's liability as an
unauthorized signer. Section 30-3-404, MCA, provides that
"any unauthorized signature is wholly inoperative as that of
the person whose name is signed unless he ratifies it or is
precluded from denying it; but it operates as the signature
of the unauthorized signer in favor of any person who in good
faith pays the instrument or takes it for value." The bank
ties in Mary's status as (they contend) an unauthorized
signer (and an imposter under 30-3-405, MCA) with §
30-3-414, MCA, which requires an endorser to pay instruments
on dishonor.
We reject the leap of logic made by both the bank and
the trial court. There is no evidence in the record
indicating in one way or another that Mary acted without
authority. The question of whether she was an authorized or
unauthorized endorser must be established before any
conclusions can be drawn regarding her liability on the four
checks.
The District Court judge's legal analysis of the present
issue states:
10 AmJur 2d, page 573, contains the statement that
recovery may be had from those who do not have
title to an instrument. And in the same volume at
page 602, is a general discussion of the right of
the bank to recover money paid to an endorser of
checks.
This summary judgment does not deal with rights and
liabilities existing between Mary Giles and James
Giles.
The District Court assumed, without any evidence in the
record, that Mary did not have authority and at the same time
stated that it has not dealt with the rights and liabilities
between Mary and James. These are wholly inconsistent
statements.
The determinative factor in this litigation is whether
Mary acted with authority. This factor is the foundational
element for any claim the bank has, for if Mary had authority
to cash the checks, then the bank's claim is against the VA
or James, not Mary.
Clearly there are unresolved material factual issues
before this Court and summary judgment was improper.
Therefore, the summary judgment is reversed and the case is
remanded for further proceedings in accordance with this
opinion.
Justice I;/
We Concur:
A