Bank IV Olathe v. Capitol Fed'l Savings & Loan Ass'n

Abbott, J.,

concurring and dissenting: I have no quarrel with the law or reasoning of the majority except as set forth in this dissent. I would point out that most of the authority cited by the majority deals with checks. Clearly, a bank could not function if, in check transactions, the bank was required to do more than the majority opinion requires.

*557My dissent is simple. In my opinion, the trial judge’s grant of summary judgment was premature because I would adopt an additional requirement: If a transaction dependent upon a durable power of attorney is more than a routine transaction and if an officer of the bank is involved directly and has actual or constructive knowledge leading a reasonable person to suspect funds are about to be misappropriated, then the bank has a duty either to inquire into the circumstances before it pays out the money or to pay the funds out in such a manner that will protect the depositor. See Hubbard v. Home Fed’l Savings & Loan Ass’n, 10 Kan. App. 2d 547, 557, 704 P.2d 399 (1985); Renzi v. Aleszczyk, 44 App. Div. 2d 648, 352 N.Y.S.2d 736 (1974).

My proposed standard raises a fact question of whether a reasonable person would find that Capitol Federal had actual or constructive knowledge funds were about to be misappropriated. I am aware the facts set forth in this dissent do not always correspond with the facts set forth by the trial judge or the majority; however, the record supports the discussion of facts that follows. Summary judgment was premature because, as will be illustrated, the facts are both material and conflicting.

Martha Flanders appeared at Capitol Federal on January 13, 1988, and 20 minutes later walked out with $135,791.34 in checks, some payable to Martha Flanders and some to Martha and her husband, James Flanders.

Mrs. Flanders was taken to the desk of John Denton and, when she explained what she wanted, he took her to Joseph Morley, an assistant vice president. Morley was not acquainted with Mrs. Flanders or her husband. In fact, Morley had never met the Flanders or Mrs. Flinn, the depositor.

Mrs. Flanders presented a durable power of attorney from Mrs. Flinn dated June 15, 1987. On its face, it was apparent the document had been “clipped” from the “Family Circle” magazine issue of June 1, 1987, and the blanks had been filled in. Although not relevant to my dissent, Mrs. Flinn signed the durable power of attorney without legal advice at a time when her treating physician testified she was incompetent. The document was notarized by the same woman who, after a grant of immunity, admitted she also had notarized Mrs. Flinn’s purported will, *558which was forged five days after Mrs. Flinn’s death and backdated to December 29, 1987.

Mrs. Flanders also had a handwritten letter signed by Mrs. Flinn, instructing that Mrs. Flinn’s niece and nephew, the Flanders, had her power of attorney and that Mrs. Flinn wished to cash five certificates of deposit that she identified by number. Mrs. Flanders wanted three of the certificates of deposit cashed and a check made payable to her personally. The remaining two certificates of deposit were to be cashed and the check made payable to both Mrs. Flanders and her husband. The five certificates of deposit totalled $135,791.34, and Mrs. Flanders forfeited $4,757.70 in accrued interest in order to cash the certificates of deposit.

Morley testified by deposition that the use of a power of attorney is “an unusual occurrence at most banks. You don’t see it that often. You want to pay attention to what you are doing.” In its brief and at oral argument, Capitol Federal stated that it averages 500 transactions involving agency or the power of attorney relationship each day. Capitol Federal’s statement, which is noted in the majority opinion, seems at odds with the deposition testimony of Morley, an assistant vice president of Capitol Federal.

All Morley did was check the signature on the durable power of attorney against the signature on the letter of instruction and the five signature cards, one signature card for each certificate of deposit. He then made out the checks. The entire procedure took less than 20 minutes.

Anyone giving the signatures even a cursory glance can see that Mrs. Flinn’s signatures on the early signature cards, dated 1973 and 1982, are clear, firm, and legible. Even the signatures on the cards signed in 1986 are clear, firm, and legible. The signature on the durable power of attorney was started twice. There is only one “hump” on the “M” in “Mrs.” and the word “Flinn” is not legible. The handwriting is weak and shaky. The signature on the handwritten letter of instruction (no one would contend the letter itself is in Mrs. Flinn’s handwriting) is shaky and meandering.

In summary, a complete stranger entered a financial institution and a bank officer, who had never seen that person before and *559who did not know the depositor, accepted a durable power of attorney that clearly shows on its face that it was clipped out of a magazine usually sold at a supermarket checkout stand. The bank then paid out a large sum of money to the holders of the power of attorney, after deducting $4,757.70 in forfeited accrued interest. The transaction was based on signatures that clearly showed a deteriorating depositor. To me, the above presents a question of fact whether a reasonable person would be put on notice that funds were about to be misappropriated.

Any inquiry could have prevented the loss. The financial institution also could have fully protected itself by drawing the checks in Mrs. Flinn’s name. I cannot agree with the majority’s view that, because Mrs. Flanders could have stolen the money later, Capitol Federal’s lack of due caution is irrelevant. If the Flanders had deposited the funds and then written checks to themselves, Capitol Federal’s duty would have ended and any negligence would be that of another institution. By not making the checks payable to Mrs. Flinn, Capitol Federal made the cashing of the checks simple. Had the checks been made payable to Mrs. Flinn, the theft might have been prevented or the funds recovered. In summary, Capitol Federal could have left Mrs. Flinn in the same position as before the transaction by making the checks for her money payable to her.

I would reverse and remand for trial.

Herd, J., joins the foregoing concurring and dissenting opinion.