dissenting in part and concurring in part. I concur with the result reached by the majority as to the 10 checks without restrictive indorsements, totaling $9,229.18. I dissent from the result reached as to the 91 checks with restrictive indorsements, totaling $46,564.46.
Basically, I concur with the Court of Appeals opinion herein *620(Cairo Cooperative Exchange v. First Nat’l Bank of Cunningham, 4 Kan. App. 2d 458, 608 P.2d 1370 [1980]). I would affirm in toto the trial court’s entry of judgment in favor of the defendants. I feel, however, some additional comments are appropriate.
The majority opinion illustrates a problem all too frequently encountered when the Uniform Commercial Code is applied to the facts in particular cases. Before stating the problem, some background comments must be made. Prior to the enactment of the UCC, the law of commercial transactions was scattered over a number of particular subject areas. Attorneys were trained in the former law and felt comfortable with it. The applicable law was neatly categorized with such titles as “negotiable instruments law,” “warehouse receipts act,” “uniform stock transfer act,” etc. The codification of all the various categories into one voluminous and rather inscrutable act was a difficult adjustment. Even today an attorney often wanders through the Code searching for the applicable provision. Upon encountering an applicable provision, he hoists his discovery high with a cry of “Eureka!” and is satisfied the provision is the entire applicable law. Unless some other provision in the Code can be found that specifically and expressly modifies that particular provision, then the provision is all the law on the subject.
The danger in isolating a provision in the Code and considering it in a vacuum is apparent. The one provision controls the outcome of the litigation — irrespective of other general provisions of the Code or other applicable principles of law. Certainly, when a person places a restrictive indorsement on a check, directing the bank to deposit the check in the person’s bank account, it is an instruction to the bank to do just that. K.S.A. 84-3-206. Simple, common sense reaches that result, with or without a Code provision. But the Code does not state that failure to follow the instruction results in absolute liability to the bank in all circumstances.
Under the rationale of the majority opinion, if I take a check payable to me, with my restrictive “for deposit only” indorsement to the bank I regularly patronize, and advise the teller I have changed my mind and want cash, then I must be paid twice for my check if the bank follows my instructions. This is not and cannot be the law.
The UCC acknowledges variation by agreement in K.S.A. 84-1-102 as follows:
*621“(3) The effect of provisions of this act may be varied by agreement, except as otherwise provided in this act and except that the obligations of good faith, diligence, reasonableness and care prescribed by this act may not be disclaimed by agreement but the parties may by agreement determine the standards by which the performance of such obligations is to be measured if such standards are not manifestly unreasonable.
“(4) The presence in certain provisions of this act of the words ‘unless otherwise agreed’ or words of similar import does not imply that the effect of other provisions may not be varied by agreement under subsection (3).”
Other principles of law are made applicable to commercial transactions by K.S.A. 84-1-103, which provides:
“Unless displaced by the particular provisions of this act, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause shall supplement its provisions.”
Kansas has recognized that the law of principal and agent, estoppel, etc., supplements the Code. Service Iron Foundry, Inc. v. M. A. Bell Co., 2 Kan. App. 2d 662, 588 P.2d 463 (1978); Leaderbrand v. Central State Bank of Wichita, 202 Kan. 450, 453, 450 P.2d 1 (1969); and Meador v. Ranchmart State Bank, 213 Kan. 372, 517 P.2d 123 (1973).
The trial court made the following findings of fact which are unchallenged on appeal:
“3. That plaintiff, thru the Cunningham branch, at all times pertinent to this suit was a customer of defendant and has maintained a checking account with defendant, No. 00-134-1, and regularly deposited funds with defendant and withdrew the same. That shortly after K. C. Jones became manager of the Cunningham branch, a bank signature card was signed by K. C. Jones, authorized by the Co-op general manager, and placed in the files of the bank. K. C. Jones was the only authorized signature on the card and was the only person signing checks on the account during the time in question in this suit. There was no requirement or arrangement for a co-signature. The signature card is the only written agreement between plaintiff and defendant and reads as follows:
“ ‘The corporation, and each and all of its officers, agents, and employees whose signatures appear hereon, hereby represent to said Bank that said corporation is duly and legally authorized to transact business, and that each of its officers, jigents, and employees whose signatures appear hereon are now duly authorized by said corporation to represent and act for said corporation in all its transactions with said Bank. Said corporation further agrees to promptly notify said bank in writing of any change in their authority to so act. ’
“7. Plaintiff never notified the defendant of any restrictions upon the authority *622of K. C. Jones to act for the plaintiff in the plaintiff’s transactions with the defendant until after Jones was fired.
“8. The plaintiff never notified the bank that there was any restriction on the amount of cash that could be received from the plaintiff’s account by the branch manager.
“9. K. C. Jones had authority to write a check for cash on the corporate account and obtain cash for the check.
“10. In the mind of the community in Cunningham, K. C. Jones was the cooperative in Cunningham, and had authority to transact all business for the Cunningham branch and was authorized to do anything but embezzle.”
“12. That neither the defendant nor any of its officers or employees had actual knowledge of the alleged scheme of K. C. Jones to defraud plaintiff.” (Emphasis added.)
These facts amply support judgment for the defendants under the applicable laws of estoppel and principal and agent.
Additionally, as noted by the Court of Appeals in the Cairo Cooperative Exchange case, 4 Kan. App. 2d at 467-468:
“It is to be borne in mind that none of the checks here involved contained alterations or omissions sufficient to alert bank personnel to anything out of the ordinary. As far as defendant was concerned, it was the drawer of the check who stood before the teller’s window and demanded payment in cash. There is nothing in this record to indicate anything other than good faith in the transactions on the part of defendant. Nor is there anything in the record to indicate, or is it even alleged, that defendant’s transactions with plaintiff as conducted by its agent were a departure from reasonable commercial standards of defendant’s business. Moreover, any failure of defendant to exercise ordinary care in handling the various items in question is offset by plaintiff’s own negligence, as previously discussed. Cf. Hanover Ins. Companies v. Brotherhood State Bank, 482 F. Supp. 501 (D. Kan. 1979).”
The facts of this case are readily distinguishable from the three cases relied on by the majority.
Underpinning v. Chase, 46 N.Y.2d 459, 414 N.Y.S.2d 298, 386 N.E.2d 1319 (1979), involves restrictive indorsements on corporation checks, but the checks were prepared by an underling, signed by an innocent officer and cashed at the bank by the underling under highly suspicious circumstances. I agree with the result reached.
C. S. Bowen Co. v. Maryland Nat’l Bank, 36 Md. App. 26, 36, 373 A.2d 30 (1977), involves an embezzling bookkeeper who had corporation checks with restrictive indorsements deposited in her own checking account. The bank’s gross negligence was clear. I agree with the result.
*623Kraftsman Container v. United Ctys. Trust Co., 169 N.J. Super. 488, 404 A.2d 1288 (1979), does not involve restrictive indorsements, although it does have an embezzling bookkeeper-treasurer and checks made out to fictitious payees. The court held that simple negligence on the part of the bank does not affect the operation of the UCC provision deeming effective indorsements by anyone in the name of a fictitious payee, but bad faith bars the bank from invoking such provision to defeat the customer’s claim. Additionally, the court held that bad faith, such as to preclude the bank from invoking the UCC provision deeming effective indorsement by anyone in the name of a fictitious payee to bar customer’s claim, may be evidenced by consistent failure by the bank to monitor and investigate a series of irregular transactions, and in such case effective indorsements do not relieve the bank from liability if there is proof of course of dealing so irregular in nature that the bank is shown to have violated its own policies and to have failed to act according to the standard of honesty-in-fact required under the Code.
I would affirm the trial court and the Court of Appeals for reasons expressed herein and in the opinion of the Court of Appeals.
Prager, J., joins the foregoing dissenting and concurring opinion.