Levy Baldante Finney & Rubenstein v. Wells Fargo

J-A22035-17
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
LEVY BALDANTE FINNEY & : IN THE SUPERIOR COURT OF
RUBENSTEIN, P.C. : PENNSYLVANIA
:
Appellant :
:
:
v. :
:
: No. 3241 EDA 2016
WELLS FARGO BANK, N.A. AND TD :
BANK, N.A. :
Appeal from the Order Entered September 14, 2016
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): 001575 June Term 2015
BEFORE: BOWES, J., LAZARUS, J., and PLATT*, J.
CONCURRING MEMORANDUM BY BOWES, J.: FILED FEBRUARY 14, 2018
I am constrained to concur in the result reached by my learned
colleagues. Herein, the record establishes that, although images of both the
fronts and backs of Appellant’s checks were available online for viewing by
Appellant’s controller, she did not examine them unless the statement and the
account could not be reconciled. On the one occasion when the bank rejected
Appellant’s check because the endorsement did not match the name of the
payee, the controller recognized the handwriting on the back of the check as
that of Mr. Cohen. Thus, there is record evidence that supports the trial
court’s finding that Appellant’s controller reasonably could have detected Mr.
Cohen’s unauthorized endorsements on the other checks had she examined
them. Since prompt detection and reporting could have averted successive
losses caused by the same wrongdoer, I can accept the result herein.
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* Retired Senior Judge assigned to the Superior Court.
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Nonetheless, I believe that in many cases it would be difficult, if not
impossible, for the customer to detect an improper or forged endorsement,
even with access to a copy of both the front and back of a check. In those
instances, the question whether the unauthorized endorsement or forgery
should reasonably have been discovered by the customer with the information
made available by the drawee bank would constitute a material issue of fact
that would preclude entry of summary judgment.
I write separately to express my consternation that Wells Fargo, the
depository bank in this case, did not conduct even a rudimentary scrutiny of
the checks deposited by Mr. Cohen in its ATMs (“automated teller machine”).
On twenty-nine occasions, Mr. Cohen utilized a Wells Fargo ATM to deposit
into his own Wells Fargo account checks payable to another, but which he
blatantly endorsed in his own name. The depository bank admitted that its
policy was not to compare the signature of the endorser to the name of the
payee for any check under $50,000 deposited in its ATMs. Yet, despite that
policy, the depository bank repeatedly warranted to the drawee, TD Bank, that
the special endorsements were signed by the payee. TD Bank relied upon
that warranty of presentment to debit Appellant’s account. There was no risk
to TD Bank in doing so because the depository bank must defend and
indemnify the drawee for any breach of its presentment warranties. The
drawee’s thirty-day notice requirement in its deposit contract with its
customer further reduced the exposure of the indemnitor to liability.
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Having been required on numerous occasions to produce identification
to a teller when cashing or depositing a check, it is disconcerting to this writer
to learn that at least one major bank had abandoned any pretense of ensuring
that ATM-deposited checks were similarly scrutinized. It is unclear from the
record whether the policy of not comparing the payee and the endorser on
any check less than a certain dollar amount deposited in an ATM is industry
wide. Had there been evidence adduced herein that TD Bank knew of Wells
Fargo’s policy, but debited Appellant’s accounts without further scrutiny, or
that TD Bank has a similar ATM policy, a plausible argument could be made
that TD Bank failed to exercise ordinary care in paying the item, and that its
failure substantially contributed to the loss.1 Absent ordinary care, 13 Pa.C.S.
§ 4406 provides for the allocation of the loss between the customer and the
bank that is asserting the preclusion based on the extent of their respective
failures to exercise ordinary care. Id. at § 4406(e). Although the Uniform
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1 Ordinary care is defined in Article 3 as
observance of reasonable commercial standards, prevailing in the
area in which the person is located, with respect to the business
in which the person is engaged. In the case of a bank that takes
an instrument for processing for collection or payment by
automated means, reasonable commercial standards do not
require the bank to examine the instrument if the failure to
examine does not violate the bank’s prescribed procedures and
the bank’s procedures do not vary unreasonably from general
banking usage not disapproved by this division or Division 4
(relating to bank deposits and collections).
13 Pa.C.S. § 3103.
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Commercial Code permits provisions such as § 4406 to be modified by
agreement, the agreement “cannot disclaim the responsibility of a bank for its
lack of good faith or failure to exercise ordinary care.” UCC 4-103(a); 13
Pa.C.S. § 4103; N.J.S.A. 12A:4-103. I submit that, to the extent a deposit
agreement operates to relieve the banks of liability for a lack of ordinary care,
it is unenforceable.
The banking industry is founded on trust. It is my belief that banks that
have failed to implement at least minimal safeguards against all improper or
forged endorsements or other alterations at ATMs, not just those involving
amounts in excess of $50,000, have failed to exercise ordinary care.
Furthermore, a deposit agreement that effectively shifts all responsibility to
the customer to detect and report fraud and forgeries, while concomitantly
reducing the time in which the customer must do so in order to preserve any
remedy, smacks of bad faith. In the proper case, I recommend that we
examine whether such banking practices and deposit agreements are contrary
to public policy.
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