FIRST BANK & TRUST COMPANY OF BOCA RATON, NATIONAL ASSOCIATION, APPELLANT,
v.
COUNTY NATIONAL BANK OF NORTH MIAMI BEACH AND DONALD M. HILL, APPELLEES
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First Bank sought to compel County National Bank to honor its endorsement guarantee on two checks totaling $5,000 that were fraudulently endorsed as payable to a non-existent corporation. The court reversed the lower court's judgment and held that the endorsing bank is liable to the drawee bank that relied upon the endorsement under Florida's Uniform Commercial Code provisions.
The endorsing bank is liable to the drawee bank. County National Bank breached its warranty under Florida Statutes §§ 673.3-417(2)(b) and 674.4-207(2)(b) and (3) by guaranteeing all prior endorsements when, in fact, the endorsements were not genuine or authorized, and the drawee bank that relied on the guarantee is entitled to recover damages.
[1] An endorsing bank is liable to a drawee bank that relies upon the endorsement.
[2] A bank that transfers an item for consideration warrants to the transferee or subsequent collecting bank that all signatures on the item are genuine or authorized.
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Join FLexlaw to unlock all legal intelligence“Unless they otherwise agree, indorsers are liable to one another in the order in which they indorse, which is presumed to be the order in which their signatures appear on the instrument.”
Establishes the statutory basis for indorser liability under Florida's UCC
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Join FLexlaw to unlock all legal intelligenceDonald Hill, a depositor of First Bank, wrote two checks payable to "Firebird International, Inc.," a non-existent corporate entity. The checks were f…
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Appellant plaintiff seeks review of a final judgment rendered in favor of appellee defendant in a suit to compel appellee to honor certain endorsement guarantees. We reverse.
A Mr. Donald Hill, a depositor of appellant, wrote two checks1 on his account to “Firebird International, Inc.”, and the checks were delivered to the individual intended. No such corporate entity existed. Nonetheless, the checks were endorsed by one Bill Johnson as president of Fire-bird International and Firebird International, Inc. and both checks were made payable to the account of a Mr. Charles Moskowitz in the County National Bank of North Miami Beach, appellee herein. County National then endorsed the checks by stamping thereon the following:
"PAY TO THE ORDER OF ANY BANK, BANKER OR TRUST CO., All Prior Endorsements Guaranteed
-“April 7, 1969,
"63-724 631 COUNTY NATIONAL BANK OF NORTH MIAMI BEACH 63-724 631"
[Emphasis supplied.]
Appellant, relying on said endorsement, duly honored the checks. A few months thereafter Hill brought suit in the Circuit Court of Palm Beach County against appellant alleging an improper payment by the drawee to a fictitious entity since no corporate status existed for Firebird International, the payee. That suit resulted in a judgment rendered in favor of Hill for $5,000.00, and is the basis claimed by appellant as its damages herein.2
Upon careful consideration of the record, briefs and arguments of counsel, we are of the opinion that the trial judge erred, as a matter of law, in not finding that an endorsing bank is liable to *517a drawee bank relying upon that endorsement. Fla.Stat. § 673.3-414(2), F.S.A. states:
“Unless they otherwise agree, indorsers are liable to one another in the order in which they indorse, which is presumed to be the order in which their signatures appear on the instrument.”
Moreover, any person, customer or collecting bank transferring such an item to another, who has received consideration therefor warrants to the transferree or subsequent collecting bank that all signatures therein are genuine or authorized. See: Fla.Stat. §§ 673.3-417(2)(b), 674.4-207(2) (b) and (3). It was shown in the case sub judice that such warranty or guaranty from appellee to appellant was not met and as a result the appellant suffered damage. Under the foregoing statutes it clearly appears that the appellant was entitled to recover judgment from appellee. Accordingly, the final judgment herein appealed is reversed with directions for the trial court to enter judgment in accord with this opinion and to dispose of the third party complaint still pending before it in this cause.
Reversed and remanded with directions.