Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

تمرين 24

FACTS Hyatt Corporation hired Skyscraper Building Maintenance to perform maintenance work for Hyatt hotels in South Florida. Skyscraper entered into a loan agreement with J D Financial Corp. under which Hyatt was to make checks payable for maintenance services to Skyscraper and J D. Of the many checks issued by Hyatt to J D and Skyscraper, two were cashed by the Palm Beach National Bank but indorsed only by Skyscraper. They were made payable as follows:
1. Check No. 1-78671 for $22,531 payable to:
J D Financial Corp.
Skyscraper Building Maint
P.O. Box 610250
North Miami, Florida 33261-0250
2. Check No. 1-75723 for $21,107 payable to:
Skyscraper Building Maint
J D Financial Corp.
P.O. Box 610250
North Miami, Florida 33261-0250
J D filed a complaint against Skyscraper, Hyatt, and the bank. J D sought damages against Skyscraper under the loan agreement and against Hyatt and the bank for improper negotiation of the two checks. The bank, Hyatt, and J D all moved for summary judgment on the issue of whether the bank properly negotiated the checks. It is uncontested that the bank had a duty to negotiate the checks only on proper indorsement, and if it did not, it is liable.
The bank argued that the checks were payable to J D and Skyscraper alternatively, and thus the bank could properly negotiate the checks based upon the indorsement of either of the two payees. The bank further argued that the checks were drafted ambiguously as to whether they were payable alternatively or jointly, and thus the checks would be construed as a matter of law to be payable alternatively.
Hyatt's position was that the checks were not ambiguous, were payable jointly and not alternatively, and thus the checks could only be negotiated by indorsement of both of the payees. J D similarly argued that the checks were payable jointly. The trial court granted summary judgment for the bank. Hyatt and J D appealed.
DECISION The trial court's summary judgment is affirmed.
OPINION Levy, J. The issue on appeal is whether or not a check payable to J D Financial Corporation Skyscraper Building Maintenance (stacked payees) is payable jointly to both payees requiring the indorsement of both, or whether it is ambiguous regarding whether the check was drafted payable alternatively, so that the bank could negotiate the check when it was indorsed by only one of the two payees.
In 1990, Article 3 of the UCC was revised *** Revised UCC Section 3-110(d) *** states, ''If an instrument payable to two or more persons is ambiguous as to whether it is payable to the persons alternatively, the instrument is payable to the persons alternatively.'' ***
Turning to our jurisdiction, Florida has adopted the statutory revision to UCC 3-110 ***.
***
While it does appear that former [Article 3] would have required the checks in this case to be payable to and negotiable only by all of the payees listed, this is no longer the case … [Citation]. Under these facts, the court found that the check was unambiguous.
We conclude that based on the 1990 amendment to the Uniform Commercial Code, when a check lists two payees without the use of the word ''and'' or ''or'', the nature of the payee is ambiguous as to whether they are alternative payees or joint payees. Therefore, the UCC amendment prevails and they are to be treated as alternative payees, thus requiring only one of the payees' signatures. Consequently, the bank could negotiate the check when it was indorsed by only one of the two payees, thereby escaping liability.
INTERPRETATION The listing of multiple payees on a check renders the check ambiguous as to whether alternate or joint payees were intended by the drawer and thus the payees are treated as alternative payees requiring indorsement by only one payee.
ETHICAL QUESTION Did the bank or Skyscraper act inappropriately? Explain.
CRITICAL THINKING QUESTION How would you decide this case? Explain.