Holifield, et al. v. BancorpSouth, Inc.
| Docket Number: | 2002-CA-01590-COA Linked Case(s): 2002-CT-01590-SCT ; 2002-CA-01590-COA |
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| Court of Appeals: |
Opinion Link Opinion Date: 08-03-2004 Opinion Author: Southwick, P.J. Holding: Affirmed |
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| Additional Case Information: |
Topic: Common law negligence - Duty of bank - Section 75-3-110 - Section 91-9-115 Judge(s) Concurring: King, C.J., Bridges, P.J., Lee, Irving, Myers, Chandler and Griffis, JJ. Procedural History: Summary Judgment Nature of the Case: CIVIL - TORTS-OTHER THAN PERSONAL INJURY & PROPERTY DAMAGE |
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| Trial Court: |
Date of Trial Judgment: 08-23-2002 Appealed from: Jones County Circuit Court Judge: Joseph H. Loper Disposition: SUMMARY JUDGMENT FOR THE APPELLEES Case Number: 98-5-58 |
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| Party Name: | Attorney Name: | |||
| Appellant: | Ronald L. Holifield, et al. |
KENNETH A. RUTHERFORD |
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| Appellee: | BancorpSouth, Inc. d/b/a Bank of Mississippi, et al. | JAMES PATRICK CALDWELL |
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| Topic: | Common law negligence - Duty of bank - Section 75-3-110 - Section 91-9-115 |
| Summary of the Facts: | Ronald Holifield and approximately fifty other individuals and businesses (the investors) filed suit against BancorpSouth and other defendants, alleging that BancorpSouth was negligent by permitting a person (Harrell) who defrauded the investors to take large sums of money from two accounts and wire the funds to European destinations. The bank filed a motion for summary judgment which the court granted. The investors appeal. |
| Summary of Opinion Analysis: | At summary judgment, the sole legal claims that the investors presented were based on common law negligence. The investors argue that the bank owed a duty to them which was breached and proximately caused them damage. They argue that the bank should not have allowed Harrell to make the deposits into his general account, since the payee on the checks was to Harrell "in trust." The argument is that unless Harrell was using a trust account, the bank should have refused to deposit checks made to a trustee. Reasonableness in the actions of a bank in accepting checks for deposit is defined as whether a reasonable person would be on notice that something is running afoul of what is commercially reasonable, whether from some impropriety appearing in the form of the instrument and the accompanying endorsements or from knowledge of extrinsic facts outside of the instrument itself. Section 75-3-110 guides the identification of the entity to whom funds are to be paid but does not address the obligations of the bank in determining what to do with a check or other negotiable instrument made out to a payee in trust. There is no authority that a trustee's endorsement is defective if he does not refer in some manner to his fiduciary capacity. Under section 91-9-115, the bank cannot be liable to the investors if there was no actual knowledge of Harrell's wrongdoings. Harrell took funds from checks made payable to his trust account and sent them to banks in the United States as well as abroad. BancorpSouth had no duty to ensure that the funds of the trust account were properly being spent. Therefore, the court did not err in granting summary judgment. |
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