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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37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.

____________________________________
* Retired Senior Judge assigned to the Superior Court.
J-A22035-17



      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

____________________________________________



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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J-A22035-17



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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