                                     I N THE COURT OF APPEALS

                                                                                 FILED
                                                                                    June 6, 1997

                                                                                 Cecil Crowson, Jr.
                                                                                 Appellate C ourt Clerk
FI RST TENNESSEE BANK, NATI ONAL                       )   HAM LTON CHANCERY
                                                               I
ASSOCI ATI ON,                                         )   C. A. NO. 03A01- 9701- CH- 0001 4
                                                       )
                                                       )
                   Pl a i nt i f f - Appe l l e e      )
                                                       )
                                                       )
                                                       )
                                                       )
                                                       )
vs .                                                   )   HON. R. VANN OWENS
                                                       )   CHANCELLOR
                                                       )
                                                       )
                                                       )
                                                       )
                                                       )
J ESSE O. QUI LLI AN,                                  )   AFFI RMED AND REMANDED
                                                       )
                   De f e nda nt - Appe l l a nt       )




RI CHARD A. FI SHER, Loga n, Thomps on, M l l e r ,       i                     Bi l bo,    Thomps on        &
Fi s h e r , P. C. , Cl e ve l a nd, f or Appe l l a nt .


THOM   AS L.       N.    KNI GHT,      Gr i s ha m,   Kni ght   & Hoo p e r ,     Cha t t a nooga ,       f or
Ap p e l l e e .




                                              O P I N I O N



                                                                                           M M r a y, J .
                                                                                            c ur
         Thi s c a s e or i gi na t e d a s a n a c t i on t o c ol l e c t moni e s due un d e r

t he t e r ms of a pr omi s s or y not e e x e c u t e d b y t he de f e nda nt                                t o t he

p l a i nt i f f Fi r s t Te nne s s e e Ba nk,               Na t i o n a l     As s oc i a t i on.      An a ns we r

wa s f i l e d by t he de f e nda nt a dmi t t i ng t he e xe c ut i on of t he not e a n d

t ha t   t h e r e wa s a n out s t a ndi ng ba l a nc e t he r e o n .                       He a l s o f i l e d a

c ou n t e r c l a i m i n whi c h he s ought                    a s e t of f a nd da ma ge s f or f or g e d

c he c ks d r a wn on hi s a c c oun t a nd pa i d by t he ba nk.                              The t r i a l c o u r t

o n mo t i o n of t he pl a i nt i f f , e nt e r e d a s umma r y j udgme nt a ga i ns t t h e

d e f e n d a nt on t he or i gi na l c ompl a i nt a nd di s mi s s e d t he c ount e r c l a i m.

A j u d g me nt      i n t h e a mo u n t        of       $34, 399. 24 wa s e nt e r e d a ga i ns t                t he

d e f e n d a nt .     Thi s a ppe a l r e s ul t e d.              W a f f i r m t he j udg me n t of t h e
                                                                     e

t r i a l c our t .



         The de f e nda nt c ha l l e n ge s t he pr opr i e t y of t h e t r i a l c our t ' s

a c t i o n i n gr a nt i ng t he pl a i nt i f f ' s mot i on f or                         s umma r y j udgme n t .

The p r i ma r y t hr us t of t he a r gume nt put f or t h by t he de f e nda nt i s

t ha t t h e ba nk wa s ne gl i ge nt by f a i l i ng t o e xe r c i s e or di na r y c a r e

a nd t o a c t         wi t h c omme r c i a l           r e a s ona bl e ne s s      i n de a l i ng wi t h t h e

d e f e n d a nt ' s a c c ount .



         Un de r      t he     undi s put e d          f act s     in     t he     cas e,     t he     de f e nda n t ' s

b o o k k e e pe r    ha d,     f or     a   pe r i od o f         ye a r s      ( 1992- 1995) ,        f or ge d t h e

d e f e n d a nt ' s n a me on a l a r ge numbe r of c he c ks , c a s he d t he c he c ks a nd

us e d    t h e m f or        he r     be ne f i t .        Sh e     is       now unde r       i ndi c t me nt      f or

e mb e z z l e me nt .       The d e f e nda n t a dmi t s t ha t i t wa s t he pr a c t i c e of h i s



                                                             2
of f i c e   f or     hi m t o       s i gn   c he c ks       pa ya bl e   to   cas h    a nd   ha ve    t he

b o o k k e e pe r t a ke t he m t o t he ba nk,               c a s h t he m f or hi m a nd gi ve h i m

t he c a s h.        The b o okke e pe r a ppa r e nt l y f or ge d s e ve r a l            c he c ks ma d e

p a y a b l e t o c a s h, c a s he d t he c he c ks a nd c onve r t e d t he f unds t o h e r

o wn u s e .        She f ur t he r      wr ot e c he c ks t o ot he r s i n pa yme nt              of   he r

p e r s o n a l obl i ga t i ons .



        The r e c or d f ur t he r r e f l e c t s t ha t t he ba nk ha d s e nt s t a t e me n t s

o f t h e de f e nda nt ' s a c c ount ,         i nc l u d i n g c a nc e l e d c he c ks ,    t o hi m a t

t he p r o pe r a ddr e s s e ve r y mo nt h.             The de f e nda nt a dmi t s r e c e i vi ng t h e

s t a t e me nt s   a nd t ha t       he di d not             r e vi e w t he c a nc e l e d c he c ks   nor

r e c on c i l e hi s a c c ount dur i ng t he pe r i od wi t hi n whi c h t he e mbe z z l e -

me n t t o ok p l a c e .    Ra t he r , he de l e ga t e d t ha t dut y t o hi s bookke e p e r

who i s c ha r ge d wi t h e mbe z z l e me nt .                  The de f e nda nt     di s c ove r e d t h e

f o r g e r i e s s ome t i me i n 1995 a nd r e por t e d t he m t o t he ba nk on Ap r i l

6, 1995.



                                         STANDARD OF REVI EW



        Our s t a nda r d of r e vi e w i n c ons i de r i ng t he pr opr i e t y of s umma r y

j u d g me n t i s a s f ol l ows :



                  The s t a nda r ds gove r ni ng a n a ppe l l a t e c our t ' s r e vi e w
        o f a t r i a l c our t ' s a c t i on on a mot i on f or s umma r y
        j u dgme nt a r e we l l s e t t l e d. Si nc e our i nqui r y i nvol ve s
        p u r e l y a que s t i on of l a w, no pr e s umpt i on of c or r e c t ne s s
        a t t a c he s t o t he t r i a l c our t ' s j udgme nt , a nd our t a s k i s
        c o nf i ne d t o r e vi e wi ng t he r e c or d t o de t e r mi ne whe t he r t he


                                                          3
           r e qui r e me nt s of Te nn. R. Ci v. P. 56 ha ve be e n me t . Cowde n
           v . Sovr a n Ba nk/ Ce nt r a l Sout h , 816 S. W 2d 741, 744 ( Te nn.
                                                                 .
           1 9 91) . Te nn. R. Ci v. P. 56. 03 pr ovi de s t ha t s umma r y
           j u dgme nt i s onl y a ppr opr i a t e whe r e : ( 1) t he r e i s no
           g e nui ne i s s ue wi t h r e ga r d t o t he ma t e r i a l f a c t s r e l e va nt
           t o t he c l a i m or de f e ns e c ont a i ne d i n t he mot i on, Byr d v.
           Ha l l , 847 S. W 2d 208, 210 ( Te nn. 1 9 9 3 ) ; a nd ( 2) t he
                                .
           mo vi ng pa r t y i s e nt i t l e d t o a j udgme nt a s ma t t e r of l a w
           o n t he undi s put e d f a c t s . An d e r s on v. St a nda r d Re gi s t e r
           Co. , 559 ( Te nn. 1993) . The movi ng pa r t y ha s t he bur de n of
           p r ovi ng t ha t i t s mot i on s a t i s f i e s t he s e r e qui r e me nt s .
           Do wne n v . Al l s t a t e I n s . Co . , 524 ( Te nn. 1991) .

                    The s t a nda r ds gove r ni ng t he a s s e s s me nt of e vi de nc e
           i n t he s umma r y j udgme nt c o nt e xt a r e a l s o we l l e s t a b-
           l i s he d. Cour t s mus t v i e w t he e vi de nc e i n t he l i ght mos t
           f a vor a bl e t o t he nonmovi ng pa r t y a nd mus t a l s o dr a w a l l
           r e a s ona bl e i nf e r e nc e s i n t he nonmovi ng pa r t y' s f a vor .
           Byr d , 847 S. W 2d a t 210- 11. Cour t s s houl d gr a nt a s umma r y
                               .
           j u dgme nt onl y whe n bo t h t he f a c t s a nd t he c onc l us i ons t o
           b e dr a wn f r o m t he f a c t s pe r mi t a r e a s ona bl e pe r s on t o
           r e a c h onl y one c onc l u s i on. I d.


Ca r v e l l v. Bot t oms , 900 S. W 2d 23 ( Te nn. 1995) .
                                    .



           The c ha nc e l l or i s s ue d a s c hol a r l y me mor a ndum opi ni on i n wh i c h

h e f o u n d t ha t         t he r e we r e s ome di s put e d i s s ue s of                      f act      but     t ha t

t h e r e wa s n o g e nui ne i s s ue of a ma t e r i a l f a c t whi c h r e qui r e d t h a t

t he       case     be     t r i e d.       The        c ha nc e l l or      not e d    t ha t    " [ o] ne      of    t he

f u n d a me nt a l      pr i nc i pl e s       of     c omme r c i a l     l aw i s     t ha t    ' no pe r s on i s

l i a b l e o n a n i ns t r ume nt                  u nl e s s   hi s     s i gna t ur e a ppe a r s        t he r e on ' "

c i t i ng Ka l e y v . Uni on Pl a nt e r ' s Na t ' l Ba nk, 775 S. W 2d 607, 609. He
                                                                       .

f u r t h e r c or r e c t l y not e d t ha t t he r e a r e e xc e pt i ons t o t hi s ge ne r a l

r ul e .     The e xc e pt i on upon whi c h t he c our t ba s e s i t s de c i s i on i s t h e

p r o v i s i ons     of     T. C. A.       §        4 7- 4- 406,        whi c h   at   al l      t i me s    ma t e r i a l

p r o v i d e d a s f ol l ows :



                                                                  4
          47- 4- 406, Cus t om r ' s dut y t o di s c ove r and r e por t
                                  e
unaut hor i z e d s i gnat ur e or aut hor i z at i on. — ( 1) W n a ba nk
                                                                     he
s e nds t o i t s c us t ome r s a s t a t e me nt o f a c c ount a c c ompa ni e d
b y i t e ms pa i d i n go od f a i t h i n s uppor t of t he de bi t
e n t r i e s or hol ds t he s t a t e me nt a nd i t e ms pur s u a n t t o a
r e que s t or i ns t r uc t i ons of i t s c us t ome r or ot he r wi s e i n
a r e a s ona b l e ma nne r ma ke s t he s t a t e me nt a nd i t e ms
a va i l a bl e t o t he c us t ome r , t he c us t om r m t e xe r c i s e
                                                           e     us
r e as onabl e c ar e and pr om ne s s t o e xam ne t he s t at e m nt
                                      pt                  i                   e
a nd i t e m t o di s c ove r hi s unaut hor i z e d s i gnat ur e or any
               s
a l t e r at i on on an i t e m and m t not i f y t he bank pr om l y
                                          us                                 pt
a f t e r di s c ove r y t he r e of . ( Empha s i s a dde d) .

          ( 2) I f t he ba nk e s t a bl i s he s t ha t t he c us t ome r f a i l e d
wi t h r e s pe c t t o a n i t e m t o c ompl y wi t h hi s dut i e s i mpos e d
o n t he c us t ome r by s ubs e c t i on ( 1) t he c us t ome r i s
p r e c l ude d f r om a s s e r t i ng a ga i ns t t he ba nk:

       ( a)    Hi s una ut ho r i z e d s i gna t ur e or a ny a l t e r a t i on
               on t he i t e m i f t he ba nk a l s o e s t a bl i s he s t ha t
               i t s uf f e r e d a l os s by r e a s on of s uc h f a i l ur e ;
               a nd

       ( b)    An una ut hor i z e d s i gna t ur e or a l t e r a t i on by t he
               s a me wr ongd oe r on a ny ot he r i t e m pa i d i n good
               f a i t h by t he b a nk a f t e r t he f i r s t i t e m a nd
               s t a t e me nt wa s a va i l a bl e t o t he c us t ome r f or a
               r e a s ona bl e pe r i od not e xc e e di ng f our t e e n ( 14)
               c a l e nda r da ys a nd be f or e t he ba nk r e c e i ve s
               not i f i c a t i on f r om t he c us t ome r of a ny s uc h
               una ut hor i z e d s i gna t ur e or a l t e r a t i on.

         ( 3) A c us t ome r who doe s not wi t hi n one ( 1) ye a r f r om
t he t i me t he s t a t e me nt a nd i t e ms a r e ma d e a va i l a bl e t o
t he c us t ome r ( s ubs e c t i on ( 1) ) di s c ove r a nd r e por t hi s
u n a ut hor i z e d s i gna t ur e or a ny a l t e r a t i on on t he f a c e or
b a c k of t he i t e m or doe s not wi t hi n t hr e e ( 3) ye a r s f r om
t h a t t i me di s c ove r a n d r e por t a ny una ut hor i z e d e ndor s e -
me nt i s pr e c l ude d f r om a s s e r t i ng a ga i ns t t he ba nk s uc h
u n a ut hor i z e d s i gna t ur e or e ndor s e me nt or s uc h a l t e r a t i on.

         ( 4) I f unde r t hi s s e c t i on a pa yor ba nk ha s a va l i d
d e f e ns e a ga i ns t a c l a i m of a c us t ome r upon or r e s ul t i ng
f r om pa yme nt of a n i t e m a nd wa i ve s or f a i l s upon r e que s t
t o a s s e r t t he de f e ns e t he ba nk ma y not a s s e r t a ga i ns t a ny
c ol l e c t i n g b a nk or ot he r pr i or pa r t y pr e s e nt i ng or
t r a ns f e r r i ng t he i t e m a c l a i m ba s e d upon t he una ut hor i z e d
s i gna t ur e or a l t e r a t i on gi vi ng r i s e t o t he c us t ome r ' s
c l a i m. [ Ac t s 1963, c h. 81, § 1 ( 4- 406) l 1991, c h. 52, §
3. ]


                                          5
         The de f e nda nt      i ns i s t s t ha t       it      i s ne c e s s a r y t o l ook t o t h e

l e g i s l a t i ve hi s t or y of T. C. A. § 47- 4- 406 f or a pr ope r i nt e r pr e t a -

t i o n o f t he e na c t me nt .      W a r e of t he opi ni on t ha t t he s t a t ut e i s
                                        e

u n a mb i g uous a nd t ha t t he l e gi s l a t i ve hi s t or y i s i r r e l e va nt .



                       The mos t ba s i c r ul e of s t a t ut or y c ons t r uc t i on i s
         t o a s c e r t a i n a nd gi ve e f f e c t t o t he i nt e nt i on a nd pur pos e
         o f t he l e gi s l a t ur e . W r a l l v. Kr oge r Co. , 5 45 S. W 2d 736
                                           or                                      .
         ( Te nn. 1977) . Le gi s l a t i ve i nt e nt or p u r pos e i s t o be
         a s c e r t a i ne d pr i ma r i l y f r om t he na t ur a l a nd or di na r y
         me a ni ng of t he l a ngua ge us e d, wi t hout f or c e d or s ubt l e
         c o ns t r uc t i o n t ha t woul d l i mi t or e xt e nd t he me a ni ng of
         t h e l a ngua ge . Na t i ona l Ga s Di s t r i but or s , I nc . v . St a t e ,
         8 0 4 S. W 2d 66 ( Te nn. 1991) . W r e t he l a ngua ge c ont a i ne d
                      .                                he
         wi t hi n t he f our c or ne r s of a s t a t ut e i s pl a i n, c l e a r , a nd
         u n a mbi guous a nd t he e na c t me nt i s wi t hi n l e gi s l a t i ve
         c ompe t e nc y, " t he dut y of t he c our t s i s s i mpl e a nd
         o b vi ous , n a me l y, t o s a y s i c l e x s c r i pt a , a nd obe y i t . "
         M l l e r v . Chi l dr e s s , 21 Te nn. ( 2 Hum. ) 319, 321- 22
           i
         ( 1 841) .



         The    de f e nda nt    al s o   i ns i s t s         t ha t   t he    ba nk    is    s ubj e c t    to

c omp a r a t i ve ne gl i ge nc e a s a dopt e d i n M I nt yr e v.
                                                       c                                Ba l l e nt i ne ,   833

S. W 2 d 52 ( Te nn. 1992)
    .                                  W f i nd no a ut hor i t y f or t hi s pr opos i t i o n
                                        e

a s t he s t a t ut e e xi s t e d a t      t i m s ma t e r i a l
                                                 e                         t o t hi s di s put e .           Th e

s t a t ut e wa s a me nde d i n 1995.                The 1995 a me ndme nt                a dde d s e ve r a l

p r o v i s i ons t o T. C. A.    § 4 7 - 4 - 4 0 6 i nc l udi ng a pr ovi s i on t ha t " [ i ] f

t he c u s t ome r      pr ove s t ha t   t he ba nk di d not                  pa y t he i t e m i n g o o d

f a i t h,   t he pr e c l us i on unde r s ubs e c t i on ( d) doe s not a ppl y. "                         Th e

c o mme n t s t o t he of f i c i a l     t e xt      af t er       t he 1995 a me ndme nt           s eem t o

i nd i c a t e t ha t    c ompa r a t i ve ne gl i ge nc e ma y now be a c ons i de r a t i o n



                                                      6
u n d e r t hi s s e c t i o n o f t he c ode .       The c omme nt s ,   i n pe r t i ne nt pa r t

a r e a s f ol l ows :



                4. Subs e c t i on ( e ) r e pl a c e s f or me r s ubs e c t i on ( 3) a nd
       p o s e s a modi f i e d c ompa r a t i ve ne gl i ge nc e t e s t f or de t e r -
       mi ni ng l i a bi l i t y.     Se e t he d i s c u s s i on on t hi s poi nt i n
       t he Comme nt s t o Se c t i ons 3- 404, 3- 405, a nd 3- 406. The
       t e r m " good f a i t h" i s de f i ne d i n Se c t i on 3- 103 ( a ) ( 4) a s
       i n c l udi ng " o bs e r va nc e of r e a s ona bl e c omme r c i a l s t a nda r ds
       o f f a i r de a l i ng. " The c onnot a t i on of t hi s s t a nda r d i s
       f a i r ne s s a nd not a bs e nc e of ne gl i ge nc e .



       Si nc e , howe ve r , t hi s a me ndme nt wa s not e na c t e d u nt i l a f t e r t he

d a t e s ma t e r i a l t o t hi s c a s e , t he a me ndme nt ha s no c ons e que nc e a s t o

t he o u t c ome he r e .   W be l i e ve t ha t t he s a me r e a s oni ng a s a ppl i e d i n
                             e

Ve n d i n g Cha t t a nooga , I nc . , v. Ame r i c a n Na t ' l Ba nk & Tr us t Co. , 7 3 0

S. W 2 d 624 ( Te nn. 1987) i s a ppl i c a bl e he r e .
    .                                                               I n Ve ndi ng, t he c ou r t

not e d:



                I n a f or ge r y c a s e , we s t a r t wi t h t he ba s i c pr e mi s e
       a n d r ul e of l a w t ha t be t we e n t he c us t ome r a nd t he ba nk,
       t h e ba nk mus t be a r t he l os s whe r e moni e s ha ve be e n pa i d
       o u t due t o a t hi r d pa r t y f or gi ng t he c us t ome r ' s s i gna t ur e
       o n a c he c k. Te nn. Code Ann § 47- 3- 401( 1) , pr ovi de s " No
       p e r s on i s l i a bl e on a n i ns t r ume nt unl e s s hi s s i gna t ur e
       a p pe a r s t he r e on. " The s i gna t ur e of t he dr a we r i s one of
       t he e s s e nt i a l e l e me nt s t o t he va l i di t y of a c he c k a nd t he
       g e ne r a l r ul e i s t he ba nk mus t know t he ge nui ne ne s s of t he
       d e pos i t or ' s s i gna t ur e . Ame r i c a n Na t i ona l Ba nk v. M l e s ,
                                                                                   i
       1 8 Te nn. App. 440, 79 S. W 2d 47 ( 1935) .
                                               .

              An e xc e pt i on t o t hi s g e n e r a l r ul e i s c ont a i ne d i n
       T. C. A. § 47- 4- 406, whi c h, a s pe r t i ne nt he r e pr ovi de s :

                Cus t ome r ' s dut y t o di s c ove r a nd r e por t una ut hor i z e d
       s i gna t ur e or a l t e r a t i on. - - ( 1) W n a ba nk s e nds t o i t s
                                                       he
       c u s t ome r a s t a t e me nt of a c c ount a c c ompa ni e d b y i t e ms p a i d
       i n good f a i t h i n s uppor t of t he de bi t e nt r i e s or hol ds


                                                  7
t he s t a t e me nt a nd i t e ms pur s ua nt t o a r e que s t or i ns t r uc -
t i ons of i t s c us t ome r or ot he r wi s e i n a r e a s ona bl e ma nne r
ma ke s t he s t a t e me nt a nd i t e ms a va i l a bl e t o t he c us t ome r ,
t he c us t ome r mus t e xe r c i s e r e a s ona bl e c a r e a nd pr ompt ne s s
t o e xa mi ne t h e s t a t e me nt a nd i t e ms t o di s c ove r hi s
u n a ut hor i z e d s i gna t ur e or a ny a l t e r a t i on on a n i t e m a nd
mu s t not i f y t he ba nk pr ompt l y a f t e r di s c ove r y t he r e of .

( 2) I f t he ba nk e s t a bl i s he s t ha t t he c us t ome r f a i l e d wi t h
r e s pe c t t o a n i t e m t o c ompl y wi t h t he dut i e s i mpos e d on
t he c us t ome r by s ubs e c t i on ( 1) t he c us t ome r i s pr e c l ude d
f r om a s s e r t i ng a ga i ns t t he ba nk:

                 ( a ) hi s una ut hor i z e d s i gna t ur e or a ny a l t e r -
         a t i on on t he i t e m i f t he ba nk a l s o e s t a bl i s he s t ha t
         i t s uf f e r e d a l os s by r e a s on of s uc h f a i l ur e ; a nd

                   ( b) a n una ut hor i z e d s i gna t ur e or a l t e r a t i on by
         t h e s a me wr ongdoe r on a ny ot he r i t e m pa i d i n goo d
         f a i t h by t he ba nk a f t e r t he f i r s t i t e m a nd s t a t e -
         me nt wa s a va i l a bl e t o t he c us t ome r f or a r e a s ona bl e
         pe r i od not e xc e e di ng f our t e e n ( 14) c a l e nda r da ys
         a nd be f or e t he b a nk r e c e i ve s not i f i c a t i on f r om t he
         c us t ome r of a ny s uc h una ut hor i z e d s i gna t ur e or
         a l t e r a t i on.

                  ( 3) The pr e c l us i on unde r s ubs e c t i on ( 2) doe s
         not a ppl y i f t h e c us t ome r e s t a bl i s he s l a c k of
         or di na r y c a r e on t he pa r t of t he ba nk i n pa yi ng t he
         i t e m( s ) . 1

         The a ppe l l a nt ba nk c ont e nds t ha t t he t r i a l c our t a nd
t he Cour t of Appe a l s we r e i n e r r or i n t he a ppl i c a t i on of
t he f a c t s o f t hi s c a s e t o t he l a w a s c ont a i ne d i n T. C. A.
§ 47- 4- 406, i n t ha t : ( 1) pl a i nt i f f , Ve ndi ng Cha t t a nooga ,
I nc . , di d not e xe r c i s e r e a s ona bl e c a r e t o e xa mi ne i t s
b a nk s t a t e me nt a nd t he e nc l os e d c he c ks i n or de r t o
d i s c ove r t he una ut hor i z e d s i gna t ur e s of i t s pr e s i de nt on
t he f or ge d c he c ks , a n d f a i l e d t o r e por t t he f or ge r i e s t o
t h e ba nk a s r e qui r e d by l a w; a nd ( 2) t he ba nk e xe r c i s e d
o r di na r y c a r e i n hono r i ng t he c he c ks be a r i ng t he f or ge d
s i gna t ur e s .

          Al l f or t y c he c ks i nvol ve d " a n una ut hor i z e d s i gna t ur e
o r a l t e r a t i on of t he s a me wr ongdoe r , " a nd t h us t he
s p e c i a l p r o v i s i on of s ubs e c t i on ( 2) ( b) of T. C. A. §
4 7 - 4- 406 c ome s i nt o p l a y. Thus , i f t he c us t ome r i s f ound
n o t t o h a ve e xe r c i s e d r e a s ona bl e c a r e i n e xa mi ni ng t he


1
    This provision was removed by the 1991 amendment.

                                          8
       b a nk s t a t e me nt s , t he ba nk woul d not be l i a bl e f or
       f or ge r i e s pa i d a f t e r t he f i r s t f or ge d c he c k a nd s t a t e me nt
       wa s a va i l a bl e t o t he c us t ome r f or a r e a s ona bl e pe r i od not
       e xc e e di ng f our t e e n c a l e nda r da ys be f or e t he ba nk r e c e i ve s
       n o t i f i c a t i on f r om t he c us t ome r of t he f or ge r y.



       The    de f e nda nt    r e a di l y a dmi t s        t ha t   he       di d not     e xa mi n e   t he

s t a t e me nt s of a c c ount a nd c he c ks t ha t we r e s e nt t o hi m by t he ba n k .

Hi s d e p os i t i on t e s t i mony di s c l os e s t he f ol l owi ng:



                               *            *          *         *         *

       Q.      Al l r i ght .   But wi t h r e s pe c t t o, s a y, t h i s p e r i od
               of a bout a ye a r a nd a ha l f , t wo ye a r s t ha t s he [ t he
               bookke e pe r ] wor ke d f or you, how ma ny t i me s do you
               t hi nk you woul d ha ve l ooke d a t a b a n k s t a t e me nt
               f r om Fi r s t Te nne s s e e Ba nk on t hi s a c c ount ?

       A.      M ybe f our or f i ve t i me s .
                a

       Q.      Al l r i ght .  W s t he r e a nyt hi ng t ha t you not i c e d on
                                a
               a n y of t hos e f our or f i ve oc c a s i ons t ha t wa s un -
               us ua l ?

       A.      Not hi ng unus ua l a t t he t i me .

       Q.      Al l r i ght , s i r .       But di d you not a t t e mpt t o ma t c h
               t he c he c ks t ha t we r e i n t hos e s t a t e me nt s wi t h t he
               s t a t e me nt s t he ms e l ve s , di d you?

       A.      No, s i r . I       j us t       a c c e pt e d i t    as   a    t r ue    c opy a nd
               wha t e ve r .

       Q.      But you woul d be a wa r e of t he f a c t t ha t t he be s t
               wa y or e a s i e s t wa y t o de t e c t a f or ge r y woul d be t o
               c ompa r e t he c he c k i t s e l f wi t h t he e nt r y on t he
               s t a t e me nt , c or r e c t , s i r ?

       A.      Tha t ' s c or r e c t .

       Q.      Al l r i ght .     I n o t he r wor ds , you l ooke d a t nume r ous
               c he c ks he r e a f e w mi nut e s a go a nd c oul d t e l l us
               e a s i l y whi c h we r e not f or ge r i e s , r i ght ?



                                                       9
         A.          W l l , I l ooke d a t t he s e a t l e ngt h a n hour or t wo
                       e
                     a go.      I di dn' t s t udy t he one s t ha t c a me t hr ough a s
                     c l os e l y a s I di d t he s e t oda y.

         Q.          M p o i n t i s , Dr Qui l l i a n, ha d you l ooke d a t t he
                      y
                     c he c ks whe n t he y c a me i n e a c h mont h, e a c h a nd e ve r y
                     mont h, mont h i n a nd mont h out , y o u c oul d ha ve
                     de t e c t e d whi c h we r e your s i gna t ur e s a nd whi c h we r e
                     f or ge r i e s ?

         A.          I f I ' d be e n a l e r t , a l e r t e nough t o, I wo u l d ha ve ,
                     but I ha d no i de a t ha t a nyt hi ng wa s wr ong.

         Q.          Oka y.     But I ' m n ot a s ki ng you, a nd I woul d a s k o r
                     r e que s t t ha t you a ns we r my que s t i on.        Ha d you
                     l ooke d a t t hos e c he c ks , you c oul d h a v e d e t e c t e d
                     whi c h one s we r e f or ge r i e s , c oul d you not ?

         A.          I c oul d.     I ha ve done s o t oda y.

                                    *        *          *         *           *



         Si mpl y s t a t e d ,      t he de f e nda nt       f a i l e d t o e xe r c i s e r e a s ona bl e

c a r e a n d di l i ge nc e i n di s c ove r i ng t he f or ge r i e s a nd di d not t i me l y

n o t i f y t he ba nk.           ". . .   a de pos i t or mus t       be he l d c ha r g e a b l e wi t h

k n o wl e d ge of a l l t he f a c t s t ha t a r e a s ona bl e a nd pr ude nt e xa mi n a -

t i on o f t he r e t ur ne d ba nk s t a t e me nt s woul d ha ve di s c l os e d ha d i t

be e n       ma de    by   a   pe r s on    on   t he    de pos i t o r ' s       b e ha l f   who   ha d   not

p a r t i c i pa t e d i n t he f or ge r i e s . "         Ve ndi ng Cha t t a nooga , s upr a .



         I n c onc l us i on, we c onc ur wi t h t he f i ndi ngs of t he t r i a l c o u r t

t ha t   t h e r e a r e no ma t e r i a l       i s s ue s i n t h i s c a s e whi c h r e qui r e a

t r i al .      W a f f i r m t he j udg me nt of t he t r i a l c our t i n a l l r e s pe c t s .
                 e




                                                        10
       Co s t s o f t hi s c a s e a r e a s s e s s e d t o t he de f e nda nt .   Thi s c a s e

i s r e ma nde d t o t he t r i a l c our t .




                                                     ___________________________ _ _ _
                                                     Don T. M M r a y, J udge
                                                             c ur



CONCUR:


_ _ _ _ _ _ _ ____________________________
He r s c h e l P. Fr a nks , J udge


_ _ _ _ _ _ _ ____________________________
Ch a r l e s D. Sus a no, J r . , J u dge




                                                11
                                 I N THE COURT OF APPEALS




FI RST TENNESSEE BANK, NATI ONAL                    )   HAM LTON CHANCERY
                                                            I
ASSOCI ATI ON,                                      )   C. A. NO. 03A01- 9701- CH- 0001 4
                                                    )
                                                    )
               Pl a i nt i f f - Appe l l e e       )
                                                    )
                                                    )
                                                    )
                                                    )
                                                    )
vs .                                                )   HON. R. VANN OWENS
                                                    )   CHANCELLOR
                                                    )
                                                    )
                                                    )
                                                    )
                                                    )
J ESSE O. QUI LLI AN,                               )   AFFI RMED AND REMANDED
                                                    )
               De f e nda nt - Appe l l a nt        )



                                                JUDGMENT


       Thi s    a ppe a l   c a me o n t o be he a r d upon t he r e c or d f r om t h e

Ch a nc e r y Cour t of Ha mi l t on Count y, br i e f s a nd a r gume nt of c ouns e l .

Up o n c o n s i de r a t i on t he r e of , t hi s Cour t i s of opi ni on t ha t t he r e wa s

n o r e v e r s i bl e e r r or i n t he t r i a l c our t .

       W a f f i r m t he j udgme nt
        e                                       of t he t r i a l    c our t   i n al l   r e s pe c t s .

Co s t s o f a r e a s s e s s e d t o t he de f e nda nt .         Thi s c a s e i s r e ma nde d t o

t he t r i a l c our t .
     PER CURI AM




13
