                       IN THE SUPREME COURT OF MISSISSIPPI

                                      NO. 2003-CA-02221-SCT


UNION PLANTERS BANK,
NATIONAL ASSOCIATION

v.

NEAL DONIPHAN ROGERS, JR.,
EXECUTOR OF THE ESTATE OF
HELEN ROGERS, DECEASED,
a/k/a HELEN K. ROGERS


DATE OF JUDGMENT:                             08/04/2003
TRIAL JUDGE:                                  HON. W. ASHLEY HINES
COURT FROM WHICH APPEALED:                    WASHINGTON COUNTY CIRCUIT COURT
ATTORNEY FOR APPELLANT:                       CHARLES J. SWAYZE, JR.
ATTORNEY FOR APPELLEE:                        NATHAN P. ADAMS, JR.
NATURE OF THE CASE:                           CIVIL - CONTRACT
DISPOSITION:                                  REVERSED AND RENDERED - 04/28/2005
MOTION FOR REHEARING FILED:
MANDATE ISSUED:


       EN BANC.

       WALLER, PRESIDING JUSTICE, FOR THE COURT:

¶1.    This appeal involves an issue of first impression in Mississippi – the interpretation of

Miss. Code Ann. § 75-4-406 (Rev. 2002), which imposes duties on banks and their customers

insofar as forgeries are concerned.     The case arises from a series of forgeries made by one

person on four checking accounts maintained by Helen Rogers at the Union Planters Bank. We

find that the circuit judge erred in denying Union Planters’ motion for JNOV because, under

§ 75-4-406, Rogers failed to inspect her bank statements in a timely manner and because
Rogers produced no evidence that Union Planters had failed to exercise ordinary care or that

Union Planters acted with bad faith in paying the checks.

                                                FACTS

¶2.     Neal D. and Helen K. Rogers 1 maintained four checking accounts with the Union

Planters Bank in Greenville, Washington County, Mississippi. Each of these four accounts had

originally been opened at banks (the Sunburst Bank, the Magnolia Federal Savings Bank; and

the Washington Federal Savings Bank) which later merged with Union Planters.       The Rogers

were both in their eighties when the events which gave rise to this lawsuit took place. After

Neal became bedridden, Helen hired Jackie Reese to help her take care of Neal and to do

chores and errands.

¶3.     In September of 2000, Reese began writing checks on the Rogerses’ four accounts and

forged Helen’s name on the signature line. Some of the checks were made out to “cash,” some

to “Helen K. Rogers,” and some to “Jackie Reese.”           The following chart summarizes the

forgeries to each account:2




        1
        Neal Rogers died prior to the institution of this lawsuit. Helen Rogers died after
Union Planters filed this appeal. We have substituted Helen’s estate as appellee.
        2
         Detailed lists of the forged checks are found as attachments to the complaint and will
not be reproduced in this opinion.

                                                   2
      ACCOUNT                                                   NUMBER             AMOUNT
      NUMBER            BEGINNING              ENDING          OF CHECKS          OF CHECKS
       54282309          11/27/2000            6/18/2001            46               $16,635.00

      0039289441          9/27/2000            1/25/2001            10                $2,701.00

      6100110922         11/29/2000            8/13/2001            29                $9,297.00

      6404000343         11/20/2000            8/16/2001            83               $29,765.00

       TOTAL                                                       168               $58,398.00

¶4.      Neal died in late May of 2001. Shortly thereafter, the Rogerses’ son, Neal, Jr., began

helping Helen with financial matters.        Together they discovered that many bank statements

were missing and that there was not as much money in the accounts as they had thought.3 In

June of 2001, they contacted Union Planters and asked for copies of the missing bank

statements. In September of 2001, Helen was advised by Union Planters to contact the police

due to forgeries made on her accounts.           More specific dates and facts leading up to the

discovery of the forgeries are not found in the record.

¶5.      Subsequently, criminal charges were brought against Reese. 4       In the meantime, Helen

filed suit against Union Planters, alleging conversion (unlawful payment of forged checks) and

negligence.   After a trial, the jury awarded Helen $29,595 in damages, and the circuit court

entered judgment accordingly. From this judgment, Union Planters appeals.




         3
        For instance, Helen thought one account balance should have been around $17,000.00,
when it was in fact around $800.00.
         4
          The record does not reveal the disposition of the criminal proceedings against Reese.

                                                    3
                                             DISCUSSION

                I.      WHETHER THE CIRCUIT JUDGE ERRED IN
                        DENYING UNION PLANTERS’ MOTION TO
                        COMPEL ARBITRATION.

¶6.     After its acquisition of the Sunburst Bank, the Magnolia Federal Savings Bank and the

Washington Federal Savings Bank, Union Planters sent many mailings to its customers

outlining the duties and responsibilities of the bank to the customers and of the customers to

the bank.    Contained in one of the mail-outs was an arbitration clause which included the

following language:

                BY SIGNING A SIGNATURE CARD AND USING YOUR
                ACCOUNT YOU AGREE TO THE TERMS OF THIS
                ARBITRATION AGREEMENT.       BY SIGNING YOUR
                SIGNATURE CARD YOU ACKNOWLEDGE THAT YOU HAVE
                READ AND UNDERSTAND THIS ARBITRATION
                AGREEMENT, INCLUDING THE WAIVER OF YOUR RIGHT
                TO A JURY TRIAL OR TRIAL BY A JUDGE IN A PUBLIC
                COURT.

The circuit judge ruled that the arbitration clause was not enforceable because, even though

Rogers had signed signature cards with the individual banks prior to merger, she had never

signed a signature card for Union Planters containing an arbitration clause.

¶7.     Union Planters argues that whether Rogers signed a Union Planters signature card is

immaterial because many of the mail-outs had the following or similar language: “Your

continued use of the Account evidences your agreement to any amendment.”        Since Rogers

continued to use her accounts, it contends, she agreed to the amendment which added the

arbitration clause.   Union Planters also cites to Herrington v. Union Planters Bank, 113



                                                    4
F. Supp. 2d 1026 (S.D. Miss. 2000), aff’d, 265 F.3d 1059 (5th Cir. 2001), which dealt with

almost identical facts. There, United States District Judge Walter Gex held as follows:

                        When the plaintiffs signed their initial signature cards
                [from a bank before it merged with Union Planters], they agreed
                that the terms and conditions of their deposit accounts could
                change in the future upon sufficient notice. It is undisputed that
                the plaintiffs were given notice in March of 1998 that their
                accounts were being revised to include an arbitration clause. It is
                further undisputed that the plaintiffs continued to use their
                accounts after the effective date of the arbitration clause. . . .

                                                  ***

                       The cover letter accompanying the “revised Deposit
                Account Agreement” explicitly informed the plaintiffs that the
                revised deposit agreement contained “important information
                about [the depositor’s] [sic] account.” After reviewing the letter
                and revised deposit agreement, the Court finds that the plaintiffs
                were sufficiently notified that the terms and conditions of their
                accounts would change . . . . The plaintiffs’ apparent failure to
                read the revisions to their accounts is irrelevant to the issue of
                whether they agreed to arbitrate or are subject to those changes.

                                                  ***

                          The absence of the plaintiffs’ signature on a new card does
                not alter the fact that the plaintiffs accepted the terms of the
                arbitration agreement by continuing to utilize their accounts. The
                plaintiffs could have simply declined to accept the arbitration
                provision by terminating their account before the effective date
                of the amendment. Because the plaintiffs continued performance
                under the revised deposit agreements. . , the Court finds that the
                plaintiffs agreed to arbitrate their disputes with Union Planters.

113 F. Supp. 2d at 1031-32 (citations omitted).




                                                   5
¶8.     A review of arbitration law and contract law leads us to a different conclusion.

Submitting to arbitration means giving up the right to file a lawsuit in a court of competent

jurisdiction. Waiving that right requires more than implied consent:

                Waiver presupposes full knowledge of a right existing, and an
                intentional surrender or relinquishment of that right.           It
                contemplates something done designedly or knowingly, which
                modifies or changes existing rights or varies or changes the terms
                and conditions of a contract. It is the voluntary surrender of a
                right. To establish a waiver, there must be shown an act or
                omission on the part of the one charged with the waiver fairly
                evidencing an intention permanently to surrender the right alleged
                to have been waived.

Ewing v. Adams, 573 So. 2d 1364, 1369 (Miss. 1990). We find absolutely no evidence that

either of the Rogerses voluntarily and knowingly waived their right to access to the courts. As

another federal district court has held:

                [T]his court has no hesitation in finding that the parties never
                agreed to arbitration and that plaintiff did not waive her right to
                seek adjudication of her claims in court. The application was the
                only document plaintiff ever signed; there is, of course, no
                mention in its contents of the arbitration endorsement. That
                endorsement is part of the insurance contract which plaintiff
                received upon completion of the application process. When
                plaintiff received the policy, she was given the option of
                "return[ing] it for any reason," in which case, the policy was "void
                from the beginning...." There was no notice, no discussion, and no
                negotiation of the arbitration endorsement, circumstances, which,
                in this court's view, hardly signify either agreement or waiver.
                The arbitration endorsement is therefore not enforceable, and this
                matter may proceed in this court.

McCreary v. Liberty Nat'l Life, 6 F. Supp. 2d 920, 920-21 (N.D. Miss. 1998) (quoted with

favor in Pre-Paid Legal Servs., Inc. v. Battle, 873 So. 2d 79, 83 (Miss. 2004)). See also


                                                    6
Stone v. Golden Wexler & Sarnese, P.C., 341 F. Supp. 2d 189 (E.D.N.Y. 2004) (arbitration

agreement not binding without express or implicit consent by customer); Gustavsson v.

Washington Mut. Bank, 850 So. 2d 570 (Fla. Dist. Ct. App. 2003) (same); DIRECTV, Inc.

v. Mattingly, 829 A.2d 626 (Md. 2003) (citing Mattingly v. Hughes Electronics Corp., 810

A.2d 498 (Md. Ct. Spec. App. 2001)) (where contract mandated written notice of changes and

written notice of addition of arbitration clause was not given, arbitration was not binding on

customer).

¶9.     As in McCreary and Pre-Paid, the Rogerses signed signature cards for the four banks

prior to their merger with Union Planters, and these signature cards did not contain arbitration

provisions.

¶10.    The use of basic contract construction rules also leads us to the conclusion that the

Rogerses were not bound by Union Planters’ arbitration provision.            A cardinal rule of

construction of a contract is to ascertain the mutual intentions of the parties.   Miss. Transp.

Comm’n v. Ronald Adams Contractor, Inc., 753 So. 2d 1077, 1084 (Miss. 2000). Intent

should first be sought in an objective reading of the words employed in the contract. Id. We

find that the general provisions of the mail-outs and the specific provisions of the arbitration

clause are in conflict (i.e., the general provisions require “use” of the account only, whereas

the specific provisions   of the arbitration clause require “use” of the account and the execution

of a signature card), causing ambiguity. Ambiguities in a contract are to be construed against

the party who drafted the contract. Id. at 1085. And specific language controls over general



                                                 7
inconsistent language in a contract. Id.      Construing the ambiguities against Union Planters, the

drafter of the contract, we find that the specific provisions of the arbitration clause supplant

the general provisions.

¶11.    Therefore, because Rogers did not execute a new signature card after Union Planters

bought out the various banks, the arbitration clause does not apply to her, and the circuit judge

was correct in denying Union Planters’ motion to compel arbitration.

¶12.    We are aware that there is a split in authority on this issue and that other jurisdictions

which have held that the right of access to the courts may be implicitly waived.          Cf., e.g.,

Jureczki v. Banc One Texas, N.A., 252 F. Supp. 2d 368 (S.D. Tex.), aff’d, 75 Fed. Appx. 272

(5th Cir. 2003) (arbitration agreement in force at time of execution of bank signature card

valid even though customer claimed ignorance thereof); Goetsch v. Shell Oil Co., 197 F.R.D.

574 (W.D.N.C. 2000) (notice of change of terms in credit card agreement sufficient to bind

customer to arbitration provision where customer continued to use account); SouthTrust Bank

v. Williams, 775 So. 2d 184 (Ala. 2000) (same). However, we find that waiving the right to

have access to the courts is something much more significant and of a different character than

changing the terms and conditions of a bank account, assent for which can be obtained simply

by the continued use of the account. See McCreary, Stone, Gustavsson and Mattingly, supra.




                II.       WHETHER ROGERS’ DELAY IN DETECTING THE
                          FORGERIES BARRED SUIT AGAINST UNION
                          PLANTERS.



                                                  8
¶13.   The relationship between Rogers and Union Planters is governed by Article 4 of the

Uniform Commercial Code, enacted in Miss. Code Ann. §§ 75-4-101 through -504 (Rev.

2002). Section 75-4-406(a) & (c)5 provide that a bank customer has a duty to discover and

report “unauthorized signatures”; i.e., forgeries.6     Section 4-406 of the UCC reflects an

underlying policy decision that furthers the UCC’s “objective of promoting certainty and

predictability in commercial transactions.”          The UCC facilitates financial transactions,

benefitting both consumers and financial institutions, by allocating responsibility among the

parties according to whomever is best able to prevent a loss. Because the customer is more



       5
        Miss. Code Ann. § 75-4-406(a) & (c) (Rev. 2002) provide as follows:

       (a)     A bank that sends or makes available to a customer a statement of
               account showing payment of items for the account shall either return or
               make available to the customer the items paid or provide information in
               the statement of account sufficient to allow the customer reasonable to
               identify the items paid. The statement of account provides sufficient
               information if the items is described by item number, amount, and date
               of payment.

                                               ***

       (c)     If a bank sends or makes available a statement of account or items
               pursuant to subsection (a), the customer must exercise reasonable
               promptness in examining the statement or the items to determine
               whether any payment was not authorized because of . . . a purported
               signature by or on behalf of the customer was not authorized. If, based
               on the statement or items provided, the customer should reasonably have
               discovered the unauthorized payment, the customer must promptly notify
               the bank of the relevant facts.
       6
          Miss. Code Ann. § 75-3-403(a) (Rev. 2002) states that “an unauthorized signature is
ineffective except as the signature of the unauthorized signer in favor of a person who in good
faith pays the instrument or takes it for value.”

                                                 9
familiar with his own signature, and should know whether or not he authorized a particular

withdrawal or check, he can prevent further unauthorized activity better than a financial

institution which may process thousands of transactions in a single day.            Section 4-406

acknowledges that the customer is best situated to detect unauthorized transactions on his own

account by placing the burden on the customer to exercise reasonable care to discover and

report such transactions. The customer’s duty to exercise this care is triggered when the bank

satisfies its burden to provide sufficient information to the customer.   As a result, if the bank

provides sufficient information, the customer bears the loss when he fails to detect and notify

the bank about unauthorized transactions.      See, e.g., Am. Airlines Employees Fed. Credit

Union v. Martin, 29 S.W.3d 86, 92 (Tex. 2000).

       A.      Union Planters’ Duty to Provide Information under § 75-4-406(a).

¶14.   The court admitted into evidence copies of all Union Planters statements sent to Rogers

during the relevant time period.   Enclosed with the bank statements were either the cancelled

checks themselves or copies of the checks relating to the period of time of each statement.

The evidence shows that all bank statements and cancelled checks were sent, via United States

Mail, postage prepaid, to all customers at their “designated address” each month.          Rogers

introduced no evidence to the contrary.     We therefore find that the bank fulfilled its duty of

making the statements available to Rogers and that the remaining provisions of § 75-4-406 are

applicable to the case at bar. See Whitney Nat’l Bank v. Baker, 122 S.W.3d 204, 208 (Tex.

Ct. App. 2003) (bank’s duty under § 4-406 is satisfied when bank sends regular monthly

statements to customer).

                                                10
¶15.    In defense of her failure to inspect the bank statements, Rogers claims that she never

received the bank statements and cancelled checks. Even if this allegation is true,7 it does not

excuse Rogers from failing to fulfill her duties under § 75-4-406(a) & (c) because the statute

clearly states a bank discharges its duty in providing the necessary information to a customer

when it “sends . . . to a customer a statement of account showing payment of items.” See Miss.

Code Ann. § 75-4-406(a) (emphasis added). See also Stowell v. Cloquet Co-op Credit Union,

557 N.W.2d 567 (Minn. 1997) (once bank statements placed in mail, account holder bears risk

statements will be lost or intercepted). The word “receive” is absent. The customer’s duty to

inspect and report does not arise when the statement is received, as Rogers claims; the

customer’s duty to inspect and report arises when the bank sends the statement to the

customer’s address.     A reasonable person who has not received a monthly statement from the

bank would promptly ask the bank for a copy of the statement. Here, Rogers claims that she

did not receive numerous statements. We find that she failed to act reasonably when she failed

to take any action to replace the missing statements.

        B.      Rogers’ Duty to Report the Forgeries under § 75-4-406(d).

¶16.    A customer who has not promptly notified a bank of an irregularity may be precluded

from bringing certain claims against the bank:

                (d)     If the bank proves that the customer failed, with respect to
                        an item, to comply with the duties imposed on the


        7
         Since there was a series of forged checks, it is reasonable to assume that Reese
intercepted the bank statements before Rogers could inspect them. However, Union Planters
cannot be held liable for Reese’s fraudulent concealment.

                                                   11
                       customer by subsection (c), the customer is precluded
                       from asserting against the bank:

                       (1)    The customer’s unauthorized signature . . . on the
                              item, if the bank also proves that it suffered a loss
                              by reason of the failure; . . .

Miss. Code Ann. § 75-4-406(d)(1).

¶17.     Also, when there is a series of forgeries, § 75-4-406(d)(2) places additional duties on

the customer:

                       (2)    The customer’s unauthorized signature . . . by the
                              same wrongdoer on any other item paid in good
                              faith by the bank if the payment was made before
                              the bank received notice from the customer of the
                              unauthorized signature . . . and after the customer
                              had been afforded a reasonable period of time, not
                              exceeding thirty (30) days, in which to examine the
                              item or statement of account and notify the bank.

Id. A bank may shorten the customer’s thirty-day period for notifying the bank of a series of

forgeries, and here, Union Planters shortened the thirty-day period to fifteen days. The statute

states that a customer must report a series of forgeries within “a reasonable period of time, not

exceeding thirty (30) days, . .” “The 30-day period is an outside limit only. However 30 days

is presumed to be reasonable and the bank bears the burden of proving otherwise.” Lawrence’s

Anderson on the Uniform Commercial Code § 4-406:19, at 423 (3d ed. 2000); see also

Flagship Bank of Seminole v. Complete Interiors, Inc. 450 So. 2d 337 (Fla. Dist. Ct. App.

1984).

¶18.     Although there is no mention of a specific date, Rogers testified that she and her son

began looking for the statements in late May or early June of 2001, after her husband had died.

                                               12
Her son felt that it was prudent to consolidate some of the five bank accounts.     When they

discovered that statements were missing, they notified Union Planters in June of 2001 to

replace the statements.     At this time, no mention of possible forgery was made, even though

Neal, Jr., thought that “something was wrong.” In fact, Neal, Jr., had felt that something was

wrong as far back as December of 2000, but failed to do anything.       Neal, Jr., testified that

neither he nor his mother knew that Reese had been forging checks until September of 2001.8

Courts in Louisiana and Texas have held that, under similar circumstances, a customer’s claims

against a bank for paying forged checks are without merit. See Marx v. Whitney Nat’l Bank,

713 So. 2d 1142 (La. 1998); Ju-Nel Homes, Inc. v. White Rock Bank of Dallas, 632 S.W.2d

648 (Tex. Ct. App. 1982).

¶19.   Rogers is therefore precluded from making claims against Union Planters because (1)

under § 75-4-406(a), Union Planters provided the statements to Rogers, and (2) under § 75-4-

406(d)(2), Rogers failed to notify Union Planters of the forgeries within 15 and/or 30 days

of the date she should have reasonably discovered the forgeries.




               III.    WHETHER THE CIRCUIT COURT ERRED IN
                       DENYING UNION PLANTERS’ MOTIONS FOR
                       DIRECTED VERDICT AND/OR JNOV.

¶20.   We find that the circuit court erred when it denied Union Planters’ motions for directed

verdict and/or JNOV. Miss. Code Ann. § 75-4-406(e) (Rev. 2002) provides that the preclusion


       8
        Actually, it was Union Planters that notified Rogers that there had been forgeries, as
opposed to Rogers’ discovering the forgeries herself.

                                                  13
to bring claims against a bank may not apply if a customer “proves that the bank failed to

exercise ordinary care in paying the item and that the failure substantially contributed to [the]

loss.”9

¶21.      The only evidence put on by Rogers during her case-in-chief was live testimony by

Rogers and her son, Neal, Jr., and the deposition testimony of three Union Planters officers.

Most of this testimony pertained to the facts underlying the investigation into the forgeries.

The only testimony regarding Union Planters’ policies was elicited from Diane Towles, who

said that it was not Union Planters’ practice to inspect a signature card every time a check was

presented for payment. Under the statute, the only way Rogers could escape preclusion of her

claims was to prove that Union Planters failed to exercise ordinary care in the payment of the

forged checks.      Rogers presented absolutely no evidence concerning Union Planters’ alleged

failure to exercise ordinary care, much less present expert testimony on what ordinary care in

the banking business would be.




          9
           Miss. Code Ann. § 75-4-103(7) (Rev. 2002) provides as follows:

                         “Ordinary care” in the case of a person engaged in business
                 means 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 chapter or Chapter 4.

                                                 14
¶22.    In a recent case, a Georgia court held that summary judgment was appropriate where a

bank customer failed to present adequate evidence of the bank’s failure to exercise ordinary

care.      The customer’s expert witness testified that he had never analyzed fraud detection

systems in the Atlanta area, that he did not know what fraud detection procedures the bank

utilized, and that he did not know what, if anything, the bank and other Atlanta area banks

informed their customers about fraud detection procedures.         He opined that reasonable

commercial standards for banks in the Atlanta area did not require banks to inspect visually

every check and that no Georgia law required the bank to do so. Spacemakers of Am., Inc. v.

SunTrust Bank, 609 S.E.2d 683, 688-89 (Ga. Ct. App. 2005).

¶23.    As stated, the Georgia court held this expert testimony to be insufficient to create a

question of fact for the jury.   Because Rogers failed to put on any expert testimony pertaining

to ordinary care, Union Planters’ motions for directed verdict and/or JNOV should have been

granted.

                                         CONCLUSION

¶24.    The circuit court erred in denying Union Planters’ motion for JNOV because, under

§ 75-4-406, Rogers is precluded from recovering amounts paid by Union Planters on any of

the forged checks because she failed to timely detect and notify the bank of the unauthorized

transactions and because she failed to show that Union Planters failed to use ordinary care in

its processing of the forged checks.     Therefore, we reverse the circuit court’s judgment and

render judgment here that Rogers take nothing and that the complaint and this action are finally

dismissed with prejudice.

                                               15
¶25.   REVERSED AND RENDERED.

     SMITH, C.J., COBB, P.J., CARLSON, DICKINSON AND RANDOLPH, JJ.,
CONCUR. GRAVES, J., CONCURS IN PART AND DISSENTS IN PART WITHOUT
SEPARATE WRITTEN OPINION. EASLEY, J., DISSENTS WITHOUT SEPARATE
WRITTEN OPINION. DIAZ, J., NOT PARTICIPATING.




                                16
