                    United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 01-2197
                                   ___________

Anthony S. Cassello; Vincent            *
DiBenedetto; Bernard Grossman;          *
Martin L. Magee; Patricia B. Magee;     *
Vincent Palazzolo; Anthony J.           *
Pope; and Rocco A. Sapienza,            * Appeal from the United States
                                        * District Court for the Eastern
             Appellants,                * District of Missouri.
                                        *
      v.                                *
                                        *
Allegiant Bank and                      *
Royal Banks of Missouri,                *
                                        *
             Appellees.                 *
                                   ___________

                             Submitted: December 12, 2001

                                  Filed: May 1, 2002
                                   ___________

Before MORRIS SHEPPARD ARNOLD, BEAM, and RILEY, Circuit Judges.
                         ___________

MORRIS SHEPPARD ARNOLD, Circuit Judge.

      Anthony Cassello and the other plaintiffs appeal the judgment of the district
court granting Allegiant Bank's motion to dismiss and Royal Banks of Missouri's
motion for judgment on the pleadings. We affirm the district court’s judgment in part
and reverse it in part.
      According to the complaint, Ronald Roberts and Kenneth Powell fraudulently
induced the plaintiffs to write checks or to transfer funds by cashier's check to them,
or to organizations controlled by them, in amounts that totaled more than $2.5
million. The plaintiffs further alleged that the defendants, Allegiant and Royal, acted
negligently in depositing these checks because the checks lacked proper
endorsements or were made payable to entities other than the ones into whose
accounts they were deposited. The district court concluded that the Uniform
Commercial Code (UCC) preempted any common-law claims for negligence against
depositary banks, and that the UCC itself provided no cause of action for the maker
of a check or the purchaser of a cashier's check against a depositary bank that
improperly deposits the check.

                                            I.
       We first consider the plaintiffs’ common-law negligence claim. In interpreting
state laws such as the UCC, when sitting in diversity, we are bound by the decisions
of the relevant state's highest court. See Swope v. Siegel-Robert, Inc., 243 F.3d 486,
496 (8th Cir. 2001), cert. denied, 122 S. Ct. 198 (2001). Where, as in the present
case, the state's highest court has not addressed the question under consideration, we
are bound to apply the rule of decision that we believe the state's highest court would
apply. See id. In determining what the state's highest court would do, we often look
to the opinions of intermediate appellate courts of that state for guidance. See id.

      As the district court noted, the Missouri Court of Appeals has held that a
negligence claim in the circumstances that this case presents does not lie because the
UCC "pre-empts the claims and defenses regulating negotiable instruments, bank
deposits, and collections." City of Wellston v. Jackson, 965 S.W.2d 867, 869 (Mo.
Ct. App. 1998); see also Consolidated Public Water Supply v. Farmers Bank, 686
S.W.2d 844, 853 (Mo. Ct. App. 1985). While it is true, as plaintiffs maintain, that
City of Wellston is not technically controlling because it emanates from an

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intermediate court, we are obliged to follow the decisions of state intermediate courts
when they provide the best evidence of what the state's law is. Swope, 243 F.3d at
486.

       The plaintiffs nonetheless urge us to ignore City of Wellston because, they
argue, the Supreme Court of Missouri would come to a different conclusion if the
issue in this case (and that one) were to come before it. As the plaintiffs point out,
in Dalton & Marberry, P.C. v. NationsBank, N.A., 982 S.W.2d 231, 232-35 (Mo.
1998), the Missouri Supreme Court held that a common-law negligence action lay
against a bank that failed in its duty of inquiry when an employee, who was not
authorized to do so, repeatedly exchanged her employer’s checks drawn on the bank
for money orders or blank cashier's checks. It is plain, therefore, that the Supreme
Court of Missouri would not hold that all common-law actions of negligence by a
bank in connection with its handling of checks are preempted by the UCC.

       Allegiant and Royal argue that Dalton & Marberry is inapposite because in that
case the bank was both payee and drawee whereas in the instant case the banks are
merely depositary banks. But there is nothing in Dalton & Marberry that suggests
that the result there turned on this distinction. The case, it seems to us, stands for the
general proposition that a drawer may in the proper circumstances sue a bank for
negligently handling the drawer's checks. The UCC provides that "principles of law
and equity ... shall supplement its provisions" unless "displaced by [its] particular
provisions." Mo. Rev. Stat. § 400.1-103. We have discovered no "particular
provision" of the UCC that would "displace" a common-law claim of negligence, so
we conclude that the Missouri Supreme Court would hold that a drawer of a check
could have a common-law cause of action against a depositary bank for negligently
handling the drawer's check.

       We come to this conclusion with some very considerable reluctance because
of the holding in City of Wellston. But it is important to our reasoning that the UCC

                                           -3-
itself quite specifically reserves common-law claims unless they are particularly
displaced by one of its provisions. The code, in other words, does not purport to
occupy the field so completely as to preempt altogether any other law dealing with
bank collections. In short, it is not the only place to look to determine whether an
action lies in the present circumstances.

      One other point bears mentioning. We have not reached the question of
whether the facts pleaded by the plaintiffs in this case actually make out a claim of
negligence, because the parties have not raised or briefed that issue. We leave that
matter to such further proceedings in the district court as may occur.

                                           II.
       We turn now to a consideration of the plaintiffs’ contention that they have an
action against Allegiant and Royal under the UCC itself. In Rizzo Motors, Inc. v.
Central Bank of Kansas City, 825 S.W.2d 354, 357 (Mo. Ct. App. 1992), the Missouri
Court of Appeals held that the UCC's transfer warranties, see Mo. Rev. Stat. § 400.4-
207, do not run in favor of drawers. Instead, the drawer's cause of action is against
his or her own bank (i.e., the drawee bank) for improper payment, not against the
depositary bank. While we are not at all certain in any case that the transfer
warranties extend to the actions that plaintiffs complain about here, we think that the
Missouri Supreme Court would resolve the issue presented in Rizzo the same way that
the Rizzo court did because the result there is supported by both reason and authority.

       The UCC creates warranties in favor of transferees or holders, and the plaintiffs
here are neither: they are not holders because the relevant instruments are not
payable to bearer or to themselves, see Mo. Rev. Stat. § 400.1-201(20), and they are
not transferees because they were not given possession of those instruments "for the
purpose of giving [them] the right to enforce" those instruments, see Mo. Rev. Stat
§ 400.3-203(a). As a leading treatise notes, "[w]arranties made by a transferor of a
check do not go beyond the drawee. Thus, the depositary bank that presents a check

                                          -4-
for payment makes no warranty to the drawer." 2 J. White & R. Summers, Uniform
Commercial Code, § 18-7 at 234 n. 8. (4th ed. 1995).

        Royal points out that while the plaintiffs were drawers of some of the checks
in issue, they were remitters of the others (the cashier’s checks). The UCC defines
a remitter as "a person who purchases an instrument from its issuer if the instrument
is payable to an identified person other than the purchaser." Mo. Rev. Stat. § 400.3-
103(a)(11). Royal argues that as remitters the plaintiffs also have no claim against
the depositary banks for breach of warranty. We agree. Missouri courts have held
that a remitter may assert a contract claim against the selling bank when the check is
paid to an improper party. See, e.g., C.A.L., Inc. v. Worth, 813 S.W.2d 12, 16 (Mo. Ct.
App. 1991); Twellman v. Lindell Trust Co., 534 S.W.2d 83, 97 (Mo. Ct. App. 1976).
But a remitter lacks a cause of action under the UCC against a depositary bank,
unless, of course, the depositary bank was also the issuing bank. The proper party to
sue the depositary bank under the UCC is the drawee. See Twellman, 534 S.W.2d at
98. The remitter should instead bring his or her action, if any, against the bank that
sold the remitter the cashier's check. See C.A.L, 813 S.W.2d at 16; Twellman, 534
S.W.2d at 97. While it is true that C.A.L. and Twellman were decided before adoption
of the revised UCC in Missouri, we see nothing in the revised version that would
make for an opposite result in this case.

                                         III.
       For the foregoing reasons, we affirm the judgment of the district court in part
and reverse it in part. We remand the case to the district court for further proceedings
not inconsistent with this opinion.




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A true copy.

      Attest:

         CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




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