Melley v. Pioneer Bank, N.A.

834 A.2d 1191, 2003 Pa. Super. 389, 2003 Pa. Super. LEXIS 3689
CourtSuperior Court of Pennsylvania
DecidedOctober 21, 2003
StatusPublished
Cited by24 cases

This text of 834 A.2d 1191 (Melley v. Pioneer Bank, N.A.) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Melley v. Pioneer Bank, N.A., 834 A.2d 1191, 2003 Pa. Super. 389, 2003 Pa. Super. LEXIS 3689 (Pa. Ct. App. 2003).

Opinion

TAMILIA, J.

¶ 1 Pioneer Bank, N.A., appeals from the January 15, 2002 judgment entered against it following the November 29, 2000 *1195 verdict in favor of appellees, sisters Jennifer and Stephanie Melley. The court concluded appellant wrongfully allowed a third party, the girls’ mother, to misappropriate and dissipate funds awarded to ap-pellees as proceeds from a wrongful death and survival action brought on their behalf as a result of their father’s death in a fire. The aggregate judgment entered against appellant and in favor of appellees was $351,385.89, plus delay damages. 1

¶ 2 The facts underlying this appeal, as set forth by the trial court, follow.

The father of [appellees] died in a fire and an action was subsequently brought by his estate to recover damages for wrongful death and survival. A settlement was achieved and checks were cut in favor of wife, Sandra Melley, and her daughters, Stephanie and Jennifer Mel-ley [then minors]. By Orders dated September 30, 1987 and February 3, 1988, the Court of Common Pleas of Philadelphia directed that the settlement checks be made out in favor of the mother, Sandra Melley for the benefit of the minor [appellees] as parent and natural guardian of the children, Stephanie and Jennifer.
On November 20,1987, Sandra Melley appeared at [appellant] bank in upstate Pennsylvania and opened a new account in her name only. She was permitted to deposit the first set of settlement checks therein, which were made payable to Sandra Melley, as parent and natural guardian of Stephanie and Jennifer Mel-ley. No further restrictions were in-eluded on said checks. On March 4, 1988, Sandra Melley appeared at the same bank and made a further deposit of a second set of checks from the same settlement funds. These checks clearly stated that the funds were made payable to Sandra Melley, as parent and natural guardian of Stephanie and Jennifer Mel-ley, minors pursuant to Court Order, dated February 3,1988.
These transactions were completed by an employee of the [appellant] bank, Ms. Chapman, who was in customer service at the branch where the account was established.

Trial Court Opinion, Watkins, J., 1/16/03 at 2 (emphasis in original, citations omitted). Appellees brought suit on February 24, 1997, alleging, inter alia, that appellant wrongly allowed their mother to convert the funds owned by them and deposited in appellant bank. Judgment was entered in appellees’ favor, post-trial motions were denied, and this appeal followed.

¶ 3 The September 30,1987 Order states in pertinent part that distribution of the sisters’ share would be payable to

Sandra Melley, as parent and natural guardian of Jennifer Melley, a minor (Date of birth 12/7/75), said sum to be deposited in a federally insured restricted bank account not to be withdrawn until the minor reaches her eighteenth birthday on 12/7/93.

Plaintiffs’ Exhibit 1. The Order relative to appellee Stephanie was worded identically, with the child’s July 5, 1978 birthdate indi *1196 cated. Id. Each child was to receive $53,751.45.

¶ 4 The February 3, 1988 Order stated the individual awards to the sisters were to be made payable to

Sandra Melley, as parent and natural guardian of Jennifer Melley, a minor (Date of birth 12/7/75), said sum to be deposited in a federally insured restricted bank account not be withdrawn -until the minor reaches her eighteenth birthday on 12/7/93.

Plaintiffs’ Exhibit 3. Once again, the Order relative to Stephanie was worded identically, with her July 5, 1978 birthdate substituted and funds not to be withdrawn until her eighteenth birthday on 7/5/96. Id. Each child was to receive $44,444.45.

¶ 5 Appellant raises six issues on appeal.
1. Did the [t]riai [c]ourt err as a matter of law by failing to find in the bank’s favor based upon protections set forth in the Uniform Fiduciaries Act (“UFA”)?
2. Did the trial court err as a matter of law in finding the Bank’s conduct to be the proximate cause of [appellees’] damages in light of the intervening, superseding criminal actions and/or conversion of [appellees’] mother?
3. Are Jennifer Melley’s claims barred by the applicable statute of limitations?
4. Were the Bank’s actions consistent with the requirements of the Uniform Commercial Code (“UCC”)?
5. Did the [t]rial [j]udge improperly calculate interest or delay damages?
6. Was the [t]rial [c]ourt bound by the “law of the case” erroneously established in pre-trial orders of a different £j]udge?

Appellant’s brief at 4.

¶ 6 Appellant first argues its teller’s actions were protected from appellees’ claim by the Uniform Fiduciaries Act (UFA), 7 P.S. § 6351, et. seq. Section 6372 of the UFA, Transfer of negotiable instruments by fiduciary, provides a bank’s actions may be protected by its demonstrated “good faith.” This “good faith” section states generally that if the fiduciary, herein mother, indorses 2 the instrument, the indorsee, herein appellant bank, “is not bound to inquire whether the fiduciary is committing a breach of his obligation as fiduciary in indorsing or delivering the instrument, and is not chargeable with notice that the fiduciary is committing a breach of his obligation as fiduciary unless he takes the instrument with actual knowledge of such breach or with knowledge of such facts that his action in taking the instrument amounts to bad faith.” (Emphasis added). Relying on this section, appellant believes its actions were protected, and appellees did not establish the bank’s actions fell below “a reasonable standard of commercial practice,” or that it acted in bad faith. Appellant’s brief at 16.

[I]t is critical to understand that no restrictive language appears on the face of either the December Checks or the March Checks (together, the “Settlement Checks”). Language on the “payee” line of the Settlement Checks identifying Sandra Melley as the parent and natural guardian of the individual [ap-pellees] is merely descriptive; however, it neither creates a “restriction” on the deposit of the Settlement Funds nor places the Bank on notice of the exis *1197 tence of any such restriction. In fact, under the UFA, the Bank has no duty of inquiry as to the existence of a restriction even if suspicious circumstances exist (which the facts of this case do not reflect in any manner). Without notice, knowledge or duty of inquiry concerning the existence of a restriction, there is no basis in law to find the Bank acted in bad faith.

Id. at 17 (emphasis in original, citation omitted).

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Bluebook (online)
834 A.2d 1191, 2003 Pa. Super. 389, 2003 Pa. Super. LEXIS 3689, Counsel Stack Legal Research, https://law.counselstack.com/opinion/melley-v-pioneer-bank-na-pasuperct-2003.