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LOVE v. PENNSYLVANIA R.R. CO.

December 28, 1961

Dorothy H. LOVE
v.
The PENNSYLVANIA RAILROAD COMPANY v. The FIRST NATIONAL BANK OF ALTOONA, Central Trust Company and Charles M. Kurtz, Executor of the Estate of Carl Weiss, Deceased



The opinion of the court was delivered by: KRAFT

Plaintiff seeks damages against the Pennsylvania Railroad Company ('Railroad'), alleging that plaintiff, prior to the death of her father, Carl Weiss, was the owner jointly with him of 220 shares of the capital stock of the Railroad, with the right of survivorship, and that in September, 1955, the Railroad transferred such shares from the joint names of plaintiff and her father to the sole name of her father, pursuant to an assignment on which plaintiff's name was wrongfully and fraudulently forged.

The Railroad brought in as third-party defendants the First National Bank of Altoona and the Central Trust Company, who had guaranteed the purported signature of plaintiff and the signature of her father on a stock assignment and on a dividend request.

 Presently before us is plaintiff's motion for leave to amend her complaint so as to assert a claim against the third-party defendants based solely on their respective signature guarantees.

 The third-party defendants oppose the motion on the ground that the facts alleged in plaintiff's proposed amended complaint do not constitute a legal claim against either of them. We are persuaded that the third-party defendants' contention is sound, and that plaintiff's motion must be dismissed.

 Plaintiff relies in part upon § 8-312 of the Uniform Commercial Code, 12A P.S. § 8-312, as that section provided at the time of the guarantee:

 ' § 8-312. Effect of Guaranteeing Signature or Indorsement

 '(1) Any person guaranteeing a signature as being that of an indorser of a security warrants to any person taking or dealing with the security in reliance on the guaranteed signature that

 '(a) the signature is not forged; and

 '(b) the signer is the holder or has authority to sign in the name of the holder; and

 '(c) the signer has legal capacity to sign.

 'But the guarantor does not warrant the rightfulness of the particular transfer.

 '(2) * * *

 '(3) The guarantor of a signature or an indorsement shall be liable to any person, including an issuer who registers a transfer in reliance on the guarantee, for any loss resulting from breach of the warranties stated in this section but no issuer may require an indorsement guarantee as a condition to registration or transfer of a security.'

 Plaintiff emphasizes the phrase 'to any person' in subsection (3), and contends that these words establish the third-party defendants' liability to her for her loss resulting from the breach of the warranty that 'the signature is not forged.' While a literal reading of the provision leads some support to the plaintiff's contention, we think it clear that its language must be read in conjunction with that contained in subsection (1). So read, the signature guarantor's liability 'to any person' must be deemed coextensive merely with his warranty, which runs only 'to any person taking or dealing with the security in reliance on the guaranteed signature.' That this was the real meaning of subsection (3) seems apparent from the fact that the subsection was amended in 1959 to express, in clear and unequivocal language, that precise meaning. Since, under the averments of the ...


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