No. 2741 October Term, 1978, Appeal from the Judgment entered in the Court of Common Pleas of Philadelphia County, Trial Division at No. 2900 December Term, 1973.
John J. O'Brien, Jr., Philadelphia, for appellant.
Ronald H. Surkin, Philadelphia, for appellee.
Spaeth, Hester and Cavanaugh, JJ. Hester, J., concurs in the result.
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This is an action against a bank for honoring checks claimed to have been unsigned and therefore issued without authority. The critical issue is whether the drawer of the checks is precluded by its negligence from asserting the lack of authority.
In April 1970, appellant opened a regular checking account at the Hunting Park branch of appellee Continental Bank. Appellant had its checks printed by its own printer to its own specifications. Record at 228a. In the lower right hand corner, where ordinarily the drawer signs a check, appellant had printed its full corporate name, "Jacoby Transport System, Inc.," with no signature lines underneath. Paul Pidgeon, assistant vice-president of Continental's depositing-accounting department, testified that Continental will print personalized checks for its customers, and that in the case of a corporate customer, such checks will generally have two signature lines below the corporate name. Record at 323a. Robert Campbell, also an assistant vice-president of Continental, testified that when a corporate customer opens an account, the bank obtains a resolution listing the officers authorized to sign checks on behalf of the corporation and a signature card containing their signatures. Record at 236a. On file at Continental's Hunting Park branch was a signature card containing the following signatures: "Lee Burgher, Harold Burgher, James Burgher." Record at 339a. The name, "Jacoby Transport System, Inc.," did not appear as a signature on the card. Record at 340a.
On October 18, 1972, Harold Burgher, sole owner of appellant's stock and its secretary-treasurer, and Ray Slater entered into an agreement by which appellant agreed to buy Slater's trucking business for $16,000, with a down payment of $3,000 and weekly payments of $250, with 6% interest. Record at 490a-491a. When Slater was unable to deliver
[ 277 Pa. Super. Page 443]
title to all the equipment at settlement, Burgher gave Slater a check for $3,000, for the down payment, and a folder of post-dated checks covering the balance of the purchase price. The first of the post-dated checks was dated October 30, 1972. The next November 6, 1973, and so on until the last, dated September 17, 1973. Record at 495a-511a. None of the checks, however, had Burgher's or any other authorized signature below the name "Jacoby Transport System, Inc.," in the lower right hand corner. When Slater remarked to Burgher that the checks were unsigned, Burgher replied that each check would be signed as and when he received the completed certificates of title covering the equipment. Record at 457a.
Slater proceeded to negotiate the checks by presenting them to the Girard Bank, without obtaining Burgher's or any other authorized, signature.*fn1 Pidgeon testified that the checks made their way to Continental through a clearing house. He further testified that Continental's bookkeeping personnel did not examine such checks for facial regularity because of the volume processed by the bank on a daily basis -- approximately 94,000, Record at 288a -- and a clearing house rule requiring return of the checks, Record at 308a; the only time such an examination was made was in special circumstances, such as an outstanding stop payment order, or because the account was on customer referral, Record at 308a. Pidgeon testified that Continental's practice was to examine for facial regularity only checks that it cashed, Record at 309a, and that the practice of other banks in Philadelphia was essentially the same, Record at 311a-312a.
Between October 20, 1972, and May 23, 1973, Slater negotiated 38 of the unsigned checks that Burgher had given him at settlement. Appellant received at least one of the 38 checks in each of its monthly statements from ...