Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.



filed: August 7, 1981.


Nos. 82 and 86 Pittsburgh, 1980, Appeal of: West Penn Administration, Inc. at No. 82 Pittsburgh 1980, Appeal of: Pittsburgh National Bank at No. 86 Pittsburgh 1980, Appeal from Orders of the Court of Common Pleas, Civil Division, of Allegheny County, October Term, 1972, No. 3547.


George E. McGrann, Pittsburgh, for West Penn, et al., appellants (at No. 82) and appellees (at No. 86).

Richard B. Tucker, III, Pittsburgh, for Pittsburgh National, appellant (at No. 86) and appellee (at No. 82).

Stephen A. George, Pittsburgh, for Union National, et al., appellees.

Price, Cavanaugh and Hoffman, JJ.

Author: Price

[ 289 Pa. Super. Page 462]

This appeal arises out of an action in trespass and assumpsit brought to recover damages caused by an embezzlement. Appellants, West Penn Administration, Inc. and its constituent trustees, trusts and unincorporated associations [hereinafter West Penn], commenced this action on September 26, 1972, by filing a writ of summons against Pittsburgh National

[ 289 Pa. Super. Page 463]

Bank [hereinafter PNB]. West Penn filed a complaint on June 16, 1975 seeking to recover from PNB losses allegedly incurred through PNB's negligent payment of checks bearing PNB's forged endorsement. PNB asserted, inter alia, that West Penn lacked standing to institute this action. On May 21, 1979 PNB filed a motion for judgment on the pleadings based upon West Penn's alleged lack of standing, to which West Penn replied that it had acquired standing through an assignment. West Penn then filed a motion for judgment on the pleadings on Count I of its complaint, which sought recovery for twenty-one checks on which PNB was both the payee and the drawee. Following a hearing the trial court entered an order granting the motion of PNB and denying that of West Penn. On January 28, 1980, West Penn appealed the trial court's order.

Shortly after this action was commenced, PNB joined appellee The Union National Bank of Pittsburgh [hereinafter Union National], McRandal Brothers, Inc., Chrisal, Inc., A.J.A., Inc. and John F. Miller as additional defendants. PNB alleged that Union National was liable to PNB for any loss it sustained on the basis of Union National's neligent acceptance of the deposits and Union National's guarantee of prior endorsements. Union National then moved for summary judgment, contending that the action was barred by res judicata and collateral estoppel. Following a hearing Union National's motion was granted and PNB's appeal ensued. The appeals of West Penn and PNB have been consolidated for our review.

The following are the pertinent facts.*fn1 West Penn Administration, Inc. is a nonprofit corporation engaged in administering the pension and welfare trusts of the other appellants.*fn2 The trusts were established pursuant to collective bargaining agreements between certain employers in

[ 289 Pa. Super. Page 464]

    the construction industry and union representatives. The agreements required the parties to periodically submit "Employer Contribution Reports" listing their employees and the benefits each employee had accrued during that period. Checks for the aggregate amount due for employee benefits were to accompany the reports. Approximately ninety per cent of the reports and checks were mailed directly to West Penn. West Penn would process the checks and then deposit them in one of the four employee contribution accounts it had established with PNB in 1964.*fn3 The remaining ten percent of the checks were mailed to PNB. PNB would deliver these checks to West Penn for processing prior to accepting them for deposit.

The procedures used by West Penn and PNB in accounting for the employer contribution checks enabled a West Penn account auditor and bookkeeper, John F. Miller, to divert one hundred and twenty-one of the checks to his own use. Commencing in October of 1969, when Miller received reports with accompanying checks he would take the check and stamp the report "Report Without Payment." For each report he then entered a false account receivable in the computer. He subsequently made a false journal voucher indicating that the dilatory payment had been received. The journal voucher was given to keypunchers who fed the information into the computer, erasing the account receivable from the data banks. Miller would then destroy the false journal voucher, type a false endorsement on the check and deposit the check in one of four accounts at Union National to which he had access.*fn4

A Union National teller questioned the first check Miller presented for deposit. Miller told her that the check had

[ 289 Pa. Super. Page 465]

    been made out to the wrong payee. The teller consulted one of her supervisors for approval and then processed the check. The additional checks were accepted for deposit in a similar manner. Union National stamped all of the checks with its guarantee of prior endorsements and forwarded them to the drawee banks for payment. All of the drawees, including PNB who was both payee and drawee for twenty-one of the checks, paid the checks without question. Through this scheme Miller was able to withdraw the money and divert $444,527.57 to his personal use.

Soon after forging the initial endorsements Miller became ill and was absent from work for three months. During his absence, a chief officer of West Penn discovered a discrepancy in one of the falsified accounts and located the false journal voucher. West Penn failed to conduct an investigation, however, and the remainder of the forgeries passed undetected.

West Penn inadvertently learned of the fraud in February of 1970. Although he was not a suspect, Miller fled the state. He subsequently surrendered and pled guilty to criminal charges. Union National promptly garnished Miller's assets, recovering $390,187.20.

We were first presented with an action arising out of these transactions in West Penn Administration, Inc. v. Union National Bank, 233 Pa. Super. 311, 335 A.2d 725 (1975) [hereinafter West Penn I ]. West Penn brought this earlier action against Union National to recover all of the fraudulently deposited funds. In that action we were obliged to initially determine who had standing to bring an action for recovery of the proceeds. West Penn contended that, as the trustee of the accounts, it was the payee and, therefore, had standing under § 3110(a)(5) of the Uniform Commercial Code*fn5 to bring an action to recover the funds. We found,

[ 289 Pa. Super. Page 466]

    however, that the checks named PNB the unconditional payee and the additional words "(Tradename) Contribution Account" were of no significance in identifying the payee. Thus, under § 3117(3) of the Uniform Commercial Code,*fn6 PNB was the payee and, as such, PNB was the real party in interest. Accordingly, West Penn could proceed against Union National only through an assignment of PNB's claims.

We next addressed the question whether West Penn could, with PNB's assignment, assert the forgeries against Union National. We concluded that the evidence supported the trial court's finding that West Penn and PNB committed gross negligence that "substantially contributed" to the making of the forgeries. West Penn I, 233 Pa. Super. at 332, 335 A.2d at 733; 13 Pa. C.S.A. § 3406.*fn7 Therefore, PNB was

[ 289 Pa. Super. Page 467]

    estopped from denying the forgeries, and West Penn, as PNB's assignee, could not raise them.

We then determined that Union National had acted in accordance with reasonable business standards in accepting the checks for deposit. Accordingly, we affirmed the verdict limiting Union National's liability to those assets which Union National had successfully recovered through its fraudulent debtors attachment action.

West Penn instituted the instant case against PNB to regain those funds not recovered in West Penn I. West Penn's claim is grounded upon PNB's alleged negligent processing of all of the checks and upon PNB's alleged conversion of the twenty-one checks drawn on and payable to PNB. PNB contends that Union National became responsible for the twenty-one checks when it made its guarantees of prior endorsements. Moreover, PNB claims that the loss was caused by the negligence of West Penn and Union National.

The trial court first held that West Penn lacked standing to bring an action for the twenty-one checks, and accordingly, denied West Penn's motion seeking recovery of the proceeds. Second, the court held that West Penn was barred from proceeding on its negligence claim against PNB because West Penn had itself been found grossly negligent in the same transaction. Finally, the court held that PNB was precluded from proceeding against Union National on the basis of collateral estoppel. For the following reasons we affirm the orders of the court below.

We first address the trial court's grant of PNB's motion for judgment on the pleadings. "To determine the propriety of awarding judgment on the pleadings, we must . . . [accept] as true all well-pleaded averments of fact of the party against whom the motion is granted and [consider] against him only those facts that he specifically admits. Bata v. Central-Penn National Bank, 423 Pa. 373, 224 A.2d 174 (1966), cert. denied, 386 U.S. 1007, 87 S.Ct. 1348, 18 L.Ed.2d 433 . . . (1967)." Beckman v. Dunn, 276 Pa. Super. 527, 531,

[ 289 Pa. Super. Page 468419]

A.2d 583, 585 (1980). The parties cannot be deemed to admit either conclusions of law or unjustified inferences. Sinn v. Burd, 486 Pa. 146, 404 A.2d 672 (1979); Higbee Corporation v. Kennedy, 286 Pa. Super. 101, 428 A.2d 592 (1981). We will affirm the grant of such a motion only when the moving party's right to succeed is certain. Leidy v. Deseret Enterprises, Inc., 252 Pa. Super. 162, 381 A.2d 164 (1977).

West Penn admits that it is bound by our earlier holding that PNB is the real party in interest.*fn8 West Penn argues, however, that it has acquired standing to proceed against PNB through the following assignment.

Know all men by these presents, that Pittsburgh National Bank (PNB), a national banking association organized and existing under the laws of the United States and having its principal office at One Oliver Plaza, Pittsburgh, Pennsylvania, in consideration of the sum of One ($1.00) Dollar to it in hand paid, the receipt whereof is hereby acknowledged and other good and valuable consideration, intending to be legally bound hereby, has sold, assigned, transferred, and set over unto West Penn Administration Inc. (West Penn), a non-profit corporation, its successors and assigns, to their own proper use and benefit, any and all sums of money due or owing PNB and any and all claims, demands, and causes of action whatsoever in law or in equity which it has or may have against The Union National Bank of Pittsburgh (Union National) arising out of those certain series of transactions or occurrences involving the negotiation by Union National of certain checks payable to PNB, said transactions or occurrences being more fully set forth in the Amended Complaint filed of record in the Court of Common Pleas of Allegheny County, Pennsylvania, Civil Division, at No. 723 October Term, 1970, in a certain legal action entitled "West Penn Administration, Inc. et al., plaintiffs, versus The Union National Bank of Pittsburgh, defendant," said checks being more fully identified in Exhibit "A" attached to said Amended Complaint.

[ 289 Pa. Super. Page 469]

(Record at 32a). In support of this contention, West Penn claims that PNB as payee had rights against PNB as drawee. West Penn argues that only PNB's rights as payee were transferred by this assignment, and as recipient thereof, West Penn can proceed against PNB acting in the capacity of drawee. We disagree.

It is axiomatic that a party may not sue himself. Such an action would perforce have an absurd result. Moreover, it would deny the court the benefit of truly adverse parties. See Moore v. Jamieson, 451 Pa. 299, 306 A.2d 283 (1973). PNB as payee could not, therefore, bring an action against itself as drawee. Since "[a]n assignment does not confer upon the assignee any greater right, power, or interest than that possessed by the assignor," West Penn is precluded from bringing a conversion action against PNB.*fn9 Pa. Higher Education Assistance Agency v. DeVore, 267 Pa. Super. 74, 76, 406 A.2d 343, 344 (1979).

West Penn next claims that it has common law standing to bring an action against PNB to recover losses allegedly incurred because of PNB's negligence.*fn10 Again, we disagree.

In West Penn I we affirmed the trial court's finding that West Penn and PNB were grossly negligent in their management of the contribution checks. 233 Pa. Super. at 329, 335 A.2d at 735.*fn11 West Penn correctly states that

[ 289 Pa. Super. Page 470]

    negligence is not a bar to recovery against a party who is guilty of wanton, reckless or grossly negligent conduct.*fn12 West Penn's gross negligence, however, is a bar to its recovery.*fn13 Hogg v. Bessemer and Lake Erie Railroad Company, 373 Pa. 632, 96 A.2d 879 (1953). "Plaintiff's reckless conduct bars recovery for the result of defendant's wanton misconduct for the same reason that contributory negligence constitutes a defense to an action based on mere negligence." Elliott v. Philadelphia Transportation Co., 356 Pa. 643, 53 A.2d 81 (1947). Thus, as with contributory negligence, plaintiff's gross negligence is a bar because it presents a new cause that replaces defendant's gross negligence as the legal cause of plaintiff's injury.*fn14 West Penn thus cannot bring a negligence claim against PNB.

[ 289 Pa. Super. Page 471]

We next address the trial judge's grant of Union National's motion for summary judgment.*fn15 We affirm the order granting the motion for two reasons. First, PNB had joined Union National as an additional defendant in order to seek indemnification. Record at 10a-17a. In light of our affirmance of the order granting PNB's motion for judgment on the pleadings PNB logically has no claim against Union National. Second, as the real party in interest, PNB*fn16 has assigned to West Penn all of its claims against Union National arising out of this dispute.*fn17 "When the parties to an agreement reduce their understanding to a writing which uses clear and unambiguous terms, a court need look no further than [the] writing itself when asked to give effect to that understanding. Robert F. Felte v. White, 451 Pa. 137, 144, 302 A.2d 347, 351 (1973)." In Re Estate of Breyer, 475 Pa. 108, 115, 379 A.2d 1305, 1309 (1977). The effect of the assignment then becomes a question of law to be decided by the court. Katz v. Pittsburgh Mercantile Co., 414 Pa. 638, 202 A.2d 25 (1964). PNB's assignment to West Penn unequivocally conveyed to West Penn any and all of PNB's claims arising out of the diversion of the contribution checks.*fn18 PNB, therefore, cannot bring an action against Union National for claims arising out of these transactions.

[ 289 Pa. Super. Page 472]

Accordingly, we affirm the orders of the court of common pleas.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.