No. 1040 Philadelphia 1983, No. 01123 Philadelphia 1983, Appeal from the Judgment entered April 6, 1983, in the Court of Common Pleas of Philadelphia County, Civil No. 196 February Term 1979.
Ronald H. Surkin, Philadelphia, for appellant (at 1040) and for appellee (at 1123).
Richard M. Jordan, Philadelphia, for appellant (at 1123) and for appellee (at 1040).
McEwen, Olszewski and Hoffman, JJ. McEwen, J., concurs in the result.
[ 337 Pa. Super. Page 507]
This case is a subplot in the story of Richard Robinson, a one-time partner in the law firm of Bolger & Picker who, in 1978 and 1979, embezzled funds from an escrow account of the law firm and converted checks belonging to clients. This action deals solely with the embezzlement of funds held for Robinson Protective Alarm Company. The question before us is who shall bear the loss.*fn1
[ 337 Pa. Super. Page 508]
Each of the appellants, Bolger & Picker and Continental Bank, contends that the other should bear the loss. The trial court held that the loss should fall on the law firm to the extent of $206,247.75 and on Continental to the extent of $140,000. Both appeal.
The facts are these: Robinson Protective was involved in a tax dispute with the City of Philadelphia, and engaged Bolger & Picker to represent the company. The disputed tax was to go into an escrow account under the control of Bolger & Picker*fn2 and the tax due would be paid from this account when the parties settled. The account at Continental was opened in the name of "Bolger & Picker, Escrow Agents," and three partners, including Richard Robinson, signed a signature card enabling any one partner to withdraw funds. Continental was not a party to the escrow agreement and knew nothing of its terms. Lower court opinion at 4.
Robinson Protective paid approximately $50,000 per year into this account from 1972 to 1978; the money was kept in a passbook savings account and in certificates of deposit in the name of "Bolger & Picker, Escrow Agents."
Richard Robinson, on April 5, 1978, requested Continental to redeem a certificate of deposit and put the proceeds into the savings account. On April 6, he directed Continental to draw a check for $100,000 on the account, payable to the order of "BEDCO."*fn3 Lower court opinion at 16. The bank issued a treasurer's check as directed and delivered it to
[ 337 Pa. Super. Page 509]
Richard Robinson. On May 4, 1978, at Richard Robinson's request, the bank redeemed a second certificate, issued a check for $140,000 payable to Blythe, Eastman, Dillon and Company, and delivered it to him. On January 2, 1979, Continental redeemed a third certificate, and issued and delivered a check for $106,247.75, payable to Bolger & Picker, Escrow Agents, again at Richard Robinson's request.*fn4 Richard Robinson used these checks for his own purposes.
The funds for the first check came from the savings account, which was composed in part of the proceeds of a certificate of deposit, No. 3-91891, owned by "Bolger & Picker, Escrow Agents." The funds for the second check came from a certificate of deposit, No. 3-94855, owned by "Bolger & Picker, Escrow Agents." The funds for the third check came from a certificate of deposit, No. 3-99924, owned by "Bolger & Picker, Escrow Agents." None were endorsed, as required by bank rules. Lower court opinion at 17-19.
The trial court initially held the bank liable for all three withdrawals,*fn5 but on the bank's exceptions, held that Continental was liable for only $140,000, the amount of the second certificate.*fn6 The court based its holding on 13 Pa.C.S. § 3419 (Purdon's 1984 Pamphlet), stating that the bank had not paid the certificate in accordance with ...