bank, such as Main Line, unless such negligence amounts to a lack of good faith, or unless the drawee bank returns the instrument or sends notice of dishonor within the limited time provided by § 4301 of the Pennsylvania adoption of the UCC. Perini, 553 F.2d at 404, 407; 13 Pa. Cons. Stat. Ann. § 3418 cmts. 4-5.
C. The Crossclaim of Merrill Lynch
Main Line has moved this Court to grant judgment on the pleadings on the crossclaim of Merrill Lynch as it relates to the Group One and Group Two checks. Because the parties agree that Main Line is entitled to judgment against Merrill Lynch on the Group One checks, however, this Court will apply the above legal analysis only to the crossclaim of contribution and/or indemnity and breach of presentment warranties as it relates to the Group Two checks.
In Pennsylvania, the right of contribution arises only between joint tortfeasors. Pennine Resources v. Dorwart Andrew & Co., 639 F. Supp. 1071, 1074 (citing Lasprogata v. Qualls, 263 Pa. Super. 174, 397 A.2d 803, 805 n.2 (Pa. Super. Ct. 1979)). Joint tortfeasors, as defined by the Pennsylvania Uniform Contribution Among Tortfeasors Act, are "two or more persons jointly or severally liable in tort for the same injury to persons or property, whether or not judgment has been recovered against all or some of them." 42 Pa. Cons. Stat. § 8322. Elaborating on the foregoing definition, Pennsylvania courts have reasoned that "the parties must either act together in committing the wrong, or their acts, if independent of each other, must unite in causing a single injury." Pennine Resources, 639 F. Supp. at 1074 (quoting Lasprogata, 397 A.2d at 805 n.4) (internal quotations and brackets omitted). Where two or more persons owe to another the same duty, and by their common neglect such other is injured, a joint tort has occurred. Id.
It is uncontested that Main Line accepted from Nancy Stedman the Group Two checks for deposit, and subsequently presented these checks to Merrill Lynch for payment. It is also uncontested that Merrill Lynch honored the Group Two checks when presented, and charged the WCMA of the ALA for instruments that in fact bore dual forgeries. However, the independent actions of Main Line and Merrill Lynch did not, as a matter of law, unite in causing the losses suffered by Travelers. Because the Group Two checks bore no true maker's signatures, no true payee ever existed in relation to the Group Two checks. It cannot be said, therefore, that the losses suffered by Travelers resulted from the combined conduct of Main Line and Merrill Lynch. Rather, the losses suffered by Travelers resulted from Merrill Lynch having paid over the forged maker's signatures contained in the Group Two checks, instruments not properly payable under the terms of the Pennsylvania's adoption of the UCC. See, e.g., National Credit, 771 F.2d at 157-58 (discussing loss causation in "double forgery" situations). Therefore, no joint tort occurred, and no right to contribution exists between Merrill Lynch and Main Line.
Furthermore, as discussed above, the UCC has codified the grounds for assessing liability in the transfer of negotiable instruments. While principles of law and equity, such as contribution, continue to supplement the provisions of the UCC, these principles only apply where specific provisions of the UCC have not displaced them. See 13 Pa. Cons. Stat. Ann. § 1103. Under the terms of the UCC, as discussed above, Merrill Lynch is strictly liable to Travelers for payment over the forged maker's signatures contained in the Group Two checks, and Merrill Lynch cannot share that liability with Main Line. Therefore, the claim for contribution by Merrill Lynch necessarily fails as a matter of law not only because Merrill Lynch and Main Line committed no joint tort but also because the provisions of the UCC do not allow for the division of liability between Merrill Lynch and Main Line.
The right of indemnity, unlike contribution, arises solely by explicit contractual agreement, or some other legal obligation between the parties which has been implicated because of a failure by the indemnitor to discover or correct a defect. Klotz v. Superior Elec. Products Corp., 498 F. Supp. 1099, 1101 (E.D. Pa. 1980). If however, the party seeking indemnification is actively negligent or is guilty of an independent act of negligence which also is a cause of the underlying injuries, indemnity is not available as a matter of law. Consolidated Rail v. Youngstown Steel Door Co., 695 F. Supp. 1577, 1581 (E.D. Pa. 1988). Nevertheless, if available, indemnity would shift the entire burden for the losses sustained by Travelers from Merrill Lynch to Main Line. See Eagle-Picher Industries v. United States, 846 F.2d 888, 892 n.4 (3d Cir. 1988).
Under the UCC, Main Line had a legal obligation to Merrill Lynch to act in good faith in its handling of the checks at issue here. See Perini, 553 F.2d at 404, 407; 13 Pa. Cons. Stat. Ann. § 3418 cmts. 4-5. Therefore, if Merrill Lynch can show that its crossclaim raises a factual issue as to whether Main Line acted in good faith with regard to the Group Two checks, then Merrill Lynch would have pleaded a viable claim for indemnification against Main Line such that Merrill Lynch's indemnity claim would survive the instant motion for judgment on the pleadings as to the Group Two checks. "Good faith" is defined as under the UCC as "honesty in fact in the conduct or transaction concerned." 13 Pa. Cons. Stat. Ann. § 1201.
According to the amended complaint, all of the Group Two checks were made payable to the ALA or to the ALA and Stedman and bore forged endorsements; these checks, totalling $ 85,254.01, were then accepted for deposit by Main Line into Stedman's personal account. Amended complaint P 15. In its crossclaim, Merrill Lynch alleges that it has a right to contribution and/or indemnity from Main Line "as a result of the negligence or intentional misconduct of [Main Line] which caused or contributed to plaintiff's losses," negligence or intentional misconduct apparently related to Main Line's acceptance of these checks for deposit. Amended crossclaims P 4.
Taking all inferences in Merrill Lynch's favor, as is required when considering the instant motion by Main Line for judgment on the pleadings, the Court concludes that these factual allegations are sufficient to create a inference that Main Line did not act in good faith with regard to the Group Two checks. As Merrill Lynch points out, the allegation that Main Line accepted six checks for deposit into Stedman's personal account despite the fact that the checks were made out to the ALA alone or in combination with Stedman, and despite the fact that the checks totalled a sizable amount, $ 85,254.01, provides sufficient support for Merrill Lynch's allegation that Main Line's actions may have constituted intentional misconduct. And if Main Line's alleged actions did constitute intentional misconduct, they could not have been made in good faith. As a result, the pleadings, as interpreted in Merrill Lynch's favor, indicate that Main Line breached its legal obligation to act in good faith toward Merrill Lynch and so Merrill Lynch's crossclaim for indemnity against Main Line survives the instant motion.
3. Breach of Presentment Warranties
The final count of the crossclaim by Merrill Lynch is a claim for the an alleged breach of presentment warranties under to 13 Pa. Cons. Stat. Ann. § 3417. As the Court illustrated above, the loss allocation rules of the UCC permit a payee bank to shift liability to a depositary bank via a claim for breach of presentment warranties if, and only if, the checks at issue contain only forged indorsements. Should the checks in fact also bear forged maker's signatures, then a depositary or collecting bank is immunized from liability for having honored such checks unless the depositary or collecting bank failed to meet the requirements of the final payment rule codified in 13 Pa. Cons. Stat. Ann. § 3418. See National Credit, 771 F.2d at 157; Perini, 553 F.2d at 404. Moreover, checks bearing dual forgeries are treated as though containing only forged maker's signatures. Thus, because it is uncontested that all Group Two checks bear forged maker's signatures, liability for honoring these checks may only be assessed under the loss allocation rules relevant to checks bearing only forged maker's signatures. See discussion supra part II.B. In other words, Merrill Lynch is precluded by the operation of law from asserting a claim for breach of presentment warranties under the loss allocation scheme of the UCC. As a matter of law, therefore, Merrill Lynch can prove no set of facts in support of this claim that would entitle it to the relief demanded, and this Court will accordingly also grant judgment on the pleadings to Main Line on the claim for breach of presentment warranties as it relates to the Group Two checks.
For the reasons stated in the foregoing discussion, the motion by Main Line for judgment on the pleadings as it relates to the claims for contribution and breach of presentment warranties on the Group One and Two checks will be granted. The motion by Main Line for judgment on the pleadings as it relates to the claim for indemnity, however, will only be granted with regard to the Group One checks and will be denied with regard to the Group Two checks.
An appropriate Order follows.
AND NOW, this 16th day of August, 1995, upon consideration of the motion by defendant Main Line Federal Savings Bank ("Main Line") for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c) or for partial summary judgment pursuant to Fed. R. Civ. P. 56(b) (Document No. 24), and the response of codefendant Merrill, Lynch, Pierce, Fenner & Smith ("Merrill Lynch") thereto, and for the reasons stated in the attached memorandum, it is hereby ORDERED that the motion for judgment on the pleadings is GRANTED ON ALL COUNTS of the crossclaim by defendant Merrill Lynch against defendant Main Line with respect to the GROUP ONE CHECKS.1a
IT IS FURTHER ORDERED that the motion for judgment on the pleadings is GRANTED on the counts of the crossclaim for CONTRIBUTION and BREACH OF PRESENTMENT WARRANTIES with respect to the GROUP TWO CHECKS.
IT IS FURTHER ORDERED that the motion for judgment on the pleadings is DENIED on the count of the crossclaim for INDEMNITY with respect to the GROUP TWO CHECKS.
LOWELL A. REED, JR., J.