Opinion
Nov. 21, 1972.
Editorial Note:
This case has been marked 'not for publication' by the court.
Page 364
Louis Parkinson, Englewood, for plaintiffs-appellants.
Dawson, Nagel, Sherman & Howard, Craig A. Christensen, Denver, for defendant-appellee.
COYTE, Judge.
Plaintiff Ross Clinger was a co-owner with plaintiff George Laumeyer of Rockwell Concrete Products, Inc. Defendant Dennis Clinger, Ross's twin brother, owned Republic Concrete Construction Co. At a meeting held to settle the accounts between the concrete companies, it was determined that Republic owed Rockwell $3,952.71 and that Rockwell owed Republic $3,848.30. Dennis and his wife prepared a check for $3,952.71 on the Republic account payable to Dennis Clinger And Rockwell Concrete Products. The two brothers took the check to the Continental National Bank and the bank, at their request, certified the check. They then proceeded to the Southwest State Bank where Ross endorsed the check as agent for Rockwell and deposited it in the Rockwell account. Dennis was standing beside Ross at the teller's window when this transaction took place, but he did not endorse the check nor did the Southwest State Bank employee notice that two endorsements were required. Southwest State Bank then gave Ross a cashier's check payable to Republic Concrete Construction Co. for $3,848.30, which Ross delivered to Dennis.
When the $3,952.71 certified check was presented for payment to the Continental National Bank, the bank refused payment because of the missing endorsement and returned it to the Southwest State Bank, the collecting bank. Ross then added the endorsement of Dennis Clinger to the check and attempted to re-negotiate it. Payment was again refused by Continental National Bank. In the meantime Dennis requested Continental National Bank to stop payment on the certified check. Continental National Bank subsequently released to Republic the funds which the bank had been holding from the Republic account for payment of the certified check.
Plaintiffs brought suit against defendants, Dennis Clinger and Republic Concrete Construction Co., on three claims for relief and against defendant Continental National Bank for wrongful release of funds. Trial was to the court which found in favor of plaintiffs and against Dennis Clinger and Republic Concrete Construction Co. and entered judgment accordingly, but dismissed plaintiffs' complaint against Continental National Bank. The only appeal in this case is plaintiffs' appeal from the order dismissing plaintiffs' claim against the bank.
Plaintiffs claim that had the bank not released the funds those funds would be available to satisfy their judgment against the other defendants. They therefore urge that the Continental National Bank is liable to them for damages which they sustained because of the bank wrongfully releasing to the drawers, Dennis Clinger and Republic Concrete Construction Co., funds encumbered by the certified check. We reject this contention and affirm the judgment.
Under their theory of wrongful release, plaintiffs contend that the bank was obligated to the payees of the certified check to set aside and hold certain funds belonging to the drawer for the benefit of the payees. No statute or case cited by plaintiffs imposes such obligation on the bank. On the contrary,
'A check or other draft does not of itself operate as an assignment of any funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until (it) accepts it.' C.R.S.1963, 155--3--409.
Certification of a check constitutes acceptance, C.R.S.1963, 155--3--411(1), and this acceptance is the bank's signed engagement to pay the check upon presentment when properly endorsed. C.R.S.1963, 155--3--410(1) and 155--3--413(1). The statutory effect of the bank's certification was to create the bank's direct liability on the instrument when properly endorsed and presented for payment. The fact that the bank released the funds to the drawer's account created no new liability on the part of the bank. Even after release of the funds, if the certified check were presented in a properly endorsed form, the bank would have been liable on it.
Continental National Bank's obligation was on the instrument and was to make payment upon proper presentment. Since the check was made payable to the order of Dennis Clinger and Rockwell Concrete Products, the signatures of both payees were required for negotiation. C.R.S.1963, 155--3--116. Refusal of the bank to pay the check was not a breach of its obligation on the instrument.
Since the issue is not before this court as to whether Dennis should be required to endorse the check and revoke the stop payment order, we have not addressed ourselves to such issue.
Judgment affirmed.
DWYER and ENOCH, JJ., concur.