CAUDILL (BOBBIE) VS. SALYERSVILLE NATIONAL BANK
Annotate this Case
Download PDF
RENDERED: JANUARY 8, 2010; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2008-CA-000017-MR
BOBBIE CAUDILL
v.
APPELLANT
APPEAL FROM MAGOFFIN CIRCUIT COURT
HONORABLE KIM C. CHILDERS, JUDGE
ACTION NO. 95-CI-00226
SALYERSVILLE NATIONAL BANK
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: CAPERTON, THOMPSON AND WINE, JUDGES.
THOMPSON, JUDGE: Bobbie Caudill, Administratrix of Arnett Gertrude’s
estate, filed this action against Salyersville National Bank, alleging that the Bank
aided and assisted Jack Scriber, acting under the authority of a power of attorney
and as an authorized signatory on Gertrude’s personal checking account, to convert
$414,000 in funds held by the Bank. The Bank defended on the basis that Scriber
was an authorized signatory on Gertrude’s account and that Scriber presented a
valid and enforceable power of attorney which authorized him to cash the
certificates of deposit. A jury trial was commenced and, after hearing the evidence
presented on behalf of the estate, the trial court granted the Bank’s motion for a
directed verdict holding that the signature card and the power of attorney precluded
any action against the Bank.
Gertrude, a widower with no children, lived with her sister, Dovie
Cisco and Scriber, her son. After Gertrude was diagnosed with cancer, in March
1995, she added Scriber to her checking account at the Bank as an authorized
signatory and, on March 27, 1995, gave Scriber her power of attorney. The
“Consumer Account Agreement” and the power of attorney were crucial to the trial
court’s decision to grant a directed verdict.
The Consumer Account Agreement was a standard form provided by
the Bank and, in addition to its designation of Scriber as an authorized signatory, it
stated that the account’s purpose was “household.”
The power of attorney included a general clause authorizing Scriber to
“exercise or perform any act, power, duty, and right obligation whatsoever that I
now have or may hereafter acquire. . . .” It further granted authority to “collect,
receive, hold all such money . . . checks . . . certificate of deposits . . . payable” to
Gertrude, “redeem certificate of deposits,” “withdraw assets from any account” in
Gertrude’s name and to “transact every kind of business of whatever nature.”
Paragraph twenty-two provided:
Interpretation and Governing Law. This instrument is to
be construed and interpreted as a general durable power
of attorney. The enumeration of specific powers herein
-2-
is not intended to, nor does it, limit or restrict the general
powers herein granted to my agent. Paragraph headings
are for convenience only and are not to be deemed to be
part of this instrument. This instrument is executed and
delivered in the State of Kentucky, and the laws of the
State of Kentucky shall govern all questions as to the
validity of this power and the construction of its
provisions;
Despite the general provisions quoted, the estate contended at trial that the power
of attorney was limited by paragraph six which provided:
Banking Powers. To make, draw, sign in my
name, deliver and accept checks, drafts, receipts for
moneys, notes, or other orders for the payment of money
against, or otherwise make withdrawals from any
commercial, checking or savings account which I may
have in my sole name or in joint name with my spouse or
other person(s), in any Bank or financial institution, for
any purpose which my agent may think necessary,
advisable or proper; and to endorse and negotiate in my
name and deliver checks, drafts, notes, bills, certificates
of deposit, commercial paper, money market instruments,
bills of exchange or other instruments for the payment of
money and to deposit same, as cash or for collection, and
cash into any commercial, checking or savings account
which I may have in my sole name or in joint name with
my spouse or other person(s), in any Bank or financial
institution and to carry on all my ordinary Banking
business.
The transactions involving the present controversy occurred after
March 1995, but prior to Gertrude’s death in August 1995, and involved five
checks written by Scriber and two certificates of deposits cashed by Scriber. The
estate argues that paragraph six limited Scriber’s authority to transfer funds held by
the Bank only to Gertrude’s personal account.
-3-
Three of the five checks were written on April 11, 1995. The first,
written for $5,000 payable to the Bank, was signed by Scriber as power of
attorney. He received a cashier’s check that was deposited into Scriber’s bank
account. On the same date, he signed a second check as power of attorney for an
additional $5,000 that was also deposited into Scriber’s bank account. The third
check was cashed for $150,000 and was payable to Dovie Cisco with a “gift”
notation on the remitter line. This check was deposited into Cisco and Scriber’s
joint account.
The fourth check was written on July 6, 1995, payable to the Bank in
the amount of $90,000 most of which was deposited into Scriber and Cisco’s joint
bank account. On the same date, Scriber cashed two certificates of deposit owned
by Gertrude, one for $55,000 and the second for $100,000. Because the
certificates of deposit were redeemed prior to their maturity date, an early
withdraw penalty of $3,714.51 was assessed. The proceeds from the certificates of
deposit were deposited into Scriber and Cisco’s joint account.
The fifth check dated July 7, 1995, in the amount of $90,000 was
deposited into Scriber’s savings and checking accounts and he was given cash in
the amount of $3,000.
After Gertrude’s death, Gertrude’s sister, Amanda Caudill, was
appointed as administratrix. She filed a complaint against Scriber and Dovie Cisco
alleging that they had converted Gertrude’s funds by Scriber’s exercise of authority
beyond that granted by the power of attorney. Subsequently, the complaint was
-4-
amended to include the Bank as a defendant alleging that it had aided and assisted
Scriber in converting Gertrude’s funds.
When the trial commenced against the Bank in November 2007,
Amanda Caudill, Jack Scriber, and Dovie Cisco had died and Bobbie Caudill had
been appointed as administratrix. The claims against Scriber and Cisco had been
settled and those claims dismissed leaving only the estate’s claims against the
Bank.
At trial, Scriber’s deposition was introduced. He testified that
Gertrude entrusted the management of her financial affairs to him and instructed
him that she desired to dispose of her estate to him and his mother. According to
his testimony, Gertrude requested that a power of attorney be prepared. He
recalled that when he requested that the certificates of deposit be redeemed, he
presented the power of attorney to a Bank employee who had it approved by a
superior.
The estate introduced testimony from Amanda Caudill and Ruth
Gertrude who both described Gertrude’s frail physical condition when the power of
attorney was executed and testified that it was given to Scriber for the limited
purpose of paying her bills.
Donna Sayler, president of the Bank, testified that, although an
authorized signatory on a bank account is not the owner, the Bank was required to
honor the signature because it had no knowledge that Scriber was violating a
fiduciary duty or acting beyond the scope of the power of attorney. She reviewed
-5-
the power of attorney when presented and concluded that it gave Scriber unlimited
power, including access to Gertrude’s account.
The estate also offered the expert testimony of James Taylor who
opined that the Bank breached a fiduciary duty to Gertrude to guard against
misappropriation of her funds but acknowledged that there was no document or
trust instrument that would impose such a duty. The premise upon which his
opinion was based was that the three checks written on April 11, 1995, and the
transactions on July 6, 1995, should have “signaled” to the Bank that Scriber’s
actions were a breach of fiduciary duty to Gertrude. He further opined that
paragraph six of the power of attorney limited Scriber’s authority.
After the estate closed its case, both parties moved for a directed
verdict. The trial court held that cashing the checks and depositing the proceeds
into Scriber’s accounts did not constitute notice to the Bank that Scriber converted
the funds. It further held that the signature card authorized Scriber to sign the
checks, and that the power of attorney authorized Scriber to liquidate the
certificates of deposit and deposit the proceeds into Scriber’s and his mother’s
personal account.
The standard of review of a trial court's granting of a motion for a
directed verdict is well established.
On a motion for directed verdict, the trial judge must
draw all fair and reasonable inferences from the evidence
in favor of the party opposing the motion. When
engaging in appellate review of a ruling on a motion for
directed verdict, the reviewing court must ascribe to the
-6-
evidence all reasonable inferences and deductions which
support the claim of the prevailing party. Meyers v.
Chapman Printing Co., Inc., Ky., 840 S.W.2d 814
(1992). Once the issue is squarely presented to the trial
judge, who heard and considered the evidence, a
reviewing court cannot substitute its judgment for that of
the trial judge unless the trial judge is clearly erroneous.
Davis v. Graviss, Ky., 672 S.W.2d 928 (1984).
Bierman v. Klapheke, 967 S.W.2d 16, 18 (Ky. 1998). Having reviewed the record,
we conclude that the trial court properly sustained the Bank’s motion for directed
verdict.
We emphasize that Scriber’s liability as a fiduciary is not an issue on
appeal and the cases cited by the estate as to a fiduciary’s liability are irrelevant.
As a general rule, a fiduciary relationship is “founded on trust or confidence
reposed by one person in the integrity and fidelity of another and which also
necessarily involves an undertaking in which a duty is created in one person to act
primarily for another's benefit in matters connected with such undertaking.”
Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 485 (Ky. 1991).
It is the consistent view that the relationship between a bank and a
depositor is one of debtor-creditor and ordinarily does not impose a fiduciary duty
upon the bank. de Jong v. Leitchfield Deposit Bank, 254 S.W.3d 817 (Ky.App.
2007); Steelvest, Inc., 807 S.W.2d at 485. Because there was no document or trust
arrangement that established a fiduciary relationship between the Bank and
Gertrude, Gertrude’s relationship to the Bank was simply as a depositor; therefore,
the Bank did not owe her a fiduciary duty.
-7-
The Bank’s liability to the estate must rest upon its knowledge of
Scriber’s breach of his fiduciary duty owed to Gertrude or that it acted in bad
faith.1 Our legal premise is founded in our statutory law codified in KRS 386.120:
If a fiduciary makes a deposit in a bank or trust company
to his personal credit of checks drawn by him upon an
account in his own name as fiduciary, or of checks
payable to him as fiduciary, or of checks drawn by him
upon an account in the name of his principal if he is
empowered to draw checks thereon, or of checks payable
to his principal and endorsed by him if he is empowered
to endorse them, or if he otherwise makes a deposit of
funds held by him as fiduciary, the bank or trust company
receiving the deposit is not bound to inquire whether the
fiduciary is committing thereby a breach of his obligation
as fiduciary. The bank or trust company may pay the
amount of the deposit or any part thereof upon the
personal check of the fiduciary without being liable to the
principal, unless it receives the deposit or pays the check
with actual knowledge that the fiduciary is committing a
breach of his obligation as fiduciary in making the
deposit or in drawing the check or with knowledge of
such facts that its action in receiving the deposit or
paying the check amounts to bad faith.
The definition of bad faith as used in the context of banking
transactions was articulated in Taylor v. Citizens Bank of Albany, 290 Ky. 149, 160
S.W.2d 639 (1942). Bad faith “does not necessarily involve furtive or evil
motives, but has a commercial sense of disregard of and refusal to learn the facts
when available; and that the circumstances and conditions may be so cogent and
obvious that to remain passive amounts to bad faith.” Id. at 641.
1
The estate has made recurrent references to KRS 355.3-307(2)(b) with no explanation
regarding its relevance. Regardless of its reasoning for referring this Court to the statute, it fails
to recognize that the provision cited was not added until 1997, two years after the transactions in
question. Therefore, we refrain from further comment on the application of that provision.
-8-
Although the estate produced a plethora of evidence that Scriber was
of questionable character, there was no evidence that the Bank acted in bad faith.
To the contrary, the undisputable evidence was that its actions were in conformity
with the legal authority granted by Gertrude to Scriber.
There is no dispute that the power of attorney was validly executed.
By its explicit terms, it conferred general unlimited authority upon Scriber to
transact all financial affairs for Gertrude. Although the estate relies on paragraph
six and urges its interpretation in isolation, the entire instrument evidences
Gertrude’s intent to bestow unlimited authority upon Scriber to conduct her
financial affairs. See Ingram v. Cates, 74 S.W.3d 783 (Ky.App. 2002). The
purpose of the power of attorney was to confer general powers and was not limited
by any of the specific powers granted.
In addition to the general power of attorney, Scriber was an authorized
signatory on Gertrude’s account. Although designated as a household account,
there was unrefuted testimony that the designation meant it was a personal account,
not a restriction on how the funds could be expended. Under the Consumer
Account Agreement, Scriber was given all rights to make withdrawals and deposits
and, in accordance with the terms of the signature card, the Bank was obligated to
honor any checks written by Scriber on Gertrude’s account. Indeed, had it refused
to do so, the Bank was subject to liability for wrongful dishonor pursuant to KRS
355.4-402.
-9-
In summary, there was no evidence that the Bank acted in bad faith or
with knowledge that Scriber breached his fiduciary duty when it conducted the
financial transactions concerning Gertrude’s account. It acted pursuant to a valid
power of attorney and Consumer Account Agreement. Although the estate is
critical of Gertrude’s decision to authorize Scriber’s general authority to access her
financial affairs, the Bank was not obligated to look beyond the language of the
power of attorney to determine the extent of the power. Parton v. Robinson, 574
S.W.2d 679 (Ky.App. 1978). We reiterate the view expressed in Pulliam v.
Pulliam, 738 S.W.2d 846, 848 (Ky.App. 1987), that a bank has no duty to meddle
into the affairs of its account holders and echo the federal court’s observation in
Long v. Watkins, 271 F.Supp. 630, 634-635 (D.C. Ky. 1967), as to the
responsibility of a bank regarding the financial decision of its depositors, including
the appointment of a fiduciary:
A depositor has a right to rely upon the bank for the
security of deposits entrusted to it. He must also
recognize the limits of the bank with respect to security
for the money deposited. The bank keeps the money
secure and under the direction of the depositor. It has no
personnel equipped by training to investigate fiduciaries
having legal authority to withdraw funds from the
depositor's account. While the bank is held to a strict
accountability, the law does not impose upon it the duty
of insuring the depositor's funds against the depredations
of a corrupt or careless fiduciary. For this reason courts
should be slow to adjudge responsibility upon a bank in
the absence of clear and convincing proof of actual
knowledge of fraud. If banks were held to a stricter
accountability with each of their hundreds or possibly
thousands of depositors, they could not continue long in
business. Certainly they should not be charged with
-10-
withholding money on checks or drafts, which on their
face are regular and in accord with the fiduciary
arrangement, until investigation is made.
The liability for the conversion of the funds, if any, rests with Scriber and Cisco,
not the Bank.
Based on the foregoing, the judgment of the Magoffin Circuit Court is
affirmed.
ALL CONCUR.
BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
Barbara Anderson
Lexington, Kentucky
John T. Hamilton
Lexington, Kentucky
-11-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
