Pelican v. Provident

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Pelican National Bank v. Provident Bank of Maryland No. 48, September Term, 2002 HEAD NOTE S: C HECK, A MBIGUITY, R EQUIRED I NDORSEMENTS FOR S TACKED P AYEE D ESIGNATION, M ARYLAND U NIFORM C OMMERCIAL C ODE Pursuant to Uniform Commercial Code, § 3-110 (d), which dictates a default rule that when a check lists multiple payees in a manner that renders it ambiguous as to the indorsem ents necess ary to negotiate th e instrumen t, a check, m ade payable to multiple payees in stack ed forma t, without an y grammatica l connecto r or punctu ation, is ambig uous, a nd thus , payable in the altern ative to a ny one o f the na med p ayees. IN THE COURT OF APPEALS OF MARYLAND No. 48 September Term, 2002 Pelican National Bank v. Provident Bank of Maryland Bell, C.J. * Eldridge Raker Wilner Cathell Harrell Battaglia, JJ. Opinion by Bell, C.J. Filed: May 14, 2004 *Eldridge, J., now retired, p articipated in the hearing and conference of this case while an active member of this Court; after being recalled pursuant to the Constitution, Article IV, Section 3A, he also participated in the decision and adoption of this opinion. The issue in this case is whether a check m ade payable to multiple payees, listed in stacked formation on its face, without any grammatical connector or punctuatio n, is ambiguous as to whether it is negotiable only jointly, thus, requiring the indorsement of all of the named payees, or alternatively, requiring the indorsement of any one of the named payees. The Circuit Court for Baltimore City held that a check so drawn is ambiguous and, acco rdingly, entered summary judgment in favor of Provident Bank of Maryland, the appellee, and against Pelican National Bank, the appellant. We shall affirm the judgment of the Circ uit Court. I. Harford Mutual Insurance Company issued a check, drawn on Allfirst Bank, in the amount of $60,150.00, to payees as follows: Andrew Michael Bogdan, Jr., Crystal Bogdan Oceanmark Bank FSB Goodman-Gable-Gould Company . The chec k wa s in p ayme nt of a cas ualty c laim mad e by B ogdan on an insu ranc e policy, issued by Ha rfor d M utua l, on c omm ercia l property own ed by Bogdan and his wife and on which Oceanm ark, the app ellant s prede cessor in interest, 1 held a mortgage. Thus, the payees of the check were the property owners, the mortgage holder and the insurance agent 1 The appellant avers that the Bogdan property was financed initially by First National Funding Corporation. That company sold the note and deed of trust pertaining to the proper ty to Oce anma rk, wh o, in turn , sold the m to Pe lican N ational B ank, the appella nt. It is for this reason that the appellant asserts that it is assignee of the note and deed of trust and, thus , Oceanm ark s succe ssor in interest. who adjusted the casualty c laim. In addition to the payees, the f ace of the c heck listed, in small print, the insurance policy number, claim identification number and the loss date and a small notation that read MEMO Fire - building. The check, indorsed only by the Bogdans and the insurance adjuster, was presented to the appellee, which cashed it. Michael Bogdan deposited the proceeds in a commercial account he held at the appellee bank. When the appellant filed its Complaint for Money Judgme nt, Bogda n had no t distributed an y of the proce eds of the c heck to the appellant. Having failed in its attempt to obtain reimbursement from the appellee for negotiating the check without Oceanmark s endorsement, the appellant filed against the appellee, in the Circuit Court f or Baltim ore City, a Comp laint for M oney Judgm ent. Alleging conversion,2 it argued that the subject check was negotiable only if each o f the listed pa yees indorsed it and, since the check was not indorsed by Oceanmark, the appellee improperly negotiated the check. After it filed its answer to the comp laint, 3 arguing as an affirmative defense, that the 2 Under Maryland Code (1975, 2002 Replacement Volume) § 3-420 of the Commercial Law Article: An instrument is . . . converted if it is taken by transfer, other than a negotiation, from a pe rson not en titled to enforc e the instrument or a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. An action for conversion of an instrument may not be brought by (i) the issuer or acceptor of the instrument or (ii) a payee or indorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a co-payee. 3 The appellee also filed a Third -Party Complaint against the other payees named on the check, Andrew Michae l Bogdan , Jr., Crystal Bogdan, and Goodman-G able -Go uld C omp any, seeking indemnification. Goodman filed a Motion to Dismiss the Third-Party Complaint against it, which the court granted. 2 check was payab le in the alternative pursuant to Maryland Code, (1975, 2002 Replacement Volume) § 3-110 (b) of the Commercial Law Article,4 the appellee moved for summary judgment on that basis. The appellant responded with its Cross-Motion for Summary Judgme nt. 5 The Circuit Cou rt granted the appelle e s mo tion for summ ary judgm ent. Interpreting § 3-110 (b) as resolving any ambiguity with respect to w hether a check pa yable to two or more p ersons is pa yable jointly or in the a lternative in favor o f the latte r, i.e., that such checks are payable in the alternative, and noting the parties arguments acknowledging that the issue w as wheth er the chec k was am biguous, th e court held : 4 More specifically, the appellee asserted: Pelican s claims against Provident are barred because, under Section 3-110 (d) of the Commercial Law Article of the Maryland Annotated Code, the check was payable to the payees in the alternative and Oceanmark s endorsement was not req uired to negotia te the ch eck. Section 3-110 (d) is a part of Maryland s Uniform C ommercial Co de. The Unifo rm Commercial Code is a set of uniform laws, initially promulgated by the National Conference of Commissione rs on Uniform State Laws (N.C.C.U.S.L.) and the American Law Institute, to ensure uniformity among the states and territories regarding commercial practices. The first version of the Uniform Commercial Code w as promulgated in the early 1960's. It was extensively revised in 1990 by the N.C.C.U.S.L. Maryland, in 1996, like a number of other states, adopted the revisions, including the revision to § 3-116, the predecessor of the current provisio n, § 3-1 10. 5 In support, the appellant relied on Peoples National Bank v. American Fid. Fire Ins. Co., 39 Md. App. 614, 618, 386 A.2d 1254, 1257 (1978), which, interpreting Maryland U.C.C. § 3116, the precursor to § 3-110, held that a check payable to two or more persons without indication that it is pa yable in th e alterna tive is pa yable on ly jointly, i.e., requires the indorsement of all of the named payees. The petitioner also relied upon Bank of America National Trust and Savings Assoc. v. Allstate Insurance Co., 29 F. Supp.2d 1129 ( C.D. Calif. 1 998). 3 [o]n its face, the ch eck is payable to two or more persons and has no intervening connectors, marks or punctuation, such as and , or, or and/or . Therefore, this court finds as a matter of law that the check is ambiguous as to whether or not it is payable to the persons jointly or alternatively. It relied on City First Mo rtgage Co rp. v. Florida R esidential Pro perty & Casu alty, 37 U.C.C. Rep. Serv. 2d 126 (Miami-Dade County Ct. 1998)6 and Bijlani v. Nationsbank of Florida, N. A., 25 U.C.C. Rep. Serv. 2d 1165 (Fla. Cir. Ct. 1995), 7 but neither addressed, nor cited, Peoples National Bank v. American Fid. Fire Ins. Co., 39 Md. App. 614, 386 A.2d 1254 (1978). The court also rejected Bank of America National Trust and Savings Assoc. v. Allstate Insurance Co., 29 F. Supp.2d 1129 ( C.D. Calif. 1998) as supp orting the appellant s 6 The payee designation in City First Mo rtgage Corp. v. F lorid a Re sidential Prop erty & Casualty, 37 U.C.C. Rep. Serv. 2d 126 (Miami-Dade C ounty Ct. 1998) was: BORIS LA ROSA ODALYS LA ROSA CITY FIRS T MT G. CO RP. IS AOA ATIM A. Applying § 3-110 (d) of the Florida Code, the court held, the Check is payable to two or more persons and, as a matter of law, the payee designation on the Check is ambiguous as to whe ther it is pa yable to th e perso ns altern atively. 7 In Bijlani v. Nationsbank of Florida, N.A., 25 U.C.C. Rep.Serv. 2d 1165 (Fla. Cir. 1995), the payees were listed as follows: Bay Village Inc Michael Bijlani & Ron Delo & Assoc 5411 Grenada Blvd Coral G ables, F L 331 33. The court held that [t]he multiple payee designation on the che ck is ambig uous as to whether it is payable to [the named stacked payees] jointly or alternatively and that Section 673.1101(4), Fla. Stat. . . . [Florida s revised UCC rule], which applies to this case, reverses the prio r rule. 4 argumen t. The court explained that the court in Allstate Insurance Company, 29 F. Supp. at 1139, required extrinsic evidence and determined that the check was unambiguous based [on] the custom and usage developed under the prior UCC provision, § 3-116; h oweve r, it pointed out, [n]eg otiability [should be] determined from the face, the four-corners, of the instrument without reference to extrinsic facts. (quoting Participating Parts Associates v. Pylant, 460 So. 2d 1299, 1301, 40 U.C.C. Rep. Serv. 498 (Ala. Civ. App. 1984) and Holsonback v. First State B ank of A lbertville, 394 So. 2d 381, 383, 30 U.C.C. Rep. Serv. 222 (Ala. Civ. App.19 80)). The appellant timely filed a Notice of Appeal to the Maryland Court of Special Appeals. This court issued a writ of certiorari before the intermediate appellate court considered the case . Pelican National Bank v. Provident Bank of Maryland, 369 Md. 659, 802 A.2d 43 8 (2002). In this Cou rt, the appellant argues that the Circuit Court erred when it granted the appellee s motion for summary judgment and denied its motion. In so arguing, it acknowledges the applicability to the case sub judice of § 3-110 (d) and that, pursuant to that provision, the defau lt rule with reg ard to the pa yment of ch ecks with ambiguo us multiple payee designations is that they are payable alternatively, rather than jointly. Nor does the appellant dispute that the default rule was changed from the prior law. Nevertheless, the appellant asserts, as it did in the Circuit Court, that the listing of multiple payees in stacked format on a check, without any terms or co nnectors, is not ambig uous. To the contrary, aga in 5 as it did in the Circuit Court, the appellant maintains that the Court o f Special A ppeals resolved the matter in Peoples National Bank, where the court held the bank liable [in that case] because the check was payable jointly, not payable in the alternative. (appellant s Brief at 7). According to the appellant, the rule enunciated by that case is that checks containing multiple payees in stacked fo rmat are per se unambig uous and jointly payable. The appellant also relies on Allstate Insurance Co., supra for the pro position that, notwithstanding the change in the language of the relevant U.C.C. provision, the case law that existed under § 3-116 with respect to stacked payee designations on the checks (specifically including Peoples Nat. Bank) remains firmly in place under § 3-110 (d). Rejecting the argument that the sentence in § 3-110 (d) prescribing the default rule for ambiguity is dispositive of this case, the appellant submits: The last sentence to § 3-110 (d) only applies if the check is ambiguous. The second sentence to § 3-110 (d) (which was applied in both the Peoples N at. Bank and Allstate Ins. Co. decisions) re mains firm ly in place. The second sentence of § 3-11 0 (d) provid es that [i]f an instrum ent is payable to two or more persons not alternatively, it is payable to all of them and may be negotiated, discha rged, or enforc ed only b y all of the m. (emphasis added ). Because the Check in the present case was in the stacked payee designation format and payable to two or more persons not alternatively, the Court need not reach the last sentence of § 3-110 (d) which would only apply if the Check was am biguou s. The appellee acknowledges that, prior to 1996, pursuant to § 3-116 and People s National Bank, checks with stacked payees, as is the case with the check sub judice, were deemed payable only jointly. Noting that Maryland law reg arding check s payable to 6 multiple payees was changed with the adoption of the 1 990 ve rsion of the UC C in 19 96, in particular, the addition of a sentence, which provides that checks with an ambiguo us multiple payee designation are payable in th e alternative, it argues that, under that provision, checks listing multiple payees in stacked format without terms or connectors are ambiguous and thus, payable in the a ltern ative . Con sequ ently, the appellee contends that People s National Bank, having be en decide d under § 3-116, is inapposite to the case sub judice. Because § 3-110 expressly resolves the situation in which a check with multiple payees is ambiguous as to whe ther it is alternatively or jointly payable, it asserts that the default rule enunciated in People s National Bank is abrog ated. II. The only issue that we must resolve is one of law, whether a check with stacked payees, unseparated by a term, punctuation, connector or symbol indicating joint or alternative payment, is ambiguous. Where a statutory provisio n of the U .C.C. purp orts to cover an area of the law, it is the language and the intent of the statute that will govern a conflict that arises within that particul ar area o f law. Harford Fire Ins. Co. v. Maryland Nat l Bank, N.A., 341 Md. 408, 413, 671 A.2d 22, 24 (1996) ( The rights an d duties of drawe rs and depositary banks are governed by ... Titles 3 and 4 of the Commercial Law Article, which are essentially the same as Articles 3 and 4 of the Uniform Commercial Code 7 (U.C.C.) ); see § 1-301 of the Commercial Law Article.8 This is, in other words, a matter of statutory interpretation,9 the canons of which are well settled. This Court has of ten state d the pa ramou nt goal o f statuto ry interpre tation, to ascertain and effectuate the intention of the legislature. Oaks v. Con nors, 339 Md. 24, 35, 600 A.2d 423, 429 (199 5); NationsBank v. Stine, 379 Md. 76, 85, 839 A.2d 7 27, 732 -33 (20 03). The quest to ascertain legislative intent requires examination of the language of the statute as written and if, given the plain and ordinary meaning of the words used, the meaning and application of the statute is clear, w e end o ur inqu iry. Comp troller of the T reasury v. Ko lzig, 375 M d. 562, 567 , 826 A.2d 467, 469 (2003). It is also true, howe ver, that : 8 Maryland Code (1 975, 200 2 Replac ement V olume) § 1 -103 of th e Comm ercial Law Article provides: Unless displaced by the particular provisions of Titles 1 through 10 of this article, the principles of law and equity, including the law merchant and the law relative to cap acity to contract, principal and agent, estoppel, fraud, misr epre sentation , duress, c oerc ion, m istak e, ba nkru ptcy, or other validating or invalidating cause shall supplement its provisions, except that (a) the age of majority as it pertains to the capacity to contract is eighteen years of age; and (b) no person who has attained the age of eighteen years shall be consid ered to b e witho ut capa city by reaso n of ag e. 9 As indicated, this case was decided on summary judgment. This court has frequently stated the standard o f review f or a grant of summa ry judgment, whether the trial court w as legally correct . Goodwich v. Sinai Hosp. of Baltimore, Inc., 343 Md. 185, 204, 680 A.2d 1067, 1076 (1996); Murphy v. Merzbacher, 346 Md. 525, 530-31, 697 A.2d 861, 864 (1997); Heat & Power Corp., Inc. v. Air Prods. & Chems., Inc., 320 Md. 584, 592, 578 A.2d 1202, 1206 (1990) (citations om itted). Whe ther summ ary judgmen t is properly granted as a matter of law is a question of law. Engineering Manageme nt Services , Inc. v. Ma ryland State Highway Admin., 375 M d. 211, 2 29, 825 A.2d 9 66, 976 (2003 ). 8 While the language of the statute is the primary source for determining legislative intention, the plain meaning rule of construction is not absolute; rather, the statute must be construed reasonably with reference to the purpose, aim, or policy of the enacting b ody. The C ourt will look at the larger co ntext, including the legislative purpose, within which statutory language appears. Construction of a statute which is unreasonable, illogical, unjust, or inconsistent with common sense should be avoided. Tracey v. Tracey, 328 Md. 380, 387, 614 A.2d 5 90, 594 (1992) (C itations omitted). In seeking to avoid constructions of a statute which is unreasonable, illogical, unjust, or inconsistent with common sense, Pak v. Hoang, 378 M d. 315, 3 23, 835 A.2d 1185, 1189 (2003), we prefer an interpretation of the statute that avoids rendering any part of the statute . . . meaningless or nugatory. Toler v. Motor Vehicle Admin., 373 Md. 214, 220, 817 A.2d 229, 234 (2003) (citing Gillespie v. S tate, 370 Md. 219, 222, 804 A.2d 426, 428 (2002)). Enacted by Acts of 1996, ch. 1, § 2 , as part of the 1996 re vision to the Maryland Uniform Commercial Code, § 3-110 (d) enunciates the rules for determining, objectively, the intent of a draw er with resp ect to an instru ment ma de payable to multip le payees . Therefore, we must first examine § 3-110 (d) to determine whether the stacked payee format in this case is an ambig uous mu ltiple payee designation as contem plated by the Maryland Leg islature when it enacted the statute. Section 3-110 (d) provides: (d) If an instrument is payable to two or more persons alte rnatively, it is payable to any of them and may be negotiated, discharged, or enforced by any or all of them in possession of the instrument. If an instrument is payable to two or more p ersons no t alternatively, it is payable to all of them and may be negotiated, discharged, or enforced only by all of them. If an instrument 9 payable to two or more persons is ambiguous as to whether it is payable to the persons alternatively, the instrum ent is pa yable to th e perso ns altern atively. The Official C ommen t to that section provides f urther guid ance rega rding how to treat a check with multiple payees: An instrument payable to X or Y is governed by the first sentence of subsection (d). An instrument payable to X and Y is governed by the second sentence of subsec tion (d). If an in strument is p ayable to X or Y, either is the payee and if either is in possession that person is the holder and the person entitled to enforce the instrument. ... If an instrument is payable to X and Y, neither X nor Y acting alone is the person to whom the instrument is payable. ... The instrument is payable to an identified person. The identified person is X a nd Y actin g jointly. * * * * The third sentence of subsection (d) is directed to cases in which it is not clear whether an instrument is payable to multiple payees alternatively. In the case of ambiguity person s dealing w ith the instrum ent should be able to re ly on the indorsem ent of a sing le payee. For ex ample, an in strument p ayable to X and /or Y is tr eated lik e an ins trumen t payable t o X or Y. Thus, § 3-110 (d), confirmed by the explanation in the Official Comment, clearly and unambig uously enunciates the defau lt rule, that, unless c hecks pa yable to multiple payees, are specifically and clearly made payable jointly or in the alternative, they are ambiguous with respect to ho w they are to b e paid and, therefore, are payable alternatively. Indeed, that is precisely what the last sentence of the section states. Confirmation is also supplied by an analysis of the statute that § 3-110 (d) replaced. 10 Prior to 1996, the controlling provision with respect to multiple payee instrum ents was Maryland Code, (1975, 1992 Replacement Volume) § 3-116 of the Commercial Law Article. It provided: An instrument payable to the order of two or more persons (a) If in the alternative is payable to any one of them and may be negotiated, discharged or enforce d by any of them who ha s possession of it; (b) If not in the alternative is payable to all of them and may be negotiated, discharged or enforced only by all of them. Like § 3-110 (d), § 3-116 is clear and unambiguous. Unlike § 3-110 (d), which addressed three scenarios, however, it addressed o nly two scen arios, whe re the multip le payee instrument is payable in the alternativ e and w here it is p ayable n ot in the a lternativ e. In the case of the forme r, § 3-116 p rovided fo r the paymen t of the instrum ent on the indorsement of any one of the payees. When, however, the instrument was payable not in the alternative, that statute required the indorsement of all of the payees for negotiation. Esse ntial ly, therefo re, unde r § 3-11 6, joint payment was the default - when the payment directio n did no t clearly ma ke the in strume nt payab le jointly, i.e. by using the word, and or an amp ersand, or cle arly make it payable in the altern ative, i.e. by using, or , and/or , or a virgule,10 then it wa s paya ble o nly jointly. 10 A virgule is a slash o r diago nal line, r eprese nted by th e symbo l, / . Dynalectron Corp. v. Equitable Trust Co., 704 F.2d 737, 739 (4 th Cir.,1983); Kinzig v. First Fidelity Bank, N. A., 649 A. 2d 634, 636 (N. J. Super. 1994). Courts have interprete d the use o f a virgule to 11 The Court of Special Appeals considered, and applied, § 3-116 in Peoples Nat l Bank v. American Fid. Fire Ins. Co., 39 Md. App. 614, 386 A.2d 1254 (1978). In that case, pursuant to a surety payment bond arrangement, the plaintiff, American Fidelity, arranged for payment from the United States of America, to cover the costs of an unpaid amount to a subcontractor. The United States Treasury issued the check, payable to multiple payees, as follows: Floors Inc. American Fidelity Fire Insurance Company 8400 Truck Way Capitol Heights, Md. 20037 Id. at 616, 386 A.2d at 1255. Floors Inc. received and indorsed th e check, b ut failed to obtain the indorsement of the plaintiff in surance co mpany bef ore subm itting it for payme nt. The defenda nt, Peoples National Bank, accepted the check and deposited the entire amount in the Floors, Inc. account. The plaintiff sued the defendant for conversion and the Circuit Court for Prince George s County granted it summary judgment. On appeal, the intermediate appellate court held: separate multiple payee names as a manifestation of the drawer s intent to make the instrument alternatively payable; thus a virgule is, in essence, the word or for purposes of applying the mu ltiple paye e provi sions o f the U .C.C. E.g., Dynalectron, 704 F.2d at 738 (holding that the Federal District Court in that case w as correct w hen it held th at a virgule normally is used to separate alternatives, citing Dynalectron Corp. v. Union First Nat l Bank, 488 F.Supp. 868, 869 (D.C. Mo. 1980), and thus, a check listing multiple payees separated b y a virgule wa s alternatively payab le); Kinzig, 649 A . 2d at 63 7. 12 As previously stated, Md . Com. L aw Co de Ann . § 3-116 (1 975) clearly provides that a check payable to the order of two or more persons . . . (i)f not in the alternative . . . may be negotiated, discharged or enforced only by all of them. . . . Since the ch eck was not payable in the alternative , then it could not have been negotiated by less than all the payees. The fact that the defendant bank was unaware of the joint pay agreement between the United States and the plain tiff doe s not ch ange th e result. A payment upon a missing indorsement is equivalent to a payment ove r a forged indorsement. Federal Deposit Insurance Corp. v. Marine National Bank, 431 F.2d 341 (5 th Cir. 1970) . An instrum ent is converted when p aid on a forged indorsement, Md. Com. Law Code Ann. s 3-419(1)(c) (1975). Since the bank paid the amount of the c heck w ith a missing in dorseme nt, it converted the check. Id. at 618-19, 386 A.2d at 1257. Thus, the court inter preted, and applied, the d efault rule prescribed by § 3-116, that, if the check is drawn payable to multiple payees, but not in the alter nativ e, it is payable jointly. Other courts considering their state s equivalent of § 3-11 6, reach the s ame result. See Moram Agencies, Inc. v. Farrell Trans., Inc., 35 U.C.C. Rep. Serv. 1236, (E. D. Pa. 1982) (noting, referring to a check with multiple payees listed in stacked format, [i]t was not made payable in the alternative and therefore the indorsement of both purp orted payees is necessary, citing People s National Bank); Midwest Industrial Funding, Div. of Rivera Land Lease, Inc. v. First National Bank, 973 F.2d 534 , 537 (7 th Cir. 1992) (explaining that [t]he general rule is that if there are two names on the check and the check is not payable in the alternative then the statute e stablish es that ch eck is jo intly payable and, thus, under the literal application of ¶ 3-116, the checks could be negotiated only by both [of the named parties] ); Van Lunen v. State Central Savings Bank of Keokuk, Iowa, 751 F. Supp. 145, 148 13 (S.D. Iowa 1990) (holding that the critical inquiry is not whether the drawer of the check intended to make a check containing multiple payees jointly payable and enunciating a preference to rely on th e plain la nguag e of Iow a Cod e, § 554.311 6 (b) whic h clearly stated that [a]n instrument . . . payable to the or der of tw o or mo re perso ns . . . if not in the alternative is payable to all of them and may be negotiated . . . only by all of them. ); Feldman Constr. Co. v. Union Bank, 28 Ca l.App.3 d 731, 7 35 (19 72). As we have seen, the General Assembly amended the Maryland U.C.C. in 1996, and, in the process substituted § 3-110 (d) for § 3-116. In so doing, the General Assembly also changed the default rule regarding check s with m ultiple p ayees. Rather than retaining the test requiring a determination of whether the check is unambiguously payable in the alternative, the General Assembly added a new test; by adding the last sentence to the statute, it established the default rule that if a check, drawn payable to multiple payees, does not clearly indicate the indorseme nts required for nego tiation, and thu s, is ambigu ous as to whether it is payable to tw o or more persons alte rnatively, the check is payable in the alternative and may be negotiated on the indorsement of any one of the payees. Applying § 3-110 (d) and this default rule to the facts of the case sub judice produces a clear result. The subject check was drawn to the order o f three payees , listed in stacked format, w ith no gram matical con nector, punctuation or sym bol indicating their relationship or how th e check w as intended to be paid. Therefore, the check was neither clearly payable in the alternative, the p ayees not bein g connec ted by or or its e quivalent, 14 nor clearly payable jointly, the payees not being joined by and or its equivalent. It was, consequ ently, we hold, ambiguous as to whether it is payable to the person s alterna tively. Acc ordingly, we furth er hold, it w as proper for the appellee to have negotiated the check without the indorsement of the appellant. The indorsement of any one of the payees was suffici ent. This interpretation o f § 3-110 (d) is consistent with the interpretation courts that have considered this issue have given their states post-1990 version of the U.C.C. multiple payee statute. J.R. Simplot, Inc. v. Knight, 988 P.2d 955, 95 6 (Wash.,1999) (since multiple payees separated by hyphen did no t unambiguously indicate w hether they were to be paid join tly or in the alternative, RCW 62A.3-110 mandate[d] they were payable in the alternative ); Hyatt Corporation v. Palm Beach National Bank, 840 So. 2d 300, 303 (Fla. D. Ct. App. 2003); Harder v . First Capital B ank, 775 N.E.2d 610, 613 (Ill. App. 2002)(checks listing multiple payees without grammatical connectors except between names of two payees w ere ambiguous as to whether checks were payable jointly or in the alternative and thus, were payable in the alternativ e); Meng v. Maywood Proviso State Bank, 702 N. E. 2d 258, 2 64 (Ill. App. 1998) (cashier's check which did not include any language or markings, such as the word "and" or the word "or," regarding whether the check w as payable altern atively or jointly was ambiguo us, thus payab le alternatively); Allied Capital Partners, L.P. v. Bank One, Texas, N.A., 68 S.W.3d 51, 52-54 (Tx. Ct. App. 2001)(checks which listed two payees that were not connected by "and" or "or" were ambiguous as to whether they were payable to two 15 payees jointly or alternatively, and thus properly cashed on indorsement of only one payee); Danco, Inc. V. Commerce Bank/Shore, N.A., 675 A. 2d 663 , 665 (N. J. Super. 1996) (noting that, under U.C.C. § 3-110 (d), where any ambiguity between joint or alternativ e payees is present, the ambig uity should be resolved in favor of a lternative con struction ); Dimm itt & Owens Financial, Inc. v. USA Glass & Metal, Inc., 1998 WL 852862 (N.D.Ill.1998)(holding that check without any indication as to wheth er it was inten ded to be p ayable alternative ly or jointly was ambiguous as to whether it was made payable to either payee alternatively and could be paid to either payee individ ually); But see, Bank of America Natl. Trust and Savings Assoc. v. Allstate Ins. Co., 29 F. S upp.2d 1129 ( C.D. C alif. 199 8). Some of these cases contrasted the interpretation of § 3-110 (d) with that given former § 3-116. In Allied Capital Partners, supra, applying Te xas U.C .C. § 3-110 (d), which is identical to the Maryland provision, the court held that checks with stacked multiple payees and without punctuation marks or connecting terms indicatin g the draw er s intent w ith respect to whethe r they were pa yable jointly or alternatively, were ambiguous and payable alternatively. 68 S.W.3d at 54. It noted, however, with respect to the prior law: While it does appear that former section 3.116 would have required the checks in this case to be payable to and negotiable only by all of the payees listed, this is no longer the case. Former section 3.116 provided that all checks which were n ot payable in the alternative ( or ) were payable and negotiable only by all nam ed payee s. In contrast, section 3.110(d) no w includes a third category of instruments: those that are ambiguous a s to whether they are payable to the named payees alternatively and therefore payable to any of the named payees individually. Thus, Allied and American s reliance on cases decide d befo re the en actmen t of sect ion 3-1 10(d) is misplac ed. 16 Id. (citations omitted) Similarly, in Meng, supra, the Appellate Court of Illinois determined that a cashier s check, which listed multiple payees in sta cked form at was pa yable alter nativ ely, reasoning that [u]nder former section 3-116 of the Co de, an instrum ent was p resumed to be payable jointly where the instrum ent did n ot desig nate pa yment in t he altern ative. . . . Contrary to the former provision, the current section shifts the presumption to pay on an instrument in the alternative rather than jointly. Id. at 136, 702 N.E.2d at 264. The court added: We find, as a matter of law, that the designation of two payees on a cashier s check is ambiguous where no directives are stated on the checks to determine the manner of payment. In the present case, the cashier s check at issue names two payees but does not include any directions regarding whether the check is payable to the named persons alternatively or jointly. The subject cashier s check does not contain any language or markings to instruct the method of payment, such as the word and or the w ord or. A ccor ding ly, section 3-110 provides that a check is p ayable to the persons alternatively. Therefore, in the present case, one n amed pa yee was suf ficient to negotiate the cashier s check. . . . Id. See Harder v. First Capital Bank, 775 N.E .2d 610, 61 4 (Ill. 2002), in which, applying Meng, the court co ncluded th at checks with stacked payee designations and without any grammatical connector between the listed payees were ambiguous as a matter of law and, therefore, were payable in the alternative with the indorsement of any single payee. See also Matthew Bender & Co. § 115.10 Multiple Payees: Mode of Indorsement (2003) ( The revised section states that if an instrument payable to tw o or more persons is ambiguous as to whe ther it is payabl e to th e per sons alter nativ ely, the instrume nt is payable to the persons alternatively thereby provid ing a defin ite rule which does not exist under the Code, reversing 17 those cases which had held that where there was an ambiguity in the designation of multiple payees, they were joint payees. ). III. The appellant s reliance on Peoples National Bank is misplaced.11 That case did not enunciate a bright-line rule, holding that checks containing unpunctuated stacked payees unambig uously direct that thos e checks b e jointly payable. The court simply interpreted, and applied, § 3-116, co ncluding, in view of the clear direction provided, that a chec k payable to the order of two or more persons . . . (i)f not in the alternative . . . may be negotiated, discharged or enforced only by all of them , that the che ck at issue in th at case wa s payable jointly, there being no clear statement that it was p ayable in t he altern ative. The court, as a matter of sta tutory interpretation , applied, in short, § 3-116's default rule for resolving ambig uities in th e multip le payee s ituation . Moreover, if the appellant is correct that Peoples National Bank, rather than sim ply interpreting § 3-116, held that a check containing unpunctuated stacked multiple payees 11 Peoples National Bank should be contrasted with Dynalectron, both decided under § 3116. In Dynalectron, the court determined that a virgule constituted punctuation that was generally used as a device to separate items in a list, 704 F.2d at 739, and, therefore, that checks made payable to multiple payees sepa rated by a virgule w ere mean t to be payable in the altern ative. Dynalectron enunciated a bright line rule, that a virgule u nambigu ously means, or is the equivalent of, or. Id. Unlike Dynalectron, Peoples National Bank enunciates no bright line rule regarding the proper payment of checks listing stacked payees left unseparated by a term or connectors. Peoples National Bank is simply a statutory construction case, in which the court determine d that the statu te clearly enunc iated a defa ult rule favorin g joint payme nt. 18 unambig uously directs joint payment of that check and that the People s National Bank determination in that case remains in full force and effect, notwithstanding the amendment of the Marylan d U.C.C . to replace § 3-116 with present § 3-110 (d), then the third sentence of the latter provision is largely superfluous. That interpretation effectively thwarts the legislative inten t to change the presumption of joint payment, mandated by § 3-116, to one of altern ative pa yment, as contem plated b y the third s entenc e of § 3 -110 (d ). While decided on facts similar to those in the case sub judice and pursuant to the California equiva lent of § 3-110 (d), Bank o f Amer ica v. Allstate, supra,12 on which the appellant also heavily re lies, is no t persua sive. Firs t, Allstate did not pu rport to app ly to all checks m ade payable to multiple payees listed in a stacked format. 29 F. Supp.2d at 1139 ( [T]he Court need not determine whether all checks with stacked payee designations are unambiguou s. ). Furthermore, the issue in Allstate was different from the issue in the case 12 In Bank of America Natl. Trust and Savings. Assoc. v. Allstate Ins. Co., 29 F. Supp.2d 1129 (C. D. Calif. 1998), the plaintiff, Bank of America, had a security interest in a building, insured by Allstate, that was damaged in a fire. Allstate issued a check to cover the damages, payable as follows: Chuk N. Tang & Rosa C. Tang, HW JT Bank of America P.O. Box 5696 Diamond Barca CA Id. at 1132. The Tangs indorsed the check but failed to seek the indorsement of the Bank of America prior to nego tiating th e chec k and re taining i ts proce eds. Id. Bank of America filed a Complaint against Allstate, claiming, inter alia, that the latter breached the insurance policy when it issued the check to both the Tangs and Bank of America in such a way that it was ambiguous as to whether the check was payab le jointly or alternatively. A llstate argued , in response, that the stacked payees format unambiguously directe d that the ch eck be pa id jointly. Id. at 1137 . 19 sub judice. There, the issue was not whether the check had been cashed w ithout all necessary indorsements, rather, it was whether the drawer of the check was negligent in issuing it without clear direction as to whether it was payable jointly or in the alternative. In deciding it was not, the court relied heavily on the fact that the memo line indicated that the check constituted SETTLEMENT OF YOUR RENTAL DWELLING LOSS CAUSED BY FIRE ON 11/29/93. Id. at 1140. Furthermore, important to the court was testimony from a Bank of America official that she could discern from the face of the check that Bank of America was a third party beneficiary under a fire policy and that the chec k is payable join tly rather than in th e alterna tive. Id. Based primarily upon this evidence, the court determined that the check was not ambiguous, but rather, because it was clear from its four corners that the check was an insurance settlement check, the bank to which it was submitted for payment should have realized that the drawer intended that each named payee indorse the instrument before it could b e nego tiated. Id. at 1139-40. Section § 3-110 (d) effected a significant shift in policy from that reflected in its predecessor, § 3-11 6. See Public Citizen, Inc. v. First Nat l Bank in Fairmont, 480 S. E. 2d 538, 544 (W. Va. 1996) (stating that W. Va. Code § 46-3-110 (d), the West V irginia equivalent of § 3-110 (d), added in 1993, dramatically changed the law with respect to the problem of the am biguous p ayees ); Allied Capital Partners, supra, 68 S. W. 3d at 54 (noting that reliance on cases decided before the enactment of section 3.110 (d) is misplaced ); Reitman and W eisblatt, C hecks, Drafts & Notes § 115.1 0[2] (B ender 1 977, 20 02 Su pp.) 20 (stating that U. C. C . § 3-110 (d) provid[es] a definite rule which did not exist under the [prior] Code, reversing those cases which [held] that where there was an ambiguity, in the designation of multiple payees, they wer e joint pa yees ). Furtherm ore, as the ap pellee poin ts out, the use of extrinsic evidence of custom and practice in the banking industry to determine whether a check payable to multiple payees is ambiguous undermines, if not totally thwarts, the purpose and fu nction of § 3-110 (d).13 The appellee s explanation as to why this is true is quite persuasive: The obvious purpose of § 3-110 (d) is to provide a bright-line rule for how checks with ambiguous payee designations should be treated. That purpose would be thwar ted if it were n ecessary to resort to extrins ic evidence of custom and practice in order to determine whether a check was payable jointly or affi rmativel y. To avoid the nee d to resort to extrinsic evidence, § 3-110 (d) sets forth a simp le and straigh t-forward rule: unless th e check on its face is unambig uously payable jointly, it is deemed payable alternatively. The C ourt in Allstate Ins. Co. ignored the function of § 3-110 (d) by resorting to extrinsic evidence to determine whether the check was ambiguous. The issue of whether an ambig uity exists is a legal issue to be determined by the co urt. ... By resorting to extrinsic evidence to determine whether or not the check was ambiguous, the Court in Allstate Ins. Co. violated the cardinal rule of contract interpretation that extrinsic evidence may only be used to interpret an ambig uous c ontract. The appellee s brief at 18-19. Thus, if we were to follow Allstate, § 3-110 (d) w ould have little, or no, effec t, despite 13 Although not articulated as such, we believe this to be the thrust of the reason why the trial court, indicating that it must be determined from the face, the four corners without reference to extrinsic fac ts, (quoting Participating Parts Associates v. Pylant, 460 So.2d 1299, 130, 40 U.C.C. Rep. Serv. 498 (Ala.Civ.App. 1984)), refused to consider extrinsic evidence to decide the ambiguity question. 21 the Legislature s having enunciated clear rules for determ ining the ind orsemen t requireme nts for the n egotiatio n of m ultiple p ayee instru ments. JUDGMENT A FFIRMED, WITH COSTS. 22

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