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Fifth Third Bank v. Jones

FIFTH THIRD BANK, Plaintiff-Appellant,

Monay N. JONES, Defendant-Appellee.

No. 06CA0296.

July 12, 2007.

Opinion by Judge ROY.

favor of defendant, Monay N. Jones (the debtor), on the bank’s attempted

mortgage company in the amount of $261,250 that was secured by a deed

of trust on her home. Sometime thereafter, the bank became the holder of

the note. The debtor then defaulted in the payment of the note, and, in

September 2001, the bank and the debtor entered into a modification of

the note, which raised the note’s balance to $280,231.23. The debtor again

defaulted on the note.

On or about November 13, 2001, the bank received a check from a third

party as payment on the debtor’s account. The bank‘s loss mitigation

noted receipt of the check in the bank records and forwarded it to the

payoff department. Approximately one week later, it was noted in the

bank’s records that the check had been lost without having been posted to

the debtor’s account or submitted for payment. The bank notified the

debtor of the loss, and both parties searched, without success, for a copy

of the lost check or evidence of the identity of its maker, drawee bank, or

amount.

debtor asserted during the C.R.C.P. 120 proceedings that the note had

likely than not that [the check] was either a cashier’s check or certified

Consequently, under [§ 4-3-310, C.R.S.2006] the effect of the receipt of

that check which is not disputed at all, is discharge of the debt to the same

The question then becomes how much was the check for or how much

168 P.3d 1

Colo.App.,2007

amount of a payoff-actually probably a little bit more than the full amount of

the payoff.

Judgment was entered in favor of the debtor, and the foreclosure was

terminated.

The bank filed post-trial motions, including a motion for a new trial on the

for the payoff amount. We are not persuaded.

[1] Link to KeyCite Notes[2] Link to KeyCite Notes When sufficiency of the

evidence is challenged on appeal, an appellate court must determine

whether the evidence, viewed as a whole and in the light most favorable to

the prevailing party, is sufficient to support the verdict. Parr v. Triple L & J

bank’s assertion that it is entitled to a de novo standard of review.

[3] Link to KeyCite Notes Here, the trial court’s conclusion that the check

“was either a cashier’s check or certified funds or a certified check” was

supported by the bank representative’s testimony that if the bank had

received a personal check instead of certified funds, a notation would have

down to the “payoff department.”

The trial court’s conclusion that the check was “for the full amount of a

payoff” also has support in the testimony of the bank representative.

Specifically, she testified that when she received the check, she “assumed

it was a payoff.” While she testified that she had not determined whether

finding that the check “was either a cashier’s check or certified funds or a

certified check” and that the check was “for the full amount of a payoff.”

II.

The bank asserts that the trial court erred as a matter of law by ruling that

the promissory note was paid in full because the missing check was not

extent discharge would result if an amount of money equal to the amount

of the instrument were taken in payment of the obligation. Discharge of the

obligation does not affect any liability that the obligor may have as an

endorser of the instrument.

(Emphasis added.)

General Assembly, looking first to the statute’s plain language. In re 2000-

2001 Dist. Grand Jury, 97 P.3d 921, 924 (Colo.2004). If a statute is clear

and unambiguous on its face, then we need not look beyond the plain

language and must apply the statute as written. Garhart ex rel. Tinsman v.

Columbia/HealthONE, L.L.C., 95 P.3d 571, 591 (Colo.2004).

payment of an obligation. In that case the obligation is discharged unless

there is an agreement to the contrary.” Section 4-3-310 cmt. 2 (emphasis

added). This comment indicates that the drafters intended that the taking

for an obligation occurs simultaneously with the giving of the payment. This

interpretation corresponds with the plain meaning of the verb “take,” which

the check is paid, certified, or dishonored. The bank’s interpretation of

“taken for an obligation” would render subsection (b) meaningless.

Further, case law supports this interpretation. As used in the Uniform

Commercial Code, certified or bank checks are the equivalent of cash in

satisfying the underlying obligation. Section 4-3-310(a); Harrington v.

cashier’s check, money order, or currency passes with delivery to the

person who receives it in good faith and for valuable consideration.

Transamerica Ins. Co. v. Long, 318 F.Supp. 156, 160 (W.D.Pa.1970); see

also Chen v. Roosevelt & Main St. Realty Corp., 131 Misc.2d 572, 574,

500 N.Y.S.2d 948, 950 (Sup.Ct.1986) (“Plaintiffs’ acceptance … of the

The bank’s reliance on Transamerica Ins. Co. v. Long, supra, 318 F.Supp.

at 160, and Am. Fed. Sav. & Loan Ass’n v. Madison Valley Props. Inc., 288

Mont. 365, 958 P.2d 57, 65-66 (1998), is unavailing. Those cases hold that

in some situations, an instrument purchased with stolen funds can defeat

the holder’s title to the proceeds.

requesting payment of the amount of the check.” Section 4-3-312(b),

C.R.S.2006. In this context, “ ‘[c]laimant’ means a person who claims the

right to receive the amount of a cashier’s check, teller’s check, or certified

check that was lost, destroyed, or stolen.” Section 4-3-312(a)(2),

C.R.S.2006.

lost the check. Therefore, the debtor does not need to comply with § 4–3-

312 to benefit from the check.

In light of the immediately foregoing argument, it should be noted that the

check was lost without the bank’s having recorded the identity of the

drawee, the endorsees if any, the drawer bank, or the amount. We would

[8] Link to KeyCite Notes The bank argues that the trial court erred as a

matter of law by concluding that the loan was discharged even though

procedural conditions required by the debtor’s mortgage agreement were

never met. However, the bank did not make this argument to the trial court,

and so it will not be addressed on appeal. See Estate of Stevenson v.

Hollywood Bar & Cafe, Inc., 832 P.2d 718, 721 n. 5 (Colo.1992).

The judgment is affirmed.