YARBRO LTD v MISSOULA FEDERAL CR

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No. 01-014 iK ;Ti-!E SIJPREhZE COURT OF THE STATE OF \ / I O N T l i A 200%21T 152 'rrARBRO, L.TD., a Ncvada corporation, dibja LAKE .MEAD RADIOlLOGlSTS, Plaintiff and Pippellant, \. RIISSOUI.,A FEDERAL CREDIT UNIOX: a Montana Banking Corporation, DOE INDIVLDUALS I-X, ROE CORPORATIONS I-X, Defendants and Respondents. APPEAL FIIOM: District Court of the Fourth Judicial District: In and for the County oSMissoula, l.Ionorable John Larson, Judge Presidiiig COUNSEL. OF RECORD: For Appellant: Jolin F. \;elk, Blakely & Velk, Missoula, Montana Cl-rarles I. Lybarger, Lybarger, Burrin & Bunin, Las Vegas, Ncvada For Respondent: Ronald A. Bendcr, 12'0rdct1, TI~aile ilaines, P.C., blissoilla, ;\/lor~lana & Submitted on Briefs June 7,2001 Dccrdcd July 3,2002 Justice Jim Rice cieii\-cred ilie Opinion ni'thc Court. *; 1 iipppcil:inr Yar13rot 1-rd., db:a L;iice ticiid Radiologists (l';irbro). iipp-~~is ficirI~ ;hi: order ofthe Fo~irllr Juciiciaf District ('oilit. Miss(>i,il:i ' ( j i i r l y g ~ ~ i t i ~ ~ t ~ n ~ i i y \ - i " t diiir i ~ c ! ~ i ( n? g h v o r of Rcspoxdcnr \fisso~ili:f'eciesal C'reiiit Ljnion (Z11:C'!..:j aild denying Yiirbro's :~?criiori for a cllangc af venac. We aff'firm. 2 ' The following issilcs ar-e disposiiivc: 3 1 . Whether t!ic District Coiirt erred in granting surniiiziry judg~neiitto kd\/LFC1; 011 Yarbro's conversion claiin on the grounds that the claim was barred by the applicable statute of limitations. 7j4 2. L$Tl~el'i~er District Co~11.t the erred in gran~iiig sumrnary judgrncnt to tlFCl, on Yarhro's hreach of win-i-anty claini on the grounds that Yarbro \vas rcsponsib!e for tlic acts of its own ctiiployccs. 'I5 3. Whether thc District Court crrcd in cicnying Ynrbro's motion fbr a changc of venue. FAC'l-l.J.41. r\h'l> 0 31 Pf<OCE[>I.!R:11. t3;\<,'K(iROl..YD, Yarbro is a racliologisr firm operated as 1.akc %lead Radiolagisis in Ilerrdcrson. Ncvada. ICathryn Velean (Mci.canj was employed byVarb!-o from Jar!u;:r-y of 11193 tlirough .June of' 1906. %tcl,can's rcsponsibilities iticluclcd tl:ira ci~ii-y.filing, posting payinents, processing accounts rci.ci\rablc, sending oiit statenicnts; billing anti ;ic~oiintiiig.During the cotiric of 11cr employmcnr, blcl.ca~nforged signi!!:~!-cs oil o\.cr n i~andrcii checks and iiloncy orders. *cleI,eitn woi~lci intcrccpt cl1ecks jnid on patient accc!ilnts \\,hich ~verc pnqablc either ? - to [Lake hfeaii or to indiviciutli c1itcto1-s;she wouiil cndorsc ihc ci~ecks hehalfof i.ake Mecad on or il;e injj\i:iual doctors and makc them p a ~ h l i to !~ziselCT!~crr,? v f ~ i . ~ ; i ~i o i ! ?cridors;: : i d tl:c cl?echs in her name and mail them to fLIFC'l-: fbr ileposil into her-personal :recount ti~ere. 'l'hc iast deposit to McL.ekin' ClFC'L; account was :made on JLLIIC ILjcii>. l ~ c 7; T vaiiic of tlhc forged checks and money orders exceecied S00,000.00. " i On JutieOi l"lO'i: Yarbro filed a complaint against LIFCC in %fissoulaCounty seeking damages in rhe amount of the fbrgecl checks and moricy orders, alleging unlalvkrl conversion of negotiable inst~~iments MFClJ, tinder by of transfer warranties, under 3 30-3-41 '4. ?+\;1C.',1\ JUC'C 5 3-41 9). and breach 3 30-3-207, MC.4 (I.IC'C 3 4-207). On July 3; 21100; ,!4ppe?lanr moved for a cliange of venue, asserting iliat, because k~lonor:ible Edward klct.can, a judge of the Fourth Judicial ISistrict. is tile uttcle of McLean, an iinpai-tiai trial couid not hi: conductecl ill Misso~ilaCounty. 011 July 0 , 2000; hZF('l..T tiled a rnotioii for summary judgment, argiiing Varhro's con\-ersion claim was barred by statute of ii~nitations.that Yarbro's brcach of warmnty claiin was barred becati~e Yarbro is responsible for the acts of its own eniployees. and iitrtlier, that V:irbro could not bring warranties against k!I'vZl'C'i:. 011Septeinhel- 5.Zi)O(i, i : claim for l?rcacli of transfer the i)isirict ('cii1i.t. iioiiorable Julli? YC. Larson presiding. deniccl Yarbro's motion for change of venue and granted siimrnary jucigntcnt in fhvor of b1CIFC'U. FI-or11that judgment and order, Yarhro appeals. S7':%"L:I)ARDOF KEVlEM; 78 Summary .jutigmeni is tippropi-iatc when rite pleadings. discovery and ai'iidaviis establish that tlzere is no geniline issue as to any maierit~ifact atid that tlie moving itirre is i.r!>ting sijmrnar> jiidgmcnt dc iio;:o. by iipi?iyil?~ liie ~d M.R.C'iv.l'.. as . . iiiilli' e~i:iliiiilc)!l1:553d On iiui: 56, &st!-ict coiirt. .Sciiiir~?iri~ki~r r.;lfei.itiiii;:Oli't,.. i iO"1 8 ' 1 ' 70.4; ?4. 388 Mont. 21 7_7: 13, 050 P.2d 1370, *j 14. 0i l l'he moving parry n i ~ ~demonstrate that no genuine issues of marerial tkct itxist. st Then the burden shifts to the non-iiioving party t provc, by more tliaii mere dci~ialand o speculation, that a genuine issue does exist. Reli & :L.lnrt.cr, I'I.LC v. .Sz~l/iviit?, 200(, b1'T 200, * 25? 300 Viotit. 530, rj 25, 6 P.3d 965, rj 25. If tlie court dcternlines that genuine issi~es of Fact do not exist, the court must then dcteinninc ~vl~etlicr moving party is ci~titlcd :he to j judgment as a inattcr of Ian. Uell, ! 25. '1-his Court i.evicix;s a district coiirt's legal co~lclusions detertninc iftlrcy are correct. Hell. ";5. to 7ilO The party opposing suintnary judgrncilt cannot rely on mere allegations in thc pleadings, but 111nst present its eviilence raising gcn~iinc issrzes of material fict in the ibiai o f affidavits or other s ~ o r ltestiinoliy. .Schfi~nili;kei..15: see also Kiwi; I , . l g; T(iii'ii i~[C'~z.vciiijC' ( 1 9971,284 Mont. 167,943 P.2~1 1262. LVhile this Court rcsolves ally infcrciices draw11from the iactual record in favor of the party opposirig sunitnary judgmctit, mere cicniiii, speculation, orconclusory state~i~ents ins~ifficiciltto arc raisea ycnuinc issiieiif i-i~aterial hzt. .Sci~~imcicitei-~ (1 15. D1SCL;SSION "1 1 I i . Dici the Ilisrrict Coiilt en- in graiztiiig suiiiniary j u d g ~ ~ i eoil tihi' gro~!ii(?s ~l that Yiirhro's conversion c l a i ~ ~were ha]-rciiby the app!ictib!c sl;rtutc ui'lirnitatinris? ls 4 -5 811 iil Count i o -its Compiaint, Yarbro 2illeg~:l ui11awl;ii i:~iivcrsioi! of negotiabla: i grt3ntctisuml~?;ry,juifgn~e~it tti XiFC'L,' on this counf. lindijrg rhc n : ! i . ..?-as bi:i-rcii tinder time rhe applicable statute of lin~itations. 11olding which J'arhrii ci)l~tc!iils a \v:is "i3 CISO~C~LIS When interpreting the Llnifonii Coniincrciai C'utie, wc bear in rnii-id its purposes itilci objectives. I'hcse obicctivcs include thc uniform application o f c o i ~ ~ n ~ e r c i a l among the law v:irious jurisdictions, the siri~pliiicatiort tnoderni~arion thc 1:iw govcrnirrg cotnrncrciai and of transztcrions, and thc presumption in favor of predictability anti finality of commercial transactions. 5,13 See $ 30-1-102, blCA, "Purposes--rules of construction variation by The applicable statute of lirnit:ttions for eonvcrsion of negiitiablc insti-urncnts is set forth in $ 30-3- 122, MCX. Subsection (7) ststtcs: Llnlcss governed by orhcr law regarding claims for iridc~nnityorcontribution, an action for conversion of an iiistriirnent, ibr money llad anci rcccivcd, or for likc action bascd on conversion: fbr breach of \vztrranty; or to enforce an obligation. duty. or right arising under this chapter and not governed by this section nltlst bc commenced \vitIiin 3 years after the causc of action accrues. Section 30-3-122(7). btCL'+. Tlre Oflicial C.onzments state that tliis silbseciioo covers conversion cases and other actions to cnfoscc obligations or rights arising under Ariiclc 3. and thatthe thrcc-year statute of liii~itations cstahlisbcd b , tile statutc"f<!llows iradiiion~ii 7.i. y iu in stating that the period runs fiorn the time thc cause of aciii?n accnies.'. 7 15 . . ,iecTlon 57-2- i02: 1I;1('t\, sets forth tile ti.adiric?:zai rule in \vloiiiaria regarding the ( 1 ) For puposc; ofstatutes relarirlg to the rimc within wl~ich atlion 311 must be commenced: (a) a claim or cause oi'aition accrucs when ail cien~ei~is oEthc ciaim or causc exist or have occurred. (2) Cjnless othe~wisc r o d e d by statute, thc per-id oflii~~iiation p begins when tile claim or cause of action accrues. Lack otl<nowledgcoi'thc claim or cause of action, or of its accrual, by the party to whom it has accrued do-. not bs of postpone the begi~i~iing the pcriod of limitaiion. Section 27-2-102(11 and (2), h1C.X In this case. Yarbro's carlsc ofactiotl against MFCI,' for conversion accrueit for cczch I el~eck the time the check was deposiiect by M~1~car-i hcr tlfC'I,' account kind LlFCli: at in credited MeLean's account therefor. It is not disp~itcdthat the last cicposii io Mcl_esiii's MFCL account \%as111ailc on June 7. 19%. Becausc the elements of conLetsron for all transactions existed or occurred by then, the three-year siatute of limitations for all claims bcgan to run, at thc latcst, on J L I I 8~1096. Yarbro's complaint was not tjlcd until .lunc 9, ): !099. l 17 i Yarbro argues thc discovei-y doctrinc should be applied to the statute of limitations for coil-vcrsion in this case. 7'11~ discovery doctril-iei s an cijiiirabic cxccption to the general rule that the statute of liniitations begins to run as soon as thc cause ofaction aicnlcs. ikcorclil~g tit tile discovcry doctrine, "the applicable staiiitc of limitations begins tii run once the plilintifi' . . knctv or sirt>ulciillivc knoivir that !a cause of ac-iron exists. H/iiik ii,iMiiiitiii~;r( IO'iii). ! 8 ,. *,. ~ i i i - i w i i ; - g i e r ~hi(: 1.. K ~, Eisisii/~ 242 blont. 155,l00, 7Kii P.2d 567,576. Varljro iltrirns it had iio reiis~il st~spi-ct to il::~r 23 cor~vcrsioi:had occiirrcci prior tii?ilni: 10, 1900, lvhcn it first discovcrcd thiit klcl..can !?:id cngagcil in Sriiiidulect iiclivitlc". fFunhcr, Yarlxo asserts i t \\.as entitled to obtain copics of the checks in qucsriori fion: MFC'I.; and inspect tile checks to deterniiiie MFCG's involvement in the matter. b1ore:iver; Yarbro claims when i t knew or should have known of the forgeries is a question of material FLct that needs to be deterniinect, anci thirs, strmrmary judgrncrit is inappropriate. 710 Yarbro's assertion that the discovery doctrine slio~ild applied here is prerniscd up012 be '. -<' two al.guments. First, it cites the CCC statutes oflitlliiatioli sct Forth at 9 sr_i-4-207(5), "\1C'!i, anc! $ 30-3-117(4); MCA, both of n:hich provide that ""a cause of action !'or breach of warrant): tinder this section accrucs when the claimant has reason to know of the brc:icl~." I-ioucvcr. by the plain meaning or these ptavisions and ihcir placement witlhin statutes :iddrcssing breach of ~v~trraiity. arc applicable only to hrcazh of \v;li-i-:iilt:i actions, nor they conversion. These statutory provisiotis tllus have n o application to Yarbrois cunvcrsiun claim. 320 Secotrdly, Yztrbro cites the eonccalment or\ilcl.e:tn in this maitcr :rnci oris case law's applicatioil o f t h e discovery doctrine in certain instances. 'llthougl~tlic app!icatiiin cifthe disco.. c. i y ~ doctrinc to a LC'C conversion case is one of ilrst impression in YItii~ttiri~i~ substar~tia! consideration o f d issiic h a s o c c ~ ~ ~in ori~ercuiins. ~ ~'iil will? sig~~iticantagrceinec~. 4:2 1 , &ciiiii.d lz, [ 1, 3 . ]:.Ztj j PI?!:; rile $isc(j\~ci-;i doctril~c a I:('( io . . 1224,the 1edcr:;l circiirr ~oi:rr 4 3-41') cmicrsioi~ slating, "i.'hcrc ciisc apart! not engaging in fraudulent concealiiient asserts thcstarriic oflin1itatiiiris cicfiiiisc. ruc;ir courts have ref;ascd to apply the discovery rule to negotiable instriirncnts, finding I inimical to UC'C policies of finality aricl negotiability." .2lei1icilini,995 F.2d at 1230. 7122 In .Jl~isker iVercr Co. I>. ~GIilIii~silcr H r ~ f i i(Iowa lOOO), 300 N.kV.2~1 Sfirte i 476, tile iowa Suprcn~e Coutt offered similar reasons for not applying tl3c discovery iioetrinc. to 21 l,yi'i' 3 -3-310 conversion action and reported that otlier statcs are nearly ~ina~?inroustlieir rcftisai in to appiy tile discover-y rille in cases of conversion. It siiitcti, " t i e firlit thcir IICC~S~OIIS pcrsuasivc arid note that such ai~iiiorityis cntitlcd to cvcn greater. defcrcncc where corrsistcricy arid unifht-mity ofapplication i~r-ecsse~itial cicmcnts oTact>mprchcnsivestatutory scl~erne . . . the Uniform Cornniercial Coile." Ifztskct. jVci.i;s t,'~.. X.W.2d at 378. like 460 323 'PhcCourtofi\ppeals for the District ofColumbia C'ircuit also endorseti this approach. 111 Kuw(iiz dzfirtv~~g~.s v. Ainc~ric,(u~ 13(rtik (L1.C'. Cir. 1980), 800 F.2d 356, the c<jLiri C'orj~. Set. relectcd the application of the discovery rulc to a UCC 9 3-11') action and held that "'the discovery rulc docs not apply to toll thc srati~teof lirnitatlons where a hailk is silcd ibr ccrrr~ersioii ~ai titrgccl endorscriient." rrnless rhc b21nh tiaiiiiuiei~ril;ccii~cc:iictlthe it.:insiiciion. o Kzlivuii z4irw(~.~,.s I I ~,. 800 F.2~1 402; c~uotii?g C'( at S(jlii!i~t'c.~f c!i T r ~ s <?I. /3(in/c t ('orirt~~crcicil Lifi ti24 !/is. \,. Banker ',< C,'o. (Texas 107X)?503 S.'1ir.2d 320. '1'~voreasons cificn citeii for rejecting the application of ihc discovery iiocuir~c in convcrsion cascs are the neeti for finality in transactions involving negoiiablc instn~rnciiti~ 8 and the presiiinption that a property olirler knows u-liai and whcrc his property is. i-itisker 7 2 5 'The facrs in MisXrr l e i i : s C i ) were similar t(j. bvr cven morc harsh thani those now the e~rtployer'sindorsement on the checks, itnd depositeci tbe checks into his persocniti account. Tlie employee concealed hts ernbc//lemetrt from h ~ employer, and the e n ~ p l o ~ e i s did not cfiscol-er the employee's actions until after lon~a's statute of limitaiions hail already run. \Vhen the defendant bank interposed the statute of lim~tat~ons defense to the plaintlft's coi~vcr-sion action, the plainxiff stsscrted the discovery doctrine, ciainling the employee's fiaudulcntconccain~entpreventcd itiscotery. Citing the i.;C'i' objectives ofpreiiictahilityand finality in com~nercial transactions, thc Iowa Supreme Court refiised ti? apply the iiiscoi-ery doctrine to conversion actrons, 1Vc thinic the consicterations of finality and predicbtbility represenred by the majority r~11e substantial and outweigh the countervailiilg equities which are Icd us to apply the discovery rule iri other cases. T1ic strength of our system of commerce depends on a negotiable instrument law that is mechanical in application. . . . In cotlclusion, we hold that the discovery rttle does not apply toconversion actions under lovw,a.rodescctioil 554.34iO(l)(c) [1:CC 5 3-41 9. 1 'l'hc plaintifl-s cause of action against the Maliaska State Uank is therefore barrcd by the statute oflirnitations. The decision ofthe district court granting the bank's motion for summery judgment is affirmed. "25 10 'T'l?c court's rationale it1 Siitviiii Aii-ivitj:~ ('oip. was that art employer shurr!ci bc abic ciiscover 311 en~pIoyee tvho i s forging checks within thc ;ipplic;?blc pcriod oi'iiil~itaii~~i by evercisiilg reasonable and prudent business practices. '~'therc in bc no cjucstioii in tiic ilisiarri casc that s n oriliiia1.y business could iial;c dt.ieciecl ihu sipiliinii~g oiioifmi!s wi!i:iil ;i three-year period (if t1;eir convci-sioin." 9127 iiztiiiiii ;I!rr;.i~j..s C,'oq?., 890 F.2.d ar 461 Yarbro's attempt to trigger i~ppiicationof ;lie discovery doctrinc by asscrling Vlcl.can's frauiiuicilr concei~lmcnt not l\:ell founded. biclcaii was Yarbro's cmploycc. 110t is biFCU's cniployee; and Yarlxo has not ailcgcd any conccalrnent on tlzc part of zi1f'C'I.i. \+~c have held that "when defendant's 'iiaudulent conccalr~~cnt' prevents a plaintiff konl discovering a cause of action? the statute of limitations is gcrlcrall) tolled." kllowsto~ic (2>rzfiritr1ce ofriie L'riiteni ,Mc~rilodi.st(%l~r-c/i [).A. I>c~~;i(i.soii,C . (1987). 228 24ont. 288. 1,. /PI 204, 741 iJ.2d 794: 798. For frauciuicnt concealrrient to ctccur; "tl~cre must bc art afiir~native act corn~niired the dclcnciant, and i l ~ e by afirl~rativc must be calciilated to obscure the act cuistcnce of the cause ofaction." Yc://o\t~.si(>i~c C~o~~j>~.eric~c~ o,f/l!eL!/ii!e(i /L/cr/~o(ii,st C.Imt~~tJi, 228 biont. at 294, 741 P.2d at 798. Yarhro has set hrth no evictence claiini~lgMI;C'I' fraudulently co~lccalcd Mc1,cart's actions or Yarbro's discovery thereof. 728 We decline Yarbro's suggestion to apply thc discovery doctrinc to Yarbro's colivcrsion claim. 'The plain meaning o f 5 30-3-122(7), CIC'Al requires commencenleot of a conversion action wit1ii11three years ofthe action's accrual. Further, the public \3!ould he poorly served by a rule t h a ~ effectively shifis the respo~isihilitv caref'ul bookkeeping aiild for employee supervisioi~a\vay ii-om rirose in the best position to nio~litoraccounts ailc'i employees. The strict applicatiol: oftlie t!?r-ee-yearstatute oi'limitaiions, v-hiie i)re:iicrabiy harsh in sorirc cases, best serves t l ~ c goals adv::~-rccdby the ilr~ifor-~n Coinrrrcrcia! Code. 4;29 [lairingdetcrmjncd tbc discoyery doctrine i s nor applicahlc in t h i s case. and that the :statute of limitations wris not tolied h:- conzcalr?rcnt, t"ai.hro's argiiineilt that surnrilary juitgmcnt cannot be entered hccausc a questioii off;~ct rcmains regirding ivhen Yi~iliro knew or should havc kliown of Mc1,can's forgerie rnust fiii. 'The 111ateri;il facts ncccssaq kr i determining if sttrnnlary judgrnent is appropriate by reason of statute of limitations arc the clirtes of the convcrsion and the filing of Yarbro's Complaint. These facts arc noi in dispute, and therethre, tl?c 1)istriet ('our7 correctly licld that ?VZI;C'I.: is catitled to judgmc~lt a illatleias of law 011Y arbro's con\crsion clann "30 :I- 2. Did thc District Court err in granting summary judgment to b1FC;U on Yarbr0.s breach oftvarranty claim on the grounds that Yarbro \+-itsresponsible for the acts of its own crnployces'? 731 In Count l l of its Complaint, Yarbro alleged that MFCl.! is a eollectirtg beilk and sougllt damages against MFCV for brcacli of transfir marrantics under $ 30-4-207? l i l C 1 . Sectton 30-3-207, MC.4, sratcs in part. (1 ) : custotner or collecting bank that iransiers iin item and rcccivcs o I settlement or other consideration warrants to rlie transferee and to any subsequent collecting bank that: (a) the warrantor is a person elrtitleci to cnhrcc the item; (b) all signatures on the item arc authentic and autlrorizcd; (c) the rtenl has not been dltered; (d) the ircnl is no! subject to a ileknsc or claini iii recoLzplnent stated in 30-3-305(1) of any party to 111eitern that call be asserted against the warrantor; and (el the warrantor has 110 knowlec!ge of any iiisolveiicy pn>cccdi!ig cotnnicnced with respect to tile maker or acceptor or, in r k case of an unacceprcd draft*the cirawcr. ro *;?2 The District Co~i1.tgranted sutntnary judg~~lcnt k4IZ('11 on Varbro's brcach of warranty claim, holding, pursuant to 5 30-3-420, ?/1C.A9that an eiiiployer ~ v h o entrust an employcc with responsibility tbr processing insti-uments is liable if that cmployec ti-a~tdulcntiy endorses an instrument. except ttt the extent th;tt a party taking the irrstrulneilt for value fails to exercise ordinary care and tltereby contributes to the loss. The Llistrict Court found that Yarbro produced iio cvidence to rctiitc hfFCl;'s factua! :~ssertionsthat blcL.can was an emplopec ei~lrustcd wiili responsibility ii,r processing instrunlcnts and that '1.IFC'I: had exercised ordinary care in accepting the instruniei-its for payrncnt. Thcrcfore, i t entered sumrnary jrtcigmcnt on the breach of warranty clairn. On appeal, Yarbro argues that blcl..ean's actual or apparent authority to process instruments and \vhether MFCC cxcrciscci ordinary care, \\ere questiotis of fact which precluded surnmary jirdg~ncnt. '33 VlFC1 argued to tlic District Court, and also to this <'our( on appeal, that while Y;irbro was indeed responsible for thc actions of irs own employees, and illat 'ilii('l; exercised ordinar;. care in taking the instruments for payment, it ivas unnecessary to reach ren~edy iigainst these issties bccausc the law iioes riot provide Yarbro a breach of iiiirrar~tq blF<:C in the first instance. X2FCl:'s analysis is correct. 7'34 Scction 3(i-4-207(1 j, hlC'A, provides that a ctisti:mer or cc>licciinghank that tra:isfers an instru~ncnt reccives consideration therefor makcs certain wal-ranties "to tlic trar'isfcrec and 12 , ~* . i ~ i i n ~ . I'hus. ~ and to ;ii~y subscyiicnt coilccriiig insrri~;nent ividlii~the i of rmnsikrors, who ipiaci: ui- r;.arlsCk'i?ian C O I I I ~ I I C I C ~ir;i:i?i-?ciioi~s ~~~ i.cpcalciily iccicfia i h i ii~strurncni pay il~crcon and until the instrun~c!it rcaehcs tl1c payor bank whicli m i i k ~ ti?,: final s payrncni from ihc customer's iiccount, warrant to their transkrccs, who are thoic to vdlhon? they pass the insrrument and from ~vlianl 111ey receive payn~ciit, folio\?vs:that ti~cy, as the aanslerors, are entitlcd to enforce the instrumertt for payment, that rhc signatures on ihc iilstrurnent arc authentic and authori~cd, that the instrument ltas riot beer! aiicrcci. that the instrument is not subject to a dcfensc or claim of recouprnent undcr 5 30-3-305. ?vii';\ :ad that lllc transkror is rtot atvare ofali it~solvcncy proceeding which mayafCeci paylienr on the instrunrent. '4 t r a ~ ~ s f i r rcceivcs thc instrun~cnt rnakcs payntent to the transficror c.in tl:e cc aild basis of these m~arra~ities, is entitled to makc a breiicli of wan-ant? claim against i11c and transfer-or i n the cvcnt the instrunicnr is later determined to he kaudulcni anti a rcimbnrsing payment to tlic transferee is denied. 735 Clrrder these provisions, and tlic facts liere; Yarbro is not a transt'ercc. It dici not receive the instru~nents tltc associated transfer wa:-raniies from MFC'II, a11ddid iiot make and pay~ncrit b1FC'l.i in consideration tbr the insir~imcnts.As i'arhro rcccived no instrument to itr t-t-~lnsfer tvarranty from MFi't.'. it is not entitled. undcr thc tcrms oi'the statiitc, to bring a cause of action for brcach ofthar vvarral~tyagainst MFC'I.,. Thc(I[ '(' proridcs i.clnc.dics to Yarbro for the losses it sustained. but brcacl~ ofir;inskr ..i.xrrar!ty against \:ti'<'!' t~l~lll. is not one , . or? tlic groiinds tiliir 'iilrbri; was rcsponsib!c for h4ci~ian'sactiol;.; tinder -,() c: 3~-.>-4;.. ."it""ii. i ""^ Altl~ougli basis oi'thc District ('ciiirt's s u r n m a r y j u d g i ~ ~iirdcrt was iniorrcit, i t riacl~cil i!ic c~~ ijic COI.I.CCT restilt. if thc district coui-t is comcct iii . . its concliisions. I t rs ii?n:nii!crial what icasons ucre ;issigned thcrcibr. I,(iiir.ic 1,. M. & L. fic'olti, Ch,li>. (I()??). 15'1 ?ilo~!i.304. 4081 498 P.2d 1102. 1194. l'he District Cou~n correc!ly concluded that sumrnaryjiidgil~eiit on Y a r b r i ~ breach of n.arranty claim against MFCU was appropriate '~ 737 1. Did the District Court err in denying Yarbro's motion for a change of venue? 818 Varbro argues tllat the District Court e n c d in denying the motion for a cirange of Lenue it filed, asserting tllat because livnorablc F d i ~ a r d ?i?cl.,ean \vas a potential ~virncs.;in the case, a conflict of interest was presented that justified rnovirig the case to ani,thcrj~iiiiciai district. Section 25-2-201, ill("/\. states w l ~ c n change of venue is r-ecluircd: ,, Ihe court or judge ruusr, oil motion, cliangc the place of trial in the foilo~ving cases: (1) 1~1ll1en the count): C O L I I I ~des~gilatedrn ~ the complaint rs not thc proper (2) u hen there is reasoli to believc that an i r n p a ~ i ~ta i~ a ca11nothe had r l therein; (3)nlren the cou\.enlcnce of a ~tncsscs the ends of just~ce and \~cw!d be pr omoted b> the change Yarbro's motion was based upon 5 25-2-201(2), MC'A. Yarbro asserts that an impartitil trial cannot hc had in Clissoi~!aC'cxirity because Kathryn M/iri.e.*r: is Judge Mci2enn's iiiccc. iiecal~sc Katltryn Mcl.ca!i is a party " tiis action.' aird i~icigc 3 hlci.eiin i s ajiicigc iir .blissiii!a C'o:jncy. V;rrbro assefls that ii is a conflict cif intcrcsi h r 1-ic>::orabi;- John tV. i.aiion to presidi: aver this mattes* as Judge Larsun and Judge ?Mci,can work ii? same courihouse thc and are judges i n tile same jadiciai district 739 Yarbro filed its motion for change of vcnuc on Jul! 7, Z(iii!). ... .CZI:CI ",. answer liitd s h c ~ i tileti cln September 10, 1999. A plaintiff must raise zhe issue of i-enur \vithin 20 tkiys l of the filing of tile dcfendanr's answer or wlieriever at S O I ~ C time more than 20 days after the last pleading has been filcit an event occurs which thereafier atyords good cause to believe that an inipartiai trial cannor be had under ground 2 of said section 25-2-201, and competent proof is submitted to the court that such cause of impartiality did not exist \vithin the 20-day period aftcr tire last plcadiilg tvas filed, then the court may entertain a niotion to change the place of trial under ground 2 of section 25-2-201 within 20 days after that latcr event occurs. Rulc 12(b)(iiif, h1.R.Civ.P. Yarhro's motion for charrgc of venue was not filed within 2(J days of MFC'l.'s ans\vcr. Moreover, Yarbro has not pointed to any evcnt that i>ccurrcd20 days before Yarbro filed its niotion for change of vcnue that establishes good caiisc to be1ici.e that an in~pal-ti;~l cannot hc had i n klissouia County. To thc contrary, the rccortl trial ~ctlccts Yarbro learned ofthe rclatrc>nshtphct\\ccci Kathrqn ClcLean and Judge \lei edrl that in rbc fall oF lOO9, yet dici not file its motion for chainge of venue until July 3 , 2000, iong after expiratio11o f tlrc 20 days provided by Kr~lc12, \/Z.ii.Civ.P. Bccilrise Yarhro's rnoiion for change ofvei~ue not tintelq, ihc District Cotit? correctly denied the morion was 'i\!t!iough not ilnincii in the captioil, Mcl.ean ~vasJoinci1 the action as a third party deiei1iia:;t. iil 15 The IIistrict Court prciperiy granted summary judgmcnt in ht:ar o f %.jli:Ci; or1 Yarhro's coi~versionand brcaciz ofwarntr~ty clairtls. anti C O I - ~ C C Idl"ilii3d V ~ l j 3 i . 0i ~l ~ l j ~ i ? ~~ i O fix change of venue. itsjudgmcnt is aiiinncd. We concur: Justice Tcrry N. I'rie\r;cilcr concurring ffj41 I concur .with thc 111ajorityOpinion. 152 i write scparatcly to note that while I agree s i t h the majority's rcjeciion of thc disco\-ery doctrine as applied to the facts in this case, I would not foreclose possiblc a~plieation that doctrine to conversion actions presented under other circumstances. of y43 The discovel-y doctrine is an equitable principle which may depend on the circumstmccs of each case. For example, in spite of niy great respect for the state of Iowa: I would not follow Husker !t7erv~7 v. :2lirJtush State Bank (Iowa 1090)i 460 N.\V.2d 476. Co. I mcntiort tliat because it is apparently cited with approval in the majority Opinion. 744 Except for this qualificatiorr, I otlrci-wise agree with thc majorit;' Opinion.

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