Schall v. Gilbert

Schall v. Gilbert  (98-316); 169 Vt. 627; 741 A.2d 286

[Filed 3-Aug-1999]
                                 ENTRY ORDER

                       SUPREME COURT DOCKET NO. 98-316

                              APRIL TERM, 1999


Gary H. Schall, Esq. Guardian	     }	APPEALED FROM:
of Henriette Gilbert and Daniel	     }
T. Monte, Executor of Estate of	     }
Eustache Gilbert	             }	Orange Superior Court
	                             }	
     v.	                             }
	                             }	DOCKET NO. 108-7-97 Oecv
James Gilbert, Northfield Savings    }
Bank and Wells River Savings Bank    }


       In the above-entitled cause, the Clerk will enter:


       Plaintiffs Gary H. Schall, guardian of Henriette Gilbert, and Daniel
  Monte, executor of the  estate of Eusatache Gilbert, appeal from the
  superior court's summary judgment decision  concluding that the statute of
  limitations pursuant to 9A V.S.A. § 4-111 barred their claim against 
  defendant Northfield Savings Bank (NSB).  Plaintiffs also seek
  interlocutory review of the trial  court's ruling on the applicable statute
  of limitations and the validity of the two powers of attorney  related to
  their claim against Wells River Savings Bank (WRSB).  We affirm.

       Defendant James Gilbert is the nephew of Eustache and Henriette
  Gilbert (Gilberts).  On   January 25, 1993, the Gilberts each executed a
  power of attorney naming James Gilbert as their  attorney in fact.  On this
  same date, the Gilberts accompanied their nephew to a NSB branch where 
  they personally signed withdrawal requests to close out two certificates of
  deposit and a joint  savings account.  

       On April 15, 1993, James Gilbert visited a WRSB branch with Samuel
  Palmisano.  There,  they presented powers of attorney previously executed
  by the Gilberts and asked to close out two  certificates of deposit.  Due
  to the large dollar amount of the transaction, a WRSB employee  consulted
  with a supervisor who eventually contacted a WRSB attorney.  The bank then
  rejected the  powers of attorney because they did not contain a "durable"
  clause necessary for James Gilbert to  exercise his authority in the event
  that one or both of the Gilberts suffered from a mental disability.  The
  powers of attorney were amended to include the clause and again presented
  to WRSB the  same day.  The bank closed out both certificates of deposit
  pursuant to the amended powers of  attorney executed by the Gilberts. 
  James Gilbert, on behalf of the Gilberts, signed the withdrawal  requests
  and transferred the funds into a money market account held in his own name
  as attorney-in-fact.  



       James Gilbert allegedly turned all the withdrawn funds over to Joseph
  C. Palmisano, Samuel  Palmisano's father, who invested and lost them. 
  Plaintiffs brought suit against NSB, WRSB, and  James Gilbert.  Plaintiff's
  seek the monies withdrawn from both banks, alleging that the banks 
  breached their duty of care concerning their dealings with the elderly
  Gilberts.  The superior court  granted NSB's motion for summary judgment,
  concluding that plaintiffs' claim was filed  subsequent to the three-year
  statute of limitations under 9A V.S.A § 4-111.  In denying WRSB's  motion
  for summary judgment, the superior court concluded that there was a genuine
  issue of  material fact as to when the Gilberts knew or should have known
  of WRSB's alleged negligence.   The superior court also denied plaintiffs'
  motion for summary judgment against WRSB stating that  the clear and
  unambiguous language in the powers of attorney authorized James Gilbert to
  withdraw  the funds.  This appeal followed.      

       We first address whether an action involving certificates of deposit
  falls under article three or  four of the Vermont Uniform Commercial Code
  (UCC).  The superior court concluded that article  four, which concerns
  bank deposits and collections, applied.  See Official Comment 3, 9A V.S.A. 
  § 4-101.  Plaintiffs argue that either article three of Vermont's UCC or 12
  V.S.A. § 511 governs  the matter.  While we agree with the superior court's
  ultimate conclusion, we do not agree that  article four of Vermont's UCC
  governs this action.  Article three governs negotiable instruments,  and
  certificates of deposit are negotiable instruments under 9A V.S.A. §
  3-104(j).  See Miller v.  The Merchants Bank, 138 Vt. 235, 238, 415 A.2d 196, 198 (1980).  To be a negotiable instrument  within article three, a
  writing must: (1) be payable to the bearer at the time it is issued; (2) be 
  payable on demand or at a separate time; and, (3) not state any other
  undertaking or instruction by  the person promising or ordering payment to
  do any act in addition to the payment of money.  See  9A V.S.A. §
  3-104(a)(1)-(3).  The certificates of deposit at issue in this case
  indicate they are  payable to Eustache Gilbert and Henriette Gilbert as
  bearers of the instrument.  They also state that  the entire balance is
  payable at maturity in sixty months with the option of early withdrawal. 
  The  certificates of deposit in the instant case satisfy the final criteria
  defining a negotiable instrument  because they state no other undertaking
  for the issuing bank aside from making payment upon  orders.  For these
  reasons, we conclude that this action falls under article three of
  Vermont's UCC.

       Next we address what statute of limitations governs the current
  action.  Although we agree  with plaintiffs that this action falls under
  article three of Vermont's UCC, we do not agree that the  particular
  provision under 9A V.S.A. § 3-118(e) upon which plaintiffs rely is
  applicable.  It states  that:

    An action to enforce the obligation of a party to a certificate of
    deposit to pay  the instrument must be commenced within six years after
    demand for payment is  made to the maker, but if the instrument states a
    due date and the maker is not  required to pay before that date, the
    six-year period begins when a demand for  payment is in effect and the due
    date has passed. 

       The current action is not one to enforce either bank to pay out
  certificates of deposit.  Plaintiffs do  not allege that the banks
  neglected their duty to pay the instruments.  Indeed, plaintiffs



  recognize that the certificates of deposit were paid upon request for
  withdraw and presentation of  the powers of attorney.  Thus, 9A V.S.A. §
  3-118(e) does not govern.  
	
       Plaintiffs' action against NSB and WRSB is based upon a negligence
  claim.  They allege that  both banks failed to notice "signs and signals"
  which led to the demise of the Gilberts' assets.  In  effect, they argue
  that both banks breached their duty to safeguard the Gilberts' money, not
  their  duty to pay it.  Thus, we conclude that the appropriate statute of
  limitations is § 3-118(g), which  governs actions to enforce a duty arising
  under article three.  See 9A V.S.A. § 3-118(g).  This  subsection states
  that, "[u]nless governed by other law regarding claims for indemnity or 
  contribution, an action . . . to enforce an obligation, duty, or right
  arising under this article and not  governed by this section must be
  commenced within three years after the [cause of action] accrues."  Id.
  (emphasis added; alteration in original). 
	
       Plaintiffs alternatively advance the theory that the statute of
  limitations for general civil  actions applies to this case.  See 12 V.S.A.
  § 511.  Section 511 states in pertinent part that, a "civil  action . . .
  except as otherwise provided, shall be commenced within six months after
  the cause of  action accrues and not thereafter."  Id.  Since we have
  already determined that the action is  governed by article three of the
  Vermont UCC, plaintiffs' action is thus "otherwise provided" and  therefore
  not subject to 12 V.S.A. § 511.
	
       Having determined that a three-year statute of limitations pertains to
  this action, we now  consider when it commences.  As for the claim against
  NSB, the Gilberts were present and signed  withdraw requests at NSB on
  January 25, 1993.  The plaintiff has adduced no facts tending to show  that
  the Gilberts knew or should have known of NSB's alleged wrongdoing on a
  date other than  January 25, 1993.  As a result, the action against NSB
  accrued on January 25, 1993, and was time-barred when brought in July of
  1997.  Any cause of action related  to NSB arose and then expired long
  before the complaint in this matter was filed.

       Similarly, the three-year statute of limitations under 9A V.S.A. §
  3-188(g) pertains to the  claims against WRSB.  The date of the alleged
  wrongdoing by WRSB, however, is not as certain.   The Gilberts were not
  present on April 15, 1993, when the funds were withdrawn from WRSB.   The
  trial court correctly held that further factual development is required to
  determine when the  three-year statue of limitation commences.      

       Finally, plaintiffs argue that the powers of attorney did not
  authorize James Gilbert to  withdraw funds at WRSB.  They characterize the
  powers of attorney as granting James Gilbert a  special rather then a
  general agency.  A power of attorney is a written authorization used to 
  evidence an agent's authority to act on behalf of another person.  See
  Reality Growth Investors v.  Council of Unit Owners, 453 A.2d 450, 454
  (Del. 1982).  It is often characterized as general or  special.  The more
  specific a power of attorney is concerning performance of individual acts,
  the  more the agent is restricted from executing acts beyond the specific
  authority granted.  See Butler  v. Maples, 76 U.S. 766, 774 (9 Wall. 1869). 
  Further, the Restatement (Second) of Agency § 3  cmt. a (1958) states:



   In determining whether an agent is a general or a specific agency, the 
   number of acts to be performed in accomplishing an authorized result, the 
   number of people to be dealt with, and the length of time needed to 
   accomplish the result are the important considerations.  Continuity of 
   service rather than the extent of discretion or responsibility is the hall-
   mark of the general agent.  		

       In this instance, the powers of attorney authorized the Gilberts'
  nephew to transact all  business concerning real and personal property. 
  They also allow him:

   To make, execute and acknowledge all contracts, orders, deeds, leases,
   writings,  assurances, and instruments which may be requisite or proper to
   effectuate any matters  or things pertaining or belonging to me, including
   drawing checks against my account  for all or any part, now or hereafter
   deposited, or money standing to my credit on the  books . . .

  The powers of attorney are broadly drawn, permitting James Gilbert to
  perform a variety of general  acts.  They intrust him to make real estate
  decisions, engage in a variety of contracts and draw  funds against the
  Gilberts' account.  The powers of attorney do not expressly grant James
  Gilbert  the authority to close out certificates of deposit.  The language
  in these documents, however,  clearly and unambiguously designates a
  general agency.  Therefore, we conclude that the powers of  attorney
  conferred the authority upon James Gilbert to withdraw the certificates of
  deposit held by  WRSB.

       Affirmed.  


	BY THE COURT:



	_______________________________________
	John A. Dooley, Associate Justice

	_______________________________________
	James L. Morse, Associate Justice

	_______________________________________
	Denise R. Johnson, Associate Justice

	_______________________________________
	Marilyn S. Skoglund, Associate Justice