Appeals court upholds bank in lawsuit

By Patsy R. Brumfield/NEMS Daily Journal

JACKSON – A close state appeals court decision upheld BancorpSouth Bank’s defense in a 2011 lawsuit over forged checks.
In a decision released Tuesday, the Mississippi Court of Appeals voted 5-4, with one judge abstaining, to affirm a Lafayette County decision by Circuit Judge John A. Gregory.
The lawsuit by Century Construction Co. LLC was filed in April 2008 some 21⁄2 years after the company discovered more than $450,000 in checks were through its corporate checking account with BancorpSouth.
Century, however, began to make inquiries about the account, it said by August 2005, and by Oct. 12, 2005, informed the bank that “unauthorized parties” had been signing checks that were in turn paid by the bank. Century accused the bank of negligence, breach of warranty and wrongful conversion.
The bank asked Gregory to throw out the lawsuit, which is what he did on Nov. 10, 2011. While the bank claims it had no record, Century claimed it called twice with instructions to pay only items with authorized signatures.
Century’s attorney did not respond to a Daily Journal question of whether they will appeal to the Mississippi Supreme Court.
In the majority opinion, Judge Joseph Lee noted that in Century’s deposit agreement, it agreed to look at its bank statements with “reasonable promptness” and to alert the bank to any problems. It also agreed that if it failed to report unauthorized signatures, forgeries or errors within 60 days, the loss “will be entirely” its own.
Century contended that it had a one-year notice under state law, but Lee’s opinion says that the law’s effect may vary by deposit agreement.

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