ViewPoint Bank v.
Allied Property and Casualty Insurance Co.
Dallas Court of Appeals, No. 05-12-01370-CV (August 7, 2014)
Justices Moseley (Opinion), Francis, and Lang
Dallas Court of Appeals, No. 05-12-01370-CV (August 7, 2014)
Justices Moseley (Opinion), Francis, and Lang
In settlement of a property insurance claim, Allied issued checks to its insured that were made payable jointly to the insured and to ViewPoint Bank, which held the insured’s mortgage. The insured cashed the checks, without ViewPoint’s endorsement or consent, and deposited the proceeds in its account. ViewPoint received none of the funds. It sued Allied. The Dallas Court of Appeals held that, in such circumstances, delivery of the checks to one joint payee constitutes constructive delivery to all; but under Article 3 of the UCC, negotiation of the checks by that one payee, without the consent of the other joint payee, does not constitute payment to the nonconsenting payee. As a result, Allied was not discharged either from its underlying obligation to ViewPoint or from its obligation on the checks themselves. In so ruling, the Dallas Court abandoned its longstanding position to the contrary in Benchmark Bank v. State Farm Lloyds, a decision that recently had been disapproved by the Supreme Court of Texas in McAllen Hospitals, LP v. State Farm Mutual. The Court rendered judgment for ViewPoint, but noted that Allied “has remedies against the banks that paid the checks without the necessary endorsement.”
