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SEPTEMBER 25, 1985




This action represents a salvage effort by a Gulf Coast businessman undertaken in the wake of his shipwrecked effort to sell his gasoline distributorship business to a then unbeknownst con artist. Our purchaser-villian, bled the business dry and has left for parts unknown, no doubt from whence he came. His business destroyed, our seller sought a solvent defendant. He picked his long time banker, who at best has an incidental connection with the seller's debacle.

The ensuing lawsuit has led to the instant appeal which presents less than as ordinary questions regarding the liability vel non of a bank for losses said to have been occasioned by reliance upon casual or informal comments made to a customer. Also presented are important questions regarding the rights and liabilities of the several parties affected when a fraudulent maker presents a check bearing a forged certification to one who in turn endorses and delivers the check to the depository/collecting Bank only ultimately to have the West Indies drawee bank refuse payment and dishonor the check Faithful application of the law of this state to the facts of this case require that we resolve these issues in

 favor of the Bank and affirm the judgment of the trial court.



 Though culminating on February 15, 1978, this story has its genesis in the wake of Hurricane Camille in 1969, for in that year Austin W. White, Plaintiff below and Appellant here, and D. G. Seago, Jr., created a corporation, Mark Oil, Inc., and through that vehicle proceeded to engage in the sale, both retail and wholesale, of petroleum products in the Mississippi Gulf Coast area. Seago primarily provided financial resources to the new company, while White provided management. At the outset, White owned approximately one-fourth of the outstanding common stock of the corporation. Over the years the corporation retired (and held as treasury stock) portions of Seago's stock until the interests of White and Seago in the corporation were approximately equal.

 At the beginning Mark Oil was pumping approximately 87,000 gallons of fuel a year in the Gulf Coast area. By 1976 the company's annual volume had increased to 36,000,000 gallons of product pumped through its service stations. During this time the company's primary banking relationship was with Hancock Bank of Gulfport, Mississippi. The Bank's officer with whom Mark Oil primarily dealt was Buddy Hutchins, senior vice president.

 In 1976 or 1977 White, by reason of a combination of health and other personal reasons, determined that the company should be sold. In early February of 1978 White reached a tentative agreement with Walter Harvey and Patrick McGlon for this sale, one feature of which was to be a $250,000 down payment.

 At this time the Bank was holding Seago's stock in the company by virtue of an escrow agreement. Prior thereto, White and Seago had entered into an agreement under which Mark Oil was purchasing all of Seago's stock and holding it as treasury stock. Some $79,000.00 had been paid toward this purchase but another $173,000.00 remained outstanding as White approached the sale to Harvey and McGlon. The sales agreement, accordingly, included provision for the payoff of the outstanding $173,000.00 owed to Seago and the release of his stock from the escrow agreement.

 February 15, 1978, was fixed as the date for the closing of the sale. Hancock Bank had for some time known of White's efforts to sell the company. The Bank, however, had not been a party to the negotiations with Harvey and McGlon and did not

 learn of the sale until February 13, 1978. On that date Hutchins advised White that the transaction could be closed in the physical facilities housing the Hancock Bank Trust Department.

 On February 14, 1978, Harvey, McGlon, White and his attorney, Earl Denham, met together at a local restaurant to go over the contract documents and finalize all arrangements. No representative of the Bank was present or invited. At this time McGlon insisted that the contract provision for the $250,000.00 down payment be changed from" cash "to" cash or certified check ". White and his attorney agreed. They also agreed to delete a provision contained in an earlier draft of the sales contract to the effect that all stock in Mark Oil would be held in escrow until the purchasers had performed all of their obligations under the contract.

 On the morning of February 15, 1978, Harvey, McGlon, White, Denham, Hutchins and a trust officer with the Hancock Bank met at the Bank and the various contract and sales documents were executed. At this time McGlon produced a check drawn on the Merchants & Shipowners Bank, Kingston, St. Vincent, West Indies, on the account of Dennis Enterprises, Inc., a Washington D.C. company, in the amount of $250,000.00, and purportedly certified by the Merchants & Shipowners Bank. The check was payable to Austin W. White and had been signed by McGlon on behalf of Dennis Enterprises, Inc. The check was presented to White who showed it to Hutchins. Hutchins asked White to step outside the room for a moment and then asked White what he thought about the check. White advised Hutchins," I do not know anything about the check, I am not the banker. "Hutchins responded that the check" looked all right to him "or" that he saw nothing wrong with it ", or, according to White," something of that nature ". White did not ask Hutchins to have the check verified nor did Hutchins volunteer to do so. White then endorsed the check and delivered it to the Hancock Bank where it was placed in a savings account in the name of White and his wife.

 At this point, the parties moved to pay off the $173,000.00 indebtedness owed to Seago for the purchase of the balance of his stock. Hancock Bank made a secured loan to White and Mark Oil, Inc. in the amount of $173,000.00 and as security therefor White gave the Bank a security interest in the savings account, in which the $250,000.00 check had just been deposited. The net effect of all this was that, even though the check had not been verified or collected, Hancock Bank gave White immediate credit therefor.

 White contends that the process for collection of the

 check was arguably unnecessarily delayed. Hancock Bank sent the check to a correspondent bank, the Whitney National Bank, in New Orleans, Louisiana. The Whitney Bank then took the check and sent it to the Trust Company Bank of Atlanta, Georgia, which in turn finally sent the check to the Merchants & Shipowners Bank in the West Indies for payment. On April 4, 1978, the parties learned that the check had been dishonored; that the certification was a forgery in that the West Indies bank had no certification procedure and therefore no certification was or could have been made by that bank; that the check was probably a forgery, inasmuch as the Merchants & Shipowners Bank had no account in the name of Dennis Enterprises, Inc.; and that the check itself was not printed by the bank or an authorized agent.

 In the six weeks that intervened from the presentation of the check on February 15, 1978, the new purchasers had managed to deplete the resources of Mark Oil, Inc. Although White made an attempt to get back into the company and rehabilitate it, all too soon it became apparent that Mark Oil was gone with the wind.


 On January 22, 1980, Austin W. White commenced this civil action by filing his complaint in the Circuit Court of the First Judicial District of Harrison County, Mississippi. Hancock Bank, a Mississippi banking association, was named as the sole defendant. A second amended declaration charged that the Bank was negligent in failing to verify the $250,000.00 check, was negligent in the handling of that check and was generally negligent in the performance of various duties said to have been owed to White. White charged a breach of duties imposed by a fiduciary relationship said to have existed between himself and the Bank, that the Bank was guilty of negligent misrepresentations regarding the check. Finally the complaint charged that, upon discovery of defects in the check, the Bank had a duty to assist White in salvaging what he could but instead was grossly negligent in the protection of his rights. Plaintiff demanded actual damages, including consequential damages incident to the loss of his business and his business or credit reputation. The Bank denied the essential allegations of the complaint pleading particularly that the rights and liabilities of the parties were wholly determinable by reference to the provisions of Articles 3 and 4 of the Uniform Commercial Code as enacted in Mississippi, Miss. Code Ann. 75-3-101 and -4-101, et seq. (1972).

 After considerable discovery and other pretrial proceedings, the case was called for ...

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