
    RICEACRES, INC., Plaintiff-Appellee, v. Douglas HAYES and Jeff Davis Bank & Trust Co., Defendants-Appellants.
    No. 93-310.
    Court of Appeal of Louisiana, Third Circuit.
    Feb. 2, 1994.
    
      Timothy O’Dowd, New Orleans, for Rice-acres, Inc.
    F. Jefferson Millican, Jennings, for Douglas Hayes and Jeff Davis Bank and Trust Co.
    Mary Louise Fullington, Lake Charles, for Calcasieu Marine Nat. Bank.
    Before GUIDRY, YELVERTON, KNOLL, THIBODEAUX and SAUNDERS, JJ.
   SAUNDERS, Judge.

Plaintiff, Riceacres, Inc., filed suit against defendants, Douglas Hayes and Jeff Davis Bank and Trust Company, seeking payment for eight (8) cashier’s checks totaling $15,-313.11 drawn by Jeff Davis Bank and naming Riceacres as payee, which Jeff Davis Bank paid over the forged endorsement of Douglas Hayes. These cheeks were delivered to Douglas Hayes by Jeff Davis Bank and cashed by him between September 18, 1984, and April 4, 1986. Three (3) of the checks totaling $6,479.07 were cashed or deposited in Douglas Hayes’ personal account at Jeff Davis Bank and the other five (5) checks totaling $8,834.04 were cashed or deposited at the Calcasieu Marine National Bank. Jeff Davis Bank filed a third party demand against Calcasieu Marine National Bank and Douglas Hayes.

Judgment was rendered on December 15, 1992, in favor of plaintiff, Riceacres, Inc., in the amount of $12,026.23, together with legal interest from date of judicial demand, on the five (5) cashier’s checks which the court found were actually forged by Douglas Hayes. Judgment was also rendered in favor of Jeff Davis Bank and Trust Company and against Calcasieu Marine National Bank of Lake Charles in the amount of $8,245.23, together with legal interest from date of judicial demand, for the forged checks which were cashed or deposited at the Calcasieu Marine National Bank.

Defendant, Jeff Davis Bank and Trust Company, appeals the judgment rendered in favor of the plaintiff, Riceacres, Inc. Calca-sieu Marine National Bank has not appealed, therefore, the judgment against it is now final. After our review of the record, jurisprudence and appellate briefs, we find no manifest error on the part of the trial court and we affirm.

FACTS

This is a lawsuit which arises out of a failed attempt by Douglas Hayes to purchase approximately 530 acres of farmland located in Jefferson Davis Parish. When he was unable to finance the purchase of the land through the Federal Land Bank (FLB) based upon his own financial statements, his cousin, E.W. Hayes, president of Riceacres, Inc., agreed to help Douglas Hayes obtain the necessary financing. FLB required Riceacres to be a co-owner of the property which was purchased in equal proportions by Douglas Hayes and Riceacres and a co-ownership agreement was entered into between the parties. Riceacres verbally leased its one-half interest to Douglas Hayes, with the understanding that he would farm the entire tract. Douglas Hayes made arrangements with Farmer’s Home Administration (FmHA) to finance his farming operations. It was agreed between the parties that as long as the FLB note was paid, the entire income from the farming operation was to belong to Douglas Hayes.

Originally, Douglas Hayes’ practice was to take the crop rent checks payable to him and FmHA to FmHA who would endorse the checks with instructions as to how the checks would be payable. Initially, FmHA would make Riceacres’ rent checks payable to FLB in payment of the note. However, in late 1984, when Douglas Hayes began experiencing financial troubles, he had FmHA instruct Jeff Davis Bank to issue the cashier’s cheeks to Riceacres in payment of the rent. These checks totaling $15,813.11 are at issue in this lawsuit.

During trial, the parties stipulated the testimony of Mr. Tom Harless, a handwriting expert, whose opinion was that five (5) of the checks were forgeries and three (3) were not. Douglas Hayes admitted that he forged the signature of Riceacres on five (5) of the checks totaling $12,026.23. On the other three (3) checks at issue totaling $3,286.88, it was his testimony that he delivered these checks to E.W. Hayes who personally endorsed them on behalf of Riceacres. E.W. Hayes denied his signature on these checks, but the trial court found, based upon credible evidence, that E.W. Hayes did endorse these checks.

In 1986, FLB called in the loan and Rice-acres paid off the loan in accordance with the co-ownership agreement. Douglas Hayes then conveyed his one-half ownership interest in the farm to Riceacres.

DISCUSSION

Defendant-appellant, Jeff Davis Bank and Trust Company, alleges three assignments of error:

(1) Trial court erred in finding that Rice-acres, Inc. suit was not barred by prescription under the doctrine of Contra Non Valentem.
(2) Trial court erred in deciding that Riceacres, Inc. could recover under the theory of contracts from Appellants.
(3) Trial court erred in finding that Douglas Hayes was not authorized to endorse the checks and use the proceeds as his own.

Riceacres contends that the first knowledge it had concerning the checks was in the spring of 1989, when it learned, during a deposition of Douglas Hayes in a related lawsuit, that Douglas Hayes stated that all of the money from his crop proceeds was used to pay his crop loan. This deposition gave rise to investigation which led to this suit being filed in July of 1989, within one year of the Douglas Hayes’ deposition.

The trial court, in its reasons for judgment, concluded that the proper prescriptive period to be applied is that of five (5) years, but stated further that “should this conclusion be erroneous then the prescriptive period is one (1) year, and the court is of the opinion that under the facts of this case the Doctrine of Contra Non Valentem should be applied to interrupt the running of prescription.” We pretermit the question of whether a five (5) year prescriptive period should be applied as our review of the record shows that the trial judge was correct in his finding that the doctrine of contra non valentem should be applied.

The defendant contends that the plaintiff should have been put on notice earlier because plaintiff, E.W. Hayes, knew from the beginning that the farming operation was in financial trouble; because he paid the note in 1986 when FLB called in the loan; because he had made little or no inquiry as to how the proceeds of the rent were to be paid; because he never asked for an accounting of the farming operation; because he never checked with FLB or FmHA, nor with any of the vendors of the farming operations as to whether the debts were being paid by Douglas Hayes; and because he, in fact, signed three (3) of the checks over to Douglas Hayes, as was found by the trial court.

While these matters are established by the record, it is also clear from the record that it was agreed between Douglas Hayes and E.W. Hayes that Douglas Hayes would pay the note to FLB and that any remaining money could be used by Douglas in any manner he chose. E.W. Hayes did not expect to make a profit from this venture and was acting solely to accommodate his cousin in his efforts to obtain financing. Under these circumstances, the knowledge of E.W. Hayes that his cousin’s venture was going poorly, does not convey knowledge to him which should have made him suspect that his cousin might have forged his name and used this money in an unauthorized manner.

After consideration of the evidence, the district court concluded that:

“From the evidence, the court concludes that Riceacres did not know about the forged checks until some months after the conclusion of the Robert Guillory law suit. However, the question remains whether its lack of knowledge prior to this time was the result of its negligence, or whether its actions or inactions were reasonable. After considering all of the evidence and arguments of counsel, the court finds that due to the relationship between Douglas Hayes and E.W. Hayes and the special arrangements between the parties concerning the farming operations and the payment of the note, Riceacres was not negligent or unreasonable in its actions prior to 1988. Therefore, the Doctrine of Contra Non Valentem is applicable.”

We agree with the determination of the trial court. Prescription does not run against one who is ignorant of the existence of facts that would entitle him to bring suit and, moreover, prescription should not be used to force a person who believes he may have been damaged in some way to rush to file suit against all parties who might have caused the damages. Jordan v. Employee Transfer Corp., 509 So.2d 420, 423 (La.1987).

Appellant contends in its second assignment of error that the trial court erred in deciding that Riceacres could recover under the theory of contract from Jeff Davis Bank. It is argued that the appellee could not proceed under LSA-R.S. 10:3-419(1) as was found by the trial court as Riceacres was not a “true owner” of the cashier’s checks. Appellant takes issue with the trial court’s application of LSA-R.S. 10:3-413. We note, as did the trial court, that under the clear language of LSA-R.S. 10:3-413, it is not necessary that Riceacres be a “true owner” in order to recover under this statute. We note further the clear language of the Louisiana Supreme Court in the Daube v. Bruno, 493 So.2d 606 (La.1986):

“As stated above, La.R.S. 10:3-419(1) authorizes a delictual action. It does not, in addition to this delictual action, authorize an action on the instrument. Louisiana follows the model of the Uniform Commercial Code which only provides a tort remedy for an action brought under section 3-419(l)(c). Contractual, warranty and other remedies are provided under different sections. See for example La.R.S. 10:3-413 to 414 (contract), 10:3^417 (warranty). There is no evidence of any legislative intent to depart from this strategic deployment of remedies.”

Daube, supra, 493 So.2d at 609.

LSA-R.S. 10:3^413 states that “[t]he maker or acceptor engages that he will pay the instrument according to its tenor at the time of his engagement....” The cashier’s checks sued upon stated “Pay to the Order of Riceacres, Inc.” The statute sued upon is clear and unambiguous. Jeff Davis Bank paid the cashier’s checks contrary to their tenor and, accordingly, the district court properly allowed recovery under LSA-R.S. 10:3^413. This assignment of error is without merit.

Appellant’s final contention is that the trial court erred in finding that Douglas Hayes was not authorized to endorse the checks and use the proceeds as his own. The finding of the trial court was that Douglas Hayes and E.W. Hayes agreed that Douglas Hayes would pay the FLB note and if there was any remaining money, Douglas could use these remaining funds as he saw fit. This is a far cry from being authorized to “endorse the checks and use the proceeds as his own.” The trial court found that before any money could be used “as his own,” Douglas Hayes had to first pay the FLB note. This he did not do. The trial court’s finding of fact on this issue is correct.

CONCLUSION

For the above and forgoing reasons, the judgment of the trial court is affirmed. Costs of this appeal to be paid by defendant, Jeff Davis Bank and Trust Company.

AFFIRMED.

GUIDRY, J., dissents with reasons.

KNOLL, J., dissents for reasons assigned by GUIDRY, J.

GUIDRY, Judge,

dissenting.

Our Supreme Court’s holding in Daube v. Bruno et al, 493 So.2d 606 (La.1986), is decisive of the issue concerning the applicable prescriptive period. In that ease, which is similar on its facts to the instant case, the Supreme Court concluded that “the action authorized by La.R.S. 10:3-419(1) by a true owner of a check against the bank for payment on a forged instrument is not an action on a negotiable instrument but is a delictual action subject to a liberative prescription of one year' under Civil Code Art. 3492”. In the Daube ease, our Supreme Court specifically rejected the plaintiffs contention that such an action is one on a negotiable instrument subject to a liberative prescription of five years. The above being considered, it is clear that the applicable prescriptive period in this ease is one year and since this suit was filed more than three years after the last check cleared the banking system, absent some interruption or suspension of prescription, plaintiffs action is prescribed on its face. The trial court concluded that the one year prescriptive period was suspended under the doctrine of contra non valentem until the deposition of Douglas Hayes was taken in July of 1989. The majority affirms the trial court’s conclusion in this regard. I respectfully disagree.

In the case of In Re: Medical Review Panel of Howard, 573 So.2d 472 (La.1991), our Supreme Court explained the doctrine of contra non valentem and discussed its application stating:

The key inquiry in most contra non valentem eases is the commencement date of the one-year prescriptive period under the discovery rule. The doctrine itself is based on the theory that when the claimant is not aware of the facts giving rise to his or her cause of action against the particular defendant, the running of prescription is for that reason suspended until the tort victim discovers or should have discovered the facts upon which his or her cause of action is based. Lott v. Haley, 370 So.2d 521 (La.1979). It is often difficult to identify a precise point in time at which the claimant becomes aware of sufficient facts to begin the running of prescription.
Constructive knowledge sufficient to commence the running of prescription requires something more than a mere apprehension that something might be wrong. Cordova v. Hartford Accident & Indemnity Co., 387 So.2d 574 (La.1980). Prescription does not run against one who is ignorant of the facts upon which his cause of action is based, as long as such ignorance is not willful, negligent or unreasonable. Young v. Clement, 367 So.2d 828 (La.1979).
In determining the date of commencement of prescription in “should have discovered” cases, this court in recent cases following Cordova and Young has focused on the reasonableness of the claimant’s action or inaction.

As I appreciate the Supreme Court’s holding in Howard, the burden rests with the party relying on contra non valentem to establish that his/her ignorance of the facts giving rise to his/her cause of action was not the result of negligence or unreasonable conduct. In other words, a party is deemed to know what he could know by the exercise of reasonable diligence and contra non valentem is inapplicable if ignorance of the necessary facts is attributable to his/her own negligence and unreasonableness. It is this latter principle which, under the particular circumstances of this case, prevents application of the doctrine. I reach this conclusion on the basis of the following undisputed facts clearly reflected in the record.

E.W. and Douglas Hayes, co-owners of the property which generated the funds, had an extremely loose arrangement which allowed Douglas Hayes complete control of the farming operation of the 530 acres and complete control and use of the funds generated from the farming operation, subject only to the condition that Douglas Hayes would pay the installments due under the Federal Land Bank loan as they became due. Although E.W. Hayes, sole owner of Riceacres, was well aware that Douglas Hayes’ farming operations were in financial trouble as early as 1984, E.W. Hayes made no effort to ascertain whether or not the payments due on the loan from FLB were being made as promised. In this latter connection, E.W. Hayes knew that funds had been generated from farming operations during this period which should have been applied, at least in part, to payment of the Federal Land Bank loan because he had endorsed three cheeks for considerable sums of money which were turned back over to Douglas Hayes without question.

Most importantly, in 1986 when the FLB loan became delinquent and FLB threatened foreclosure, Riceacres was obligated to pay off the loan in full and thereafter acquired the one-half interest previously owned by Douglas Hayes. Certainly, at that time, an accounting must have been made by the Federal Land Bank to Riceacres as to the balance due and the payments which had been made on the loan since its inception. In the event such an accounting was not made, certainly same was available to Riceacres and reasonable business practice would dictate that same be demanded. Since E.W. Hayes was well aware that monies had been generated from the farming operation, a perusal of the accounting documents would have reflected that payments on the Federal Land Bank loan had not been made as promised.

I conclude that the facts set forth above were sufficient to place E.W. Hayes on notice that inquiry was required in order to determine whether or not funds generated from the farming operation, earmarked for payment to Federal Land Bank, had been misappropriated by Douglas Hayes. Lack of inquiry on the part of E.W. Hayes, under such circumstances, was negligent and unreasonable and, in my opinion, bars applicability of the doctrine of contra non valentem. For these reasons, I respectfully dissent. 
      
      . During the course of these proceedings, Douglas Hayes was declared bankrupt and is, therefore, no longer a defendant.
     