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Corporate Officer May Avoid Liability for Corporation’s Worthless Check

On Behalf of | Jul 3, 2016 | Business Litigation |

Florida’s bad check statute imposes treble damages on the drawer of a worthless check. The total amount of damages is calculated as the amount of the check plus three times the amount plus court costs and attorneys’ fees.

If the check is drawn on a corporation, even a closely held corporation, and signed by an authorized officer, the corporation may have liability for treble damages but the officer will have none. The worthless check statute applies to the drawer of the check, in this case, the corporation, and not to the signatory on the check.

If the name of the corporation appears on the check so as to identify the account holder, an authorized officer of the corporation may sign the check and avoid personal liability even though the officer’s title or capacity is not displayed on the check. Fla. Stat. 673.4021(3) operates to relieve the authorized signer of personal liability on the check and section 68.065(1) does not create a separate cause of action which can be the basis of liability.

The following case illustrates the point. Medina v. Wyche, 796 So. 2d 622, 622-23 (Fla. 3d DCA 2001) is a landlord-tenant case in which the landlord filed an action against corporate tenant, the corporate officer and a related corporation for unpaid rent and worthless check. The check was for $34,348.00 and was returned for insufficient funds. The check indicated on its face that it was written on the account of First Delta Financial, a family corporation owned and controlled by Medina.

Medina signed the check. His corporate title does not appear before his signature. Appellee James G. Wyche, the landlord, contended that Medina was personally liable because he signed the check without indicating his corporate capacity below his signature. Medina argued he was not personally liable on account of having signed the check.

The court concluded Medina was not personally liable for the corporate check based on a then recent revision of the Uniform Commercial Code pertaining to negotiable instruments. The revised statute provides, in part:

673.4021. Signature by representative (3) If a representative signs the name of the representative as drawer of a check without indication of the representative status and the check is payable from an account of the represented person who is identified on the check, the signer is not liable on the check if the signature is an authorized signature of the represented person. § 673.4021(3), Fla. Stat. (1997).

Medina v. Wyche was followed in the recent case of Big Bang Miami Entertainment, LLC v. Moumina, 137 So. 3d 1117, 1120 (Fla. 3d DCA 2014), a case decided by the appellate court in Miami-Dade County. The appellate court held the corporate officer did not bind himself by his signature on his employer’s check. The court explained the purpose of section 673.4021, is to confirm that a company’s check binds only the company, even if the company’s agent signs in his or her own name.