A California bank with an office in Salt Lake City has filed two U.S. District Court suits claiming that First Security Bank of Utah and Valley Bank and Trust Co. wrongly disbursed checks made out to the California bank.
The suits claim the Utah banks received checks made out to Commonwealth Financial Corp., but then wrongly cashed them without endorsement of Commonwealth.The suits were filed by Commonwealth, whose home office is in Walnut Creek, Calif. Both actions involve a security agreement with Commonwealth who loaned money to Wright's Furniture Mill Inc., Provo. The suits say that Wright's was indebted to Commonwealth in the sum of more than $1.4 million, under a 1987 security agreement.
Commonwealth made financial advances to Wright's on the condition that Wright's would deliver to Commonwealth all money that it received on accounts receivable that were assigned to Commonwealth. That was to continue until the all the debts were paid, the suits say.
The suits add that under the security agreement, all collections pledged to Commonwealth would be held in trust and not mingled with funds that otherwise belonged to Wright's.
In each bank, Wright's maintained an account to be used as a depository for payments pledged to Commonwealth, according to the suits.
Each suit then lists a series of checks that were supposed to go to Commonwealth, but which were allegedly taken by the bank and credited to Wright's account without Commonwealth endorsement. The suits claim that proceeds from these "wrongfully and unlawfully disbursed (by the defendant bank) at the order of Wright's."
The suit against Valley Bank and Trust lists checks valued at about $71,400 and the action against First Security Bank of Utah lists checks worth about $22,200. It does not seek punitive damages, but asks for recovery of these sums with interest.