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February 1, 1994 MEMORANDUM TO CLIENTS
CORPORATE ANNUAL REPORTS MUST BE FILED! Green and white 1994 Annual Reports are flooding corporate mailboxes across the State. Every corporation, whether profit or not-for-profit, is required to file an Annual Report with the Department of State, using the Division of Corporations' form. The form must be properly completed and timely received in Tallahassee with a $200.00 fee. Forms not properly completed or forms submitted without the fee will be returned to the corporation. Corporations which fail to file and pay the fee will be involuntarily dissolved. The effect of a dissolved corporation is to expose a corporation's principals to personal liability for the Corporation's debts. Dissolution may also adversely impact the corporation's and principal's tax status, and prevent the prosecution or defense of claims in court. Condominium and cooperative associations must file the Annual Report in addition to the Division of Land Sales' annual filing and fees. The forms should be carefully completed. The "registered agent" information should be updated with the name of counsel or other person designated to receive legal papers. A corporation must also indicate whether it has an intangible tax liability. Questions concerning a corporation's tax status should be referred to an accountant. A current roster of the corporation's officers and directors must also be listed. The firm reminds its clients to keep on file with association counsel an updated officers and directors roster. NEW CHECK HANDLING LAWS:
WHEN IS IT NOT SAFE TO ACCEPT MONEY Check handling and processing has changed. The Florida Legislature revised Florida Statutes Chapters 673 and 674 concerning negotiable instruments which includes checks. The new laws, effective January 1, 1993, attempt to clarify questions such as: when does accepting a check extinguish a debt; and, who is liable for fraudulently signed or endorsed checks. The new laws are complex and have a wide impact on all persons and organizations using checks. Due to space limitations the changes will be discussed in two parts. This month's Memorandum focuses on when to accept a check, an agent's liability for signing or endorsing a check, and a banking institution's initial liability for acceptance of a check with a forged endorsement. A future memorandum will discuss check users liability. Accord and Satisfaction. What should you do if you receive a check which is marked "payment in full", but the check is for an amount less than the total due? Revised §673.3111 Fla. Stat. (1993) provides that if a check is to extinguish a debt larger than the amount of a check, then: a) the check must be paid in good faith; b) the debt must be unliquidated (meaning that the amount due was not reduced to a specific dollar amount) or subject to a bona-fide dispute; c) the claimant must receive payment of the check; and d) the check must clearly and conspicuously state that the check is tendered as payment in full satisfaction of the debt. If the creditor is an organization, rather than an individual, and the organization has specified to the debtor how payments are to be made for disputed debts, such as to a certain address or person, then the check must be delivered as required. A creditor can avoid mistakenly extinguishing a debt when a check for an insufficient amount has been inadvertently accepted and deposited by the creditor. The debt will not be extinguished if the creditor returns payment of the check to the debtor within ninety days from the check's payment. Acceptance of a check "under protest" without returning it to the debtor does not maintain the creditor's right to pursue the difference due. Note, the ninety day exception does not apply to organizations which have specifically designated the manner in which payment for a disputed debt is to be made. Liability of Corporate Agents. Revisions to Chapter 673 affect an agent's potential liability for signing a document for the agents' principle. Previously, no person was liable on an instrument or contract unless their signature appeared on the instrument. This meant that an undisclosed principal was not liable for a negotiable instrument signed by his or her agent. Florida Statutes §673.4021 now provides that an agent can bind a principle just as if the principle signed the check. A principle is bound by his or her agent's signature on a negotiable instrument as if the principle had signed the negotiable instrument. This applies whether the principle is identified on the instrument or not. For an agent to escape personal liability for the signed instrument, the agent must sign the instrument in a manner which unambiguously shows that the signature is made on behalf of the principle who must also be identified in the instrument. Failure to sign in this manner will cause the agent to be liable to a holder in due course who accepted the instrument without notice that the agent was not to be held liable on the instrument, unless the agent proves that the original parties did not intend the agent to be liable. There is another exception, an agent will not be held liable for failing to disclose an agency relationship if the check is drawn from a corporate account and the corporation is identified on the check. Forged Endorsements on Checks. A bank which accepts a check with a forged endorsement and the bank which pays a check with a forged endorsement are both liable to the person to whom the check was originally payable. The check's owner may have an action against the banks for conversion. The owner must have received the check directly or indirectly through an agent or co-payee. The maker of the check only has a cause of action against the payor bank and not the bank in which the check was deposited. The maker of the check may sue the payor bank for a credit to the maker's account based on unauthorized payment.
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