Appeal from an order of the Supreme Court, Oneida County (Samuel D. Hester, J.), entered March 25, 2008 in actions to recover damages for the allegedly improper transfers of securities. The order, insofar as appealed from, denied that part of the motion of defendants AmeriCU Credit Union (formerly Up State Federal Credit Union), General Electric Company, Loews Corporation, Toys-"R"-Us, Inc. and Wachovia Corporation for summary judgment.
The opinion of the court was delivered by: Centra, J.
PRESENT: HURLBUTT, J.P., SMITH, CENTRA, PINE, AND GORSKI, JJ.
It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.
Plaintiff, as guardian and administrator of the estate of George J. Tapper (decedent), commenced two actions to recover damages for the allegedly improper transfers of securities owned by decedent. In 1998 decedent transferred certain shares of stock of several corporations to a third party, and his signatures on the transfers were allegedly guaranteed by AmeriCU Credit Union, formerly Up State Federal Credit Union (AmeriCU), a defendant and third-party plaintiff in action No. 1 and the third-party defendant in action No. 2. At the time of the transfers, decedent had not been adjudicated an incompetent person and no guardian had been appointed for him, but plaintiff alleged that decedent was mentally incapacitated due to Alzheimer's disease and the infirmities of old age. Plaintiff was appointed guardian of decedent's property in May 2000, and decedent died on December 2, 2001.
Plaintiff commenced action No. 1 against AmeriCU and its vice-president in April 2002, and he commenced action No. 2 in April 2004 against, inter alia, General Electric Company, Loews Corporation, Toys-"R"-Us, Inc. and Wachovia Corporation (collectively, corporate defendants), corporations that issued the securities. The corporate defendants and AmeriCU (collectively, defendants) moved to consolidate the two actions and for partial summary judgment dismissing the cause of action for wrongful registration under UCC 8-404. Plaintiff has acknowledged that there is only one cause of action against defendants, i.e., for wrongful registration, and thus we deem the motion of defendants to be one for summary judgment dismissing the complaint against them. Defendants now appeal from an order insofar as it denied that part of their motion for summary judgment dismissing the complaint. We conclude that the order should be affirmed.
An issuer of securities has a duty to register a transfer of securities (see UCC 8-401). Pursuant to UCC 8-404 (a) (1), an issuer of securities is liable for the wrongful registration of a transfer "if the issuer has registered a transfer of a security to a person not entitled to it, and the transfer was registered . . . pursuant to an ineffective endorsement or instruction . . . ." The corporate defendants, as issuers of the securities, obtained guarantees from AmeriCU pursuant to UCC 8-402 (a) that the signatures were genuine and authorized. As guarantor of the signatures of the indorser, AmeriCU thereby warranted that the signatures were genuine, that the signer was an appropriate person to indorse, and that the signer had "legal capacity" to sign (UCC 8-306 [a]).
An endorsement is effective if it is made by an "appropriate person" (UCC 8-107 [b]). The term "appropriate person" is defined in UCC 8-107 (a) as follows:
"(1) with respect to an endorsement, the person specified by a security certificate or by an effective special endorsement to be entitled to the security;
"(2) with respect to an instruction, the registered owner of an uncertificated security;
"(3) with respect to an entitlement order, the entitlement holder;
"(4) if the person designated in paragraph (1), (2), or (3) is deceased, the designated person's successor taking under other law or the designated person's personal representative acting for the estate of the decedent; or
"(5) if the person designated in paragraph (1), (2), or (3) lacks capacity, the designated person's guardian, conservator, or other similar representative who has power under other law to transfer the security or financial asset."
The sole issue before us on this appeal concerns the definition of the term "capacity" within the ...