## Facts

- On November 3, 1978, Central National Bank of Miami (Central) entered into a Mastercharge merchant agreement naming “The Stereo Corner, Inc.” as the merchant.
- The agreement was signed “The Stereo Corner, Inc., by Joel S. Ratner.”
- At the time the agreement was executed, The Stereo Corner, Inc. did not exist; it was incorporated later on July 10, 1979.
- The merchant agreement allocated responsibility to the merchant for certain improper sales drafts, including those executed or accepted fraudulently, and contemplated that credits could be provisional.
- From April 21, 1979 to October 1, 1979, a Stereo Corner employee forged a number of Mastercharge sales drafts that were deposited into Stereo Corner’s account at Central.
- Central provisionally credited the deposits and then processed a series of charge-backs against the account when it could not obtain payment from the Mastercharge Center of Southeast First National Bank on the forged drafts.
- Stereo Corner became insolvent, and Central could not recover its remaining losses from the account.
- Central sued Ratner individually for the unpaid balance, asserting personal liability on the merchant agreement because the corporation was not in existence when the contract was signed.
- The trial court entered summary judgment for Central in the amount of $32,756.56, and Ratner appealed.

## Issues

1. Whether Ratner could be held personally liable on a contract signed in the name of a corporation that did not yet exist (including under § 607.397, Florida Statutes (1979)).
2. Whether a genuine dispute existed as to Central’s intent to contract only with the later-formed corporation (and thereby not hold Ratner individually liable).
3. Whether Central’s alleged failure to exercise statutory ordinary care estopped it from recovering the losses.
4. Whether Central satisfied the statutory requirements for charge-back under § 674.212, Florida Statutes (1979), so that summary judgment was improper.

## Decision

- The District Court of Appeal of Florida, Third District, affirmed the summary judgment for Central.
- The court held Ratner personally liable for the loss arising from the forged sales drafts processed under the merchant agreement.
- The court rejected Ratner’s arguments that factual or legal disputes remained concerning Central’s intent, Central’s alleged lack of ordinary care/estoppel, and Central’s compliance with § 674.212.
- The court found no material issue of fact precluding summary judgment.

## Legal Principles

- A person who signs a contract on behalf of a corporation that does not yet exist may be personally liable for obligations arising from that contract, including under § 607.397, Florida Statutes (1979), which addresses liability for assuming to act as a corporation without authority.
- A claimed intent by the counterparty to deal only with a corporate entity does not defeat personal liability where the named corporation did not exist when the contract was executed and there is no effective release or substitution of obligors shown on the record.
- Under § 674.212, Florida Statutes (1979) (U.C.C. § 4-212), a collecting bank that gives provisional credit may revoke the settlement and charge back an item that is not finally paid, provided the statutory conditions are met.
- Allegations that a bank failed to exercise ordinary care, or that the bank should be estopped from recovery, must be supported by record evidence creating a material factual dispute; otherwise, summary judgment may be granted.

## Conclusion

The appellate court affirmed judgment for the bank, holding that Ratner—who signed a Mastercharge merchant agreement in the name of a corporation that did not yet exist—was personally responsible for the unpaid balance after forged sales drafts were deposited, charged back under § 674.212, and the corporate account proved unable to cover the loss due to insolvency.


Ratner v. Central National Bank of Miami, 414 So.2d 210 (1982)