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Triffin v. Commerce Bank

A-2615-01T5 (N.J. Super. App. Div. 2004) (Unpublished)

CHECKS—A check cashing company is not the holder in due course of a bad check if it cashes it by accepting an expired driver’s license as identification.

An investor purchased a stopped bank check from a check cashing company. The bank stopped it at the request of its customer. The investor then sued both the check cashing company’s bank and the drawer bank claiming that he was assigned the check from the check cashing company and as an assignee of the check, he was entitled to the face value of the check.

The lower court dismissed the actions against the check cashing company’s bank and the drawer bank. It ruled that the investor had failed to demonstrate that the check cashing company was a holder in due course. In order to be a holder in due course, a person must take an instrument for value in good faith in accordance with N.J.S.A. 12A:3-103(a)(4). The lower court held that the check cashing company did not take the check in good faith because it had cashed the check for a person who offered an expired driver’s licence as identification. The investor’s claim against the drawer bank was also rejected because his seller, the check cashing company, was not a holder in due course. It dismissed the investor’s action against the check cashing company’s bank based on a written agreement between the check cashing company and its bank. That agreement provided that the check cashing company’s bank could charge the company’s account if any item deposited or cashed by the company was charged back to the bank for any reason. The lower court held that this provision justified the debiting of the company’s account after payment had been stopped on the check. It also awarded counsel fees to the check company’s bank pursuant to the frivolous litigation statute, N.J.S.A. 2A:15-59.1.

The Appellate Division affirmed the lower court’s holding by holding that: 1) the investor was not entitled to the value of the check because he failed to demonstrate that the check cashing company was a holder in due course, having cashed the check without proper identification; 2) the investor’s action against the check cashing company’s bank was properly dismissed because the agreement between the company and its bank justified the bank charging the company’s account for the check; and 3) the lower court properly granted frivolous litigation fees in favor of the check cashing company’s bank because the investor’s claim totally lacked merit.


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