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Triffin v. Fleet National Bank

A-2064-03T3 (N.J. Super. App. Div. 2005) (Unpublished)

CHECKS; CHECK CASHERS—A bank can’t refuse to pay the assignee of a licensed check cashing company on the grounds that the Commissioner of Bank could have revoked the company’s license because it assigned the checks to a person who, years earlier, had been convicted of a fraud claim because the Commissioner had not, in fact, done so and the check cashing company might not even have known of the conviction.

An investor was “in the business of purchasing dishonored checks, generally from licensed check cashers and accommodation check cashers, and then seeking enforcement against the maker of the check or the bank that returned the check unpaid, asserting various theories under the Uniform Commercial Code or the Code of Federal Regulations.” Here, he had an assignment of two checks from a check cashing company. The checks had been dishonored by a bank and returned as forgeries. The bank conceded that if the assignments were valid, the investor would be entitled to be paid for the checks. Consequently, it challenged the validity of the assignments. About fifteen years earlier, the investor “was the subject of an adverse civil fraud judgment” in Pennsylvania. Under the Check Cashers Regulatory Act of 1993, the New Jersey Commissioner of Banking “may revoke or suspend the license of a check casher if, after notice and hearing, the Commissioner, among other things, determines that the licensee ‘[i]s associating with, or has associated with, any person ... who has a final judgment entered against him in a civil action upon grounds of fraud, misrepresentation or deceit… .” The investor qualified as such a person. Consequently, the bank argued that the check casher was prohibited from doing business with the investor and urged that if this were true, the assignments were void as being contrary to public policy. Both the lower court and the Appellate Division rejected that argument. Essentially, the bank was asking the court to find that the cited Act created a private right of action. Thus, the Court looked to see whether the bank was “one of the class for whose especial benefit the statute was enacted.” It found no evidence in the Act that “a bank sued by a holder in due course for the alleged improper dishonor of a check is ‘one of the class for whose especial benefit the statute was enacted.’” It also did not find that the Legislature intended to create a private cause of action under the statute. Lastly, even if the bank did show it had a private cause of action, the check casher might defend itself against suspension or revocation by the Commissioner on the basis that it did not know of the investor’s “decade-old civil fraud judgment and that, in any event, engaging in a legitimate business transaction [with the investor] did not constitute ‘associating with’ him as that term is used in the Act.”

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