Skip to main content

Triffin v. Kelly Services, Inc.

A-1621-02T5 (N.J. Super. App. Div. 2004) (Unpublished)

CHECKS; UCC—If an assignee acquires a bad check from a holder in due course, the assignee retains that status and the maker has the obligation to persuade a court that the party originally accepting the check was not a holder in due course.

The maker of two checks issued stop payment orders on both. A check cashing agency was unaware of the stop payment orders and, in good faith, cashed both checks. Both checks were then dishonored by the maker’s bank. About one year later, a buyer bought the check casher’s rights in the dishonored checks pursuant to assignment agreements executed by the check casher’s president.

The check buyer demanded payment from the maker, and brought an action against the maker and the payees for recovery when payment was declined. He sought to recover the face value of the two checks, along with costs, interest, and certain bank and credit reporting fees, pursuant to N.J.S.A. 12A:3-302a(2). The maker argued that the check buyer did not possess the legal status of a holder in due course and that one check appeared never to have been endorsed.

During a truncated trial, the buyer referenced the dishonored checks and the assignment agreements that had been attached to his complaint and incorporated in the stipulations. He also requested judicial notice of the certification from the check cashing company’s president as submitted in support of his earlier summary judgment motion. The certification was prepared in compliance with case law requirements for proving the validity of assignment agreements and to make them admissible under the business records exception to the hearsay rule. Those requirements are: a legible signature, the assignor’s address, and a designation of the signatory on the assignment documents.

In opposition to the buyer’s motion for summary judgment, the maker presented a copy of an email received from the buyer’s office manager. The email alleged that one check was signed in green ink, and that this was why the signature did not show up when it was copied. The maker argued that the buyer was not a holder in due course because, as an experienced purchaser of dishonored checks, he should have known, as did his office manager, that the signature in green ink was an irregularity on the face of the check that called into question its authenticity. However, the maker did not qualify the buyer’s office manager as an expert, nor did it present any expert testimony to support its claim that the use of green ink should have raised suspicions of dishonesty. The maker also argued that the buyer was obligated to present proof that the check cashing agency took the checks in good faith, requiring an ID or photographing the person who cashed the check.

The Court dismissed the buyer’s complaint for failing to present the check cashing agency to prove its case. The Appellate Division disagreed. It held that the maker, not the buyer, failed to present persuasive proofs. N.J.S.A. 12A:3-302a(2) defines a holder in due course as one who takes an instrument for value, in good faith, and without notice of dishonor or any defense against or claim to it on the part of any person. The buyer claimed holder in due course status under the “shelter” provision of the Uniform Commercial Code, which provides that “[t]ransfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course.” Therefore, if the check cashing agency was a holder in due course, the buyer acquired the same status by means of the assignment. The buyer had made a prima facie showing that the check cashing agency was a holder in due course and that the checks were regular on their face when they were paid. Conversely, the maker presented no evidence to rebut those facts. In fact, the maker acknowledged that consideration had been paid by the maker for the assignment and that the assignment was valid. Furthermore, the buyer had no obligation to present additional evidence of “good faith measures” taken by the check cashing agency when it cashed each check. As a result, the Court reversed the decision of the lower court, and held that the buyer, as the assignee of a holder in due course, was entitled to collect the amount of the checks from the maker.

66 Park Street • Montclair, New Jersey 07042
tel: 973-783-3000 • fax: 973-744-5757 •