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Triffin v. Mellon Bank, N.A.

A-5085-05T1 (N.J. Super. App. Div. 2007) (Unpublished)

CHECKS — The holder of a substitute check returned by a bank has the burden of showing that the substitute check does not accurately represent all of the information on the front and back of the original check as of the time the original check was truncated.

An investor, by assignment, purchased the rights of a check cashing agency in a truncated copy, rather than an original, dishonored check. He thereafter sued both the drawee and collecting banks, alleging that they breached the warranties owed to the check cashing service under federal law by returning an illegible substitute check from which he could not identify the name of the drawer and payee and which did not set forth the payee’s endorsement, thereby thwarting his ability to recover from the drawer on the check. The investor sought damages for the face amount of the check and other fees plus pre-judgment interest and costs, pursuant to federal law. Under federal law, substitute checks must meet certain requirements and if a check does, any person who fails to furnish a substitute check which does not meet those requirements breaches a warranty and is liable for up to the face amount of the check, plus interest and expenses. One bank responded that when it reviewed its own copy of the check, it was more legible than the copy attached to the complaint. The assignee claimed that, by such a response, this bank conceded that it had returned an “illegible” check and could not identify with certainty the payee’s name. It argued, as a consequence, its ability to sue on the check was thwarted because neither the identity of the drawer nor the payee on the truncated check was legible. The essence of the assignee’s argument appeared to be that in order to be an accurate representation under the federal regulation, the substitute check must be legible in all material respects.

The lower court dismissed the investor’s complaint with prejudice, both on factual grounds and legal grounds. On appeal, the Appellate Division noted that the investor carried the burden of proof to demonstrate that the substitute check returned by the bank did not accurately represent all of the information on the front and back of the original check as of the time the original check was truncated. The Court stated that once the investors proved the substitute check was inaccurate and breach of warranty, he then would have to prove that he suffered a loss caused by reason of inaccurate truncation. The Court found that the investor had presented sufficient evidence to warrant a trial and therefore vacated the order dismissing the assignee’s complaint and remanded the matter for trial.


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