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Triffin v. Millburn Professional Group, PA

A-4757-01T5 (N.J. Super. App. Div. 2003) (Unpublished)

UCC; CHECKS—A drawer of a negotiable instrument on which payment has been stopped remains liable to an innocent third party who has cashed the drawer’s check.

A man was in the business of buying dishonored checks. He purchased a check through an assignment from a licensed check cashing facility. Unknown to the check cashing firm when it cashed the check, the payee had fraudulently procured the check. The payor stopped payment on the check and that was its status when it was sold. Based upon the assignment, the man who bought the check brought suit against the company that issued it. “A drawer of a negotiable instrument on which payment has been stopped remains liable to an innocent third party who has cashed the drawer’s check.” To prevail, the holder of the check only had to prove that the check cashing company “was a holder in due course at the time it paid the check,” and that the assignment was valid. Here, there was no dispute that the assignment was valid. Further, the lower court improperly dismissed the matter when it concluded that the drawer “alerted the people at the check cashing place, and for whatever reason ... they cashed the check.” The record reflected that the notice to the check cashing company came too late. It was clear that the check had been presented for payment before the check cashing firm became aware of the stop payment order. Consequently, the check cashing company was a holder in due course and its assignee was entitled to prevail on the claim.


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