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Triffin v. Roma Federal Savings Bank

A-0371-00T2 (N.J. Super. App. Div. 2001) (Unpublished)

CHECKS; UCC; HOLDER IN DUE COURSE—If the original party that cashes a subsequently dishonored check is a holder in due course, a buyer of that check, after dishonor, is also accorded holder in due course status.

A check cashing firm accepted a money order issued by a savings bank. The money order bore both a facsimile signature of the savings bank and an endorsement signature of the payee. When the check cashing firm presented the check for payment, the bank dishonored it, “stamping plainly on the face of the instrument ‘PAYMENT STOPPED.’ The check cashing firm then assigned its rights to the instrument to a buyer. The buyer then sought to collect on the instrument from the savings bank. A bench trial was conducted with the buyer as the only witness. The lower court held that the buyer could not collect because “the Court can’t find in any evidence that at the time of presentment, it was [the payee] who cashed the Money Order or that [the check cashing firm] even asked for identification or that it was anything other than one of any other people that they cashed the check for.” Consequently, the lower court thought that the check cashing firm was never established as a holder in due course, “[a]nd you can’t buy the protection of a holder in due course by buying it from somebody who doesn’t prove by preponderance of the evidence of this Court that they were, in fact, the holder in due course when it began.” The Appellate Division disagreed. The buyer claimed “holder in due course status, not by virtue of negotiation to him for value and good faith without notice of dishonor, N.J.S.A. 12A:3-302, but under the so-called 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… .’ Consequently, if the check cashing firm was a holder in due course, the buyer acquired the same status by assignment. Further, although burden of proving that the check cashing firm was a holder in due course fell upon the buyer, but the buyer enjoyed the benefit of a presumption under the Uniform Commercial Code. Under N.J.S. 12A:3-308, a “signature is presumed to be authentic and authorized unless the action is to enforce the liability of the purported signer and the signer is dead or incompetent at the time of trial of the issue of validity of the signature, ... [and under such circumstances] unless the defendant proved a defense or a claim in recoupment… .” There was nothing derivable from the facsimile signature of the savings bank or the endorsement of the payee that constituted “apparent evidence of forgery or alteration.” Consequently, both signatures were “presumed to be authentic and authorized,” notwithstanding a denial in the saving bank’s answer of the validity of the payee’s signature. Under the Uniform Commercial Code, “presumed” means “that until some evidence is introduced which would support that the signature is forged or unauthorized, the plaintiff is not required to prove that it is valid.” Consequently, the matter was remanded to the lower court to reverse the lower court’s error of having entered an involuntarily dismissal and to allow re-submission of the buyer’s summary judgment motion, a new trial, or other appropriate proceedings.


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