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Triffin v. TD Banknorth

A-4103-04T5 (N.J. Super. App. Div. 2006) (Unpublished)

UCC; CHECKS — An assignee who has purchased a dishonored check after it has been dishonored, with full knowledge that the check had been forged and dishonored, has no standing to bring a late return claim against the drawee bank.

An investor filed two small claims actions against different banks seeking to recover on documents purported to be checks issued and drawn at those banks. The checks were cashed and subsequently dishonored by the banks on the basis that the checks were forgeries. Thereafter, the investor acquired the dishonored checks by way of an assignment. In each action, the investor alleged that the banks had wrongfully dishonored and charged back the referenced checks against the assignors’ depository accounts after the expiration of the statutory midnight deadline. The investor further alleged that the banks were strictly liable to him for the amounts of those checks, together with pre-judgment interest, costs, and fees. The banks each moved for summary judgment, contending that the investor had purchased the checks from the assignors with full knowledge that the checks had been forged and then dishonored. The lower court granted summary judgment in favor of the banks.

In addressing the investor’s appeal, the Appellate Division first discussed the issue of his standing to bring the respective actions. The Court explained that an assignee who purchases a check with notice of dishonor lacks standing to bring an action. One of the lower courts expressed that this proposition was supported by authority in other jurisdictions as well as by the Uniform Commercial Code, which confers standing to sue on a limited class comprised of those involved in the collection and payment of the check at issue who may be harmed by the failure to adhere to the deadline. The lower court reasoned that where a plaintiff became the holder of a check after its untimely return and with full knowledge of its dishonor, the plaintiff had no vested interest in the timely payment or return of those checks. Thus, the Court affirmed the decision of each lower court based on the reasoning of the lower court’s holding that an assignee who has purchased a dishonored check after it has been dishonored, with full knowledge that the check has been forged and dishonored, has no standing to bring a late return claim against the drawee bank because standing to initiate such an action is limited to the class of those parties exposed to harm by virtue of the late action by the drawee bank. It reasoned that because the investor in this case purchased the dishonored checks after their dishonor, he was not exposed to any such risk and therefore lacked standing. Furthermore, the Court reasoned that public policy favored the result because an assignee of a statutory claim who received the instrument with full knowledge that it had been dishonored as a forgery is not a holder in due course.


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