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Triffin v. Travelers Express Company, Inc.

370 N.J. Super. 399, 851 A.2d 667 (App. Div. 2004)

MONEY ORDERS; COUNTERFEITS—Where a check cashing agency ignores clear warning on a money order that the instrument will not be honored if its signature is forged and where the money order gives information on how to verify it’s legitimacy, the check cashing agency bears any loss from a counterfeit money order.

Various check cashing agencies assigned whatever causes of action they may have obtained after cashing seventeen money orders which were later dishonored. The assignee then brought suit against the money order company. The company asserted that the money orders were stolen and the signatures appearing on the money orders were unauthorized. It moved for summery judgment, arguing that not only were the seventeen money orders stolen, but also once it became aware of the theft, it stopped payment on the stolen money orders. Those same money orders were presented to and cashed by the original assignors.

In response to the motion, all the assignee submitted was his own certification describing the appearance of the money orders. The lower court granted the money order company’s motion for summary judgment because there were no material disputed facts: the money orders were stolen, were signed by an unauthorized person, and cashed.

The Appellate Division affirmed, holding that when a lost or stolen money order, unsigned by the purchaser, is later presented by a thief or finder, the issuing bank is not liable. There was no question that the money order company was the drawer in the transaction and not the issuing bank. Its name was embossed on the money orders and it was specifically identified as the “Issuer/Drawer.” Consequently, in a normal transaction, the money order company was intended to be the drawer. Here, however, the assignee had disregarded the significance of the transactions between the thieves and his assignors, as well as the undisputed fact that none of the money orders contained an authorized signature. To be an effective signature, an instrument must be executed by a party with the intent to authenticate the instrument. Although the money order company’s name is embossed on the money orders alongside the words “Issuer/Drawer,” the remainder of the document clearly indicated that the additional signature of the purchaser was required to authenticate the writing. Since there was no dispute that the money orders in question were stolen and that the signatures were not made by purchasers, the Court held that the orders did not contain authorized signatures.

The Court also held that even if the law had placed liability on the company whose signature had been forged, the assignee would still have needed to show that each respective cashing agency was a holder in due course. A holder in due course is one who cashes a check and has no knowledge or evidence of forgery or alteration to it. The Court held that this was not the case here. The evidence indicated that the checks were counterfeit and the cashing agencies had ignored the clear warning on each check. Each had a statement on the reverse side warning that it would not be paid if it were forged, and that recourse was only against the presenter. Furthermore, each order stated that information concerning the order could be obtained from the company, whose address and toll free telephone number were given. Thus, a simple telephone call would have revealed that the money orders were stolen. The Court found it relevant that the agency claiming to be a holder in due course was a check cashing company. Since failure to follow the directions on the checks would have likely precluded any holder from claiming such status, it especially precluded a company in the business of cashing checks. The very appearance of these money orders, which had unmatched serial numbers, should have made the assignors suspicious. Accordingly, the Court held that it was commercially unreasonable for a check cashing agency to fail to make such observations and to fail to take precautionary measures. As a result, the original assignors, each in the business of cashing checks, could not claim holder in due course status when they blindly cashed the instruments.

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