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Triffin v. Wachovia Bank, N.A.

A-2949-07T3 (N.J. Super. App. Div. 2009) (Unpublished)

CHECK 21 ACT; ASSIGNEES — Assignments of statutory claims are strictly prohibited as a matter of law; therefore, an assignee who purchases dishonored checks with full knowledge of the dishonor does not have a cause of action under the Check 21 Act.

An individual purchased dishonored negotiable instruments and then sought to collect on them as the assignee of all rights and interests in those instruments. He claimed that he presented several checks to a bank who, after dishonoring the checks, provided him with illegible check substitutes. The assignee sued the bank charging that it had breached applicable federal regulations.

The lower court granted summary judgment in favor of the bank. The assignee appealed, and the Appellate Division reversed and remanded the matter to the lower court. The basis for the remand was the Appellate Division’s conclusion that the lower court had mistakenly adopted a procedure that denied the assignee the full and fair opportunity to present his case. It noted, however, that its decision did not imply that the assignee would necessarily prevail. After trial, the lower court found that the assignee lacked standing to bring his claims and that such claims were not assignable. It then granted the bank’s motion for summary judgment. The assignee appealed.

The Appellate Division affirmed, finding that Congress enacted regulations under the Check 21 Act (Act) to facilitate the broader use of electronic check processing by authorizing the use of a new negotiable instrument called a substitute check. The regulations imposed several duties upon banks that electronically process checks and authorizes penalties if a bank breached such duties. Here, the Court found that the bank did not breach its duty to issue an appropriate substitute check. Moreover, it found that the statutory claims are not contractual in nature and, therefore, were not assignable. Consequently, the Court determined that the assignee lacked standing to bring an action against the bank. It noted that the assignee purchased the checks after they had been dishonored with full knowledge of their dishonor and, and but for the rights created by the Act, he would not have a cause of action against the bank. Finally, the Court pointed out that assignment of statutory claims is strictly prohibited as a matter of law.

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