Triffin v. Somerset Valley Bank

343 N.J.Super 73 (2001)

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Nature of the Case

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Facts

In October 1998, Alfred M. Hauser, president of D, was notified that several individuals were cashing what appeared to be D payroll checks. D reviewed the checks, ascertained that the checks were counterfeits and contacted the Police. D concluded that the checks were counterfeits because none of the payees were employees of D and because he did not write the checks or authorize anyone to sign those checks on his behalf. D employed Automatic Data Processing, Inc. (ADP) to provide payroll services and a facsimile signature was utilized on all D payroll checks. D executed affidavits of stolen and forged checks at the Bank, stopping payment on the checks at issue. The Bank received more than eighty similar checks valued at $25,000 all drawn on D's account. P purchases dishonored negotiable instruments. P purchased eighteen dishonored checks from four different check cashing agencies, with D as the drawer. The checks totaled $ 8,826.42. Each agency stated that it cashed the checks for value, in good faith, without notice of any claims or defenses to the checks, without knowledge that any of the signatures were unauthorized or forged, and with the expectation that the checks would be paid upon presentment to the bank upon which the checks were drawn. All the checks were marked by the Bank as 'stolen check' and stamped with the warning, 'do not present again.' P sued D and each of the nine individual payees. P contends that D was negligent in failing to safeguard both its payroll checks and its authorized drawer's facsimile stamp, and was liable for payment of the checks. P moved for summary judgment. The court concluded that because the check cashing companies took the checks in good faith, P was a holder in due course as assignee. It also held that because the checks appeared to be genuine, D was required, but had failed, to show that P's assignor had any notice that the checks were not validly drawn. The motion was granted, and D appealed.