32 Conn. Supp. 172 | Pennsylvania Court of Common Pleas | 1975
The major issue at controversy here is whether the defendant is liable to the plaintiff for the proceeds of a check which was deposited by the defendant and was later dishonored. It appears from the record that the defendant withdrew the proceeds of this cheek, which had been contingently credited to his account pending clearance, and that he has not reimbursed the plaintiff. After a careful inspection of the Connecticut law of commercial paper; General Statutes, title 42a, art. 3; as it applies to bank deposits and collections; id., art. 4; the court must hold that the plaintiff is entitled to recover the amount of $3950 plus interest accrued from the date of the defendant’s closing of the account in question.
The court finds the following facts: On January 9, 1973, the defendant, as payee, endorsed a check from a Corrine Harper. The amount of the check was $3950, and it was drawn on the Valley Bank and Trust Company of Springfield, Massachusetts. The defendant presented this check to the plaintiff to be credited to his business checking account. The defendant deposited $3050 of this amount and received $900 in cash. The cheek was dishonored by the Valley Bank and Trust Company, and the plaintiff was apprised of that situation on January
The defendant vigorously defends on two grounds. First, he alleges that the plaintiff neglected to prove that proper notice of dishonor was given in a timely fashion, as required by the “midnight deadline” rule of General Statutes § 42a-3-508 (2) and as defined in § 42a-4-104 (h). Second, the defendant contends that the plaintiff cannot maintain this action because it is no longer the “holder” of the instrument, since the plaintiff bank has admitted that the original instrument has been lost in the intervening period.
First, then, was the defendant given proper notice that the check had been dishonored? Second, can the plaintiff bank be said to be a “holder” of the dishonored cheek?
General Statutes § 42a-3-507 provides: “(1) An instrument is dishonored when (a) a necessary or optional presentment is duly made and due acceptance or payment is refused or cannot be obtained within the prescribed time or in case of bank collections the instrument is seasonably returned by
The defendant contends: “In the facts presented by the plaintiff, it is clear that the ‘notice’ was given a ‘few days’ after the check was returned. Since 42a-3-508 (2) is quite specific and definite, the court should find hard evidence of the ‘midnight deadline notice’ before a finding for the plaintiff.” This assertion of the defendant fails to consider the testimony of the bank manager, William Connell. The trial transcript contains the following examination of Connell by the plaintiff’s attorney. “Q. — Mr. Connell, when you received notice of this check being returned uncollectible, did you make any attempts to reach Mr. Sahadi? A. — Tes, I did.
The defendant’s second contention is that the plaintiff should not be entitled to recover unless it can prove it is the “holder” of the instrument. The defendant relies on the Uniform Commercial Code’s definition of “holder” at General Statutes § 42a-1-201 (20), which is as follows: “[A] person who is in possession of a document of title or an instrument or an investment security drawn, issued or endorsed to him or to his order or to bearer or in blank.” Since the plaintiff is not in “possession” of the instrument at this time, the defendant reasons that the plaintiff should be denied recourse. The defendant seems to believe this argument dispositive, for in his brief he states: “The defendant concedes that if the plaintiff is a ‘holder’ of this instrument he is liable to the plaintiff.”
The plaintiff did present evidence of the instrument at trial in the form of a photostatic copy of the lost instrument. This was admitted without
General Statutes § 42a-3-804 provides for lost, stolen, or destroyed instruments: “The owner of an instrument which is lost, whether by destruction, theft or otherwise, may maintain an action in his own name and recover from any party liable thereon upon due proof of his ownership, the facts which prevent his production of the instrument and its terms. The court may require security indemnifying the defendant against loss by reason of further claims on the instrument.” See American Finance Corporation v. Webb, 23 Conn. Sup. 346, 348. In Girard Trust Corn Exchange Bank v. Brink’s Inc., 422 Pa. 48, the court allowed the bank to recover against Brink’s for losing a bag of checks. In the instances where the bank could prove which items were missing and for what amounts, the bank was able to collect. The instance at hand is similar. A copy of the instrument was admitted into evidence, and it fairly and accurately described the transaction. Of course, it will always he assumed that the instrument itself is the best evidence, especially with regard to negotiable instruments. There is always the possibility of liability on the note if it has been acquired by another. But in this instance there does not seem to be any compelling reason not to accept the plaintiff’s explanation of loss. Further, though the statute provides that security may be offered, the court does not believe that any is necessary here. The plaintiff maintains in the state considerable attachable assets which could be reached if this note should reappear. In essence, the defendant’s argument that the plaintiff cannot be considered a holder because the check has been lost fails to account for § 42a-3-804 and cannot be a valid defense in this instance.
It is well settled that “[n]o person is liable on an instrument unless his signature appears thereon.” General Statutes § 42a-3-401 (1). “Unless the instrument clearly indicates that a signature is made in some other capacity it is an endorsement.” § 42a-3-402. The defendant signed the check in question, and this appears to satisfy the requirements of endorsement. Section 42a-3-414 (1) states: “[E]very endorser engages that upon dishonor and any necessary notice of dishonor and protest he will pay the instrument according to its tenor at the time of his endorsement to the holder . . . .” Section 42a-3-122 (3) provides: “A cause of action against a drawer of a draft or an endorser of any instrument accrues upon demand following dishonor of the instrument. Notice of dishonor is a demand.”
The plaintiff has been deprived of $3950 by the actions of the defendant. At the time of the dishonor, the plaintiff had the right of “charge-back” under General Statutes § 42a-4-212: “(1) If a collecting bank has made provisional settlement with its customer for an item and itself fails by reason of dishonor ... to receive a settlement for the item which is or becomes final, the bank may revoke the settlement given by it, charge back the amount of any credit given for the item to its customer’s account or obtain refund from its customer . . . .” The bank had the option of the charge-back, but it was evident from the fluctuations of the account that there was not enough to cover the dishonored check. The bank instead chose to proceed on the obligation of the defendant to reimburse it.
The law is clear. The defendant has not met his obligation, under General Statutes § 42a-3-414 (1), of reimbursement for dishonored instruments.
The court holds that the defendant owes the plaintiff the sum of $3950 plus accrued interest of 6 percent. General Statutes § 42a-3-122 (4) states: “Unless an instrument provides otherwise, interest runs at the rate provided by law for a judgment ... (b) ... from the date of accrual of the cause of action.” Since there are serious questions concerning the manipulations of the account in question, for this purpose the court holds that the time of accrual of this action was the day on which the defendant closed his account with the plaintiff. See Monarca v. O’Brien, 18 Conn. Sup. 13.
Judgment may enter accordingly.