82 A.D.2d 772 | N.Y. App. Div. | 1981
Order of the Supreme Court, New York County (Sutton, J.), entered August 28, 1980, denying motion of the Federal Reserve Bank of New York for summary judgment dismissing the third-party complaint and denying cross motion of Chemical Bank for partial summary judgment dismissing the main complaint, modified, on the law, to the extent of granting the motion of the Federal Reserve Bank of New York, and otherwise affirmed, without costs. Plaintiff instituted this action to recover $115,180.10 paid by defendant, Chemical Bank, on 13 checks drawn in 1976 and 1977 by plaintiff on its checking account maintained with defendant. Four of the checks were made payable to Acme Steel Partition Co., Inc., Steel Door Corp. and nine to Empire Office Equipment. Each of the 13 checks was deposited in an out-of-State bank and transmitted through the check collection network to defendant, who thereupon paid the item and debited plaintiff’s account with the amount. It is undisputed that plaintiff was the victim of a fraudulent scheme engineered by one of its own employees. The modus operand! was as follows: The employee, who worked in plaintiff’s accounts payable department, presented plaintiff’s check-issuing department with a request for a check to Acme or Empire, concerns with whom plaintiff did business. The employee gave the check-issuing department the vendor number identifying Acme or Empire in plaintiff’s accounts, the amount of the check to be issued and a false invoice number, which was a slight variation of a previous one. In this manner the check was prepared without the computer indicating the prior check’s existence. The check in payment of the bogus invoice was then delivered by the check-issuing unit to the unscrupulous employee, who directly or with the aid of confederates forged the indorsement of the named payee and deposited the check in an out-of-State bank in an account other than in the name of the named payee. Eventually, the check was transmitted to and paid by defendant, and the account of plaintiff was debited with the amount thereof. Plaintiff’s complaint contained three causes of action: (1) that defendant acted negligently and contrary to normal and accepted banking practice in paying the checks despite irregularities apparent on the face of the checks and indorsements, (2) that defendant breached its contract with plaintiff as its depositor by paying the checks contrary to plaintiff’s order, and (3) that defendant, by paying the checks over forged indorsements of the payees, converted the checks and their proceeds. Defendant’s answer alleged, inter alia, as an affirmative defense, that as a result of the negligence or dishonesty of certain employees of plaintiff, plaintiff’s claim was barred by section 3-405 of the Uniform Commercial Code. Defendant, in addition, served a third-party complaint upon the Federal Reserve Bank of New York alleging that seven of the checks (totaling $43,600) were transmitted through the Federal Reserve Bank as collecting bank; that by indorsing said checks and forwarding them for payment, the third-party defendant warranted that it had good title to the checks and that all signatures were genuine or authorized (Uniform Commercial Code, § 4-207); that, in fact, the signature of the payee on each check was not genuine or authorized (because it was forged); that, accordingly, the third-party defendant breached