ROBERT J. TRIFFIN VS. SHS GROUP, LLC (DC-013226-18, MIDDLESEX COUNTY AND STATEWIDE)
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
APPROVED FOR PUBLICATION March 3, 2021 APPELLATE DIVISION
On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. DC-013226-18.
Robert J. Triffin, appellant, argued the cause pro se.
Respondents have not filed a brief.
The
MITTERHOFF, J.A.D.
Plaintiff Robert J. Triffin appeals from a May 23, 2019 order denying his motion for reconsideration of the trial
The judge found the check was electronically deposited and paid by defendant‘s bank before the physical copy was presented for payment. Therefore the judge held defendant was not liable. See
In denying the reconsideration motion, the trial judge relied on
We discern the facts from the record of the May 23, 2019 Special Civil Part trial. Defendant is a hair styling school and participant in a government program providing financial assistance to its students. Defendant receives money from the federal government, and then distributes the funds to qualifying students for educational and living expenses. Id. On December 2, 2015, defendant issued check number 1483 to one of its students, codefendant Amanda R. Grzyb-Kelly, in the amount of $1,431. That same day, the check was redeemed twice, once via electronic deposit into Grzyb-Kelly‘s Wells Fargo bank account, and once at United Check Cashing, a check-cashing business.
Notably, plaintiff did not dispute that Grzyb-Kelly electronically deposited the check, or that defendant‘s bank paid the check. Rather, plaintiff‘s arguments attacked the legitimacy of the payment made by Bank of America, SHS’ bank, to Grzyb-Kelly‘s Wells Fargo account. Plaintiff conceded that the check was cashed twice on December 2, 2015, but argued the lack of indorsement rendered defendant‘s payment a legal nullity.
Grzyb-Kelly completed the electronic deposit by taking pictures of the front and back of the check through an application on her phone. The check was not indorsed at the time it was electronically deposited. When cashed at United Check Cashing, the check was indorsed, stamped, and relinquished. The check was subsequently dishonored when presented to Bank of America for payment and returned on December
Plaintiff as assignee brought an enforcement action against defendant and Grzyb-Kelly pursuant to
Defendant also presented bank records, including defendant‘s December 2015 Bank of America statement, which indicated that check 1483 was paid and that $1,431 was deducted from the account. Based on a comparison of the checks presented by each party, and defendant‘s December 2015 bank statement, the trial judge concluded the check was deposited into Grzyb-Kelly‘s Wells Fargo account and paid by Bank of America on December 2, 2015, before it was presented to United Check Cashing for payment. Accordingly, the trial judge found defendant had successfully proved its previously paid defense and dismissed plaintiff‘s claim against defendant.
Default judgment was entered in favor of plaintiff against codefendant Grzyb-Kelly.
The judge denied plaintiff‘s motion for reconsideration. In addition to the reasons set forth at trial, the judge also found that
On appeal, plaintiff raises the following argument for our consideration:
POINT I
THE TRIAL JUDGE COMMITTED PREJUDICIAL ERROR WHEN HE DISREGARDED N.J.S.A. 12A:3-201(b) [AND] 12A:3-203(c)‘[S] REQUIREMENTS FOR NEG[OTIA]TION, TRANSFER, AND INDORSEMENT OF CHECKS
Essentially, plaintiff argues that because SHS check number 1483 was not indorsed when codefendant Grzyb-Kelly electronically deposited it into her account, transfer, as defined by the Uniform Commercial Code4 (the Code) and New Jersey‘s statutory corollaries, could not have occurred. Accordingly, defendant‘s bank made an unauthorized payment to codefendant Grzyb-Kelly that did not satisfy defendant‘s promise to paycheck number 1483.
For these reasons, reconsideration should only be granted in “those cases which fall into that narrow corridor in which either 1) the [c]ourt has expressed its decision based upon a palpably incorrect or irrational basis, or 2) it is obvious that the [c]ourt either did not consider, or failed to appreciate the significance of probative, competent evidence . . . . ” Cummings, 295 N.J. Super. at 384 (quoting D‘Atria v. D‘Atria, 242 N.J. Super. 392, 401-02 (Ch. Div. 1990)). Therefore, we have held that “the magnitude of the error cited must be a game-changer for reconsideration to be appropriate.” Palombi v. Palombi, 414 N.J. Super. 274, 289 (App. Div. 2010).
This matter is governed by Article 3, which covers negotiable instruments,
Plaintiff‘s claim arises out of
(a) the person in possession of a negotiable instrument that is payable either to the bearer or to an identified person that is the person in possession[.]
a. “Negotiation” means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.
b. Except for negotiation by a remitter, if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder. If an instrument is payable to bearer, it may be negotiated by transfer of possession alone.
[emphasis added.]
Commentary to
A person can become holder of an instrument when the instrument is issued to that person, or the status of holder can arise as the result of an event that occurs after issuance. “Negotiation” is the term used in article 3 to describe this post-issuance event. Normally, negotiation
occurs as the result of a voluntary transfer of possession of an instrument by a holder to another person who becomes the holder as a result of the transfer. [N.J.S.A. 12A:3-201 cmt. 1.]
In most instances, as plaintiff correctly points out,
Unless otherwise agreed, if an instrument is transferred for value and the transferee does not become a holder because of lack of indorsement by the transferor, the transferee has a specifically enforceable right to the unqualified indorsement of the transferor, but negotiation of the instrument does not occur until the indorsement is made.
[emphasis added.]
Read together, plaintiff argues these statutes dictate that before a person or bank can become a “holder,” i.e. a person entitled to enforce the instrument, “negotiation” must occur between the person the instrument is made payable to and the assignee. A prerequisite of negotiation is indorsement. Because Wells Fargo accepted the unindorsed draft, plaintiff argues that negotiation, first between Grzyb-Kelly and Wells Fargo, then between Wells Fargo and Bank of America, never took place. Plaintiff argues that the only negotiation of the check that occurred on December 2, 2015, was between Grzyb-Kelly and United Check Cashing. Therefore, plaintiff argues, the unauthorized payment made by Bank of America cannot be the basis of defendant‘s previously paid defense, because the instrument could not have been transferred without negotiation.
If a customer delivers an item to a depository bank for collection:
a. the depository bank becomes a holder of the item at the time it receives the item for collection if the customer at the time of delivery was holder of the item, whether or not the customer indorses the item . . . ; and
b. the depository bank warrants to collecting banks, the payor bank or other payor, and the drawer that the amount of the item was paid to the customer or deposited to the customer‘s account.
Commentary to
Thus,
As the trial judge found, a comparison of the copies of SHS check number 1483 provided by each party conclusively demonstrate that defendant successfully proved its previously paid defense. Defendant‘s copy shows the check was deposited into Grzyb-Kelly‘s Wells Fargo account on December 2, 2015. It also shows that on the same day, the check was electronically indorsed twice, first by Wells Fargo as the bank of first deposit, then by Bank of
Plaintiff‘s copy, on the other hand, is marked duplicate, lists “DUPLICATE PRESENTMENT” as the reason for return, and is indorsed by Grzyb-Kelly. It is also marked with United Check Cashing‘s dated stamp indicating the check was received on December 2, 2015.
The presence of Grzyb-Kelly‘s indorsement, as well as United Check Cashing‘s dated stamp on plaintiff‘s copy, prove the check was electronically deposited before it was cashed at the check-cashing business. Grzyb-Kelly could not have indorsed, stamped, and relinquished the check, before she electronically deposited an unindorsed and unstamped version. The absence of the additional markings indicate the check must have been electronically deposited first. Further, the markings on plaintiff‘s copy identifying it as duplicate, compared to defendant‘s copy referencing the electronic indorsements and transfers by both banks, and defendant‘s bank statement showing $1,431 deducted from his account, clearly demonstrate the check was processed and paid as result of the electronic deposit.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION