[*1]
| I & B Check Cashing Corp. v Jensen |
| 2011 NY Slip Op 50496(U) [31 Misc 3d 1205(A)] |
| Decided on April 1, 2011 |
| Civil Court Of The City Of New York, Kings County |
| Edwards, J. |
| Published by New York State Law Reporting Bureau
pursuant to Judiciary Law § 431. |
| This opinion is uncorrected and will not be
published in the printed Official Reports. |
Civil Court of the City of New York, Kings County
I & B Check Cashing
Corp., Claimant,
against
Halvord Jensen, Defendant.
|
40061/10
The claimant and defendant were unrepresented litigants.
Genine D. Edwards, J.
Claimant commenced this action to recover monetary damages in the
amount of $5,000.00 due to dishonored checks made payable to the defendant, who is claimant's
customer.
FACTS
Claimant's President,
Andrew Siegel, testified that claimant, a commercial check cashing establishment, cashed two
checks, each over $5,000.00, for the defendant. The checks were drawn by New York Carting,
Inc., and transferred and indorsed by defendant to the claimant.[FN1] Thereafter, claimant attempted to deposit the
checks, but they were returned with the indication "No Account", and stamped "non-negotiable".
Claimant was charged a bank fee of over $100.00 for each check.
In support of this action, claimant cites UCC §3-415, and contends that as a
holder in due course it is entitled to reimbursement from the defendant for the dishonored checks.
Defendant received the checks as payment for plumbing services he rendered. He
testified that he asked claimant's employee "to check the checks" because he did not know the
person who gave them to him. Defendant admitted that at some point after the checks were
cashed, Chuck, claimant's employee, notified him that claimant was unable to deposit the checks.
LAW
A negotiable instrument
is signed by the maker or drawer and contains an unconditional promise or order to pay a sum
certain in money and no other promise. See NY UCC §3-104(1). A check is a
negotiable instrument provided it is drawn on a bank and payable on demand. See NY
UCC §3-104(2)(b). The indorser signs the back of the check and warrants that upon
dishonor and any necessary notice of dishonor and protest he will pay the amount due on the
instrument according to the terms of the instrument at the time it was indorsed, unless the
indorsement otherwise specifies (as by such words as "without recourse"). See NY UCC
§3-414; Matter of Taylor, 174 Misc. 457, 21 N.Y.S.2d 245 (Surr. Ct. New York
County 1940); Goldstein v. Brastone Corp., 254 A.D. 288, 4 N.Y.S.2d 909 (2d Dept.
1938).
Notice of dishonor must be provided by a person before midnight of the third
business day after dishonor or receipt of notice of dishonor. See NY UCC §3-508;
UCC §3-415. Such [*2]notice must be provided to the
indorser in order that he may take steps to protect himself. Cady v. Bradshaw, 116 NY
188 (1889); Goldstein v. Brastone Corp., 254 A.D. 288, 4 N.Y.S.2d 909 (2d Dept. 1938);
Matter of Taylor, 174 Misc. at 459.
Once an indorser transfers a check, the person who takes it may be a holder in due
course. A holder in due course takes a negotiable instrument for value, in good faith, and without
notice that the instrument is overdue or has been dishonored or of any defense against or claim to
it on the part of any person. NY UCC §3-302. The Court of Appeals holds that good faith
and notice requires a holder in due course to have actual knowledge of bad faith (some fact that
would prevent the taking of the check). See Chemical Bank of Rochester v. Haskell, 51
NY2d 85, 432 N.Y.S.2d 478 (1980); Regent Corp. v. Bangladesh, Ltd., 253 AD2d 134,
686 N.Y.S.2d 24 (1st Dept. 1999); Tuksass Corp. v. AVM Holding Corp., 20 Misc 3d
133(A), 867 N.Y.S.2d 379 (App. Term, 9th and 10th Jud. Dists. 2008); Adamar of N.J. v.
Chase Lincoln First Bank, 142 Misc 2d 517, 537 N.Y.S.2d 1009 (Sup. Ct., Monroe County
1989).
FINDINGS
There is no
evidence that claimant had actual knowledge of bad faith or notice of any claims or defenses or
irregularities with regard to the checks, notwithstanding the defendant's testimony regarding
verification. Hence, claimant is a holder in due course, who is entitled to seek recourse from the
defendant for the amount of the checks. See Tuksass Corp., 20 Misc 3d at 133. However,
pursuant to the UCC section that claimant cited as well as New York law, claimant has the
burden of proving that it gave notice of dishonor to the defendant within the required time
period. UCC §3-415; NY UCC §3-508. On this issue claimant misses the mark.
Indeed, the claimant failed to proffer one scintilla of evidence regarding notification to the
defendant. The fact that the defendant admitted that he received oral notice of dishonor from the
claimant's employee is irrelevant since there is no indication as to when this notice was provided.
Based upon the credible evidence adduced at trial, this Court finds that the claimant
failed to sustain its burden of proving that the defendant is liable for the amount of the checks.
Accordingly, judgment is in favor of the defendant. The complaint is hereby
dismissed.
This constitutes the decision and order of this Court.
Dated: April 1, 2011
_____________________________GENINE D. EDWARDS
A.S.C. J.
Footnotes
Footnote 1: Claimant only sued for
$5,000.00, which is the jurisdictional limit in Small Claims Court.