Adamar of New Jersey, Inc. v. Chase Lincoln First Bank, N.A.

• Citation: 537 N.Y.S.2d 1009,142 Misc.2d 517
• Parties: ADAMAR OF NEW JERSEY, INC., Plaintiff, v. CHASE LINCOLN FIRST BANK, N.A., Defendant.
• Decision Date: 25 January 1989
• Court: New York Supreme Court

Page 1009

537 N.Y.S.2d 1009

142 Misc.2d 517

ADAMAR OF NEW JERSEY, INC., Plaintiff, v. CHASE LINCOLN FIRST BANK, N.A., Defendant.

Supreme Court, Monroe County.

Jan. 25, 1989.

Harris, Beach, Wilcox, Rubin and Levey, Jeffrey W. Baker, Rochester, of counsel, for plaintiff.

Phillips, Lytle, Hitchcock, Blaine & Huber, John T. Sullivan, Jr., Rochester, of counsel, for defendant.

RAYMOND E. CORNELIUS, Justice.

The Plaintiff, ADAMAR OF NEW JERSEY, INC., which operates and does business as the TROPICANA HOTEL AND CASINO in Atlantic City, New Jersey, has made a motion for summary judgment in lieu of a complaint, pursuant to CPLR Section 3213, for money damages in the amount of $500,000.00. This sum represents the total face amounts of two cashier's checks of the Defendant, CHASE LINCOLN FIRST BANK, N.A., check No. 1451570 in the amount of $200,000.00, and check No. 1451584 in the amount of $300,000.00. The case presents novel questions involving the impact of the Casino Control Act of the State of New Jersey, as codified in N.J.S.A. Title 5, Chapter 12, and the regulations promulgated thereunder, upon the Uniform Commercial Code, as adopted in the State of New York.

Numerous affidavits have been submitted, both in support and opposition to the motion. However, many of the facts are not in dispute, or have not been contested for purposes of the motion, and the chronology of events may be briefly summarized. JAMES E. HAWES was an employee of the Defendant-bank from January 17, 1983 until February 24, 1988. On January 28, 1988, in his capacity as a loan officer at the Midtown Plaza branch office, he obtained and signed the two official cashier's checks, in question, with the date, amount and name of payee blank, and left the checks on his office desk. According to an affidavit, signed by MR. HAWES, one JOSEPH M. THOMAS was present in his office on the same day, during which time MR. HAWES left his office for a brief period of time. On February 2, 1988, MR. HAWES, on behalf of the bank, issued a stop payment request because the two checks had been "lost" or "misplaced".

Also on January 28, 1988, and presumably subsequent to the aforementioned events in the Midtown Plaza branch office, an individual, who identified himself as ROBERT CAPITANO, made a telephone call to the TROPICANA HOTEL AND CASINO in Atlantic City, New Jersey, and spoke with DARRELL NONCLERG, an Assistant Cage Manager. The individual advised MR. NONCLERG that he would be arriving at the casino later the same day, and would have in his possession a CHASE LINCOLN FIRST BANK check in the amount of $200,000.00, which could be verified by calling JAMES HAWES at the Midtown branch office. MR. NONCLERG did make a telephone call to the bank, and spoke with PAT HAYNES, who identified herself as the Operations Supervisor. In response to questions, MS. HAYNES represented that the check was good and there were sufficient funds to cover the check, but could not say whether or not a stop payment order had been issued. In addition, she replied in the negative to several other specific questions concerning whether or not more than one authorization signature was required and whether the check had been issued from her bank and payable through a second bank on deposit.

Between 8:00 P.M. and 9:00 P.M. on January 28, 1988, the person, who identified himself as ROBERT CAPITANO, appeared at the cashier's window of SHELLY LEGG, an Assistant Shift Supervisor at the casino. He presented a $200,000.00 check, drawn upon the Defendant-bank, which was dated January 28, 1988, and made payable to ROBERT CAPIT INO, and requested that he be permitted to place the face amount of the check on deposit. Identification was requested, and a temporary New York State driver's license, in the name of ROBERT J. CAPIT ANO was produced. Unlike a permanent driver's license, this did not contain a photograph of the licensed driver. MS. LEGG noted the difference in spelling between the names on the driver's license and check, but was told that the payee's name on the check had been incorrectly typed by the bank. She requested that the individual endorse the check by signing both the incorrect and correct spelling of his name, and the person purportedly complied. However, an examination of the check discloses that the person endorsed the check as ROBERT CAPIT INO and ROBERT CAPIT ONO. Indeed, the copy of the temporary driver's license, which has been supplied to the Court, would appear to contain a signature with the latter spelling, although the license was issued in the name of CAPIT ANO. In any event, MS. LEGG retrieved a cash equivalent verification form, which had been previously prepared by MR. NONCLERG, compared it to the check, and gave the individual a receipt showing that he had $200,000.00 on deposit in his name. Thereafter, incremental withdrawals were made and a total of $200,000.00 in gaming chips were allegedly issued to this individual.

On February 1, 1988, DARRELL NONCLERG, the Assistant Cage Manager, was informed that the person, who identified himself as ROBERT CAPITANO, would be returning to the casino later that day with another check, drawn on CHASE LINCOLN FIRST BANK, in the amount of $300,000.00, which could be verified by calling the bank's Midtown Plaza branch office. The same procedure was followed, as on the first occasion, and MR. NONCLERG made a telephone call and spoke to ROSA JONES, as Assistant Manager of the bank. The same questions were posed, and the same answers received, with the exception that MS. JONES reported that not only was the check good but there were no stop payment or other restrictions on the check. On the evening of February 1, 1988, an individual appeared at the cashier's window at the casino, and presented a check in the amount of $300,000.00, dated January 28, 1988, and made payable to ROBERT CAPIT ANO, to VAN BRYANT, a Shift Supervisor. Upon request the same temporary driver's license was exhibited for identification, following which the person endorsed the check as ROBERT CAPIT ONO. MR. BRYANT then compared the check to a cash equivalent verification form, which had been previously prepared by MR. NONCLERG, and the person was given a receipt indicating $300,000.00 on deposit. Incremental withdrawals were subsequently made, and a total amount of $300,000.00 in gaming chips were allegedly issued.

Plaintiff deposited the two checks, which ultimately were returned unpaid as a result of Defendant's stop payment order. In response to the motion for summary judgment, the affidavit of ROBERT J. CAPITANO, whose address corresponds to the aforementioned temporary license, was submitted to the Court. In essence, MR. CAPITANO asserts that the endorsements on both checks constitute forgeries, and he denies being present at the TROPICANA HOTEL AND CASINO during January or February 1988. Although MR. CAPITANO also denies that he applied for a driver's license and asserts that the signature appearing on the temporary license is not genuine, he does acknowledge receipt of a permanent license containing his description, but with a picture of his brother-in-law, JOSEPH THOMAS. Criminal charges are currently pending against MR. THOMAS in the United States District Court, Western District of New York, as well as the Superior Court of New Jersey, County of Atlantic, in regard to the transactions involving the two checks.

In this case, the Plaintiff asserts that it is a holder in due course of the two cashier's checks, and, as such, took the instruments free of any defenses of the Defendant. See Uniform Commercial Code Section 3-305. In relevant part, a "holder" is one "... in possession of ... an instrument ... issued or endorsed to him or to his order or to bearer or in blank". Uniform Commercial Code Section 1-201(20). Furthermore, and inherent in this very definition, Plaintiff may not be a "holder" unless the checks were "... negotiated by delivery with any necessary indorsement ...". Uniform Commercial Code Section 3-202(1). As already discussed, the check for $200,000.00 purportedly contained an incorrect spelling of the payee's name on the face thereof. Although an endorsement in that incorrect name would be effective, a person giving value for the instrument may require an endorsement in both the correct and incorrect names, as requested by Plaintiff in this case. See Uniform Commercial Code Section 3-203. Admittedly, the second endorsement on this check, as well as the $300,000.00 check, was also misspelled, or at least were spelled differently than the printed name appearing on the interim license. However, a signature made by use of any name, including an assumed name, or other symbol, with intention to authenticate a writing, would appear to be sufficient. See Uniform Commercial Code Section 1-201(39), 3-401(2). In addition to the requirement of an endorsement, and the status of being a "holder", the Plaintiff, in order to be a holder in due course, must also establish that the two checks were taken "for value", "in good faith", and "without notice" "... of any defense against or claim to it on the part of any person". Uniform Commercial Code Section 3-302(1)(a), (b) and (c), also see Marine Midland Bank v. Price, Miller, Evans & Flowers, 57 N.Y.2d 220, 455 N.Y.S.2d 565, 441 N.E.2d 1083 (1982).

If the Plaintiff were not a holder in due course, the two checks would have been taken subject to a defense that these instruments were acquired by theft. Uniform Commercial Code Section 3-306(d). Furthermore, an unauthorized signature is generally inoperative as that of the person whose name is falsely signed, except as to "... any person who in good faith pays the instrument or takes it for value". Uniform Commercial Code Section 3-404(1). In addition to the two checks, subject of this action, having been stolen and containing the unauthorized signatures of the payee, there is no question that they were materially altered by completion of otherwise...