Ashford v. Thos. Cook and Son (Bankers) Limited, 4874

CourtSupreme Court of Hawai'i
Writing for the CourtBefore RICHARDSON; ABE
Citation52 Haw. 113,471 P.2d 530
Decision Date12 June 1970
Docket NumberNo. 4874,4874
Parties, 42 A.L.R.3d 836, 7 UCC Rep.Serv. 1131 Curtis H. ASHFORD, Plaintiff-Appellee, v. THOS. COOK & SON (BANKERS) LTD. and Thos. Cook & son, Inc., Defendants-Appellants.

Page 530

471 P.2d 530
52 Haw. 113, 42 A.L.R.3d 836, 7 UCC
Rep.Serv. 1131
Curtis H. ASHFORD, Plaintiff-Appellee,
THOS. COOK & SON (BANKERS) LTD. and Thos. Cook & son, Inc.,
No. 4874.
Supreme Court of Hawai'i.
June 12, 1970.

Page 531

Syllabus by the Court

1. Travelers checks upon being printed become a medium of exchange or acquire negotiable characteristics and all the risk of theft is with the issuer. The issuer is thus liable to any bona fide purchaser for value of stolen travelers checks.

2. Where the instructions given by the trial judge correctly and fully covered the issue, his refusal to give other requested instruction on the same issue was not error.

3. The determination as to whether the plaintiff was a bona fide purchaser for value of the stolen travelers checks was a factual issue, and the trial judge correctly submitted this issue to the jury.

4. A jury finding on a factual issue supported by substantial evidence may not be set aside by this court.

[52 Haw. 123] W. Patrick O'Connor, Honolulu (A. William Barlow, Honolulu, with him on the briefs), for defendants-appellants.

Stuart M. Cowan, Honolulu (Greenstein & Cowan, Honolulu, of counsel), for plaintiff-appellee.


ABE, Justice.

On June 24, 1964, defendant, Thos. Cook & Son (Bankers) Ltd., sold and delivered travelers checks totaling $25,000 to Mr. and Mrs. Kochton at their home in the suburb of Chicago, Illinois. Mr. Kochton was at home at the time of delivery and he signed his name to one-half of the checks on the lower left hand corner in the presence of an agent for Thomas Cook & Son (Bankers) Ltd., as [52 Haw. 114] required by its regulation. However, Mrs. Kochton was not at home and her unsigned travelers checks for the amount of $12,500 were left with Mr. Kochton. In spite of an instruction to have the checks signed as provided before her departure, Mrs. Kochton failed to do so and unsigned travelers checks amounting to $11,900 were stolen from her in Tahiti in July, 1964.

On May 3, 1966, Curtis H. Ashford, plaintiff, who was then living in Tahiti, inquired of the Indo-China Bank, the only bank at Papeete, Tahiti, whether he could exchange New Zealand pounds and Polynesian francs for United States dollars and was informed that he could not. He returned to his boat to have lunch. Shortly thereafter a young Tahitian male came on board his boat and stated that he had been informed that plaintiff desired to exchange Polynesian francs for United States dollars and suggested that plaintiff purchase travelers checks. Plaintiff inquired whether that was possible becuase when he was informed at the bank that he couldn't make the exchange of Polynesian francs for United States dollars he had assumed he couldn't buy travelers checks

Page 532

with francs. When plaintiff was assured that he could purchase travelers checks, assuming that the Tahitian was connected with the bank, he asked if he should go to the bank during the noon hour. The Tahitian told plaintiff that was not necessary and that he and a director from the bank would come to the boat to consummate the transaction.

Subsequently the Tahitian returned to plaintiff's boat with a European male, who introduced himself as a Cook's agent and flashed an identification card. Thereafter the transaction was consummated 1 whereby plaintiff paid Polynesian francs and New Zealand pounds valued between $8,450 to $8,600 for United States travelers checks [52 Haw. 115] with face value of $8,300. The overcharge, according to the 'agent', was for fee, premium and difference in exchange rate.

Thereafter he remained in Tahiti for a short time before leaving for Hawaii. After coming to Hawaii, plaintiff kept the travelers checks until January 1967, when he deposited them with the Liberty Bank in Honolulu. When the checks were forwarded to New York for collection, they were not honored and Liberty Bank debited plaintiff's account.

Plaintiff brought this action against defendants Thos. Cook & Son (Bankers) Ltd., and Thos. Cook & Son, Inc. The case was tried by a jury and after the jury returned a verdict, the trial court entered judgment for plaintiff for the sum of $8,300 plus interest, costs, etc., or $9,609.06. Defendants appealed.


Defendants contend that the trial court erred in holding the travelers checks to be negotiable instruments when they were stolen.

As acknowledged by all the parties, the Uniform Commercial Code, HRS C. 490, became effective on January 1, 1967, about eight months after the plaintiff acquired the checks and is not applicable here. The defendants argue that the checks had not been delivered and under the Negotiable Instruments Law the defense of non-delivery of an incompleted instrument was applicable in this case. We cannot agree. The agent intended and did transfer possession to Mr. Kochton and delivery of the checks was completed. However, we are not concerned with this issue.

Each of the travelers checks involved here contains the following on its face:


_ _

Counter-sign here in the presence of paying Cashier

Thos. Cook & Son (Bankers) Ltd New York Agency.

Upon presentation of this cheque countersigned by the person whose signature is shown below will

Pay to the Order of _ _

Signature of holder

_ _

This cheque is redeemable by Thos. Cook & Son (Bankers) Ltd New York Agency.

Page 533

Revised Laws of Hawaii 1955, § 197-1, the Uniform Negotiable Instruments Act (hereinafter referred to as Negotiable Instruments Law or NIL) reads:

'Form of negotiable instrument. An instrument to be negotiable must conform to the following requirements:

(a) It must be in writing and signed by the maker or drawer;

(b) Must contain and unconditional promise or order to pay a sum certain in money;

(c) Must be payable on demand, or at a fixed or determinable future time;

(d) Must be payable to order or to bearer; and

(e) Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty.'

It has been conceded by scholars that travelers checks in the various forms do not fall squarely within the purview of the Negotiable Instruments Law. 2 This may be [52 Haw. 117] because the travelers check industry was in its infancy when the Negotiable Instruments Law was enacted. 3

Courts of other jurisdictions have applied the NIL to travelers checks and have arrived at conflicting results where a thief stole blank travelers checks, signed and countersigned them and negotiated to third parties for value and without notice. In American Express Co. v. Anadarko Bank & Trust Co., 179 Okl. 606, 67 P.2d 55 (1937), the Oklahoma court held that American Express Co. was liable for the checks because the purchaser's signature was not necessary to make the checks complete and as the stolen checks were completed negotiable instruments, the issuer was liable to the bona fide holder. On the other hand, in City National Bank of Galveston v. American Express Co., 16 S.W.2d 278 (Tex.Com.App.1929) the court held that...

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