Brown Strober Bldg. Supply Corp. v. Living House, Inc.
| Decision Date | 04 December 1980 |
| Parties | , 30 UCC Rep.Serv. 1020 BROWN STROBER BUILDING SUPPLY CORP., Plaintiff, v. LIVING HOUSE, INC., Citibank, N. A., and National Bank of North America, Defendants. NATIONAL BANK OF NORTH AMERICA, Third-Party Plaintiff, v. MOON RAKER CONSTRUCTION, INC., and Thomas Iadicicco, Third-Party Defendants. |
| Court | New York District Court |
Rosenthal & Goldhaber, Melville, for plaintiff.
Bigham, Englar, Jones & Houston, New York City, for defendant.
Leon P. Ciferni, New York City, for defendant and third-party plaintiff, Nat. Bank of North America.
Balin, Pares, Soloway, Seaton & Mapglin, P. C., New Hyde Park, for defendant, Living House, Inc.
The defendants, Citibank and National Bank of North America, move for summary judgment dismissing the complaint of Brown Strober Building Supply Corp. and the cross claim of defendant Living House, Inc.
In September of 1979, Living House, Inc. drew a check for $3,562.77 on its account with Citibank payable to "Brown Strober/Moon Raker Construction". Moon Raker Construction Inc. deposited this check in its account with National Bank of North America without the endorsement of Brown Strober. National Bank of North America presented this check to the payor bank, Citibank and collected on the instrument. (See Article 4-UCC)
The central issue before the Court is whether an instrument where the payees are "Brown Strober/Moon Raker Construction" is drawn in the alternative. According to UCC 3-116:
(a)n instrument payable to the order of two or more persons (a) if in the alternative is payable to any one of them and may be negotiated, discharged or enforced by any of them who has possession of it; (b) if not in the alternative is payable to all of them and may be negotiated, discharged only by all of them.
The case law in New York is clear that if an instrument is payable to either "A or B" or "A and/or B", it is payable in the alternative (Glens Falls Indemnity Co. v. Chase, 257 N.Y. 441, 178 N.E. 751, Official Comment to UCC 3-116). If an instrument is payable to "A and B", A and B are joint payees (Official Comment to UCC 3-116).
Although the New York courts are silent on the issue, the Federal Courts have addressed the problem. In Dynalectron Corp. v. Union First National Bank (488 F.Supp. 868), a check payable to "Schrader, Inc./Dynacom" was negotiated without Dynacom's endorsement but with Schrader's endorsement....
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