D & I Fashions Inc. v. Jp Morgan
| Decision Date | 28 January 2009 |
| Docket Number | SCR 60535/08. |
| Citation | 2009 NY Slip Op 29170,24 Misc.3d 694,878 N.Y.S.2d 848 |
| Parties | D & I FASHIONS INC., Claimant, v. JP MORGAN CHASE BANK, Defendant. |
| Court | New York Civil Court |
Shain, Schaffer & Rafanello, P.C., Bernardsville, New Jersey (Tracy DeWitt of counsel), for defendant.
Claimant, D & I Fashions Inc., commenced this small claims action against the defendant, JP Morgan Chase Bank, alleging that the defendant had failed to return monies claimant received as a security deposit and placed in a savings account with defendant's predecessor in interest. A trial was held on November 25, 2008. Claimant appeared without an attorney. Defendant was represented by counsel.
Claimant, by its principal, testified that on July 1, 1996 it received $2,200 from its tenant, Entertainment Technologies Pegasus Productions, as a security deposit in regard to a commercial lease of the premises, 8140 New Utrecht Avenue, Brooklyn, New York, which is owned by the claimant. On July 5, 1996, claimant deposited the $2,200 in a savings account at Chemical Bank opened at defendant's branch at 8523 20th Avenue, Brooklyn, New York. On August 4, 1996, the tenant delivered to claimant a second check in the amount of $2,200 as an additional security deposit. Claimant deposited the second check in the same account at Chemical Bank on August 12, 1996. It is conceded that the current named defendant is the successor to Chemical Bank after several mergers and acquisitions. Although Chemical Bank acquired Chase Bank in July 1996, the month this account was opened, it elected to do business under the name Chase. In 2008 the tenant, who has remained a tenant the entire time, inquired as to the status of the account. Claimant went to the defendant's branch at 8523 20th Avenue, Brooklyn, New York to close the account only to learn that the defendant no longer had any record of such an account.
Counsel for the defendant suggested that because the bank no longer had any record of the account, and since claimant insisted that it never closed the account, that perhaps the monies had been turned over to New York State as "abandoned property" as required by the Abandoned Property Law. Defendant asserted that because there was no activity on the account for several years, such as further deposits or withdrawals, the account would be deemed "abandoned" after five years. Claimant asserts that it never abandoned the account nor had it ever received any notification either from the defendant or the State of New York that the account has been deemed abandoned. Claimant alleges that when it contacted the New York State Comptroller's Office of Abandoned Property, it was informed that no such account had ever been surrendered to it. Claimant also stated that the defendant refused to cooperate and file the necessary papers with New York State to trace the account. Defendant asserts that it did not fill out the forms because its records do not show that the account was turned over to the State of New York. Defendant contends that the only logical conclusion is that the claimant must have closed the account. Either that, or the account was transferred to defendant's branch in "Brigadoon" and it will reappear in 2096.
Claimant admitted that over the years it has no record of receiving any 1099-INT form from the defendant in regard to the interest being earned on the account. Defendant asserted that after seven years it purges all of its accounts so that it has no record of any 1099-INT being issued to the claimant. Defendant also stated that the type of savings account opened by the claimant could be closed by the claimant without presenting the savings account register simply by the use of a withdrawal slip and an independent form of identification from the claimant. Under this procedure, there would be no record of the closing of the account on the savings register maintained by the claimant unless the claimant made such a notation.
State Finance Law § 95 provides:
Abandoned Property Law § 300 provides:
Abandoned Property Law § 301 provides:
Abandoned Property Law § 1412-a provides:
"1.... every person, ... or corporation required to file a report of abandoned property pursuant to this chapter, shall retain for a period of five years following the thirty-first day of December of the year for which the report has been filed, all books, records and documents necessary to establish the accuracy and completeness of such report."
12 USC § 1829b (g) provides:
Time Line
Assuming that the account was not closed by the claimant, and the account was classified as "deemed abandoned," the following time line would apparently apply in regard to defendant's obligation to maintain records.
(1) Account opened: July 5, 1996
(2) Last deposit: August 12, 1996
(3) Earliest deemed abandoned
(Abandoned Property Law § 300): August 12, 2001
(4) Report due Comptroller
(Abandoned Property Law § 301): August 1, 2002
(5) Payment due Comptroller
(Abandoned Property Law § 303): November 10, 2002
(6) Last date to retain records
(Abandoned Property Law § 1412-a): December 31, 2007
(7) Last date to retain records of
payment pursuant to federal law
(12 USC § 1829b): November 10, 2008
If the account was closed by the claimant, then the record retention obligation of the defendant would run from the date of closure. Defendant is assuming that because it has no records and that the account was not turned over to the State Comptroller, that the account was closed prior to August 12, 2001, thereby triggering even a shorter time period for record maintenance that set forth above. In any case defendant is claiming that the record retention statute shields it from liability.
Under General Obligations Law § 7-103 monies advanced as a security deposit for the rental of real property shall remain the property of the person making the deposit until repaid or applied. The person holding the monies is deemed to be holding those funds in trust and may not commingle any such deposit. The statute further provides that if the monies are deposited with a banking organization, notification must be given to the person advancing the monies of the name and address of the banking organization.
The sums deposited in July and August 1996 in the account with the defendant remained the property of the tenant even though the tenant is not named on the bank account (General Obligations Law § 7-103). Submitted by the defendant as part of its exhibits is a copy of the "savings account register" for the account in question. Although the name on the account is D & I Fashions, someone wrote on the copy presented "Pegasus Productions Security." There is no testimony as to whether this was written by the claimant or by employees of the defendant.
The "savings account register" issued by the defendant to the claimant sets forth the following information:
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