Freeman Check Cashing, Inc. v. State

• Decision Date: 12 January 1979
• Parties: , 26 UCC Rep.Serv. 1186 FREEMAN CHECK CASHING, INC., Claimant, v. The STATE of New York, Defendant.
• Court: New York Court of Claims

Page 963

412 N.Y.S.2d 963

97 Misc.2d 819, 26 UCC Rep.Serv. 1186

FREEMAN CHECK CASHING, INC., Claimant, v. The STATE of New York, Defendant.

Court of Claims.

Jan. 12, 1979.

Philip Leavitt, New York City, for claimant

Robert Abrams, Atty. Gen. by Dace Epermanis, Asst. Atty. Gen., for the State.

DECISION

GERARD M. WEISBERG, Judge.

Freeman Check Cashing Inc. (Freeman), a licensed casher of checks pursuant to Article 9-A of the Banking Law, brings suit as the alleged holder of nine Unemployment Insurance checks issued by the State of New York. Each check was negotiated to claimant for its face value less a service charge, and bears the endorsement in blank of U. A. Rodriguez, the payee. The State has refused to honor the checks upon the theory that the endorsements are forgeries.

Subdivision 1 of section 3-307 of the Uniform Commercial Code provides in relevant part that the burden of establishing the effectiveness of a disputed signature is on the party seeking to enforce it. The alleged holder is aided, however, by a statutory presumption in favor of its genuineness which did not exist at common law. (Donahue v. Bank of America, Sup., 161 N.Y.S. 232.) "Presumption" as defined by subdivision 31 of section 1-201 of the Uniform Commercial Code means that:

". . . the trier of fact must find the existence of the fact presumed unless and until evidence is introduced which would support a finding of its nonexistence."

The effect of this definition is to create a rebuttable presumption: the adversary possesses the burden of coming forward with evidence to overcome it, but once this occurs, the presumption disappears. (People v. Langan, 303 N.Y. 474, 104 N.E.2d 861; Matter of Magna v. Hegeman Harris Co., 258 N.Y. 82, 179 N.E. 266.) In this respect it is to be contrasted with those presumptions which continue to the end of trial, e. g., the presumption of innocence. (Cf. Eazor Express, Inc. v. Lanza, 60 Misc.2d 686, 303 N.Y.S.2d 571.)

The critical issue is: what quantum of evidence is necessary to overcome the presumption of genuineness? "Substantial evidence" is the test frequently applied to other rebuttable presumptions. (Thompson v. Wallin, 301 N.Y. 476, 95 N.E.2d 806, affd., 342 U.S. 801, 72 S.Ct. 92, 96 L.Ed. 607; Piwowarski v. Cornwell, 273 N.Y. 226, 7 N.E.2d 111.) However, the framers of the Uniform Commercial Code did not use the term "substantial" and, consequently, there is no reason to believe that such a test was intended. (Cf. Prince, Richardson on Evidence (10th ed.), § 58.) In this connection, the Official Comment to section 3-307 of the Uniform Commercial Code states in part:

". . . (defendant's) evidence need not be sufficient to require a directed verdict in his favor, but it must be enough to support his denial by permitting a finding in his favor."

This language suggests that the question is less one of quantity than of "legal sufficiency" as that term is used in connection with determining whether a Prima facie case has been established. The question is not "how much" evidence, but whether some evidence has been adduced upon each and every element of a cause of action or defense. Forgery does not function as a true affirmative defense since the holder has the ultimate burden of proof. However it does contain several logically independent elements which are normally proven either by testimony of a qualified expert or by a witness to the execution of the endorsement. (Matter of Boyd v. Wyman, 39 A.D.2d 874, 333 N.Y.S.2d 703.) We consider that the presumption is overcome when some evidence is introduced tending to prove each and every necessary element of forgery. The proof need not, however, possess any particular degree of "substantiality", persuasiveness or weight, since such tests are essentially subjective.

Based upon this analysis, the Court must proceed to a consideration of the sole issue in the case, to wit: whether the presumption of genuineness was overcome. Upon this subject, there was testimony by Ms. Robin Greenstein, formerly employed by the New York State Department of Labor as a Claims Examiner, that on September 7, 1976 she interviewed an individual Not personally known to her in connection with a claim of forgery. The substance of the conversation was entered upon a form to which the signature "Ulysses A. Rodriguez" was affixed by the interviewee in Ms. Greenstein's presence. This form was placed in evidence over claimant's objection. Ms. Greenstein stated that the signatures on the checks had been compared with various unidentified documents in the possession of the Department of Labor. The Court was not afforded the opportunity to compare the signatures on the checks with these documents since they were not placed in evidence. Neither did the State produce the individual claimed by it to be the real U. A. Rodriguez, ¹ or anyone personally claiming to know U. A. Rodriguez.

In order to overcome the presumption of genuineness, the State was required to produce firsthand proof as to any claim of forgery. (622 west 113th street corp. v. chemical bank new york trust co., 52 Misc.2d 444, 446, 276 N.Y.S.2d 85, 88.) Neither Ms. Greenstein's testimony, purporting to relate her conversation with the supposed payee, nor the statements contained on the interview form qualify as firsthand proof. To the contrary, this evidence was pure hearsay and was not admitted for its truth, but rather on the issue of notice to the State of the...