Industrial Nat. Bank of Rhode Island v. Leo's Used Car Exchange, Inc.
| Court | Massachusetts Supreme Judicial Court |
| Writing for the Court | Before TAURO; HENNESSEY |
| Citation | 291 N.E.2d 603,362 Mass. 797 |
| Parties | , 11 UCC Rep.Serv. 917 INDUSTRIAL NATIONAL BANK OF RHODE ISLAND v. LEO'S USED CAR EXCHANGE, INC. |
| Decision Date | 11 January 1973 |
Page 603
v.
LEO'S USED CAR EXCHANGE, INC.
Decided Jan. 11, 1973.
[362 Mass. 798]
Page 604
Edwin H. Lyman, Jr., Springfield, for plaintiff.Edward L. Donnellan, Springfield, for defendant.
Before [362 Mass. 797] TAURO, C.J., and REARDON, HENNESSEY, KAPLAN and WILKINS, JJ.
[362 Mass. 798] HENNESSEY, Justice.
This is an action in contract in which the plaintiff seeks to recover on two checks drawn by the defendant on the Security National Bank, one in the amount of $9,650 payable to Villa's Auto Sales, Inc., and the other in the amount of $5,500 payable to Villa's Auto Sales. The District Court judge found for the defendant, and the report to the Appellate Division was dismissed. The case is before us on appeal by the plaintiff.
We summarize the relevant evidence. On October 9, 1968, on agent of the defendant attended a car auction in the State of Connecticut, and purchased three cars from Frederick Villa, for which he gave the two checks described above. The defendant subsequently resold the cars at a profit.
Frederick Villa was a customer of the plaintiff bank and had a corporate account there under the name of Villa Auto Sales, Inc. The manager of the Centerville Branch of the plaintiff bank in Providence, Rhode Island, was personally acquainted with Frederick Villa. Corporate authority stating that Frederick Villa was the president and treasurer of Villa Auto Sales, Inc., and that he was authorized to sign or indorse any check held by the corporation, was on file with the bank. 1
[362 Mass. 799] Frederick Villa presented both checks to the plaintiff bank on October 10, 1968, and as was his practice, asked the teller to cash them and give him the cash since he was going to another auction and needed it. The checks were cashed and sent through the bank collection process. Meanwhile, the defendant stopped payment on the checks at the Security National Bank in Springfield, Massachusetts, following a telephone call from an officer of the Rhode Island Hospital Trust Company which claimed to hold security interests in the cars he purchased. Consequently, the checks were not honored when presented, and were returned to the plaintiff bank.
Page 605
There was also evidence of a rule at the plaintiff bank that any corporate checks drawn on another bank must be approved by the manager before being cashed by a teller. In this case, the teller did not obtain the manager's approval before he cashed both checks. However, the manager would cash a check for a corporation if he knew the person cashing the check and knew his business.
The plaintiff requested, among others, a ruling that there was no evidence that in cashing both checks it did not act in good faith. While the District Court judge found that the plaintiff met all the other requirements to qualify as a holder in due course, he denied this request and therefore found that the plaintiff was not a holder in due course of either check. The report to the Appellate Division was dismissed. The plaintiff claims an appeal on the basis that there was no evidence to support the District Court judge's finding of lack of good faith.
1. We first determine which State's law applies. The Appellate Division held that since the checks were negotiated[362 Mass. 800] in Rhode Island, its law should apply. See Restatement 2d: Conflict of Laws, § 216(2). This was erroneous. Conflict of law problems arising under the Uniform Commercial Code are resolved by the Code. The rule is stated in G.L. c. 106, § 1--105. 2 Since no special provision for Article three--Commercial Paper--is contained in paragraph (2) of § 1--105, paragraph (1) applies to this case. G.L. c. 106, § 3--102(4). Since there is no evidence that the parties agreed that a particular State's 3 law would apply, and since the transaction bears an appropriate relation to this State, Massachusetts law applies. G.L. c. 106, § 1--105(1).
2. A holder in due course is a holder who takes the instrument for value, in good faith, and without notice that it is overdue or has been dishonored or of any...
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Cohen v. McDonnell Douglas Corp.
...[389 Mass. 331] arising under the Uniform Commercial Code are resolved by the Code." Industrial Nat'l Bank v. Leo's Used Car Exch., Inc., 362 Mass. 797, 800, 291 N.E.2d 603 (1973). Section 1-105 of G.L. c. 106, provides that in the absence of an agreement between the parties as to which Sta......
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Demoulas v. Demoulas Super Markets, Inc.
...See Dion v. Silver City Dodge, Inc., 398 Mass. 58, 60, 495 N.E.2d 274 (1986); Industrial Nat'l Bank v. Leo's Used Car Exch., Inc., 362 Mass. 797, 801-802, 291 N.E.2d 603 (1973) New Bedford Inst. for Sav., supra at 652, 634 N.E.2d "A person has 'notice' of a fact when (a ) he has actual know......
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Fireman's Fund Ins. Co. v. Security Pacific Nat. Bank
...holder's own managerial rules [85 Cal.App.3d 826] regarding check cashing. (Industrial Nat. Bank v. Leo's Used Car Exchange, Inc. (1973) 362 Mass. 797, 291 N.E.2d 603, 606.) In this case, the court held that the fact that a bank teller took and cashed two checks of a corporation drawn on an......
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Prestige Imports v. South Weymouth Sav., No. 00-P-563.
...standard requiring "honesty in fact." See G.L. c. 106, § 1-201(19); Industrial Natl. Bank of R.I. v. Leo's Used Car Exch., Inc., 362 Mass. 797, 801, 291 N.E.2d 603 (1973) ("Nothing in the definition [of good faith] suggests that in addition to being honest, the holder must exercise due care......
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Cohen v. McDonnell Douglas Corp.
...[389 Mass. 331] arising under the Uniform Commercial Code are resolved by the Code." Industrial Nat'l Bank v. Leo's Used Car Exch., Inc., 362 Mass. 797, 800, 291 N.E.2d 603 (1973). Section 1-105 of G.L. c. 106, provides that in the absence of an agreement between the parties as to which Sta......
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Demoulas v. Demoulas Super Markets, Inc.
...See Dion v. Silver City Dodge, Inc., 398 Mass. 58, 60, 495 N.E.2d 274 (1986); Industrial Nat'l Bank v. Leo's Used Car Exch., Inc., 362 Mass. 797, 801-802, 291 N.E.2d 603 (1973) New Bedford Inst. for Sav., supra at 652, 634 N.E.2d "A person has 'notice' of a fact when (a ) he has actual know......
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Fireman's Fund Ins. Co. v. Security Pacific Nat. Bank
...holder's own managerial rules [85 Cal.App.3d 826] regarding check cashing. (Industrial Nat. Bank v. Leo's Used Car Exchange, Inc. (1973) 362 Mass. 797, 291 N.E.2d 603, 606.) In this case, the court held that the fact that a bank teller took and cashed two checks of a corporation drawn on an......
-
Prestige Imports v. South Weymouth Sav., No. 00-P-563.
...standard requiring "honesty in fact." See G.L. c. 106, § 1-201(19); Industrial Natl. Bank of R.I. v. Leo's Used Car Exch., Inc., 362 Mass. 797, 801, 291 N.E.2d 603 (1973) ("Nothing in the definition [of good faith] suggests that in addition to being honest, the holder must exercise due care......