Low v. Merchants Nat. Bank & Trust Co. of Syracuse
| Decision Date | 13 January 1966 |
| Citation | 266 N.Y.S.2d 74,24 A.D.2d 322 |
| Parties | , 3 UCC Rep.Serv. 191 Bruno E. LOW, Respondent, v. The MERCHANTS NATIONAL BANK & TRUST COMPANY OF SYRACUSE, Appellant. |
| Court | New York Supreme Court — Appellate Division |
Travis, Whiting & Johnson, Binghamton (Harry S. Travis, Binghamton, of counsel), for plaintiff-respondent.
Melvin & Melvin, Syracuse (Lawson Barness, Syracuse, of counsel), for defendant-appellant.
Before GIBSON, P. J., and REYNOLDS, TAYLOR, AULISI and HAMM, JJ.
This is an appeal from an order and judgment of the Supreme Court at Special Term, Broome County, which denied defendant's motion to dismiss plaintiff's second and third causes of action of the amended complaint. Plaintiff does not appeal from the dismissal of his first cause of action.
The issue is whether the drawer of checks has a cause of action against the collecting bank which paid checks on alleged illegal endorsements receiving funds from the drawee banks which charged plaintiff drawer's respective accounts.
Plaintiff and Anthony R. Bersani were co-venturers, owned stock in the Bersani Construction Corporation and Bersani was sole owner of the stock of the Bersani Realty and Construction Co., Inc. Plaintiff and Bersani as co-venturers had checking accounts in the First-City National Bank of Binghamton, N. Y., the Franklin National Bank of Long Island and defendant bank. They were indebted to the Bersani Construction Corporation in the amount of $900,000. Between July 2, 1962 and July 17, 1962 plaintiff made out and singed six checks to the order of the Bersani Construction Corporation totaling $239,726. These were drawn on the First-City National Bank of Binghamton, N. Y. Between January 19, 1962 and July 19, 1962 Mr. Low also drew eight checks on the Frankin National Bank of Long Island to the order of Bersani Construction Corporation in the amount of $516,000. The amended complaint alleges that of the 14 checks all but two were endorsed by 'Anthony R. Bersani following which said checks were stamped 'for deposit only' to the credit of Bersani Realty and Construction Co., Inc.,' and that the two exceptions were endorsed by 'Bersani Construction Corporation, but deposited in the Bersani Realty and Construction Co., Inc., account without stamping thereon the words 'for deposit only'.' Plaintiff further alleges that none of the checks reached any account of the payee Bersani Construction Corporation, Bersani having deposited them to the credit of his realty corporation in defendant's bank, and that defendant paid the checks and collected on them from the two drawee banks. He further alleges that as a result of the diversion of the checks the joint venture remained indebted to the Bersani Construction Corporation and that he has been damaged by reason of the fact that Anthony R. Bersani has filed in bankruptcy.
It is contended and alleged by the plaintiff that the defendant is responsible in damage to him for the reason that it guaranteed all prior endorsements on the checks when they were presented to the drawee banks and that 'the act on the part of the defendant herein in guaranteeing the endorsements as collecting bank * * * in view of the fact said checks had been made payable to the named payee, namely Bersani Construction Corporation, but with actual knowledge that said checks were being endorsed and in most instances stampted 'for deposit only' to the account of Bersani Realty and Construction Co., Inc., acted in bad faith and was guilty of false and fraudulent representation as to the endorsements and guaranty of the prior signatures. * * *' He also argues that a contractual relationship existed between himself and defendant.
We are of the opinion that Special Term properly held that there is no privity of contract between the drawer of a check and the collecting bank. However, we are constrained to disagree with the Court on its upholding the amended complaint on plaintiff's allegation of fraudulent respondentation based on the collecting bank's guarantee of the prior endorsements. Special Term relied on Ultramares Corp. v. Touche,...
To continue reading
Request your trial
-
Underpinning & Foundation Constructors, Inc. v. Chase Manhattan Bank, N.A.
...as is, Titan Air Conditioning Corp. v. Chase Manhattan Bank, App.Div., 402 N.Y.S.2d 12. Concededly in Low v. Merchants Nat. Bank, 24 A.D.2d 322, 266 N.Y.S.2d 74, a restrictive indorsement was involved and the court concluded a drawer had no right of action as against a depositary bank. Howe......
-
Shube v. Cheng
...N.Y.S.2d 69, 456 N.E.2d 1192; Trojan Pub. Corp. v. Manufacturers Trust Co., 298 N.Y. 771, 83 N.E.2d 465; Low v. Merchants National Bank & Trust Co., 24 A.D.2d 322, 266 N.Y.S.2d 74; Central Cadillac, Inc. v. Stern Haskell, Inc., 356 F.Supp. 1280, 1282. A drawer has no cause of action against......
-
Sonnenberg v. Manufacturers Hanover Trust Co.
...wrongful. Chase held the proceeds for the rightful payee and there was created a debtor-creditor relationship (Low v. Merchants National Bank, 24 A.D.2d 322, 266 N.Y.S.2d 74; Soma v. Handrulis, 277 N.Y. 223, 14 N.E.2d 46; Henderson v. Lincoln Rochester, Neither bank pleaded the statute of l......
-
National Bank & Trust Co. of Central Pennsylvania v. Com.
...cases have looked to the lack of privity between a drawer and a collecting-bank in denying recovery. Low v. Merchants National Bank & Trust Co., 24 A.D.2d 322, 266 N.Y.S.2d 74 (1966). Although there is attractive reasoning to support adoption of this theory, we find that the legal assignmen......