Triffin v. Dillabough
| Decision Date | 21 August 1998 |
| Parties | , 36 UCC Rep.Serv.2d 255 Robert J. TRIFFIN, Appellee, v. Stacey Anne DILLABOUGH, and American Express Travel Related Services Company, Inc. Appeal of AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC. Robert J. TRIFFIN, Appellee, v. Robert LYNN, and American Express Travel Related Services Company, Inc. Appeal of AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC. |
| Court | Pennsylvania Supreme Court |
Steven G. Sklar, Jenkintown, for American Exp. Travel Related Services Co., Inc.
Barkley Clark, Kansas City, MO, Pro Hac Vice Admission for American Exp. Travel Related Services Co., Inc.
Robert Triffin, Pro Se.
Before FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE, NIGRO, NEWMAN and SAYLOR, JJ.
Appellant American Express Travel Related Services Company, Inc. (American Express) asks this Court to decide whether certain of its money orders are negotiable instruments pursuant to the Pennsylvania version of the Uniform Commercial Code, 13 Pa.C.S. § 1101, et seq., (Commercial Code) and if they are, whether appellee Robert J. Triffin (Triffin) has the rights of a holder in due course who may recover the face value of those money orders from American Express. We hold that the money orders in question are negotiable instruments and Triffin has the rights of a holder in due course, entitling him to recover the value of the money orders from American Express.
American Express, among other endeavors, sells money orders through its authorized agents. In a typical transaction, an agent collects an amount of cash from the purchaser, also known as the sender, equal to the face value of the money order plus a small fee. The sender receives a partially completed money order embossed with the amount of the money order and blank spaces for the sender to fill in his or her own name and address, the name of the payee and the date.
On an unknown date, three American Express money orders were stolen from the premises of one of its agents, Chase Savings Bank. In an apparently unrelated incident, one hundred American Express money orders were stolen while being shipped to another agent, I.W. Levin & Company. When they were stolen, all of the money orders contained the pre-printed signature of Louis Gerstner, then Chairman of American Express, but they were blank as to amount, sender, payee and date.
On December 11, 1990, Stacey Anne Dillabough (Dillabough) presented two American Express money orders for payment at Chuckie Enterprises, Inc. (Chuckie's), a check cashing operation in Philadelphia. The money orders were in the amounts of $550.00 and $650.00, respectively, and listed Dillabough as the payee and David W. (last name indecipherable) of 436 E. Allegheny Avenue as the sender. On February 25, 1991, Robert Lynn (Lynn) presented one American Express money order at Chuckie's in the amount of $200.00, which listed himself as payee and Michael C. Pepe as the sender. In each instance, Charles Giunta (Giunta), the owner of Chuckie's, recognized Dillabough and Lynn from their previous visits to Chuckie's. Dillabough and Lynn provided photographic identification to Giunta and properly endorsed their money orders. Giunta paid the face amounts of the money orders to Dillabough and Lynn, less his standard 2 percent fee.
Giunta was unaware the American Express money orders that he cashed had been stolen. The two Dillabough money orders were stolen from the premises of Chase Savings Bank and the Lynn money order was stolen from the shipment to I.W. Levin and Company. After being cashed at Chuckie's, the money orders traveled the regular bank collection routes and were presented for payment at the United Bank of Grand Junction, Colorado. Because American Express had noted on its "fraud log" that the money orders were stolen, they were returned to Chuckie's bearing the stamp "REPORTED LOST OR STOLEN--DO NOT REDEPOSIT." American Express refused to pay Chuckie's the face amounts of the money orders. Chuckie's then sold the Dillabough and Lynn money orders to Triffin, a commercial discounter. 1 Pursuant to written agreements, Chuckie's assigned all of its right, title and interest in the money orders to Triffin.
Triffin filed separate complaints in the Court of Common Pleas of Philadelphia County (trial court) against Dillabough and American Express on July 16, 1992, and against Lynn and American Express on August 20, 1992, seeking payment of the money orders. The trial court consolidated the two actions. Triffin obtained default judgments against Dillabough and Lynn and proceeded to a non-jury trial with American Express. The trial court found that the money orders were not negotiable instruments and entered a verdict in favor of American Express. On appeal, the Superior Court reversed the trial court and held that the money orders were negotiable instruments and Triffin had the status of a holder in due course, entitling him to recover the face amount of the money orders from American Express. We granted American Express' Petition for Allowance of Appeal from the Order of the Superior Court, and we now affirm. 2
When this Court entertains an appeal originating from a non-jury trial, we are bound by the trial court's findings of fact, unless those findings are not based on competent evidence. Thatcher's Drug Store v. Consolidated Supermarkets, Inc., 535 Pa. 469, 636 A.2d 156 (1994). The trial court's conclusions of law, however, are not binding on an appellate court because it is the appellate court's duty to determine if the trial court correctly applied the law to the facts. Id.
The Superior Court has described the purpose of negotiable instruments and the Commercial Code as follows:
A negotiable instrument is an instrument capable of transfer by endorsement or delivery. Negotiability provides a means of passing on to the transferee the rights of the holder, including the right to sue in his or her own name, and the right to take free of equities as against the assignor/payee. [Citations omitted]. The purpose of the Commercial Code is to enhance the marketability of negotiable instruments and to allow bankers, brokers, and the general public to trade in confidence. [Citations omitted]. As a matter of sound economic policy, the Commercial Code encourages the free transfer and negotiability of commercial paper to stimulate financial interdependence.
Manor Bldg. Corp. v. Manor Complex Assocs., 435 Pa.Super. 246, 252-53, 645 A.2d 843, 846 (1994) (en banc ). With these principles in mind, we turn to a discussion of the American Express money orders at issue here.
The threshold question is whether the money orders qualify as negotiable instruments under Division Three of the Commercial Code, 13 Pa.C.S. § 3101, et seq., which governs negotiability. 3 Both parties agree that if the money orders are not negotiable instruments then Triffin's claims against American Express must fail. Initially, we note that the Commercial Code does not specifically define the term "money order", nor does it provide a descriptive list of financial documents that automatically qualify as negotiable instruments. Instead, 13 Pa.C.S. § 3104(a) sets forth the following four part test to determine if a particular document qualifies as a negotiable instrument:
(a) Requisites to negotiability.-Any writing to be a negotiable instrument within this division must:
(1) be signed by the maker or drawer;
(2) contain an unconditional promise or order to pay a sum certain in money and no other promise, order, obligation or power given by the maker or drawer except as authorized by this division;
(3) be payable on demand or at a definite time; and
(4) be payable to order or to bearer.
The Superior Court described the face of the money orders in question as follows:
Prior to being stolen[,] the American Express money orders read: The two Dillabough instruments were in this form. The third Lynn instrument was identical, except it did not bear an authorized agent's name, e.g., Chase Savings Bank, and was not good for over $200.
Triffin v. Dillabough, 448 Pa.Super. 72, 82, 670 A.2d 684, 689 (1996). When presented at Chuckie's, the sections for date, amount, payee and sender had been completed.
The first requisite of negotiability, a signature by the drawer or maker, "includes any symbol executed or adopted by a party with present intention to authenticate a writing." 13 Pa.C.S. § 1201. 13 Pa.C.S. § 1201, Comment 39. Additionally, section 3307(a)(2) states that when the effectiveness of a signature is challenged, it is presumed to be genuine or authorized unless the signer has died or become incompetent. 13 Pa.C.S. § 3307(a)(2). Here, the drawer, American Express, affixed the pre-printed signature of Louis Gerstner, its then Chairman, to the money orders in question before forwarding them to its agents. American Express does not argue that Gerstner's signature was affixed to the money orders for any reason other than to authenticate them. Accordingly, the money orders satisfy the first requisite for negotiability.
The second requisite, American Express argues, is lacking because the money orders do not contain an unconditional promise or order to pay. Specifically, American Express claims that a...
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