Whitehall Packing Co., Inc. v. First Nat. City Bank

• Decision Date: 27 December 1976
• Citation: 390 N.Y.S.2d 189,55 A.D.2d 675
• Parties: , 20 UCC Rep.Serv. 977 WHITEHALL PACKING CO., INC., Respondent, v. FIRST NATIONAL CITY BANK, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 189

390 N.Y.S.2d 189

55 A.D.2d 675, 20 UCC Rep.Serv. 977

WHITEHALL PACKING CO., INC., Respondent, v. FIRST NATIONAL CITY BANK, Appellant.

Supreme Court, Appellate Division, Second Department.

Dec. 27, 1976.

Shearman & Sterling, New York City (Robert M. Rosenblith, New York City, and Stephen F. Ellman, Brooklyn, of counsel), for appellant.

Joseph Heller, New York City, for respondent.

Before LATHAM, Acting P.J., and DAMIANI, HAWKINS and O'CONNOR, JJ.

MEMORANDUM BY THE COURT.

In an action to recover damages for the negligent handling of certain sight drafts, the defendant appeals from (1) an order of the Supreme Court, Kings County, dated April 23, 1976, which (a) granted plaintiff's motion to the extent of granting it summary judgment with respect to the first three causes of action asserted in the complaint and (b) severed and continued the fourth cause of action and (2) the judgment entered thereon on April 27, 1976.

Judgment and order reversed, on the law, with $50 costs and disbursements, and motion for summary judgment denied.

Plaintiff, a meat packing firm, received three orders through a broker to sell meat to Trunz Inc., on the following terms for payment: 'DRAFT: 1 ST NATIONAL CITY, BROOKLYN, NY.' Plaintiff made three shipments of meat to Trunz by truck and, on each occasion, sent a sight draft to the defendant bank accompanied by an invoice for the meat. Each of these frafts was in substantially the following form:

Upon receipt of these drafts, the defendant contacted Trunz and was told to hold them without making payment. Each of the drafts was held for more than 30 days; they were finally returned unpaid to plaintiff at its request. During the period that the bank held the checks, the assets of the insolvent Trunz were sold pursuant to the Bulk Sales Law.

Plaintiff has now brought suit on the drafts, claiming that defendant was a 'payor bank', and that by failing to either pay or return them dishonored before its midnight deadline, the defendant became liable thereon. The fourth cause of action, severed by Special Term, alleged that defendant delayed action on the items, in bad faith, because it was a major secured creditor of Trunz, and that by failing to timely notify plaintiff that the drafts had been dishonored, it induced further shipments and increased its own security in the inventory of Trunz.

Special Term was correct in holding that defendant was not a 'payor bank', which is defined as 'a bank by which an item is payable as drawn or accepted' (Uniform Commercial Code, § 4--105, subd. (b)). Although the drafts stated that they are payable at the defendant bank, this is not determinative. The items must fall...