Wednesday, June 28, 2017

Standing to sue a bank for the return of a check.

The Appellate Division affirmed dismissal of this action where plaintiff asserts that he and a friend went together to his friend's bank, because he wanted to cash a check, and, due to his immigration status, he had no identification. The two signed their names in front of the teller, before sliding the check under the teller window, with a deposit slip that instructed to clear the funds into the friend's account. The bank rejected the deposit, closed the friend's account, and did not issue a replacement check until several months later.

Practice point:  When plaintiff endorsed and delivered the check to his friend, the friend became the holder of the check, pursuant to NY UCC 3-202[1]. Thus, only the friend was entitled to negotiate the check or to enforce payment in his own name, pursuant to NY UCC 3-301[1]. Plaintiff's argument that he, as payee of the check, is entitled to enforce its return or payment is unavailing. Plaintiff lacks standing to sue the bank for the return or proceeds of the check, because he is no longer the holder of the check.

Case:  Delight Bvunzawabaya v. JP Morgan Chase & Co., NY Slip Op 04891 (1st Dep't June 15, 2017)

Here is the decision.

Tomorrow's issue:  Medical malpractice and the continuous treatment doctrine.