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American Express Co. v. Rona Travel Service Inc.

Decided: December 19, 1962.

AMERICAN EXPRESS COMPANY, AN UNINCORPORATED ASSOCIATION, PLAINTIFF,
v.
RONA TRAVEL SERVICE, INC., EDGAR JOSEPHSON, JR., AND EDWIN W BLODGETT, DEFENDANTS



Collester, J.s.c.

Collester

This matter is before the court on a motion for summary judgment brought by the plaintiff American Express Company against the defendants Rona Travel Service, Inc. (hereinafter referred to as Rona), Edgar Josephson, Jr. and Edwin W. Blodgett. A countermotion for summary judgment has been made by the defendants. Plaintiff's action is based upon an alleged breach of a trust agreement resulting in damages. The material facts admittedly are not in dispute.

Rona, a travel agency located in Passaic, New Jersey, has sold American Express travelers checks to the public as plaintiff's subagent since 1943.

The travelers checks are a form of commercial paper which are delivered by the plaintiff to the subagent bearing the signature of one of plaintiff's officers. When the subagent

sells a check to the customer, the latter is required to sign the check at a designated place thereon at the time of purchase. When the check is thereafter cashed by the customer he is required to countersign the same, at which time the person or institution cashing the check may compare the countersignature with the signature placed on the check at the time of sale.

During the night of October 13, 1960, while Rona's office was closed, it was burglarized. The office safe was broken open and American Express travelers checks in the face amount of $4,240 were stolen. The following morning Rona reported the burglary to the plaintiff and an investigation followed. The thieves were never apprehended. During the next several weeks the stolen travelers checks were cashed in various restaurants, taverns, shops and banks located in Pittsburgh and New York. The two signatures of the "assumed purchaser" were on the face of the checks. Thereafter the checks were presented to plaintiff by the bona fide holders thereof and payment was duly honored.

Plaintiff's claim to recover damages is based upon certain trust agreements entered into with the defendant Rona. The agreements consist of three documents -- a trust agreement document, a letter agreement, and trust receipts signed by defendant Rona at the time plaintiff delivered the travelers checks to it.

The trust agreement document provides, inter alia , that the

"Subagent shall take such measures to safeguard and protect all unsold financial paper * * * as a prudent person would take to safeguard and protect a like amount of his own cash. Subagent shall also observe any express instructions which may be given by American Express from time to time with respect to such safeguarding and protection." (Emphasis added.)

The trust receipts signed by defendant provide that

"The selling agency hereby agrees and undertakes * * * to observe the same care and protection in the custody of the said forms (travelers checks) as should be given to a like amount of currency belonging to the selling agency."

The letter agreement dated April 13, 1960, duly signed as accepted and agreed upon by Rona is as follows:

"In order to reduce the possibility of loss due to burglary or hold-up, we are setting forth below certain conditions in connection with the Travelers Cheques which will be held in trust by you for the American Express Company.

These conditions are:

1. The major portion of the Travelers Cheque stock to be kept at all times in safe deposit ...


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