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County Trust Co. v. Pascack Valley Bank and Trust Co.

Decided: December 28, 1966.

COUNTY TRUST COMPANY, A BANKING CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-APPELLANT,
v.
PASCACK VALLEY BANK AND TRUST COMPANY, A BANKING CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT-RESPONDENT



Gaulkin, Lewis and Labrecque. The opinion of the court was delivered by Gaulkin, S.j.a.d.

Gaulkin

The county district court made the following findings of fact:

"1. The borough of Park Ridge issued its check No. 166 dated December 27, 1963 drawn on its account in the First National Bank of Park Ridge in the amount of $843.20 to the order of Mayo Estates (Mayo Estates is a New Jersey corporation).

2. At that time and since April 2, 1963 Mayo Estates was in Chancery Receivership but it can be inferred from the evidence that this fact was unknown to the Borough as well as to the parties to this suit, at the time of the issuance of the check.

3. On January 6, 1964 John Mayo, an officer of Mayo Estates, endorsed the check 'John Mayo' and deposited it in his personal account in Pascack Valley Bank and Trust Co., the defendant.

4. Pascack then sent the check for collection to plaintiff County Trust Company (it and First National Bank of Park Ridge merged May 29, 1964) and the check was honored.

5. On September 28, 1964 County received a letter from James Major, Esq., attorney for the receiver, advising it of the receivership and the improper honoring of the improperly endorsed check and requesting a check to the receiver for $843.20.

6. Upon receipt of this letter County went to Pascack and made a demand for reimbursement; as a result Pascack gave its Treasurer's check dated October 13, 1964 for $843.20 payable to County which in turn, endorsed it over to John W. Leyden, Receiver of Mayo Estates, Inc. and delivered it to Mr. Major. Pascack debited Mayo's account with this amount.

7. At Pascack's request County returned check No. 166 to Pascack so Pascack could show it to Mayo; also since Pascack reimbursed County with its own check and debited Mayo's account, it wanted the check as proof of payment and also, Mayo was entitled to it since his account was charged with it.

8. Pascack then gave this check to Mayo who endorsed it 'Mayo Estates' and cashed it in Pascack some time between October 19, 1964 and October 22, 1964 (the bank stamp is not too clear). Pascack then sent it through for collection in the usual course of business which was again honored by County. At this time both County and Pascack knew that Mayo Estates was in receivership.

9. When the Borough received its statement from County in November, 1964 it discovered the two charges for this one check and called this to the attention of County, which discovered it had improperly honored the check again and as a consequence reimbursed the Borough. Thereafter County then made a demand again on Pascack for another reimbursement which was refused. However, at this time while Mayo still had a personal account in Pascack, there was only about $80. left in the account although at the time of the

second negotiation of the check by Mayo there were sufficient funds in the Pascack bank to ...


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