Civil action on motion for summary judgment.
Milmed, J.c.c. (temporarily assigned).
Defendants Ruth Satsky Jewelry, a corporation, and Jules Bruskin move for a summary judgment in their favor against plaintiff South Shore National Bank, contending that plaintiff has no legal right to maintain its suit against them.
The action was instituted by plaintiff bank against the defendants Mark M. Donner, Bette S. Donner, Ruth Satsky Jewelry and Jules Bruskin for, among other things, the recovery of $7,000 paid by the plaintiff (payor bank) to the Donners (payees) on a check drawn on plaintiff bank by the Quincy Mutual Fire Insurance Company, payment having been made by the bank over the stop payment order of the drawer insurance company.
It is undisputed that on December 25, 1964 the Donners sustained a burglary loss while insured under a policy covering theft of personal property issued by the Quincy Mutual Fire Insurance Company of Quincy, Massachusetts; that among the documents submitted by the Donners to the insurance company in connection with their proof of loss was an appraisal of certain items of jewelry and silverware made by defendant Jules Bruskin, president of defendant Ruth Satsky Jewelry; that these defendants knew that the appraisal was being prepared for the claim of Mark M. Donner and Bette S. Donner to their insurance carrier, Quincy Mutual Fire Insurance Company, in connection with their burglary loss; that in payment of this claim the insurance company (Quincy) issued to the Donners its check in the amount of $7,000, dated March 2, 1965 and drawn on plaintiff bank; that thereafter Quincy issued to plaintiff bank an order to stop payment on this check; that the Donners were notified of the stop payment order, but that nonetheless the
check was presented for payment and payment thereon was made by plaintiff bank.
Plaintiff contends that after the check of March 2, 1965 was issued, Quincy discovered that the Donners had willfully overvalued the stolen property listed in their proof of loss; that on March 8, 1965 Quincy issued to it an order to stop payment on the check; that on or about March 12 the Donners were notified that payment on the check had been stopped and the reasons therefor, but that nevertheless, in May of 1965, they presented the check for payment and it was mistakenly paid by plaintiff bank over the stop payment order.
Defendants Ruth Satsky Jewelry and Jules Bruskin were brought into the suit in two counts of the complaint: the sixth count, which alleges that they conspired with the Donners to defraud Quincy by knowingly preparing false estimates of the value of property for which claim was made upon Quincy; and the seventh count, which contends that by reason of the alleged conspiracy plaintiff bank is, in accordance with N.J.S.A. 12 A:4-407, subrogated to the rights of Quincy against defendants.
In his affidavit in support of the motion for summary judgment defendant Jules Bruskin acknowledges that on or about January 4, 1965 he prepared on the letterhead of Ruth Satsky Jewelry an appraisal of certain items of jewelry and silverware in connection with the burglary loss alleged to have been sustained by the Donners for submission to their insurance carrier (Quincy); that Quincy settled the loss claim submitted to it by the Donners and issued to the Donners its settlement check in the amount of $7,000; that Quincy issued an order directing plaintiff (payor bank) to stop payment on the check; that plaintiff nonetheless failed to honor the stop-payment order and made payment on the check to the Donners; that he and Ruth Satsky Jewelry did not receive any payment or other valuable consideration from the Donners or from anyone for the preparation of the
appraisal, nor did they receive any portion of the proceeds of the $7,000 check.
In memoranda submitted in support of the motion for summary judgment it is contended that section 4-407 of the Uniform Commercial Code "Bank Deposits and Collections" (N.J.S.A. 12 A:4-407) is the controlling statute; that this section limits plaintiff's cause of action as against parties to the check who would otherwise be unjustly enriched; that the only such parties in the case who can be unjustly enriched are defendant payees Mark M. Donner and Bette S. Donner; that neither Ruth Satsky Jewelry nor Jules Bruskin was a "holder of the item" within the meaning of this term as used in subsection (c) of N.J.S.A. 12 ...