This is an appeal by F.I.B., Inc. and Robert H. Biscamp, Esq., from a summary judgment entered against them in favor of plaintiff. The judgment directs Biscamp to pay to plaintiff the sum of $7,000 which he is holding in his attorney's trust account for F.I.B. The effect of the judgment is to terminate the litigation insofar as defendants-appellants are concerned. The other defendants, Michael and Lynda Klimashkey, have not filed a brief or otherwise participated in this appeal.
Defendant Michael Klimashkey made out a $7,000 check to the order of "Robert Biscamp Atty. for F.I.B." The check was drawn on plaintiff bank and represented a deposit on a contract for the purchase of F.I.B.'s restaurant and cocktail lounge and the real property in which the business was conducted. Attorney Biscamp deposited the check in his trustee account, and when it was presented to plaintiff bank, plaintiff erroneously paid the entire amount because Klimashkey had only $8.50 in his account.
Plaintiff's complaint sought the imposition of a constructive trust on the proceeds of the check held in Biscamp's trustee account. It also sought damages against Klimashkey and his wife, the co-owner of the account, and an order directing Biscamp to return the $7,000 proceeds to plaintiff.
Plaintiff moved for a summary judgment against Biscamp and F.I.B. On May 22, 1975 the order was granted. On May 28, 1975 Biscamp, representing himself and F.I.B., moved for an order vacating the summary judgment on the ground of excusable neglect in his failing to appear on the return day of the motion for summary judgment. On June 13, 1975 the merits of the application for summary judgment were thoroughly argued before the trial judge. At the conclusion he reaffirmed his earlier order and entered an order denying the motion to vacate. Accordingly, defendants' contention that the trial judge erred in refusing to open the summary judgment on the ground of excusable neglect is without merit.
The only other ground of appeal advanced by defendants is that the trial judge erred in granting summary judgment because F.I.B. was a holder in due course of the check and therefore was entitled to keep the proceeds erroneously paid by the bank. We affirm on the merits. Defendants claim that N.J.S.A. 12A:3-418 rendered payment of this check final as to both defendants and prohibited the bank from recovering the proceeds. We do not agree.
N.J.S.A. 12A:3-418 provides:
Finality of Payment or Acceptance.
Except for recovery of bank payments as provided in the Chapter on Bank Deposits and Collections (Chapter 4) and except for liability for breach of warranty on presentment under the preceding section, payment or acceptance of any instrument is final in favor of a holder in due course, or a person who has in good faith changed his position in reliance on the payment.
Contrary to defendants' argument on appeal, F.I.B. was not a holder in due course of this check. It was not, in fact, a holder at all. A holder is "a person who is in possession of * * * an instrument * * * drawn, issued or endorsed to him or his order or to bearer or in blank." N.J.S.A. 12A:1-201(20).
This instrument was not drawn or issued to F.I.B. F.I.B. was not the payee of the check since ...