On appeal from the Ocean County District Court.
Seidman, Michels and Devine. The opinion of the court was delivered by Michels, J.A.D.
[173 NJSuper Page 599] Plaintiff Bruce Newman appeals from a judgment of the Ocean County District Court in favor of defendant The First National Bank of Toms River, N.J. (bank), dismissing his action to recover the face amount of a personal money order issued by
the bank. The critical issue posed on this appeal is whether a purchaser of a personal money order has the right to stop payment before acceptance or certification by the issuing bank. The county district court judge held that a personal money order is not the equivalent of a certified check, and "therefore is not an instrument which could render a stop payment order ineffective." He also held that Sykes, who purchased the money order from the bank, was a customer of the bank within the provision of N.J.S.A. 12A:4-403(1), and consequently had the right to demand the stop payment order. We agree and affirm.
The parties stipulated that on August 22, 1978 a person identifying herself as defendant Lois Sykes (Sykes) purchased a personal money order in the amount of $900 at the main branch of the bank in Toms River, New Jersey. The bank, in accordance with its usual practice, encoded the money order in the requested amount and issued it to Sykes, leaving the date, the payee and signature lines blank. Sykes took the money order and left the bank. On the same day, and without the bank's knowledge, a woman, who also represented herself as Sykes, went to Newman's Lakewood Nursing Home in Lakewood, New Jersey, with a Robert Earl Jones. This woman produced the money order issued by the bank and asked plaintiff if he would cash it. She informed plaintiff that the money order was "good" but that she did not know anyone in Lakewood. Plaintiff agreed to cash the money order and went with her and Jones to the Lakewood office of the Garden State Bank. Jones filled in plaintiff's name on the payee line and signed his own name on the signature line at the bottom of the money order. Plaintiff then deposited it in the Garden State Bank and gave the woman the $900.
On August 24, 1978 the woman who had purchased the money order from the bank two days earlier, returned to the bank. She informed the bank that the money order had been lost or stolen and requested that payment be stopped. After being
identified by the teller who had issued her the money order, she signed a stop-payment order which read as follows:
The undersigned hereby agrees to hold you harmless for said amount and from all expenses, costs, attorney's fees incurred by you on account of your refusing to pay the said check and not to make any claim against you on account of payment if same occur through accident.
Subsequent to the execution of the stop-payment order the $900 money order was received by the bank for collection. The bank refused payment and returned the money order through the collection process, indicating that the payment had been stopped. Plaintiff thereupon instituted this action against the bank and Sykes. Sykes failed to answer plaintiff's complaint or the bank's cross-claim for indemnification.
The instrument issued by a bank, commonly referred to as a "personal money order," is not defined by the Uniform Commercial Code. In fact, it has been described as a "maverick." Comment, "Personal Money Orders and Tellers Checks: Mavericks Under the U.C.C.," 67 Colum.L.Rev. 524, 525 (1967); State v. LaRue , 5 Wash.App. 299, 487 P. 2d 255, 257 (Ct.App.1971). However, it is clear that the personal money order here under consideration has the characteristic of a check in that it constitutes "a draft drawn on a bank and payable on demand," N.J.S.A. 12A:3-104(2)(b). In this regard, the court in Garden Check Cash. Serv., Inc. v. First Nat'l City Bank , 25 App.Div. 2d 137, 267 N.Y.S. 2d 698 (App.Div.1966), aff'd o.b. 18 N.Y. 2d 941, 277 N.Y.S. 2d 141, 223 N.E. 2d 566 (Ct.App.1966), equated a personal money order with a personal check, stating:
The relationship between defendant and the purchaser of the check is reasonably clear. The latter deposited with defendant a sum of money and received therefor a writing in which defendant plainly appeared as drawee. The novel feature of the instrument was that the prospective names of drawer and payee ...