Plaintiff, the owner and operator of a check cashing business, sued the Hudson County Probation Department. Plaintiff seeks payment for three checks, apparently issued by defendant, which plaintiff cashed, and which were subsequently returned unpaid by the bank. (Venue was transferred from Hudson County to Essex County.) The facts are undisputed.
Three individuals each presented to plaintiff's employee a check from the Hudson County Probation Department, dated 3/13/92, to cash them. Upon the individuals having presented identification, plaintiff cashed each check in the amounts of $334.50, $183.00, and $360.50. When plaintiff thereafter presented the checks to the drawer bank, the checks were returned to plaintiff with a stamp indicating the subject account had been closed. The bank charged a fee to the plaintiff of $10.00 per each returned check, and plaintiff includes this fee in the amount claimed here.
Prompted by the return of the checks, plaintiff contacted the County Police and an investigation ensued. The account had been closed and zeroed out on October 1, 1991. The boxes of unused, blank, unendorsed checks were locked in a storage room. Several months after the account had been closed, the Probation Department acquired a paper shredder, and an employee working as a mail clerk was instructed to shred the blank checks.
The shredding was done in the mail room, which room was locked every day from 4:00 p.m. to 9:00 a.m., but unlocked from 9:00 a.m. to 4:00 p.m. while the mail clerk was working in the room. The mail clerk's duties required him to leave the mail room to run errands and, apparently, the door to the mail room was
closed but unlocked during these periods. While there has yet to be a determination of exactly how or when the checks were stolen from the Probation Department, it is believed that the checks were stolen from the mail room at some time during the day while the room was unlocked and unattended.
Plaintiff alleges gross negligence by defendant in two regards. First, plaintiff states defendant was grossly negligent in causing a delay of several months in destroying the checks from the closed account. Secondly, plaintiff alleges that defendant was grossly negligent in leaving the room, where the blank checks were being shredded, unlocked and unattended.
Generally, defendants deny any negligence, but state that if there was negligence it was "simple" negligence and did not rise to the level of gross negligence. Additionally, defendants argue the comparative negligence of plaintiff, in failing to verify the check before having cashed it. Finally, defendant states that they are immune from liability under the Tort Claims Act, N.J.S.A. 59:2-1 to 59:12-3.
The cause of action sounds in two forms: negligence and contract. The complaint alleges the gross negligence of the defendant, while the cause of action is based on commercial paper and purely statutory law of the Uniform Commercial Code. Analysis of the cause under both theories provides different results, because the theory of comparative negligence applies in cases of negligence, but is not a defense in a contract action. Thus, if the cause of action is based on defendant's alleged negligence, any comparative negligence of plaintiff would diminish plaintiff's recovery or, if plaintiff's negligence was greater than defendant's negligence, would bar recovery by plaintiff. N.J.S.A. 2A:15-5.1. I find the case, while making allegations of negligence, addresses a strictly contractual issue, and is founded solely in statutory law and its interpretation. The underlying issue presented by the facts here, whether plaintiff/payor can recover from defendant the value of the cashed checks, stolen from defendant and drawn on a closed account, is based in the law of commercial paper. Allegations
of negligence are relevant only as far as the Uniform Commercial Code addresses negligence in connection with stolen checks, and forged or unauthorized signatures. Thus, any argument based on plaintiff's comparative negligence is irrelevant.
The Uniform Commercial Code protects the rights of a holder in due course. A holder in due course is one who takes an instrument for value, in good faith, and without notice that it is overdue or has been dishonored or of any defense against or claim to it on the part of any person. N.J.S.A. 12A:3-302. If an individual qualifies as a holder in due course, the instrument is taken free from all claims to it on the part of any person and all defenses of any party to the instrument with whom the holder has not dealt, with certain stated exceptions. N.J.S.A. ...