This matter is before the court on cross notions for summary judgment filed by plaintiff and defendant banks. .
The facts are not disputed. In April, 1991, plaintiff James A. Kinzig and W.C.L. Designs Inc., (W.C.L.) entered into an agreement for the remodeling of plaintiff's kitchen. Pursuant to the request of Wayne Dudley, an employee of W.C.L., plaintiff issued two checks totaling $14,600. made payable to "Wayne Dudley/W.C.L. Designs." The designated payees' names were separated with a slash or diagonal line known as a virgule, represented by this symbol: "".
The first check, in the amount of $3,060 was indorsed by Dudley in his own name as a payee and also purportedly as an authorized signatory of W.C.L. Designs. He cashed the check at ALNOR Check Cashing Company. ALNOR indorsed the check and deposited it with Pennsylvania Savings Fund Society. Eventually, the drawee bank, defendant First Fidelity, paid the check from plaintiff's account.
The second check in the amount of $11,540, was indorsed in the same way by Dudley and cashed at the Chester, Pennsylvania, office of defendant Fidelity Bank. Fidelity Bank indorsed the check, which was later presented to First Fidelity Bank. First Fidelity paid the check from plaintiff's account. On May 24, 1991, plaintiff learned that Dudley had absconded with the proceeds of both checks.
The court must decide the leaning of the virgule when used by a drawer to separate two payees' names on a check. This case appears to be one of first impression in New Jersey.
Plaintiff advances three claims. First, he insists that the virgule connotes payment in the conjunctive. Second, he assert a breach of contract claim against defendant banks which, he alleges, charged his checking account over forged indorsements. Third, he contends that defendant banks are liable to him for conversion because they improperly accepted the checks from Dudley and debited plaintiff's account. Defendant banks assert that the virgule requires only one of the payees' signatures, and that Dudley's indorsement alone made the checks properly payable.
First Fidelity Bank and Fidelity Bank, insofar as these transactions are concerned, conducted business in different states - Mew Jersey and Pennsylvania. The Uniform Commercial Code § 4-102 (N.J.S.A. 12A:4-102), 13 Pa. Cons.Stat.Ann. § 4102(b)) provides:
The liability of a bank for action or non-action with respect to any item handled by it for purposes of presentment, payment or collection is governed by the law of the place where the bank is located. In the case of action or non-action by or at a branch or separate office of a bank, its liability is governed by the law of the place where the branch or separate office is located.
First Fidelity Bank, where plaintiff's account was debited, is in New Jersey. In disputes between the drawer (the individual drawing down his account) and the drawee bank, the law of the state where the drawee bank is situated applies. Perini Corp. v. First National Bank of Habersham County, 553 F.2d 398, 416 n.5 (5th Cir.) rehearing denied en banc, 557 F.2d 823 (5th Cir.1977); Girard Bank v. Mount Holly State Bank, 474 F. Supp. 1225, 1237, (D.N.J. 1979). Thus, the obligations of First Fidelity are governed by New Jersey law.
Fidelity Bank, which accepted one of the checks from Dudley, is located in Chester, Pennsylvania. Its obligations ...