On certification to the Superior Court, Appellate Division, whose opinion is reported at 276 N.J. Super. 489 (1994).
The opinion of the Court was delivered by Coleman, J. Chief Justice Wilentz and Justices Handler, O'hern, Garibaldi and Stein join in Justice Coleman's opinion. Justice Pollock did not participate.
The opinion of the court was delivered by: Coleman
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
LINDA PAGANO V. UNITED JERSEY BANK, ET AL. (A-12-95)
Argued October 11, 1995 -- Decided January 22, 1996
COLEMAN,J., writing for a unanimous Court
The issue on appeal is whether the common-law rebuttable presumption of payment after a lapse of twenty years should be applied to a passbook-savings account when the issuing bank has no record of the account and has never stamped or otherwise marked the passbook cancelled or closed.
On July 10, 1970, Rose Guarino deposited $4,400 into Peoples Trust Company of New Jersey (Peoples Trust), a state-chartered commercial bank. She received a "pyramid passbook account" in her name that reflected the deposit. On May 1, 1975, Peoples Trust became United Jersey Bank (UJB).
In 1990, Rose Guarino died of cancer. Shortly after Guarino's death, her daughter, Linda Pagano, found the passbook in Guarino's bedroom dresser. The passbook did not show any transactions since the initial deposit and no other evidence related to this account was found among Guarino's personal belongings. Within one week of her discovery, Pagano presented the passbook to UJB and requested payment of the full deposit and any accumulated interest. UJB denied Pagano's request, stating that because it had no record evidencing the existence of the account, it was presumed paid.
Pagano, as administratrix of her late mother's estate, sued UJB to compel payment. In its defense, UJB relied on the six-year statute of limitations and the common-law rebuttable presumption of payment after a lapse of twenty years. The trial Judge rejected the statute-of-limitations defense and denied UJB's motion to charge the jury on the presumption of payment. The jury found that no payment was made and returned a verdict of $4,400 in favor of Pagano. The court added $9,022.98 in interest to that judgment.
On appeal, the Appellate Division affirmed, holding that the cause of action did not accrue until Pagano's demand for payment was denied. The court also found that the common-law presumption of payment was not applicable to passbook-savings accounts.
The Supreme Court granted UJB's petition for certification.
HELD: Because the common-law presumption of payment has been applied in New Jersey almost exclusively to mortgages and has never been applied to commercial transactions, there is no sound reason to revive a doctrine after its demise in this State for over fifty years for the purpose of applying it to bank accounts for the first time.
1. For over 200 years New Jersey has recognized a rebuttable presumption of payment of a debt based on the lapse of twenty years in areas other than bank deposits. The presumption is used as evidence, based on a lapse of time, to create a rebuttable inference that the debt has been paid or otherwise satisfied. The presumption is based on the assumption that before the passage of twenty years, the person would have recovered what belonged to them. The presumption has not been applied at all in New Jersey in recent years and New Jersey has never applied the presumption to a bank deposit. (pp. 4-7)
2. The Court rejects the contention that unless the common-law presumption of payment is extended to cover savings accounts, the presumption of abandonment of savings accounts after ten years, and all state and federal regulations in respect of retention of bank account records, will become meaningless. Existing federal and State regulations are essentially irrelevant in determining whether to apply the common-law twenty-year presumption of payment to bank deposits. (pp. 7-10)
3. The failure of the Appellate Division to apply the presumption of payment does not conflict with the Uniform Unclaimed Property Act (Act), effective Apr 14, 1989, where bank deposits are presumed abandoned after ten years if the depositor has taken no action on the account. UJB's failure to produce proof of payment of the money to either the State Treasurer or the owner precludes any relief under either the Act or the former escheat statute. (pp. 10-12)
4. At a time when the common-law presumption of payment is not being applied even in matters in which it has been historically, no sound policy reason exists to extend its application to bank accounts. (pp. 12-14)
5. Although the Appellate Division incorrectly characterized the passbook-savings account as an instrument of debt, it did not regard possession of the passbook as conclusive proof of non-payment. It was the jury deliberating with the proper instructions, not the Appellate Division, that found UJB had not paid the money. Moreover, that court's Conclusion that possession of the original uncancelled passbook was prima facie evidence of non-payment was sound. Because the jury was instructed properly in respect of the burden of proof, the error by the Appellate Division was harmless. (pp. 15-18)
Judgment of the Appellate Division is AFFIRMED.
CHIEF JUSTICE WILENTZ and JUSTICES HANDLER, O'HERN, GARIBALDI and STEIN join in JUSTICE COLEMAN'S opinion. JUSTICE POLLOCK did not participate.
The opinion of the Court was delivered by COLEMAN, J.
The issue raised by this appeal is whether the common-law rebuttable presumption of payment after a lapse of twenty years should be applied to a passbook-savings account when the issuing bank has no record of the account and has never stamped or otherwise marked the passbook canceled or closed. The Appellate Division held that the presumption was inapplicable. ...