On appeal from Superior Court of New Jersey, Law Division, Atlantic County.
Approved for Publication April 29, 1997.
Before Judges Havey, Brochin and Eichen. The opinion of the court was delivered by Havey, P.j.a.d.
The opinion of the court was delivered by: Havey
The opinion of the court was delivered by
Plaintiff Trump Plaza Associates, d/b/a Trump Plaza Hotel and Casino (Trump), appeals from a summary judgment dismissing its complaint against defendant Meridian Bank, New Jersey (Meridian). In its complaint, Trump alleges that Meridian unlawfully stopped payment on a personal money order the bank had issued to a James Haas, Jr., in the amount of $35,000. Haas cashed the personal money order at Trump's casino for gaming proceeds. Trump returned the money order to Meridian, the drawee bank. Meridian refused to honor the money order, marking it "payment stopped," since Haas had insufficient funds in his account with Meridian to cover the $35,000 instrument.
In dismissing the complaint, the motion Judge concluded that the money order was a personal check and that Meridian had not "accepted" it under the provisions of the Uniform Commercial Code (UCC), former N.J.S.A. 12A:3-409(1).
On appeal, Trump argues that: (1) Meridian could not stop payment on the money order, "prejudicing the rights of a holder in due course"; (2) Meridian "accepted" the money order by marking it "payment stopped" and by use of its printed name and logo on the face of the instrument; (3) as a holder in due course, Trump "should not suffer due to Meridian's negligence" in issuing the instrument; and (4) Newman v. First Nat'l Bank of Toms River, 173 N.J. Super. 598, 414 A.2d 1367 (App. Div. 1980), relied on by the motion Judge, is distinguishable or should be overturned. We reject the arguments and affirm.
On December 13, 1994, Haas deposited two checks in the amount of $20,000 and $22,000, respectively, into the Meridian account of J.E. Haas-Mid-Way Equipment Co. The checks were drawn on a Mid-Way Equipment Co. account at Commerce Bank. Meridian credited the J.E. Haas-Mid-Way Equipment Co. account for the full amount of the two checks and forwarded them to Commerce Bank for payment.
On December 15, 1994, Haas purchased a $35,000 personal money order from Meridian. Meridian's name and logo are printed on the upper left-hand side of the money order. The money order is also stamped: "NOT VALID FOR MORE THAN $35,000." It is made payable to the order of "Jim Haas"; it is not clear from the record when the name of the payee "Jim Haas" was inserted.
Haas signed the money order in the bottom right-hand corner of the document. On December 15, 1994, he presented the signed instrument to Trump and was given $35,000 in cash for use at Trump's gaming tables.
On December 16, 1994, the Mid-Way Equipment Co. checks drawn on the Commerce Bank account were returned to Meridian unpaid with a notation that the Mid-Way Equipment Co. account had been closed. Meridian debited its J.E. Haas-Mid-Way Equipment Co. account for the amount of the returned checks which resulted in a $38,584 overdraft. On December 20, 1994, Trump presented Haas' personal money order to Meridian for payment. Meridian dishonored the order, placing a "payment stopped" notation on it, since the J.E. Haas-Mid-Way Equipment Co. account contained insufficient funds to cover the amount of the money order. It was thereupon returned to Trump's bank.
As stated, the motion Judge held that the personal money order was a personal check as opposed to a cashier's check and that Meridian, as the drawee, was not liable on the money order until it accepted it. He found that Meridian did not accept the money order merely because its name is printed on the face of the order or because it had stamped "payment stopped" on its face when the money order was dishonored. The Judge also observed that he was bound by Newman, (supra) , 173 N.J. Super. at 604, which held that a personal money order is a check and that a bank should not be deemed to have accepted a money order merely because its name and logo are printed on the face of the instrument.
A personal money order has been described as an instrument "for the convenience of anyone who does not have an ordinary checking account and needs a safe, inexpensive and readily accepted means of transferring funds." Sequoyah State Bank v. Union Nat'l Bank of Little Rock, 274 Ark. 1, 621 S.W. 2d 683, 684 (Ark. 1981) (Dudley, J., Dissenting). *fn1 There is a public perception that personal money orders are the equivalent of cash or have the credit of the issuing bank behind them. See Unger v. NCNB Nat'l Bank, 540 So. 2d 246, 247 (Fla. Dist. Ct. App. 1989); Mirabile v. Udoh, 92 Misc. 2d 168, 399 N.Y.S. 2d 869, 869 (N.Y. Civ. Ct. 1977); First Nat'l Bank of Nocona v. Duncan Sav. & Loan Ass'n, 656 F. Supp. 358, 363 (W.D. Okl. 1987), aff'd, 957 F. 2d 775 (10th Cir. ...