Before Judges Skillman, Newman and Fall.
The opinion of the court was delivered by: Newman, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
On appeal from the Superior Court of New Jersey, Law Division, Gloucester County.
This appeal questions whether a bank can be a holder in due course when it makes payment on a check, dated a year before it was presented, which, in fact, was presented within ninety days after the date of its actual issuance. We hold that, pursuant to N.J.S.A. 12A:3-304a(2), a check becomes "overdue" ninety days after the date it is actually issued and, thus, the bank retains its holder in due course status.
The facts, which are not in dispute, may be summarized as follows. On January 5, 1998, defendant, Bruce Rickett, individually and trading as Rick's Auto Sales, presented a check to Commerce Bank, N.A. (the Bank), issued to him on January 3, 1998 by DeSimone Auto, Inc., t/a Executive Auto Sales (DeSimone), in the amount of $12,000, for deposit into Rickett's checking account with the Bank. The Bank credited Rickett's account and shortly thereafter allowed him to draw against same.
The check, dated January 3, 1997, was drawn upon DeSimone's account at the Bank of Gloucester County for payment of a 1997 Buick LeSabre motor vehicle. The understanding between Rickett and DeSimone was that the check would not be presented for payment if the motor vehicle was damaged. Shortly after issuance of the check, DeSimone inspected the vehicle and found frame damage. DeSimone telephoned Rickett, advising him to pick up the vehicle and return the check. DeSimone returned the vehicle to Rickett, who accepted it. Thereafter, DeSimone issued a "stop payment" on the check, although the record does not reveal when the "stop payment" was requested. Contrary to their agreement, Rickett had already presented the check for payment on January 5, 1998, and drawn against it. The check was returned by the Bank of Gloucester County to the Bank as unpaid on January 13, 1998. The amount charged back to Rickett's account by the Bank was $11,016.48.
The Bank filed a complaint against both Rickett and DeSimone, seeking the amount charged back to Rickett's account. Rickett could not be located by the Bank. As to DeSimone, the Bank asserted that it was a "holder in due course" and, therefore, entitled to payment from DeSimone. DeSimone contended that the erroneous date of "January 3, 1997" placed the Bank on notice that the check may be overdue, and, accordingly, the Bank cannot be a holder in due course because "holder- in-due-course" status attaches at the time the transaction is made.
In support of its motion for summary judgment, the Bank submitted the certification of its assistant vice president, which states, in relevant part:
I have been employed by Commerce Bank, N.A. for approximately 17 years and have 11 years of branch experience. It has been my experience that checks presented for negotiation are often misdated in the first few days of a new year with the prior year still being written on the check.
In granting summary judgment in favor of the Bank in the amount of $11,016.48, Judge Supnick found that the Bank was a holder in due course, largely relying on the fact that DeSimone had admitted that the check was actually issued on January 3, 1998, not January 3, 1997, and on the Bank's proof that "checks presented for negotiation are often misdated in the first few days of a new year with the prior year still being written on the check." DeSimone moved for reconsideration. Judge Supnick denied the motion.
On appeal, DeSimone contends that the application of N.J.S.A. 12A:3-302a(2) negates the Bank's status as a holder in due course. That section reads as follows:
a. Subject to subsection c. of this section and subsection d. of ...