On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. CAM-L-1290-02
Before Judges Alley, Parker, and Coleman
The opinion of the court was delivered by: Alley, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE COMMITTEE ON OPINIONS
On November 8, 2000, Otto Candies, LLC (Otto), drew a check on its account at Hibernia National Bank (Hibernia) for $116,419.12, payable to"ENSCO Marine-Offshore-B" (ENSCO-B), a Texas entity. The check was drawn as intended payment due to ENSCO-B for several invoices.
On November 9, 2000, Marcus L. Vaughn opened an account in the name of"Marcus Vaughn d/b/a ENSCO Marine and Offshore Company, Inc." (ENSCO-Marine) at Commerce Bank's Rahway branch (Commerce). As was required for the opening of such an account, Vaughn presented Commerce with copies of his New Jersey driver's license and ATM card, as well as a Certificate of Trade Name for"Marcus Vaughn d/b/a ENSCO Marine and Offshore Company, Inc.," issued by the Clerk of Union County on November 8, 2000. The payee named on the check, ENSCO-B, is separate from and unrelated to ENSCO-Marine, the trade name utilized by Vaughn.
On November 20, 2000, Vaughn endorsed the check by writing"Marcus L. Vaughn" on the back and deposited it in his Commerce account at that bank's Woodbridge branch. The record does not reflect how Vaughn came into possession of the check, but there is no evidence that this occurred through negligence on the part of either Otto or ENSCO-B. On November 21, 2000, the check was presented to drawee bank Hibernia and was subsequently paid by Hibernia.
On or about February 7, 2001, ENSCO-B verified to Hibernia that it had not received the check. Hibernia then recredited Otto's account in the amount of the missing funds and sought recoupment from Commerce. After Commerce denied Hibernia's request, Hibernia filed its complaint against defendants Commerce and Vaughn on February 19, 2002. On May 9, 2003, Judge John A. Fratto granted summary judgment in favor of Hibernia as to both liability and damages. In essence the judge rejected Commerce's contention that the"impostor" exception provided under N.J.S.A. 12A:3-404*fn1 entitled it to summary judgment as a matter of law and ruled, as Hibernia asserted, that Commerce breached its presentment warranties under N.J.S.A. 12A:4-208 and that the impostor exception is inapplicable. We affirm.
The Uniform Commercial Code (UCC) as in effect in New Jersey provides that a depository bank that has presented a draft for payment to a drawee bank warrants that it was entitled to payment on behalf of the person authorized to enforce the draft. N.J.S.A. 12A:4-208(a)(1); N.J.S.A. 12A:3-417(a)(1). See e.g., Kuhn v. Tumminelli, 366 N.J. Super. 431, 446 (App. Div. 2004) (noting that the drawee-payor banks correctly relied on depository bank's warranty that it was entitled to enforce the draft under N.J.S.A. 12A:4-208(a)(1)). Subsection (a)(1) of the presentment warranties"in effect is a warranty that there are no unauthorized or missing endorsements." N.J.S.A. 12A:3-417 cmt. 2. Section 12A:4-208 provides in pertinent part:
a. If an unaccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft, the person obtaining payment or acceptance, at the time of presentment, and a previous transferor of the draft, at the time of transfer, warrant to the drawee that pays or accepts the draft in good faith that:
(1) the warrantor is, or was, at the time the warrantor transferred the draft, a person entitled to enforce the draft or authorized to obtain payment or acceptance of the draft on behalf of a person entitled to enforce the draft;
(2) the draft has not been altered; and
(3) the warrantor has no knowledge that the signature of the purported drawer of the draft is unauthorized.....
c. If a drawee asserts a claim for breach of warranty under subsection a. of this section based on an unauthorized endorsement of the draft or an alteration of the draft, the warrantor may defend by ...