On appeal from Superior Court of New Jersey, Law Division, Special Civil Part, Passaic County, Docket No. DC-11723-01.
Before Judges Coburn, Wells and C.S. Fisher.
The opinion of the court was delivered by: Fisher, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
In this case, we are called upon to determine whether an innocent party, whose check stock was imitated and whose signature was forged, can be held liable when another innocent party pays that check in good faith. We answer that question in the negative and affirm.
On April 20 and 21, 2002, Friendly Check Cashing Corp. was presented with eighteen counterfeit checks, in amounts ranging between $380 and $398, purporting to have been issued by defendant Pomerantz Staffing Services, LLC on its account with defendant Bank of New York. Each check bore Pomerantz's full name and address and a facsimile signature of"Gary Pomerantz." Also printed on the face of each check was a warning:"THE BACK OF THIS CHECK HAS HEAT SENSITIVE INK TO CONFIRM AUTHENTICITY." Without examining the checks as suggested by this warning, Friendly cashed the checks, which the bank returned unpaid and stamped:"COUNTERFEIT" and"DO NOT PRESENT AGAIN."
Friendly assigned any causes of action arising from the dishonoring of these checks to plaintiff Robert J. Triffin, who filed suit against Pomerantz, the Bank of New York and the individual payees on the eighteen checks. Plaintiff made no attempt to effect service on the payees and voluntarily dismissed his claim against the bank. Plaintiff and Pomerantz, the remaining parties, filed cross-motions for summary judgment. The trial judge granted Pomerantz's motion and dismissed the action.
We start with the signatures on the face of the checks, which purport to have been made by Pomerantz. Pomerantz claimed, and plaintiff did not dispute, that it did not sign the checks which also did not come from its check stock. Since"[a] person is not liable on an instrument unless the person signed the instrument," or the instrument was signed by another in a representative or authorized capacity, N.J.S.A. 12A:3-401(a), the Uniform Commercial Code must be examined to determine what constitutes a signature which will obligate a drawer in these circumstances to pay an instrument.
The Uniform Commercial Code, with its interest in the expeditious movement of funds through the use of checks and other negotiable instruments, declares that a document is"signed" when it includes"any symbol executed or adopted by a party with present intention to authenticate a writing." N.J.S.A. 12A:1-201(39). The importance of the authentication requirement was explained by the drafters of the Code in the following way:
The inclusion of authentication in the definition of"signed" is to make clear that as the term is used in this Act a complete signature is not necessary. Authentication may be printed, stamped or written; it may be by initials or by thumbprint. It may be on any part of the document and in appropriate cases may be found in a billhead or letterhead. No catalog of possible authentications can be complete and the court must use common sense and commercial experience in passing upon these matters. The question always is whether the symbol was executed or adopted by the party with present intention to authenticate the writing.
[N.J.S.A. 12A:1-201(39) Uniform Commercial Code comment (emphasis added).]
See also N.J.S.A. 12A:3-401(b) ("A signature may be made manually or by means of a device or machine, and by the use of any name, including a trade or assumed name, or by a word, mark, or symbol executed or adopted by a person with present intention to authenticate a writing."). Since the emphasis is not on the manner in which a symbol, representing a signature, is made, but is on the signer's"present intention to authenticate the writing," it is clear that a forged signature cannot convey the intention of the drawer to authenticate the writing.
Even forged signatures, however, have some significance in determining liability and the risk of loss imposed by the Uniform Commercial Code. That is, the Code does not place forgeries in a class by themselves but includes them within the definition of"unauthorized" signatures. N.J.S.A. 12A:1-201(43) ("'Unauthorized' signature or endorsement means one made without actual, implied, or apparent authority and includes a forgery."). In setting the bounds of liability regarding an instrument containing an"unauthorized" signature, N.J.S.A. 12A:3-403(a) declares that an"unauthorized signature is ineffective except as the signature of the unauthorized signer in favor of a person who in good faith pays the instrument or takes it for value," N.J.S.A. 12A:3-403(a).
The drafters' comments to the Code have not entirely clarified the extent to which this provision applies. There is also scant case law on the subject. Nevertheless, we conclude, as the plain language of N.J.S.A. 12A:3-403(a) demonstrates, that only the malefactor can be held liable on a forged or counterfeit instrument; that is, as the statute expressly states, the unauthorized signature is ineffective"except as the signature of the unauthorized signer." See Perini Corp. v. First Nat'l Bank, 553 F.2d 398, 404 (5th Cir. 1977) ("The forgery does not operate as the ostensible drawer's signature.") Since some malefactor signed ...