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Triffin v. State Metal Industries


August 27, 2007


On appeal from the Superior Court of New Jersey, Law Division, Camden County, L-6373-03.*fn1

Per curiam.


Argued May 23, 2007

Before Judges Lefelt, Parrillo and Sapp-Peterson.

Plaintiff Robert J. Triffin appeals the dismissal of two consolidated complaints against defendant Wachovia Bank, N.A., the payor bank. Plaintiff claimed that defendant violated N.J.S.A. 12A:4-302's midnight deadline rule with respect to several dishonored checks and that as the assignee of those checks he was entitled to reimbursement. In addition, plaintiff argued that the assignment entitled him to recover for defendant's alleged wrongful debiting of the assignor's account. The trial court rejected both theories of recovery. We affirm.

Sometime in the latter months of 2003, plaintiff purchased checks from Check Cashing Services, Inc. (CCS), LC Beverage, Inc. (LC Beverage), and United Check Cashing of Audubon (UCCA), Inc. There is no dispute that at the time plaintiff purchased the checks, he was aware that they had been dishonored by defendant.

On their face, the checks appeared to have originated from the payroll account of State Metal Industries, Inc. (SMI), an account held by First Union National Bank, defendant's predecessor. The checks had been cashed by CCS, LC Beverage and UCCA, but when they ultimately reached defendant they were dishonored as counterfeit.

Plaintiff memorialized the purchase of these dishonored checks by way of four assignment agreements. The assignment agreement for CCS was dated September 17, 2003, and the other three agreements were dated October 3, 2003. All four agreements identified the respective seller, the particular checks and granted plaintiff the right to pursue all claims that "arise[] from the respective checks." Notably, these agreements were not presented in person to an authorized agent for ratification. Rather, plaintiff obtained a signature sample from the proper agent and at a later date digitally superimposed that signature on an assignment agreement he composed, apparently with the agent's permission.

On November 13, 2003, plaintiff initiated this action by filing a complaint in the Superior Court, Law Division, Camden County. The complaint named defendant, SMI, the payroll contractor and the individuals to whom the checks were written. Plaintiff's claims against defendant alleged breach of contract, violation of the "Midnight Deadline Rule" pursuant to N.J.S.A. 12A:4-302 and 12 C.F.R. 229.34, and wrongful debiting of LC Beverage's account with defendant. On November 8, 2004, plaintiff filed a complaint in the Special Civil Part, Camden County, against defendant, and subsequently an amended complaint on November 24, 2004.

On December 22, 2004, plaintiff filed a motion to transfer two Special Civil Part matters to the Law Division (one venued in Camden County and the other venued in Essex County), to extend discovery, and for leave to file a First Amended Complaint. Defendant opposed the motion and cross-moved for summary judgment dismissing plaintiff's "Midnight Deadline" claims on the grounds that plaintiff lacked the requisite standing to invoke N.J.S.A. 12A:4-302 and 12 C.F.R. 229.34.

The motion judge granted plaintiff's motion to consolidate the two actions venued in Camden County, finding that those matters raised identical midnight deadline issues, denied plaintiff's motion to consolidate the Essex matter with the Camden County actions, and denied a discovery extension. The court then granted defendant's cross-motion for partial summary judgment dismissing plaintiff's midnight deadline claims on the basis that plaintiff lacked the requisite standing to invoke N.J.S.A. 12A:4-302.

On June 23, 2005, defendant filed a motion for summary judgment seeking dismissal of the remaining counts on the basis that plaintiff's assignment agreement was not competent evidence, that the assignment was invalid and that the claim was waived for lack of notice. Plaintiff, in addition to opposing the motion, cross-moved for summary judgment. The motion judge granted defendant's motion and denied plaintiff's cross motion. The present appeal followed.

Plaintiff argues that the trial court erred when it granted summary judgment to defendant and dismissed his Midnight Deadline claims on the basis that plaintiff did not have standing to invoke N.J.S.A. 12A:4-302. Prior to May 2, 2007, two Appellate Division panels reached different results on application of the "Midnight Deadline" rule. In Triffin v. Bridge View Bank, 330 N.J. Super. 473 (App. Div. 2000), Judge Coburn wrote that "where the plaintiff becomes the holder of the check, as well as the assignee of all rights arising from that instrument, after its untimely return and with full knowledge of its dishonor, [he] has no 'vested interest in the timely payment or return of these checks.'" Id. at 478 (quoting Am. Title Ins. Co. v. Burke & Herbert Bank & Trust Co., 813 F. Supp. 423, 428-29 (E.D. Va. 1993), aff'd, 25 F.3d 1038 (4th Cir. 1994)).

However, in Triffin v. Mellon PSFS, 372 N.J. Super. 3 (App. Div. 2004) another panel concluded that a claim based upon a breach of the midnight deadline is assignable, that the assignee may sue in his own name, and that the assignee's knowledge of dishonor or defects in the instrument is irrelevant; it is only what the assignor knew at the time of presentment, and not what the assignee later learned, which is relevant to the claim. [Id. at 7 (emphasis added).]

Although Judge Coburn concurred in the decision, he did so only because "the majority properly conclude[d] that [plaintiff] failed to prove a violation of the 'midnight deadline,'" and therefore its disagreement with Bridge View Bank was dictum. Id. at 12.

Any confusion created by the rulings in these two decisions was unequivocally resolved by the Supreme Court in Triffin v. TD Banknorth, N.A., 190 N.J. 326 (2007). The facts there are virtually identical to the facts in the present matter:

This case arose when the payor banks (TD Banknorth, N.A. and [defendant])

dishonored several checks that had been cashed by check-cashing entities. . . .

Plaintiff . . . entered into separate assignment agreements with check-cashing entities, pursuant to which he purchased their rights and interests in the dishonored checks. Thereafter, he filed small claims actions against TD Banknorth and [defendant] alleging that they wrongfully dishonored the checks in violation of the midnight rule and, accordingly, were strictly liable for the amount of the checks. [Defendant] moved for summary judgment, and TD Banknorth moved for dismissal. The trial judge granted both motions. [Id. at 327-28.]

The Court "affirm[ed] substantially for the reasons expressed by Judge Coburn in his thorough and thoughtful opinion in [Bridge View Bank]," TD Banknorth, N.A., supra, 190 N.J. at 328-29, which stated in relevant part: after [the check's] untimely return and with full knowledge of its dishonor, [the assignee] has no vested interest in the timely payment or return of these checks. . . . Any argument to the contrary would misconstrue the nature of an enforcement action under [N.J.S.A. 12A:4-302]. It is a cause of action for a breach of statutory duty, not an action for collection of a negotiable instrument. [Bridge View Bank, supra, 330 N.J. Super. at 478 (internal quotations and citations omitted).]

The Court concluded, "[w]e likewise note that Triffin can garner no support from N.J.S.A. 2A:25-1, which, in relevant part, permits assignment of 'all choses in action arising on contract. . . .' The action pursued in this case is not based on a contractual right, consequently it is not assignable. To the extent that dictum in [Mellon PSFS, supra, 372 N.J. Super. at 7-12], suggests a contrary conclusion, it is disapproved." TD Banknorth, N.A., supra, 190 N.J. at 329.

Thus, based upon the Court's most recent pronouncement, it is clear that plaintiff has no standing to assert a Midnight Deadline claim under N.J.S.A. 12A:4-302. Because plaintiff does not have standing there can be no claim, let alone a demonstration of a "'genuine issue' as to a material fact." Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.) (citing Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 529-30 (1995)), certif. denied, 154 N.J. 608 (1998). Therefore, the trial court did not err when, relying upon Bridge View Bank, it found that plaintiff lacked standing to argue a violation of N.J.S.A. 12A:4-302 and determined that the case was ripe for partial summary judgment.

Plaintiff next argues that the trial court erred when it granted summary judgment to defendant on plaintiff's claim that defendant wrongfully debited LC Beverage's account. We disagree.

Plaintiff contends that our decision in K. Woodmere Assocs., L.P. v. Menk Corp., 316 N.J. Super. 306 (App. Div. 1998) vitiates the trial court's reliance on N.J.R.E. 1002 (Best Evidence Rule) to dismiss his claim and argues that the objective intent of an assignor to transfer all of its rights in a chose in action is all that is required for an enforceable assignment agreement. Defendant counters with the argument that N.J.R.E. 1002 prohibits admission into evidence of plaintiff's assignment agreement, and even if that were not so, LC Beverage made no valid assignment to plaintiff entitling him to pursue a wrongful debiting claim.

N.J.R.E. 1002 provides, that "[t]o prove the content of a writing or photograph, the original writing or photograph is required except as otherwise provided in these rules or by statute." Ibid. Defendant argues that plaintiff cannot meet the requirements of this rule because there was never a true original of the assignment agreement. According to defendant's position, plaintiff's practice of digitally superimposing a signature onto an agreement while outside of the presence of the assignor, and after the sale has been consummated, makes it impossible for plaintiff to produce an original as contemplated by the Best Evidence Rule. The trial court found some merit in this argument:

Also, too, I don't -- I think that the -- there is an issue, which I don't think has been -- has been -- that has been responded to appropriately as our law sets forth with respect to the best evidence rule. There's no original here. There was never an original for there even to be submitted a secondary writing.

I'm somewhat confused by the argument made in that it's a memorialization, which seems to be a different argument being made here in oral argument, it's different than appears to being made in the -- in the writing -- in the actual briefs submitted.

I also note that [LC Beverage's agent] did not -- obviously, did not sign an agreement or even see it at the time that the checks were sold.

And I -- first of all, I think there's an issue with respect to the valid -- I think there's an issue, and I believe with [defendant], with respect to the best evidence rule.

In an appeal of a summary judgment order, we employ the same standard of review as the trial court. Busciglio v. DellaFave, 366 N.J. Super. 135, 139 (App. Div. 2004). The standard of review is de novo, and we are not required to accept any legal determinations made by the trial court. Singer v. Beach Trading Co., 379 N.J. Super. 63, 80 (App. Div. 2005) (citing Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).

Against that standard, we observe that under N.J.R.E. 1001(c) "[a]n 'original' of a writing is the writing itself or any counterpart intended by the person or persons executing or issuing it to have the same effect." Here, the digitally-produced "counterpart" was, by all indications from the record, intended to have the same effect as the original. In interrogatory answers defendant stated that "[t]he ref[er]enced assignment agreements that plaintiff has are composite photocopies that are intended to serve as 'originals.'" Similarly, LC Beverage's Agent certified that:

9. At the time I agreed to sell on behalf of LC Beverage all of the referenced choses in action to [plaintiff], I authorized [plaintiff] to electronically prepare and to complete with my name and facsimile signature the attached assignment agreement for the referenced five checks, and/or choses in action.

10. At the time I agreed to sell on behalf of LC Beverage all of the referenced choses in action, I expressly intended that the attached electronically prepared assignment agreement for the referenced five checks, and/or choses in action, serve -- and without limitation as to the number of its electronic counterparts -- as the original and exclusive memorial of the agreement between LC Beverage and [plaintiff] for the referenced five checks, and/or choses in action.

11. I further declare that for purposes of my convenience in documenting LC Beverage's sale to plaintiff . . . of all of LC Beverage's rights in the referenced checks, and/or choses in action, I authorized [plaintiff] to prepare and complete as necessary the attached electronically prepared and completed assignment agreement.

Therefore, according to sworn documents by both parties to the assignment agreement, it was intended that plaintiff's digital productions serve as originals. Because that intent meets the criteria of N.J.R.E. 1001(c), plaintiff's digital production is an "original" admissible under N.J.R.E. 1002 to establish the parameters of the assignment agreement between plaintiff and LC Beverage. However, although plaintiff prevails on the admissibility of the digitally-produced counterpart to the original agreement, the inquiry is not ended.

As plaintiff points out, "[a] valid assignment must contain evidence of the intent to transfer one's rights, and 'the subject matter of the assignment must be described sufficiently to make it capable of being readily identified.'" K. Woodmere Assocs., L.P., supra, 316 N.J. Super. at 314; see also Tirgan v. Mega Life & Health Ins., 304 N.J. Super. 385, 389-90 (Law Div. 1997); Berkowitz v. Haigood, 256 N.J Super. 342, 346 (Law Div. 1992); Constanzo v. Constanzo, 248 N.J. Super. 116, 124 (Law Div. 1991). Furthermore, plaintiff bears the burden of proving the assignment's validity, see Triffin v. Johnston, 359 N.J. Super. 543, 549 (App. Div. 2003); Triffin v. Quality Urban Hous.

Partners, 352 N.J. Super. 538, 543 (App. Div. 2002), and "[t]he assignment must be clear and unequivocal in order to be effective as to the obligor." Berkowitz, supra, 256 N.J. Super. at 346; see also Constanzo, supra, 248 N.J. Super. at 124 ("But even though an assignment may be effective as between the parties, it may still be ineffective as against the obligor. . . . In order for the assignment to be effective against the obligor (fiduciary), it must clearly express to him that a right has been assigned."). Here, plaintiff cannot meet his burden as to defendant.

Plaintiff's right to pursue a claim against defendant for wrongful debiting required that the assignment agreement place defendant on clear notice of the assignment of this right. Berkowitz, supra, 256 N.J. Super. at 346. The motion judge found no evidence in the record that such clear notice was given:

I've had an opportunity to review this matter in detail with respect to the submissions. I agree with [defendant]. I think that plaintiff has failed to meet a burden of proof as to the validity of the assignment.

And even so, I think there also is a problem with respect to the validity of the assignment.

Even if you think the assignment was competent evidence, the rights that it purportedly seeks to transfer appeared, reviewing everything, do not include LC Beverage's claim in the debited funds.

I agree with Counsel. When you look at it, the assignment says nothing about the erroneous debit. It says nothing about LC Beverage['s] deposit agreement with [defendant] which governs the disposition of the claim. And it doesn't even purport to transfer to [plaintiff] the LC Beverage claim to have its accounts recredited. That's succinctly what Counsel -- what [defendant] says and I agree with it.

So I think there's a problem with respect to the best evidence and the validity of the claim. And with respect to the assignment, does not describe the rights purportedly to have been -- being transferred.

The agreement itself consistently and exclusively refers to "the respective checks," "the referenced checks," and "the referenced check claims." Therefore, the agreement does not "clear[ly] and unequivocal[ly]" assign to plaintiff the right to pursue wrongful debiting claims against defendant in place of LC Beverage. Ibid. As such, plaintiff cannot satisfy his burden of proving the assignment's validity. See Johnston, supra, 359 N.J. Super. at 549.

Nevertheless, plaintiff argues that the testimony of LC Beverage's agent, rather than the agreement itself, should serve as the primary evidence of the intent of the parties. We reject this argument. The very fact that a valid assignment requires that the subject matter of the assignment be described in such a manner so as to make it readily identifiable, K. Woodmere Assocs., L.P., supra, in our view, is generally at odds with the concept of oral testimony to explain the intent of the parties to the assignment. Moreover, plaintiff, as the drafter of the agreement in question, has voluntarily restricted his ability to supplement the agreement with oral testimony seeking to explain the primary intent of the agreement. Where a writing purports to contain the entire agreement of the parties, and the writing is not deficient on its face, then extrinsic evidence is inadmissible to clarify or add to the written terms. See Ross v. Orr, 3 N.J. 277, 282 (1949); The Zone Co. v. Serv. Transp. Co., 137 N.J.L. 112, 116-17 (Sup. Ct. 1948). Here, Paragraph 28 of the agreement states that:

Buyer and Seller agree, that all there [sic] prior negotiations and representations are deemed merged into and made a part of this written Assignment Agreement, and that Buyer and Seller intend to serve as the sole and exclusive memorial of all their agreement(s) concerning the assignment of the referenced Claim to Buyer.

On its face, the agreement does not suffer from a clear defect, and plaintiff does not allege otherwise. Hence, plaintiff is prohibited from producing the testimony of LC Beverage's agent to explain what he claims is the true intent of the agreement. Moreover, to the extent that plaintiff finds some fault with Paragraph 28, as the agreement's drafter, the axiom that "'[w]here an ambiguity appears in a written agreement, the writing is to be strictly construed against the draftsman'" compels the same result. Highland Lakes Country Club & Cmty. Ass'n v. Franzino, 186 N.J. 99, 122 (2006) (quoting In re Estate of Miller, 90 N.J. 210, 221 (1982)).

Because the clear and plain language of the assignment agreement refers only to claims originating out of the dishonored checks, and plaintiff is not permitted to supplement the agreement by way of extrinsic testimonial evidence, there was no genuine issue of material fact as to plaintiff's ability to pursue a cause of action against defendant based upon an alleged wrongful debit of LC Beverage's accounts. Prudential Prop. & Cas. Ins. Co., supra, 307 N.J. Super. at 167 (citing Brill, supra, 142 N.J. at 529-30)). Therefore, the motion judge properly rejected plaintiff's argument that defendant wrongfully debited LC Beverage's account.

The remaining arguments advanced by plaintiff in his brief and during oral argument are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).


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