Any Kind Checks Cashed, Inc v. Talcott District court of Appeal of Florida 2002 Facts: D. J. Rivera, a financial advisor to John G. Talcott Jr, a 93 year old man, sold Talcott an investment for about $75,000. This investment did not produce any returns. On Dec. 7, 1999, Salvatore Guarino, a cohort of Rivera, established privileges to cash checks at Any Kind Checks Cashed, Inc. by filling out a customer card with his social security number and by showing his driver’s license. Guarino listed himself as a broker. That same day, he cashed a $450 check.
Three days later, Rivera called Talcott and convinced him to send a check for an additional $10,000 made out to Guarino to cover travel expenses, which in turn, would produce a return on his original $75,000 investment. Talcott knew Guarino was Rivera’s partner. The check was received by Rivera the next day, January 11. Talcott issued a stop payment on the check through his bank when he learned that only $5,700 would be needed to cover the travel costs. Guarino went to Any Kind and presented the $10,000 check to Nancy Michael, a supervisor employed by Any Kind, who had the authority to cash checks over $2,000.
Guarino showed Michael his license and Federal Express envelope the check came in. When asked by Michael what the purpose of the check was, Guarino told her he was a broker, and the maker of the check sent it in as an investment. This information was consistent with his information card kept on file. Michael thought the check was good, noting the envelope showed the maker intended to send it to the casher. After deducting a 5% check cashing fee, Michael gave Guarino $9,500. Michael deposited the check into the company’s bank the next day.
On January 15, Rivera called Talcott requesting a check for $5,700. The same day, Talcott sent it, assuming that Rivera knew that he had stopped payment on the $10,000 check. Two days later, Guarino went into the same Any Kind store to cash the check. Any Kind would not cash the check until the maker, Talcott, had given approval. Talcott did not answer the teller’s first phone call. On the second try, he approved the $5,700 check to be cashed, unaware that the $10,000 check had been cashed. On January 19, Rivera called Talcott to warn him that Guarino was a cheat.
Any Kind filed a two-count complaint against Guarino and Talcott, claiming it was a holder in due course. Talcott argued that Any Kind was not a holder in due course and that his obligation was nullified because of illegality on the part of Guarino. The court entered judgement in favor of Any Kind for only the $5,700 check. The judge found for Talcott on the $10,000 check. Issue: Whether or not a check cashing store qualifies as a holder in due course so that it can collect on a $10,000 check written by an elderly man who was fraudulently induced to issue the check?
Holding: The court held that the check cashing store was not a holder in due course, because the procedures it followed with the $10,000 check did not comply with reasonable commercial standards of fair dealing. Reasoning: A holder in due course is a holder who takes an instrument without apparent evidence of forgery or alteration for value, in good faith, and without notice of certain claims and defenses. Any Kind, as the party claiming it was a holder of due course, has the burden of proof. Any Kind failed to provide sufficient proof.
Any Kind’s employees acted in good faith without knowlesge of Guarino’s wrongdoing. This does not however fit the new definition of good faith in holder of due course passed by the legislation in 1992. It is unusual for a businessman to cash checks at a cash checking store instead of a bank, as he does not fit the typical customer of such a store. Any Kind should have recognized this, as well as his lack of history with the store. Sullivan v. United Dealers Corp Kentucky Court of Appeal, 1972 Facts:
Memory Swift Homes, Inc, contracted with the Sullivans to construct a prefabricated dwelling house for them. On April 9, 1963 the Sullivans executed and delivered their promissory negotiable note for $18, 224. 64 to Memorial Swift. On the same day, Memorial Swift negotiated the note and assigned the mortgage to the United, a finance company. On June 25, 1963, United negotiated the note to a bank. The Sullivans made written statements to the bank stating that the foundation of the house has been properly installed and that all work had been performed in a workmanlike manner.
In August 1963, the Sullivans made several monthly payments according to the terms of the note, but later defaulted. As a result, the bank then transferred the note back to United for value. United sued the Sullivans, who claimed the defense that United was not a holder in due course of the note and that the contractor had constructed the house in an unworkmanlike manner. Issue: Whether United Dealers Corp, a finance company, was a holder in due course of a promissory note executed and delivered by Sullivan, in payment for building material and labor furnished by Memorial Swift Homes, the payee of the note?
Holding: The court held that United was a holder in due course at the time the note was transferred and negotiated to it by the payee. Reasoning: In order to prevent one from acquiring the status of a holder in due course means notice at the time of the taking or at the time that the instrument is negotiated. The moment value is given without notice, the status of a holder in due course is definitely and irrevocably fixed. Under 3- 302 (f)- notice to a purchaser must be received at such time and in such manner as to give a reasonable opportunity to act on it.
In this case, all evidence demonstrates a complete lack of notice to the finance company, therefore making them a holder in due course. Triffin v. Somerset Valley Bank New Jersey Superior Court, Appellate Division, 2001 Facts: In October 1998, Alfred M. Hauser, president of Hauser Co. , was notified by Edwards Food Store in Raritan and the Somerset Valley Bank that several individuals were cashing what appeared to be Hauser Co. payroll checks. Mr. Hauser reviewed the checks and stated that the checks were counterfeits and contacts the police.
Mr. Hausers affirmed that the checks were counterfeits because none of the payees were employees of Hauser. The checks were not written by Mr. Houser, nor did he authorize anyone to sign those checks on his behalf. Plaintiff purchased through assignment agreements with check cashing companies,18 dishonored checks, issued by the defendant Hauser Contracting Company. Plaintiff filed suit in the Special Civil Part to enforce Hauser liability on the checks. Issue: Holding: Reasoning: