Plaintiff Robert Triffin appeals from an order denying his motion for reconsideration of an order, entered after a Special Civil Part trial, that dismissed his action against defendants SHS and John Sickles. Defendant SHS, a hair styling school, issued a check to one of students, codefendant Amanda Grzyb-Kelly, for living expenses. Grzyb-Kelly did not file an answer, and the judge entered default judgment against her at the conclusion of trial. Grzyb-Kelly cashed the check twice on the same day, first by electronically depositing it into her account at Wells-Fargo using photos of the front and back of the check through an application on her phone, then at United Check Cashing where it was indorsed, marked with a dated stamp, and exchanged for payment. The check was dishonored when United Check Cashing presented it for payment at defendant's bank, Bank of America. Plaintiff subsequently purchased the dishonored check, along with several others, through an assignment agreement.
Plaintiff filed a complaint pursuant to N.J.S.A. 12A:3-414(b), which entitles the holder of a dishonored check to enforce payment against the drawer. The trial judge found that N.J.S.A. 12A:3-308(b) provided a defense to plaintiff's right to payment based on the evidence that defendant had previously paid the check. Specifically, after reviewing both parties' copies of the check, the judge noted that the electronically deposited check into Wells-Fargo lacked an indorsement, whereas the check cashed at United Check Cashing was indorsed and physically relinquished. Accordingly, the court dismissed the complaint against SHS and Sickles.
In his motion to reconsider, plaintiff argued that because the check was not indorsed, negotiation and transfer, as required by N.J.S.A. 12A:3-201(b) and -203 (c), did not occur. Rather, plaintiff argued, defendant's bank made an illegitimate payment that did not satisfy defendant's obligation to pay. On reconsideration, the trial judge relied, in part, on N.J.S.A. 12A:3-414(c) and concluded the defendant's obligation to pay was discharged. N.J.S.A. 12A:3-414(c) states: "If a draft is accepted by a bank, the drawer is discharged, regardless of when or by whom acceptance was obtained." Similar to a certified check, "acceptance" in this context refers to a process by which a bank guarantees payment of a draft, N.J.S.A. 12A:3-409(a); the statute does not use the term in its colloquial sense.
The court found that N.J.S.A. 12A:4-205 eliminates the indorsement requirement for negotiation and transfer if the customer of a depository bank delivers an item for collection. Because Grzyb-Kelly was a customer of Wells Fargo, the depository bank in this case, the unendorsed check was effectively negotiated and transferred when she made the electronic deposit. Indorsement was not required. The court affirmed the trial judge's finding that defendant had successfully proved his previously paid defense.
Affirmed.