1. Why are there so many cases cited in which Triffin is a party?

2. Why is it important to know whether JCNB is a holder in due course?

3. What effect does the postdate on the check have on the decision in the case?

A check dated August 10, 2007, was made payable to one of Liccardi’s employees, Charles Stallone, Jr. Liccardi withheld the check from Stallone because he suspected him of embezzlement. However, the check still disappeared from the company offices, and when the disappearance was discovered, Liccardi immediately placed a stop payment on the check. JCNB Check Cashing, Inc. (JCNB), cashed the check for Stallone before the issue date (the check was postdated) and JCNB then deposited the check in its own bank account on August 9, 2007. However, the issuing bank refused to honor the check. On February 11, 2009, Robert Triffin acquired the dishonored payroll check from JCNB and sued Liccardi and Stallone for the amount of the check plus interest. Triffin’s business is buying dishonored checks and attempting to collect on them. The trial court dismissed Triffin’s complaint on the grounds that he was not a holder in due course. Triffin appealed.

JUDICIAL OPINION

REISNER, Judge … Under the New Jersey Uniform Commercial Code, to be a holder in due course one must take “an instrument for value, in good faith, and without notice of dishonor or any defense against or claim to it on the part of any person.” Triffin v. Quality Urban Hous. Partners, 352 N.J. Super. at 541, 800 A.2d 905. “Good faith” includes “the observance of reasonable commercial standards of fair dealing.” Further, the document must not be “so irregular or incomplete as to call into question its authenticity.” Triffin v. Pomerantz Staffing Servs., LLC, 851 A.2d 100 (App. Div. 2004).

Triffin did not take the Liccardi check as a holder in due course, because he purchased the instrument with notice that it had been dishonored. However, if JCNB was a holder in due course when it obtained the check from Stallone, it could assign its interest in the check to Triffin and he in turn could enforce JCNB’s rights as its assignee.

There is no basis on this record to dispute that Stallone stole the check from his employer and induced JCNB to cash it before the issue date on the check. If Stallone attempted to collect on the check from the obligor, he would be subject to Liccardi’s defenses. Therefore, the critical question is whether JCNB took the check as a holder in due course and can thereby avoid the defenses to enforcement that Liccardi has against Stallone.

“A party who fails to make an inquiry, reasonably required by the circumstances of the transaction, so as to remain ignorant of facts that might disclose a defect cannot claim to be a holder in due course.” A check casher must inquire into the authenticity of checks when presented with “evidence that they were not authentic.”

It is reasonable, in considering whether the instruments were received in good faith and whether the holder comported with reasonable commercial standards, that the holder be expected to fully examine the front and back of the instrument and, where the instrument purports to contain a method by which its authenticity may be tested, that the holder actually utilize that method.

Under the express terms of the Check Cashers Regulatory Act of 1993, a check cashing service is prohibited from “cash[ing] or advancing] any money on a postdated check.” Therefore, the Act requires that a licensee, such as JCNB, examine the face of a check and refrain from cashing it if the check is postdated. We conclude that in this case the Act defined the “reasonable commercial standards” that JCNB was required to follow, and having failed to follow those standards, JCNB was not a holder in due course.

JCNB clearly violated a provision of the Act and, therefore, failed to observe reasonable commercial standards of the check cashing industry as established by the Act. Thus, JCNB cannot qualify as a holder in due course. ………………….