Reliable Check Cashing v. Banco Popular


New York Law Journal


Justice Carolyn Demarest

Reliable Check Cashing (RCC) sought recovery based on non-payment of cashier's checks. Banco Popular moved to dismiss RCC's complaint, arguing there were no triable issues of fact. RCC cross-moved for summary judgment against the bank, claiming entitlement as a holder in due course of the subject checks. The court noted it was undisputed that the bank was defrauded by defendant Goldberger and Supreme Interior Management, but questioned whether the bank or RCC should bear the loss for such fraud. It stated the answer rested on whether RCC was a holder in due course so as to take the cashier's checks free of the bank's defenses. The court noted it was undisputed RCC was a holder of the checks, and gave value for them. The bank argued RCC was not a holder in due course as it was unable to meet the good faith and notice requirements of UCC 3-302(1). The bank's claim RCC was not a holder in due course was premised on its speculation that RCC was complicit in Goldberger's fraud. Yet, the court stated the consequences of negligence should fall on the bank, the facilitator of the fraud who issued the checks to its own depositor, not an apparently innocent holder in due course. Thus, RCC's cross-motion was granted.

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