Summary
finding American Express a holder in due course after an employee misdirected a corporate check to pay her daughter's credit card account
Summary of this case from Travelers Casualty Surety v. CitibankOpinion
December 1, 1994
Appeal from the Supreme Court, New York County (Ira Gammerman, J.).
Defendant American Express took plaintiffs' checks, which had been misdirected by a faithless employee to make payments on her daughter's private credit card account, as a holder in due course, free of any claims others may have had on it (UCC 3-305), since it was without notice as to those claims (UCC 3-302 [c]). Plaintiffs offer no evidence that American Express had actual notice, and their argument that American Express had constructive notice on the basis of "speculation as to what they had reason to know, or what would have aroused the suspicion of a reasonable person in their circumstances" is meritless (Hartford Acc. Indem. Co. v American Express Co., 74 N.Y.2d 153, 163). The defendant payor bank was properly held not liable, since it was the transferee of a holder in due course, entitled to assert the rights of the holder in due course (see, DH Cattle Holdings Co. v Smith, 195 A.D.2d 202, 212).
Concur — Ellerin, J.P., Wallach, Ross and Williams, JJ.