Home Insurance v. Manufacturers Hanover Trust Co.

203 A.D.2d 125, 610 N.Y.S.2d 508, 23 U.C.C. Rep. Serv. 2d (West) 816, 1994 N.Y. App. Div. LEXIS 4065

Opinion

Order, Supreme Court, New York County (Joan Lobis, J.), entered April 29, 1993, which, insofar as appealed from, granted plaintiffs motion for summary judgment as to liability on its cause of action for conversion, unanimously affirmed, with costs.

The IAS Court correctly held that defendant’s acceptance of drafts for deposit without endorsements was commercially unreasonable as a matter of law (UCC 3-419 [1], [3]; see, Tonelli v Chase Manhattan Bank, 41 NY2d 667), and that the authority of plaintiffs agent to approve the drafts was no defense where, as here, the drafts contained no endorsements whatsoever (compare, Rohrbacher v BancOhio Natl. Bank, 171 AD2d 533). Contrary to defendant’s argument first raised on appeal, plaintiff, as drawee of the drafts, has standing to assert a cause of action in conversion against defendant, the depositary bank (see, Millens v Kingston Trust Co., 118 Misc 2d 512).

We also agree with the IAS Court that UCC 4-207 (4) expressly applies only to a claim for breach of warranty, and should not be applied to a claim for conversion. Concur— Murphy, P. J., Sullivan, Carro, Rosenberger and Asch, JJ.