Tonelli v. Chase Manhattan Bank, N.A.

53 A.D.2d 183, 386 N.Y.S.2d 424, 1976 N.Y. App. Div. LEXIS 12501

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: July 8, 1976
• Status: Published

Opinions

Capozzoli, J.

We affirm on the well-reasoned opinion of Mr. Justice Kirschenbaum at Special Term.

We add a brief statement concerning the attempt of the dissent to distinguish Hillsley v State Bank of Albany (24 AD2d 28) from the case at bar. Just as is done in the case before us, the defense was urged in the Hillsley case that the defendant bank was entitled to "a credit or setoff on the premise that the entire proceeds of the forged instrument were paid to Hillsley” (p 30). The court considered the authorities which the defendant bank cited and agreed that those cases did hold that recovery on a forged instrument may be defeated by showing that the rightful owner suffered no damage, and went on to say "[a]n action by the drawer of a check against his bank may be defended by proof that payment was made to the person entitled to it as against the drawer [citing cases]” (p 30). But the court then went on to say (pp 30-31):

"In the case at bar the action is in conversion of the allocation of moneys. Plaintiff’s damage is prima facie $10,000, the amount of the check payable to Hillsley and Glennon Builders. * * *

"It was incumbent on the defendant bank to establish that despite the conversion the plaintiff did not sustain damages. [Citing case.] The trial court found and the record demonstrates that the check was expressly intended for application to the Mooney house; that, instead, it was misapplied to the Springwood Manor house because of the forgery and plaintiff’s lack of knowledge of the maker’s direction as to how it should be applied. * * * The defense is of an equitable nature and requires proof of the absence of damages on the part of the plaintiff [citing case] which the defendant bank on this record has failed to establish.”

Applying this reasoning to the facts presented in the case at bar, it is clear that, although the cashier’s check, issued on the order of one who obviously had no authority to direct its issuance, did find its way to Totowa, it was not used to purchase a certificate of deposit for plaintiff. Instead, it was used to buy the certificate in the name of a stranger. Just as happened in the Hillsley case (supra) the plaintiff has suffered a loss by reason of the misapplication, to say the least, of its funds.

The order of Supreme Court, New York County entered on January 27, 1976 and the judgment entered thereon on Feburary 25, 1976 (Kirschenbaum, J.) granting plaintiff’s motion for summary judgment and denying defendant Chase’s cross motion for summary judgment dismissing the complaint or for summary judgment over against defendant, Totowa, should be affirmed, with costs.