In Check Fin. Servs., Inc. v Lifespire, Inc.

[*1] In Check Fin. Servs., Inc. v Lifespire, Inc. 2007 NY Slip Op 52487(U) [18 Misc 3d 1110(A)] Decided on December 12, 2007 Civil Court Of The City Of New York, New York County Engoron, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on December 12, 2007
Civil Court of the City of New York, New York County

In Check Financial Services, Inc., d/b/a in Check Check Cashing, Plaintiff,

against

Lifespire, Inc., et al., Defendants.



51500/06

Arthur F. Engoron, J.

Plaintiff owns and operates a check cashing business. Defendant Lifespire, Inc. ("Lifespire") has a payroll checking account at non-party JP Morgan Chase ("Chase"). In or about June of 2003, defaulting defendants Rafael Texidor, Jesus Batista and Anthony McGeachy presented to plaintiff what appeared to be regular and proper checks made out by Lifespire to the individual defendants and drawn on Chase. Plaintiff paid said defendants for the checks. The checks were forwarded to Chase, which recognized them as forgeries (i.e., Lifespire's actual checks, with forged signatures) or counterfeits (paper printed to look like Lifespire's actual checks, with forged signatures), refused payment, and returned them to plaintiff. Plaintiff commenced the instant action against the aforesaid defendants. The three individual defendants defaulted; Lifespire answered. Plaintiff now moves for summary judgment against Lifespire; Lifespire now cross-moves for summary judgment.

Discussion

Plaintiff has failed to provide any basis to hold Lifespire liable. First and foremost, Lifespire is not the maker (a/k/a "drawer") of the checks. This distinguishes the instant case from all of those cited by plaintiff in which the defendant actually made out the checks and the question was whether the loss would fall on the maker or a holder in due course.

Indeed, on the record before the Court, not only did Lifespire not make out the checks, Lifespire did not do anything regarding the checks! If the checks are counterfeit (as opposed to forged), all that could be said is that Lifespire opened a checking account and issued checks to third [*2]persons, one or more of whom attempted to reproduce them, like a counterfeiter trying to copy United States currency. And if the checks are forged, all that could be said is that someone stole them from Lifespire.

Plaintiff claims that if the checks were stolen, this would raise a presumption of negligence on the part of Lifespire. However, the record is barren of any particular negligence, whether of commission or omission, by Lifespire, and this Court is not aware of any authority for the proposition that the mere fact that somebody's personal property was stolen raises a presumption of negligence.[FN1] People use checks, rather than cash, because things get stolen. Plaintiff has not conducted any discovery (presumably because of the modest amount of money at issue herein) and has neither requested any nor argued that the instant motion should be held in abeyance or denied pursuant to CPLR 3212(f).

Related to this second argument, plaintiff contends that as it did nothing wrong, it should not suffer any loss. Aside from the fact that plaintiff could, at least in theory, have attempted to verify the checks by telephoning or otherwise contacting Lifespire and/or Chase, Lifespire did nothing at all. So the moral of the story is not that as between two "innocent" parties a loss should fall on the person most able to prevent it, the moral of the story is that as between two parties, one of which did something and suffered a loss, and the other of which did nothing at all, the loss should remain where it fell. In the final analysis, even if plaintiff had no way of knowing that it was being cheated, it was, but there is no evidence that it was Lifespire's fault.

Dated:December 12, 2007

Arthur F. Engoron, J.C.C. Footnotes

Footnote 1: Just by way of rough comparison, under New York law, res ipsa loquitur has three criteria: "(1) the event must be of a kind which ordinarily does not occur in the absence of someone's negligence; (2) it must be caused by an agency or instrumentality within the exclusive control of the defendant; (3) it must not have been due to any voluntary action or contribution on the part of the plaintiff." Dermatossian v New York City Tr. Auth., 67 NY2d 219, 226 (1986). None of these elements is present here (the third because plaintiff cashed the checks).