III. Banking

BANKING, COMMERCIAL PAPER AND CREDITOR CAUSES OF ACTION

Types for Causes of Action:

  1. Bank Leaving Funds Transfer Incomplete
  2. Bank Misconduct When Relying on Power of Attorney
  3. Bank Mishandling Funds Transfer
  4. Bankrupt’s Voiding of Preferential Transfer of Property
  5. Bank’s Wrongful Dishonor of Negotiable Instrument
  6. Bank’s Wrongful Payment of Negotiable Instrument
  7. Bounced Check Causing Damage
  8. Certified or Cashier’s Check Wrongfully Dishonored
  9. Checking Account Funds  Misappropriated by Fiduciary
  10. Collecting Bank Late Objection to Negotiable Instrument
  11. Collecting Bank Mishandling Negotiable Instrument
  12. Credit Issuer Dishonoring or Repudiating
  13. Debtor Lying to Creditor About Assets
  14. Debtor’s Fraudulent Conveyance
  15. Electronic Funds Transfer Privacy or Safety Violation
  16. Enforcement of Security Interest delegating Seller’s Performance
  17. Fraudulent Negotiable Instrument Paid or Taken
  18. Lessee’s Default on Lease of Goods
  19. Lessor’s Breach of Implied Warranty on Goods
  20. Lessor’s Breach of Express Warranty on Goods
  21. Lessor’s Default on Lease of Goods
  22. Letter of Credit Obligation Breached
  23. Mistaken Payment on Draft Returned
  24. Mortgage Contingency Loan Exacting Illegal Commission
  25. Mortgage Exacting Illegal Points and Prepayments Fees
  26. Mortgage Holder Breaching Escrow Obligations
  27. Mortgage Failing to Cancel Redeemed Mortgage
  28. Negotiable Instrument
  29. Negotiable Instrument Forged or Stolen
  30. Negotiable Instrument Signed For Accommodation
  31. Noncompliance with Secured Transactions Laws
  32. Spouse Liable for Other Spouse’s Debt
  33. Registration of Investment Security Transfer Denied
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I. BANK LEAVING FUNDS TRANSFER INCOMPLETE

Elements to prove:

Notice, that the sender may recover ordinary or incidental expenses in the transaction, and interest losses resulting from the failure to execute where the

  1. receiving bank;
  2. fails to execute a payment order; and
  3. that it was obliged by express agreement to execute.

II. BANK MISCONDUCT WHEN RELYING ON POWER OF ATTORNEY

Elements to prove:

  1. money is paid;
  2. on a negotiable instrument;
  3. endorsed using power of attorney;
  4. under a mistake of fact;
  5. that power of attorney was still intact, where, in fact, it had been revoked;
  6. is recoverable; and
  7. from endorser who was not entitled to the funds.

III. BANK MISHANDLING FUNDS TRANSFER

Elements to prove: Here, the receiving bank is obliged:

  1. to issue;
  2. on the execution date;
  3. a payment order complying with the sender’s order; and
  4. to follow the sender’s instructions concerning
  1. any intermediary bank or funds-transfer system to be used in carrying out the funds transfer; or
  2. the means by which payment orders are to be transmitted in the funds transfer.

IV. BANKRUPT’S VOIDING OF PREFERENTIAL TRANSFER OF PROPERTY

Elements to prove:

  1. there was a conveyance;
  2. that the transferor would become insolvent as a result of the conveyance; and
  3. there was no fair consideration for the conveyance.

V. BANK’S WRONGFUL DISHONOR OF NEGOTIABLE INSTRUMENT

Elements to prove bank liability:

  1. to anyone having an account with a bank;
  2. for damages proximately caused by;
  3. the wrongful dishonor of an instrument for the payment of money that is properly payable;
  4. a bank may dishonor an item that would create an overdraft unless it has agreed to pay the overdraft.

VI. BANK’S WRONGFUL PAYMENT OF NEGOTIABLE INSTRUMENT

Elements to prove by drawer:

  1. there has been damage;
  2. by reason of;
  3. bank’s wrongful payment;
  4. after receipt of order; and
  5. absent ratification.

VII. BOUNCED CHECK CAUSING DAMAGE

Elements to prove:

  1. a drawer negotiating a check;
  2. who knows or should know that payment of such check will be refused by the drawee bank
    1. either because the drawer has no account with such bank, or
    2. because the drawer has insufficient funds on deposit with such bank;
  3. shall be liable to the payee who has presented such check for payment;
  4. not only for the face amount of the check;
  5. but also for additional, liquidated damages
    1. when the drawer has no account with such bank: in no event shall such amount be greater than twice the face amount of the check or seven hundred fifty dollars, whichever is less,
    2. when the drawer has insufficient funds on deposit with such bank: in no event shall such amount be greater than twice the face amount of the check or four hundred dollars, whichever is less;
  6. where the check is dishonored and the drawer fails to pay the face amount of such check within thirty days following the date of mailing by the payee of the second written demand for payment as provided in this section; and
  7. the drawer shall not be liable to the payee for the additional, liquidated damages provided for by this section if
    1. the drawer gave such check as payment for the rental of residential premises; or
    2. the drawer gave such check as payment for residential service supplied by a gas, electric, steam, telephone or water corporation; or
    3. the drawer gave such check as repayment of all, or a portion of, a debt secured by collateral which the payee has repossessed.

VIII. CERTIFIED OR CASHIER’S CHECK WRONGFULLY DISHONORED

Elements to prove:

  1. issuance of stop payment orders;
  2. on certified or cashier’s checks;
  3. made payable to order of another bank;
  4. for deposit into plaintiff’s account;
  5. constituted wrongful dishonor of checks;
  6. absent evidence that checks were fraudulently issued or obtained; and
  7. even if checks were stopped because customers of plaintiff informed issuing bank that they had made alternative arrangements with the plaintiff for payment.

IX. CHECKING ACCOUNT FUNDS MISAPPROPRIATED BY FIDUCIARY

Elements to prove bank liability:

  1. the depository bank;
  2. has actual knowledge or notice;
  3. that a diversion will occur or is ongoing, demonstrated by
  4. facts sufficient to cause;
  5. a reasonably prudent person;
  6. to suspect that trust funds are being misappropriated;
  7. that will trigger a duty of inquiry on the part of a depository bank; and
  8. the bank’s failure to conduct a reasonable inquiry when the obligation arises will result in the bank being charged with such knowledge as inquiry would have disclosed.

X. COLLECTING BANK LATE OBJECTION TO NEGOTIABLE INSTRUMENT

Elements to prove that collecting bank must use ordinary care:

  1. presenting an item or sending it for presentment;
  2. sending notice of dishonor or non-payment or returning an item other than a documentary draft to the bank’s transferor or directly to the depositary bank under subsection (2) of Section 4-212 after learning that the item has not been paid or accepted, as the case may be;
  3. settling for an item when the bank receives final settlement;
  4. making or providing for any necessary protest; and
  5. notifying its transferor of any loss or delay in transit within a reasonable time after discovery thereof.
  1. the depository bank;
  2. has actual knowledge or notice;
  3. that a diversion will occur or is ongoing, demonstrated by
  4. facts sufficient to cause;
  5. a reasonably prudent person;
  6. to suspect that trust funds are being misappropriated;
  7. that will trigger a duty of inquiry on the part of a depository bank; and
  8. the bank’s failure to conduct a reasonable inquiry when the obligation arises will result in the bank being charged with such knowledge as inquiry would have disclosed.

XI. COLLECTING BANK MISHANDLING NEGOTIABLE INSTRUMENT

Elements to prove for liability:

  1. a bank;
  2. receiving a check for collection;
  3. acts as agent; and
  4. upon proof of its failure to exercise ordinary care.

XII. CREDIT ISSUER DISHONORING OR REPUDIATING

Elements to prove:

  1. an issuer of credit;
  2. dishonors or repudiates their letter of credit;
  3. where a presentation appears on its face to comply with the terms and conditions of the letter of credit;
  4. the beneficiary, successor, or nominated person;
  5. may recover from the issuer the amount that is subject of the dishonor or repudiation.

XIII. DEBTOR LYING TO CREDITOR ABOUT ASSETS

Elements to prove in line with intent presumed in law, to hinder, delay, or defraud either present or future creditors, is fraudulent as to both present and future creditors.

XIV. DEBTOR’S FRAUDULENT CONVEYANCE

Elements to prove to avoid it:

  1. every conveyance made and every obligation incurred;
  2. with actual intent (as distinguished from intent presumed in law);
  3. to hinder, delay, or defraud;
  4. either present or future creditors; and
  5. is fraudulent as to both present and future creditors.

 

XV. ELECTRONIC FUND TRANSFER PRIVACY OR SAFETY VIOLATION

Elements to prove consider that the bank may be held liable for privacy or safety violations in certain circumstances when the bank discloses a depositor’s confidential information that is not relevant to a suspected crime or other violation. 

XVI. ENFORCEMENT OF SECURITY INTEREST DELEGATING SELLER’S PERFORMANCE

Elements to prove that the secured party:

  1. undertakes to collect from or enforce an obligation of an account debtor or other person obligated on collateral; and
  2. is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor or a secondary obligor.

 

XVII. FRAUDULENT NEGOTIABLE INSTRUMENT PAID OR TAKEN

Elements to prove:

  1. an instrument;
  2. is converted when;
  3. it is paid;
  4. on a forged endorsement.

XVIII. LESSEE’S DEFAULT ON LEASE OF GOODS

Elements to prove that the lessee:

  1. wrongfully
    1. rejects; or
    2. revokes acceptance of goods; or
    3. fails to make a payment when due; or
    4. repudiates with respect to a part or whole; and
  2. then, with respect to any goods involved and with respect to all the goods if, under an installment lease contract, the value of the whole lease contract is substantially impaired.

XIX. LESSOR’S BREACH OF IMPLIED WARRANTY ON GOODS

Elements to prove:

  1. except in a finance lease, a warranty that the goods will be merchantable is implied in a lease contract if the lessor is a merchant with respect to goods of that kind;
  2. goods breached the implied warranty on goods if they
    1. do not pass without objection in the trade under the description in the lease agreement;
    2. in the case of fungible goods, are not of fair average quality within the description;
    3. are not fit for the ordinary purposes for which goods of that type are used;
    4. do not run, within the variation permitted by the lease agreement, of even kind, quality, and quantity within each unit and among all units involved;
    5. are not adequately contained, packaged, and labeled as the lease agreement may require; and
    6. do not conform to any promises or affirmations of fact made on the container or label;
  3. other implied warranties may arise from course of dealing or usage of trade.

XX. LESSOR’S BREACH OF EXPRESS WARRANTY ON GOODS

Elements to prove:

  1. the lessor;
  2. has set forth;
  3. an express warranty of goods;
  4. the goods do not conform to the affirmation or promise of the warranty; and
  5. the lessor has breached the warranty.

XXI. LESSOR’S DEFAULT ON LEASE OF GOODS

Elements to prove:

  1. a lessor;
  2. fails to deliver the goods;
    1. in conformity to the lease contract; or
    2. repudiates the lease contract; or
  3. the lessee rightfully rejects the goods or justifiably revokes acceptance of the goods; and
  4. then, with respect to any goods involved and with respect to all goods if under an installment lease contract the value of the whole lease contract is substantially impaired, and the lessor is in default.

XXII. LETTER OF CREDIT OBLIGATION BREACHED

Elements to prove that issuer breached obligation:

  1. it does not act with good faith and observance of any general banking usage;
  2. it does not honor a presentation that appears on its face strictly to comply with the terms and conditions of the letter of credit absent intentional fraud on the part of the beneficiary; and
  3. it takes more than seven business days after receipt of documents to honor, accept a draft or incur a deferred obligation, or give notice to presenter of discrepancies in presentation.

XXIII. MISTAKEN PAYMENT ON DRAFT RETURNED

Elements to prove:

  1. a payor bank;
  2. has paid an item;
  3. over the stop payment order of the drawer, maker, or otherwise under circumstances giving a basis for objection by the drawer or maker; and the payor bank shall be subrogated to the rights:
  4. of any holder in due course on the item against the drawer or maker;
  5. of the payee or any other holder of the item against the drawer or maker either on the item or under the transaction out of which the item arose; and
  6. of the drawer or maker against the payee or any other holder of the item with respect to the transaction out of which the item arose.

XXIV. MORTGAGE CONTINGENCY LOAN EXACTING ILLEGAL COMMISSION

Elements to prove:

  1. broker;
  2. has not procured;
  3. an enforceable contract of sale;
  4. because contractual contingencies have not been met; and
  5. he is not entitled to obtain any commission from his principal.

XXV. MORTGAGE EXACTING ILLEGAL POINTS AND PREPAYMENTS FEES

Elements to prove that mortgagor can recover prepayment fees are:

  1. mortgagee;
  2. after electing to accelerate the mortgage;
  3. because of a default;
  4. exacts a prepayment penalty;
  5. because of the premature termination of the mortgage.
  1. broker;
  2. has not procured;
  3. an enforceable contract of sale;
  4. because contractual contingencies have not been met; and
  5. he is not entitled to obtain any commission from his principal.

XXVI. MORTGAGE HOLDER BREACHING ESCROW OBLIGATIONS

Elements to prove for recovery are:

  1. failure of the;
  2. grantee or obligee;
  3. to perform;
  4. the conditions upon which an instrument was deposited in escrow; and
  5. the depositor is entitled to the return and cancellation of the instrument.

XXVII. MORTGAGEE FAILING TO CANCEL REDEEMED MORTGAGE

Elements to prove:

  1. after payment of authorized principal, interest and any other amounts due thereunder or otherwise owed by law has actually been made;
  2. a mortgagee of real property situated in this state, unless otherwise requested in writing by the mortgagor or the assignee of such mortgage;
  3. must execute and acknowledge;
  4. before a proper officer;
  5. a satisfaction of mortgage; and
  6. thereupon within 30 days arrange to have the satisfaction of mortgage:
    1. presented for recording to the recording officer of the county where the mortgage is recorded, or
    2. if so requested by the mortgagor or the mortgagor’s designee, to the mortgagor or the mortgagor’s designee.

XXVIII. NEGOTIABLE INSTRUMENT

Elements to prove:

  1. be in writing and signed by the maker or drawer;
  2. contain an unconditional promise or order to pay a “sum certain” in money and no other promise, order, obligation or power given by the maker or drawer except as authorized by UCC Article 3;
  3. be payable on demand or at a definite time; and
  4. be payable to order or to bearer.

XXIX. NEGOTIABLE INSTRUMENT FORGED OR STOLEN

Elements to prove for bank to recover:

  1. from its customer;
  2. the amount it was required to pay to drawee bank;
  3. for accepting customer’s deposit of check;
  4. bearing prior forged endorsement;
  5. the proceeds of which the bank paid to customer; and
  6. where the bank acted in good faith and in accordance with reasonable commercial standards.

XXX. NEGOTIABLE INSTRUMENT SIGNED FOR ACCOMMODATION

Elements to prove:

  1. a party signs the instrument;
  2. in any capacity of lending his or her name to another party to it;
  3. that party is a surety; and
  4. his or her liability is on the instrument.

XXXI. NONCOMPLIANCE WITH SECURED TRANSACTIONS LAWS

Elements to prove, there is:

  1. improper disposition of the collateral;
  2. failure to properly perform his or her duties as pledge;
  3. failure to make collection from an account debtor or obligor in a commercially reasonable manner;
  4. improper repossession of the collateral;
  5. failure to sell consumer goods as to which the debtor has paid a prescribed percent of the cash price or loan in the manner and within the time required;
  6. any impropriety in connection with an attempt to retain the collateral in satisfaction of the obligation; and
  7. any action prejudicial to the debtor’s right of redemption.

XXXII. SPOUSE LIABLE FOR OTHER SPOUSE’S DEBT

Elements to prove:

  1. the cost of;
  2. necessaries;
  3. that were furnished;
  4. to debtor spouse; and
  5. where the non-debtor spouse has the ability to satisfy the debt.

XXXIII. REGISTRATION OF INVESTMENT SECURITY TRANSFER DENIED

Elements to prove:

  1. a certificated security;
  2. in registered form;
  3. presented to an issuer;
  4. with a request to register transfer or an instruction presented to an issuer with a request to register transfer of an un-certificated security;
  5. the issuer shall register the transfer as requested if
    1. under the terms of the security the person seeking registration of transfer is eligible to have the security registered in its name,
    2. the endorsement or instruction is made by the appropriate person or by an agent who has actual authority to act on behalf of the appropriate person,
    3. reasonable assurance is given that the endorsement or instruction is genuine and authorized,
    4. any applicable law relating to the collection of taxes has been complied with,
    5. the transfer does not violate any restriction on transfer imposed by the issuer,
    6. a demand that the issuer not register transfer has not become effective; and
    7. the transfer is in fact rightful or is to a protected purchaser.

the above is an abstract from the Encyclopedia of New York Causes of Action by Ernest Edward Badway, 2018 edition

Copyright Claim: subject to ALM’s terms of use. 

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