A.K.S. JEWELRY MANUFACTURING CORP., RESPONDENT, v. DORAS DISTRIBUTOR, INC.,
ET AL., DEFENDANTS, AND THE CHASE MANHATTAN BANK, N.A., APPELLANT.
THOMAS A. HANNA AND TAH LTD., APPELLANTS-RESPONDENTS, v. FIRST NATIONAL BANK
OF ROCHESTER AND FLEET BANK, RESPONDENTS- APPELLANTS.
87 N.Y.2d 107, 661 N.E.2d 683, 637 N.Y.S.2d 953
December 5, 1995
1 No. 272 (1995 NY Int. 269)
4 No. 285 (1995 NY Int. 269)
Decided December 5, 1995
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This opinion is uncorrected and subject to revision before publication
in the New York Reports.
No. 272:
Andrew S. O'Connor, for Appellant.
Saul E. Feder, for Respondent.
No. 285:
Sean T. Hanna, for Appellants-respondents.
Sally A. Smith for First National Bank, Respondent-appellant.
Jeffrey W. Baker for Fleet Bank, Respondent-appellant.
SIMONS, J.:
These two unrelated appeals involve claims by payees to recover on
checks dishonored by the payor banks and address the liability imposed
on a payor bank by UCC 4-302(a). Specifically, they raise the
questions whether (1) a payor bank's timely return or dishonor of an
item by midnight of the day following its receipt of the item is a
defense to the bank's failure to settle the item on the day it was
received by the payor bank; (2) a payor bank that has returned checks
after its midnight deadline will be relieved of liability when the
depositary bank subsequently debits its depositor's account in
violation of UCC 4-212(1); and (3) equitable considerations will
relieve a bank of liability for its failure to timely dishonor a check
when the check was presented by a payee who was aware that it would be
paid only if the bank made a mistake.
For the reasons which follow, we conclude that the judgment in Hanna
should be modified to grant summary judgment to plaintiffs and
defendant depositary bank, First National Bank of Rochester, and, in
SNIPPETS:
THOMAS A. HANNA AND TAH LTD., APPELLANTS-RESPONDENTS, v.
FIRST NATIONAL BANK
OF ROCHESTER AND FLEET BANK,
Andrew S. O'Connor, for Appellant.
Saul E. Feder, for Respondent.
These two unrelated appeals involve claims by payees to recover on checks dishonored by the
they raise the questions whether a payor bank's timely return or dishonor of an item by
ty for its failure to timely dishonor a check when the check was presented by a payee who was aware
plaintiffs Thomas Hanna and TAH Ltd. are the payees of 18 checks drawn on an account of
In May 1991, Heavy Hitters had asked Fleet not to honor any "stale dated" checks drawn on its
The record does not indicate the reason for the request, but Fleet accepted it, and issued a
First National received the dishonored 13 checks the following day, whereupon it charged back
Plaintiffs then instituted this action against both banks, asserting a number of causes of
Plaintiffs moved for summary judgment, and the banks filed a cross motion for similar relief.
November 12, but it did nothing on that day which would constitute settlement or remittance
13 and did not dishonor those checks until November 20, 1991, after final payment was established
It ruled in favor of defendants on four of the five remaining checks, however, recognizing
The Appellate Division modified, holding that Fleet Bank's timely compliance with the
Plaintiff A.K.S. Jewelry, is the payee of a $100,000 check which was drawn on the account of
The payor bank's settlement for the item, whether provisional or final, is necessary and
It does so by imposing liability for the amount of the item as a penalty upon a payor bank
First National's right to charge back plaintiffs' account for a provisional credit is set
In A.K.S. Jewelry v Doras Distributor, payor bank Chase Manhattan concedes that its dishonor
In A.K.S. Jewelry Manufacturing Corporation v Doras Distributor, et al., the order of the
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