Doseung Chung v. RACING ASSN.

KENNETH L. GARTNER, J. A published news article recently reported that an investigation the payee's employ) stole it back and returned it to the bank, which cancelled it and gave the remitter a credit. The Court of Appeals determined that while an action could presumably be maintained by the payee against the remitter, equitable estoppel would bar the payee from pursuing a claim against the bank. The Court held that upon the check's return by the remitter the bank had no obligation to the named payee to make any inquiry of the named payee before cancelling the check. In a dissent, Judge Breitel objected that freeing the bank of the obligation to make some inquiry of the specific person to whose order the check was made would obliterate the "distinction between order paper and bearer paper." (31 NY2d, at 236.) Implicit in Judge Breitel's objection (as well as the majority's holding) is that in the case of bearer paper there certainly would be no obligation on the issuing bank to make any investigation before accepting its return, and giving value for it. (See also, Heinike Assocs. v Liberty Natl. Bank, 166 AD2d 922 [4th Dept 1990] [drawee bank was a holder in due course and thus not liable to drawer for permitting drawer's faithless employee to cash bearer instruments].) Moreover, the plaintiff in the instant case knew that the voucher could be "Exchange[d] for cash." The plaintiff conceded at trial that (1) when he himself utilized the voucher prior to its loss, no identity or ownership check was ever made, and (2) he nevertheless continued to use it. The plaintiff could therefore not contend that he had any expectation that the defendant had in place any safeguards against the voucher's unencumbered use, or that he had taken any actions in reliance on the same. This court is compelled to render judgment denying the plaintiff's claim, and in favor of the defendant.