VICTORIA UNGER, APPELLANT,
v.
NCNB NATIONAL BANK, APPELLEE
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Victoria Unger loaned money to Peter Sclafani in exchange for ten personal money orders drawn on NCNB National Bank. When the bank refused to pay the instruments, Unger sued. The court held that personal money orders issued by a bank create a reasonable expectation that the bank has received funds to cover them, making them similar to cashier's checks rather than ordinary checks, and reversed the lower court's judgment in favor of the bank.
Personal money orders issued by a bank should be treated as cashier's checks or bank money orders rather than ordinary checks. A person receiving such an instrument would reasonably believe the bank had already received sufficient funds from the remitter to pay it. As between two innocent parties, the party who enabled the fraudulent act—in this case, the bank that issued the personal money orders—should bear the loss.
[1] Personal money orders are not explicitly addressed by the Uniform Commercial Code.
[2] Authority is divided on whether personal money orders are subject to dishonor.
Previewing 2 of 5 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“We conclude that anyone in the South Florida banking community receiving a personal money order, as issued by appellee, would believe, as is customary with other money orders in general use in the area, the bank whose name appeared thereon already had received sufficient moneys from the remitter to pay the personal money order when presented.”
Establishes the reasonable expectation standard for interpreting personal money orders and the custom and usage in the banking community.
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Join FLexlaw to unlock all legal intelligencePeter Sclafani opened an account at NCNB National Bank under the name Broward Check Cashing Service, Inc. with a $100 check that was later returned fo…
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[*247] GARRETT, Judge.
Peter Sclafani deposited a one hundred dollar check and opened an account with appellee in the name of Broward Check Cashing Service, Inc. He ordered a supply of forms with “PERSONAL MONEY ORDER” printed on the top. After his check was returned for insufficient funds, appel-lee closed the account and contacted the printing company to cancel the order. The forms had already been mailed.
Thereafter, appellant agreed to loan Mr. Sclafani ten thousand dollars. As collateral for the loan, Sclafani gave appellant ten of the personal money orders each made out by him for one thousand dollars. Later, appellant presented them for collection. The appellee refused to pay.
Personal money orders are not mentioned in the Uniform Commercial Code. The authority is divided as how to treat such instruments. Garden Check Cashing Serv., Inc. v. First Nat’l City Bank, 25 A.D.2d 137, 267 N.Y.S.2d 698 (1st Dep’t), aff'd mem., 18 N.Y.2d 941, 223 N.E. 2d 566, 277 N.Y.S.2d 141 (1966), treats them as checks subject to dishonor since no bank officer signed or certified the instrument. Sequoyah State Bank v. Union National Bank of Little Rock, 274 Ark. 1, 621 S.W. 2d 683 (1981) and Interfirst Bank Carrollton v. Northpark National Bank of Dallas, 671 S.W. 2d 100 (Tex.App.1984), treat them as cashier’s checks or bank money orders not subject to dishonor as dictated by custom and usage.
We conclude that anyone in the South Florida banking community receiving a personal money order, as issued by appellee, would believe, as is customary with other money orders in general use in the area, the bank whose name appeared thereon already had received sufficient moneys from the remitter to pay the personal money order when presented.
The appellant and the appellee are both innocent parties. As between innocent parties the one who enabled the fraudulent act to be committed should bear the loss. But for appellee’s issuance of the personal money orders there would be no loss. See Emerick v. Long Island Trust Co., 20 U.C.C.Rep. 424 (N.Y.App.1976).
The legislature may want to consider legislation to address the continued use of personal money orders in this state.
Accordingly, we reverse and remand for further proceedings consistent herewith.
HERSEY, C.J., concurs.
WALDEN, J., dissents without opinion.